10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-17706

QNB Corp.

(Exact Name of Registrant as Specified in Its Charter)

     Pennsylvania

     23-2318082

     (State or Other Jurisdiction of
Incorporation or Organization)

     (I.R.S. Employer
Identification No.)


15 North Third Street, P.O. Box 9005 Quakertown, PA		18951-9005
(Address of Principal Executive Offices)		(Zip Code)

(215) 538-5600

Registrant's Telephone Number, Including Area Code

Not Applicable

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act: None.

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock

     QNBC

     N/A

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class		Outstanding at July 31, 2026
Common Stock, par value $0.625		4,979,570

QNB CORP. AND SUBSIDIARY

FORM 10-Q

QUARTER ENDED JUNE 30, 2026

INDEX


	PART I - FINANCIAL INFORMATION

ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)	PAGE

	Consolidated Balance Sheets at June 30, 2026 and December 31, 2025	2

	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2026 and 2025	3

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2026 and 2025	4

	Consolidated Statement of Shareholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025	5

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025	7

	Notes to Consolidated Financial Statements	8

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	47

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	66

ITEM 4.	CONTROLS AND PROCEDURES	67

	PART II - OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	68

ITEM 1A.	RISK FACTORS	68

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	68

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	68

ITEM 4.	MINE SAFETY DISCLOSURES	68

ITEM 5.	OTHER INFORMATION	68

ITEM 6.	EXHIBITS	69

SIGNATURES		70

CERTIFICATIONS

QNB Corp. and Subsidiary

CONSOLIDATED BALANCE SHEETS


	(in thousands, except share data)
	(current period unaudited)
	June 30, 2026			December 31, 2025
Assets
Cash and due from banks	$	26,799		$	12,900
Interest-bearing deposits in banks		52,541			37,397
Total cash and cash equivalents		79,340			50,297
Investments:
Available-for-sale (amortized cost $572,778 and $602,047)		516,978			542,830
Equity securities		268			—
Restricted investment in stocks		7,287			6,663
Loans held-for-sale		395			246
Loans receivable		1,716,599			1,262,074
Allowance for credit losses on loans		(12,770	)		(9,215	)
Loans receivable, net		1,703,829			1,252,859
Bank-owned life insurance		18,628			12,275
Premises and equipment, net		25,273			16,886
Goodwill		11,164			—
Other intangible assets		7,358			346
Accrued interest receivable		6,399			4,839
Net deferred tax assets		13,384			13,993
Other assets		8,667			4,771
Total assets	$	2,398,970		$	1,906,005

Liabilities
Deposits
Demand, non-interest bearing	$	266,120		$	189,957
Interest-bearing demand		626,897			534,854
Money market		388,326			260,742
Savings		352,077			281,161
Time less than or equal to $250		353,948			316,760
Time greater than $250		79,783			59,037
Total deposits		2,067,151			1,642,511
Short-term borrowings		75,428			80,601
Subordinated debt		54,018			39,268
Accrued interest payable		4,337			5,050
Other liabilities		14,522			9,012
Total liabilities		2,215,456			1,776,442

Shareholders' Equity
Common stock, par value $0.625 per share;
authorized 10,000,000 shares; 5,185,847 shares and 3,947,561
shares issued; 4,977,161 and 3,738,875 shares outstanding		3,241			2,467
Surplus		77,334			29,206
Retained earnings		150,764			148,397
Accumulated other comprehensive loss, net of tax		(43,788	)		(46,470	)
Treasury stock, at cost; 208,686 and 208,686 shares		(4,037	)		(4,037	)
Total shareholders' equity		183,514			129,563
Total liabilities and shareholders' equity	$	2,398,970		$	1,906,005

The accompanying notes are an integral part of the consolidated financial statements.

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME


	(in thousands, except per share data - unaudited)
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
		2026			2025			2026		2025
Interest income
Interest and fees on loans	$	26,632		$	18,067		$	45,258		$	35,382
Interest and dividends on available-for-sale & equity securities:
Taxable		3,120			3,970			6,263			7,983
Tax-exempt		368			355			723			708
Interest on interest-bearing balances and other interest income		511			718			863			1,235
Total interest income		30,631			23,110			53,107			45,308
Interest expense
Interest on deposits
Interest-bearing demand		2,660			2,315			4,654			4,715
Money market		2,691			1,862			4,294			3,680
Savings		1,361			901			2,264			1,794
Time less than or equal to $250		2,956			3,159			5,594			6,442
Time greater than $250		736			527			1,266			1,045
Interest on short-term borrowings		596			689			1,358			1,145
Interest on long-term debt		—			67			—			423
Interest on subordinated debt		1,280			938			2,217			1,875
Total interest expense		12,280			10,458			21,647			21,119
Net interest income		18,351			12,652			31,460			24,189
Provision (reversal) for credit losses		222			(146	)		522			404
Net interest income after provision (reversal) for credit losses		18,129			12,798			30,938			23,785
Non-interest income
Fees for services to customers		658			485			1,171			932
ATM and debit card		811			724			1,552			1,380
Retail brokerage and advisory		148			140			351			281
Bank-owned life insurance		133			81			225			168
Merchant		81			82			163			157
Net gain on sale of securities		96			—			96			—
Net unrealized gain on equity securities		268			—			268			—
Net loss on interest-rate swap termination		(303	)		—			(303	)		—
Net gain on sale of loans		36			4			44			22
Other		211			136			373			296
Total non-interest income		2,139			1,652			3,940			3,236
Non-interest expense
Salaries and employee benefits		7,200			5,251			12,816			10,283
Net occupancy		767			546			1,452			1,160
Furniture and equipment		1,422			1,135			2,629			2,257
Marketing		242			250			600			439
Third party services		1,193			788			2,007			1,450
Telephone, postage and supplies		150			120			273			244
State taxes		441			236			646			503
FDIC insurance premiums		302			269			494			543
Merger-related expenses		3,084			—			3,972			—
Other		1,635			967			2,685			2,052
Total non-interest expense		16,436			9,562			27,574			18,931
Income before income taxes		3,832			4,888			7,304			8,090
Provision for income taxes		817			1,005			1,524			1,629
Net income	$	3,015		$	3,883		$	5,780		$	6,461
Earnings per share - basic	$	0.61		$	1.05		$	1.32		$	1.74
Earnings per share - diluted	$	0.60		$	1.04		$	1.32		$	1.74
Cash dividends per share	$	0.39		$	0.38		$	0.78		$	0.76
The accompanying notes are an integral part of the consolidated financial statements.

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	(in thousands - unaudited)
	2026									2025
For the Three Months Ended June 30,	Before tax amount			Tax expense (benefit)			Net of tax amount			Before tax amount		Tax expense (benefit)		Net of tax amount
Net income	$	3,832		$	817		$	3,015		$	4,888	$	1,005	$	3,883
Other comprehensive gain:
Net unrealized holding gains on available-for-sale securities:
Unrealized holding gains arising during the period		4,229			909			3,320			2,794		600		2,194
Reclassification adjustment for gains included in net income		(96	)		(20	)		(76	)		—		—		—
Other comprehensive gain		4,133			889			3,244			2,794		600		2,194
Total comprehensive income	$	7,965		$	1,706		$	6,259		$	7,682	$	1,605	$	6,077



	(in thousands - unaudited)
For the Six Months Ended June 30,	2026									2025
	Before tax amount			Tax expense (benefit)			Net of tax amount			Before tax amount		Tax expense (benefit)		Net of tax amount
Net income	$	7,304		$	1,524		$	5,780		$	8,090	$	1,629	$	6,461
Other comprehensive gain:
Net unrealized holding gains on available-for-sale securities:
Unrealized holding gains arising during the period		3,513			755			2,758			6,927		1,490		5,437
Reclassification adjustment for gains included in net income		(96	)		(20	)		(76	)		—		—		—
Other comprehensive gain		3,417			735			2,682			6,927		1,490		5,437
Total comprehensive income	$	10,721		$	2,259		$	8,462		$	15,017	$	3,119	$	11,898

The accompanying notes are an integral part of the consolidated financial statements.

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY


For the Three Months Ended June 30, 2026 and 2025
										Accumulated
	Number of									Other
(unaudited)	Shares		Common				Retained			Comprehensive			Treasury
(in thousands, except share and per share data)	Outstanding		Stock		Surplus		Earnings			Loss			Stock			Total
Balance, April 1, 2026		3,784,227	$	2,496	$	30,268	$	149,689		$	(47,032	)	$	(4,037	)	$	131,384
Impact of The Victory Bancorp, Inc. Acquisition		1,178,182		736		46,367		—			—			—			47,103
Net income				—		—		3,015			—			—			3,015
Other comprehensive income, net of tax				—		—		—			3,244			—			3,244
Cash dividends declared ($0.39 per share)				—		—		(1,940	)		—			—			(1,940	)
Stock issued in connection with dividend reinvestment and stock purchase plan		4,642		3		197		—			—			—			200
Stock issued for employee stock purchase plan		2,712		2		84											86
Stock issued for options exercised		7,398		4		237		—			—			—			241
Stock-based compensation expense				—		181		—			—			—			181
Balance, June 30, 2026		4,977,161	$	3,241	$	77,334	$	150,764		$	(43,788	)	$	(4,037	)	$	183,514

										Accumulated
	Number of									Other
(unaudited)	Shares		Common				Retained			Comprehensive			Treasury
(in thousands, except share and per share data)	Outstanding		Stock		Surplus		Earnings			Loss			Stock			Total
Balance, April 1, 2025		3,709,497	$	2,449	$	28,085	$	141,129		$	(59,403	)	$	(4,037	)	$	108,223
Net income				—		—		3,883			—			—			3,883
Other comprehensive income, net of tax				—		—		—			2,194			—			2,194
Cash dividends declared ($0.38 per share)				—		—		(1,411	)		—			—			(1,411	)
Stock issued in connection with dividend reinvestment and stock purchase plan		6,026		4		198		—			—			—			202
Stock issued for employee stock purchase plan		2,950		2		83		—			—			—			85
Stock issued for options exercised		100		—		2		—			—			—			2
Stock-based compensation expense		—		—		91		—			—			—			91
Balance, June 30, 2025		3,718,573	$	2,455	$	28,459	$	143,601		$	(57,209	)	$	(4,037	)	$	113,269

The accompanying notes are an integral part of the consolidated financial statements.


For the Six Months Ended June 30, 2026 and 2025

											Accumulated
	Number of										Other
(unaudited)	Shares		Common					Retained			Comprehensive			Treasury
(in thousands, except share and per share data)	Outstanding		Stock		Surplus			Earnings			Loss			Stock			Total
Balance, January 1, 2026		3,738,875	$	2,467	$	29,206		$	148,397		$	(46,470	)	$	(4,037	)	$	129,563
Impact of The Victory Bancorp, Inc. Acquisition		1,178,182		736		46,367			—			—			—			47,103
Net income				—		—			5,780			—			—			5,780
Other comprehensive income, net of tax				—		—			—			2,682			—			2,682
Cash dividends declared ($0.78 per share)				—		—			(3,413	)		—			—			(3,413	)
Stock issued in connection with dividend reinvestment and stock purchase plan		9,778		6		390			—			—			—			396
Stock issued for employee stock purchase plan		2,712		2		84			—			—			—			86
Stock issued for options exercised		32,148		20		999			—									1,019
Issuance of restricted stock awards		13,000		8		(8	)		—			—			—			—
Stock issued for Non-Employee Director Compensation		2,466		2		(2	)		—			—			—			—
Stock-based compensation expense						298			—			—			—			298
Balance, June 30, 2026		4,977,161	$	3,241	$	77,334		$	150,764		$	(43,788	)	$	(4,037	)	$	183,514

											Accumulated
	Number of										Other
(unaudited)	Shares		Common					Retained			Comprehensive			Treasury
(in thousands, except share and per share data)	Outstanding		Stock		Surplus			Earnings			Loss			Stock			Total
Balance, January 1, 2025		3,696,616	$	2,441	$	27,633		$	139,958		$	(62,646	)	$	(4,037	)	$	103,349
Net income				—		—			6,461			—			—			6,461
Other comprehensive income, net of tax				—		—			—			5,437			—			5,437
Cash dividends declared ($0.76 per share)				—		—			(2,818	)		—			—			(2,818	)
Stock issued in connection with dividend reinvestment and stock purchase plan		12,629		8		425			—			—			—			433
Stock issued for employee stock purchase plan		2,950		2		83			—			—			—			85
Stock issued for options exercised		5,325		3		155			—									158
Issuance of restricted stock awards		—		—		—												—
Stock issued for Non-Employee Director Compensation		1,053		1		(1	)		—			—			—			—
Stock-based compensation expense		—		—		164			—			—			—			164
Balance, June 30, 2025		3,718,573	$	2,455	$	28,459		$	143,601		$	(57,209	)	$	(4,037	)	$	113,269

The accompanying notes are an integral part of the consolidated financial statements.

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS


	(in thousands, unaudited)
For the Six Months Ended June 30,		2026			2025
Operating Activities
Net income	$	5,780		$	6,461
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		927			890
Provision for credit losses		522			404
Reserve for make whole agreement		23			—
Net gain on investment debit and equity securities		(96	)		—
Net unrealized gain on equity securities		(268	)		—
Net gain on sale of loans		(44	)		(22	)
Proceeds from sales of residential mortgages held-for-sale		2,565			668
Origination of residential mortgages held-for-sale		(2,670	)		(2,005	)
Increase in cash surrender value of bank-owned life insurance		(225	)		(168	)
Stock-based compensation expense		298			164
Amortization of core deposit intangible asset		332			-
Deferred income tax (income) expense		(917	)		32
Net (decrease) increase in income taxes payable		(754	)		199
Net decrease (increase) in accrued interest receivable		31			(37	)
Fair value remeasurements on interest rate swap		42			(70	)
Amortization of mortgage servicing rights and change in valuation allowance		21			21
Net amortization of premiums and discounts on investment securities		252			520
Net amortization of deferred costs on subordinated debt		100			100
Net decrease in accrued interest payable		(988	)		(1,329	)
Operating lease payments		(395	)		(323	)
(Increase) decrease in other assets		(398	)		456
Increase (Decrease) in other liabilities		812			(1,217	)
Net cash provided by operating activities		4,950			4,744
Investing Activities
Proceeds from payments, maturities and calls of investments available-for-sale		68,094			49,226
Proceeds from sale of investment securities available-for-sale		6,752			-
Purchases of investments available-for-sale		(33,449	)		(40,452	)
Proceeds from redemption of investment in restricted stock		6,776			3,270
Purchases of restricted stock		(5,948	)		(3,606	)
Net increase in loans		(45,540	)		(1,615	)
Net purchases of premises and equipment		(1,525	)		(413	)
Cash received in acquisition		20,553			-
Net cash provided by investing activities		15,713			6,410
Financing Activities
Net increase in non-interest-bearing deposits		5,002			17,961
Net increase in interest-bearing deposits		10,463			5,165
Net (decrease) increase in short-term borrowings		(5,173	)		13,620
Repayments of long-term debt		—			(30,000	)
Cash dividends paid, net of reinvestment		(3,078	)		(2,489	)
Proceeds from issuance of common stock		1,166			347
Net cash provided by financing activities		8,380			4,604
Increase in cash and cash equivalents		29,043			15,758
Cash and cash equivalents at beginning of year		50,297			50,713
Cash and cash equivalents at end of period	$	79,340		$	66,471
Supplemental Cash Flow Disclosures
Interest paid	$	22,360		$	22,448
Federal income taxes paid, net of refunds received		2,000			1,400
State income taxes paid, net of refunds received		80			—
Supplemental Schedule of Non-cash Investing and Financing Activities
Transfer of loans from held-for-sale to loans receivable	$	—		$	857
Right-of-use assets obtained in exchange for new operating lease liabilities		3,420			—
Non-cash consideration transferred for the Victory Acquisition		47,103			—

The accompanying notes are an integral part of the consolidated financial statements.

QNB CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of QNB Corp. and its wholly-owned subsidiary, QNB Bank (the “Bank”). The consolidated entity is referred to herein as “QNB” or the “Company”. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in QNB's 2025 Annual Report incorporated in the Form 10-K. Operating results for the three- and six-month periods ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

The unaudited consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of operations for the period and are of a normal and recurring nature.

Tabular information, other than share and per share data, is presented in thousands of dollars.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from such estimates.

QNB has evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2026 for items that should potentially be recognized or disclosed in these consolidated financial statements and has not identified any subsequent events.

2. RECENT ACCOUNTING PRONOUNCEMENTS AND UPDATES TO SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Policies Not Yet Adopted

On March 6, 2024, the Securities and Exchange Commission (SEC) adopted final rules requiring registrants to disclose climate-related information in registration statements and annual reports. These enhanced and standardized disclosures include material climate-related risks, board oversight and risk management activities descriptions, material impacts of these risks on a registrant’s strategy, business model and outlook, and any material climate-related targets or goals. The SEC’s climate-related disclosure rules are the subject of litigation by certain states and private parties, which has been consolidated in the federal Eighth Circuit Court of Appeals. The SEC previously stayed effectiveness of the rules pending completion of that litigation. On March 27, 2025, the SEC announced that it had voted to withdraw its defense of its climate-related disclosure rules. On April 4, 2025, the intervenor states filed a motion to hold the litigation in abeyance until the SEC determines whether it will amend or rescind the climate-related disclosure rules through the rulemaking process. On May 29, 2026, the SEC officially proposed to rescind its 2024 climate-related disclosure rules in their entirety. The formal rescission process has not been completed and the original rules never took effect.

On June 26, 2024, the Financial Accounting Standards Board (FASB) voted to issue final rules this year that will require public companies to provide enhanced detailed information about their income statement expenses. On November 4, 2024, FASB issued ASU 2024-03—Income Statement—Reporting Comprehensive Income, requiring companies to break out certain expense items, such as employee compensation and purchases of inventory, in footnotes to their income statements. On January 6, 2025, the FASB issued an amendment to ASU 2024-03 to clarify the effective date. The amendment clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption will be permitted prospectively for the disclosure requirements, with optional retrospective application, for both interim and year-end reporting periods.

Recent Accounting Policies Adopted

QNB adopted FASB issued ASU 2025-08--Finance Instruments--Credit Losses (Topic 326): Purchased Loans, amending ASC 326 to expand use of the gross-up approach in ASC 326, Credit Losses, to all purchased seasoned loans (PSLs). This approach was previously only applied to purchased credit deteriorated (PCD) assets. Purchased seasoned loans are defined as loans that are not PCD assets, credit card receivables, debt securities or trade receivables that are acquired in a business combination, or obtained through a transfer that is not a business combination or initially recognized through the consolidation of a variable interest entity, if certain seasoning criteria are met. A loan is considered seasoned if it is obtained more than 90 days after its origination date and the transferee was not involved in the origination. QNB first applied ASU 2025-08 as of April 1, 2026, the effective date on which QNB closed the merger with The Victory Bancorp, Inc. (the "Victory Merger").

Updates to Significant Accounting Polices

QNB updated its accounting policies for loans in conjunction with the adoption of ASU 2025-08. Additionally, QNB added policies on goodwill and other acquired identifiable intangible assets, and the amortization and accretion purchase accounting fair value adjustments on loan and certificate of deposits as detailed below.

Loans

Loans are generally reported at the principal balance outstanding, net of deferred loan fees and costs. Interest income is accrued on the principal amount outstanding. Loan origination and commitment fees net of related direct costs are deferred and amortized to income over the term of the respective loan and loan commitment period as a yield adjustment.

Loans acquired by QNB through a purchase or business combination are initially evaluated for classification as PCD. Acquired loans are classified as PCD when there is evidence of more than insignificant deterioration in credit quality since origination. Loans that do not meet the criteria to be classified as PCD, are evaluated to determine whether they qualify as PSLs. Loans acquired in a business combination are automatically deemed PSLs.

PCD loans and PSLs are accounted for under the gross-up approach, as of the date of acquisition, recognizing an allowance for credit losses (ACL) and an offsetting entry added, or gross-up, to the fair value of the loan; resulting in an initial amortized cost basis in an amount equal to the sum of the purchase price plus the ACL. The difference between the amortized cost basis of the PCD and PSLs (as adjusted for expected credit losses) and the unpaid principal balance is recognized as a noncredit discount or premium and accreted or amortized into interest income over the life of the loan as an adjustment to yield.

Goodwill and Core Deposit Intangibles

QNB accounts for its acquisitions using the purchase accounting method. The total purchase price is allocated to the estimated fair values of assets acquired and liabilities assumed, including recognized intangible assets. The excess in the purchase price exceeding the fair value of net assets acquired is recorded as goodwill.

Core deposit intangibles are a measure of the value of checking, money market and savings deposits acquired in business combinations accounted for under the purchase method. Core deposit intangibles are amortized using the sum of the year's digits over their estimated useful lives of up to ten years.

QNB will perform an assessment of goodwill and other identifiable intangible assets at least annually, or more often if events and circumstances indicate, that an impairment test should be performed.

3. ACQUISITION OF THE VICTORY BANCORP, INC.

On April 1, 2026, QNB closed the Victory Merger in an all-stock transaction, including cash paid for fractional shares, valued at approximately $47,106,000. Victory was headquartered in Limerick, Pennsylvania, with two full-service bank branches and two loans production offices. Under the terms of the merger agreement, each outstanding share of Victory’s common stock was converted into 0.55 shares of QNB common stock. QNB issued 1,178,182 shares of its common stock to holders of Victory common stock as of the acquisition date, representing a value per common share of $39.98, based on the closing price of QNB's common stock on March 31,

2026. Fractional shares were not issued and were instead paid in cash. Upon closing of the transaction, all shares of Victory common stock were cancelled and retired.

The Victory Merger constituted a business combination and was accounted for under the acquisition method of accounting. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. Fair value estimates, including those for loans, intangible assets, deposits, bank premises and equipment, other liabilities, certain tax-related matters and goodwill, are preliminary and subject to change as management continues to identify and assess information regarding the assets acquired and liabilities assumed, including more comprehensive information and management review of any new information that may arise as a result of integration activities.

The following table reflects total consideration transferred for Victory’s net assets and the amounts of acquired identifiable assets and

liabilities assumed at their preliminary estimated fair values as of the acquisition date:


( $ in thousands)
Purchase price	$	47,106
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and equivalents	$	20,553
Investment securities available-for-sale		15,605
Restricted investment in stocks		1,452
Loans receivable		408,379
Allowance for credit losses on loans		(3,020	)
Loans receivable, net		405,359
Premises and equipment		3,580
Bank-owned life insurance		6,128
Core deposit intangible		7,302
Accrued interest receivable		1,591
Other assets		2,322
Total assets acquired		463,892
Liabilities:
Deposits		409,165
Subordinated debt		17,650
Other liabilities		1,135
Total liabilities assumed	$	427,950
Net identifiable assets acquired	$	35,942
Goodwill	$	11,164

In connection with the merger, QNB recognized approximately $11,164,000 of goodwill, which is not expected to be tax-deductible.

The following is a description of the methods used to determine the estimated fair values of significant assets and liabilities:

Cash and cash equivalents: Carrying amounts approximate fair value.

Investment securities: Fair values were based on quoted market prices, where available. If quoted market prices were not available, fair value estimates were based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that are observable in the market. In the absence of observable inputs, fair value was estimated based on pricing models and/or discounted cashflow methodologies.

Restricted investment in stocks: Includes ACBB, Federal Home Loan Bank and the Federal Reserve Bank stock. The carrying amount, based on redemption provisions, and the limited marketability of such securities, approximate fair value.

Loans, net: Fair values were estimated individually based on a discounted cashflow methodology that considered factors including the type of loan and related collateral, fixed or variable interest rate, remaining term, credit quality ratings or scores. Loans with similar characteristics were pooled together to determine certain inputs or assumptions when applying various valuation techniques. The discount rates used for loans were based on an evaluation of current market rates for new originations of comparable loans and a market participant’s required rate of return to purchase similar assets, including adjustments for liquidity and credit quality when necessary. The

initial amortized cost basis of acquired loans also included the initial ACL amount for instruments designated as PCD loans or PSLs. The following table reflects the unpaid principal balance, fair value and initial amortized cost basis of acquired loans as of April 1, 2026:


($ in thousands)	PCD			PSLs			Other		Total
Fair Value of acquired loans	$	33,114		$	372,207		$	38	$	405,359
Adjustments for credit losses		178			2,842			—		3,020
Initial amortized cost basis of acquired loans		33,292			375,049			38		408,379
Unpaid principal balance of acquired loans		33,356			376,749			38		410,143
Noncredit discount, net.	$	(64	)	$	(1,700	)	$	—	$	(1,764	)

Premises and equipment: Fair values for bank premises and equipment were generally based on appraisals of the property values.

Bank owned life insurance: Recognized at their cash surrender value which approximates fair value.

Core Deposit Intangible: The fair value was estimated based on a discounted cashflow methodology that considered expected customer attrition rates, net maintenance cost of the deposit base, the alternative cost of funds and the interest costs associated with customer deposits. The core deposit intangible is being amortized on an accelerated basis over its estimated useful life.

Deposits: The fair values for time deposits were estimated using a discounted cashflow methodology whereby the contractual remaining cash flows were discounted using market rates currently being offered for time deposits of similar maturities. For transactional deposits, carrying amounts approximate fair value.

Subordinated debt: Subordinated debt has stated maturities and call dates and have been valued using the present value of cash flows discounted at rates approximating the current market for similar debt instruments.

Unaudited Pro Forma Information

Results for the three and six months of 2026 include three months of post-merger activity related to the Victory Merger. The acquired business was fully integrated into the Company's operations. As a result, it is impracticable to separately identify the revenue and earnings attributable to the acquired business since the acquisition date. The following table presented unaudited pro forma information as if the Victory Merger occurred on January 1, 2026. This unaudited pro forma information combines the historical condensed consolidated results of operations of QNB and Victory after giving effect to certain adjustments, including purchase accounting adjustments, amortization of intangible assets and merger costs, and the related income tax effects. Comparative historical information for the 2025 interim period is not readily available for Victory.

The unaudited pro forma information does not necessarily reflect the results of operations that would have occurred had QNB acquired Victory on January 1, 2025. Furthermore, cost savings and other synergies related the merger are not reflected in the unaudited amounts for the six months ended June 30, 2026.


Unaudited Pro Forma Information
For the Six Months Ended June 30, 2026
( $ in thousands)
Net interest income	$	35,503
Non-interest income (loss)		3,470
Net income		2,218

Merger Related Charges

Direct merger-related charges associated with the Victory Merger were expensed as incurred by QNB. These merger-related charges primarily related to employee change in control and termination expenses, system conversions and other costs of integrating and conforming the acquired operations with those of QNB. The table below summarizes the direct merger-related charges recorded in the Condensed Consolidated Statements of Income:


( $ in thousands)	For the Three Months Ended June 30, 2026		For the Six Months Ended June 30, 2026
Legal and consultant expenses	$	131	$	346
Compensation and benefits		1,033		1,055
Contract termination fees		654		654
Regulatory filings and special shareholder meeting costs		146		235
Success Fee		117		117
System Conversion/Technology Costs		884		1,444
Communications		119		121
	$	3,084	$	3,972

4. STOCK-BASED COMPENSATION AND SHAREHOLDERS’ EQUITY

All Stock-based compensation plans are administered by a Board committee (the “Committee”).

2015 Stock Incentive Plan (the "2015 Plan"), under which both qualified and non-qualified stock options were granted periodically to certain employees, was authorized to issue 300,000 shares. Compensation cost has been measured using the fair value of an award on the grant date and is recognized over the service period, which is usually the vesting period. The 2015 Plan expired February 24, 2025.

The 2025 Stock Incentive Plan (the "2025 Plan"), authorizing the issuance of 500,000 shares, was approved at the Company's 2025 Meeting of Shareholders. Under the 2025 Plan, qualified stock options may be granted to certain employees and non-qualified stock options, restricted stock and awards may be granted to certain employees and non-employee directors. Compensation cost will be measured using the fair value of an award on the grant date and recognized over the service period, which is usually the vesting period. The 2025 Plan will expire on May 19, 2035.

As part of the acquisition of Victory, QNB assumed outstanding stock options equating to 628 shares. These options had been fully expensed by Victory and no additional fair value adjustments were necessary. Subsequently, all options were exercised in the second quarter of 2026. These options are excluded from the tables below.

Stock-based compensation expense related to the 2015 Plan and 2025 Plan was $101,000 and $35,000 for the three months ended June 30, 2026 and 2025, respectively, and $170,000 and $65,000 for the six months ended June 30, 2026 and 2025, respectively. At June 30, 2026, there was approximately $680,000 of unrecognized compensation cost related to unvested share-based compensation on stock option award grants that is expected to be recognized over the next 28 months; and $414,000 or unrecognized compensation cost related to share-based compensation on restricted stock awards that is expected to be recognized over the next 17 months.

Options were granted to certain employees at prices equal to the market value of the stock on the date the options are granted. The time period during which any option is exercisable under the 2025 Plan was determined by the Committee but shall not commence before the expiration of six months after the date of grant. Stock option awards granted under the Plan will vest 20% each consecutive year commencing on the first anniversary date of the award unless otherwise specified in an award agreement. Restrict Stock Awards granted under the plan will vest over three year; however, some of the awards are performance-based and will vest over three years based of performance factors. As of June 30, 2026 there were 50,000 total options and awards granted and outstanding and 450,000 shares available for future grants under the 2025 Plan. As of June 30, 2026 there were 142,675 options outstanding under the 2015 Plan.

The following assumptions were used in the option pricing model in determining the fair value of options granted during the period:


For the Six Months Ended June 30,	2026		2025
Risk free interest rate	3.82	%	4.44	%
Dividend yield	4.35	%	4.36	%
Volatility	26.34	%	24.96	%
Expected life (years)	6.50		6.50

The risk-free interest rate was selected based upon yields of U.S. Treasury securities with a term approximating the expected life of the option being valued. Historical information was the basis for the selection of the expected dividend yield, expected volatility and expected lives of the options.

The fair market value of options granted in the six months ended June 30, 2026 and 2025 was $7.17 and $6.64, respectively.

Stock option activity during the six months ended June 30, 2026 and 2025 is as follows:


	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2025		176,145		$	31.07			$	2,251
Granted		37,000			38.00				216
Exercised		(31,520	)		32.00				373
Forfeited		(1,950	)		32.50				22
Outstanding at June 30, 2026		179,675		$	32.32		7.51	$	2,072
Exercisable at June 30, 2026		51,315		$	31.85		4.99	$	616


	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2024		137,275		$	30.51			$	578
Granted		68,975			33.50				13
Exercised		(5,325	)		29.69				21
Forfeited		(21,050	)		36.04				—
Outstanding at June 30, 2025		179,875		$	31.04		7.11	$	565
Exercisable at June 30, 2025		60,280		$	32.80		3.32	$	141

Restricted stock award activity during the six months ended June 30, 2026 is as follows; there were no restricted stock awards granted prior to February 2026:


	Number of options		Weighted average Fair Value		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2025		—	$	—			$	—
Granted		13,000		38.00				570
Vested		—		—				—
Forfeited		—		—				—
Outstanding at June 30, 2026		13,000	$	38.00	$	9.7	$	570
Awards Nonvested at June 30, 2026		13,000	$	38.00	$	9.7	$	570

QNB maintained a 2021 Employee Stock Purchase Plan (the "2021 ESPP") offering eligible employees an opportunity to purchase shares of QNB Corp. common stock at a 10% discount from the lesser of fair market value on the first or last day of each offering period (as defined by the Plan). There was $32,000 and $13,000 of stock-based compensation expense related to the 2021 ESPP for the both three and six months ended June 30, 2026 and 2025, respectively. The 2021 ESPP authorized the issuance of 30,000 shares. As of June 30, 2026 there were 607 shares remaining under the 2021 ESPP Plan; however the 2021 ESPP Plan expired May 31, 2026. At the 2026 Annual Shareholders Meeting, the 2026 Employee Stock Purchase Plan (the "2026 ESPP") was approved and authorized the issuance of 50,000 shares. The 2026 Plan offers eligible employees an opportunity to purchase shares of QNB Corp. common stock at a 10% discount from the lesser of fair market value on the first or last day of each offering period (as defined by the Plan).

The QNB Corp. 2023 Non-Employee Director Compensation Plan was approved by shareholders on May 23, 2023 (The "Director Compensation Plan"). The Director Compensation Plan authorized the issuance of 50,000 shares, is effective January 1, 2023 and expires on January 1, 2033. The Plan initially required each non-employee director of QNB, or any subsidiary of QNB designated by the Board (including QNB Bank), to receive $8,000 of their total annual compensation for service as a director in the form of the QNB’s common stock; this amount was increased to $19,230 for 2025 to align director compensation with our peers. Under the Director Compensation Plan, commencing with the six-month period ended June 30, 2023, each non-employee director will receive, in addition to any cash compensation otherwise payable, a semi-annual grant of such number of shares of the QNB’s common stock determined by dividing (i) the Semi-Annual Stock Payment Amount (which is one-half of the annual compensation paid in stock) by (ii) the market value of a share of common stock determined as of June 30 or December 31 of any year, as applicable. Payments will be made under the Director Compensation Plan only to non-employee directors in office on the applicable payment date. As of June 30, 2026, 10,884 shares were issued to non-employee directors and there were 39,116 shares remaining under the Plan. Stock-based compensation expense related to the Director Compensation Plan was $96,000 for the six months ended June 30, 2026 and $86,000 for the six months ended June 30, 2025.

5. EARNINGS PER SHARE & SHARE REPURCHASE PLAN

The following sets forth the computation of basic and diluted earnings per share:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2026		2025		2026		2025
Numerator for basic and diluted earnings per share - net income	$	3,015	$	3,883	$	5,780	$	6,461
Denominator for basic earnings per share - weighted average shares outstanding		4,968,665		3,710,878		4,368,001		3,705,396
Effect of dilutive securities - employee stock options		32,945		13,930		22,152		13,117
Denominator for diluted earnings per share - adjusted weighted average shares outstanding		5,001,610		3,724,808		4,390,153		3,718,513
Earnings per share - basic	$	0.61	$	1.05	$	1.32	$	1.74
Earnings per share - diluted		0.60		1.04		1.32		1.74

There were 37,000 and 92,075 stock options that were anti-dilutive for the three-month periods ended June 30, 2026 and 2025, respectively. There were 37,000 and 92,075 stock options that were anti-dilutive for the six-month periods ended June 30, 2026 and 2025, respectively. These stock options were not included in the above calculation.

QNB’s current stock repurchase plan was originally approved by the Board of Directors on January 21, 2008, increased in amount on February 9, 2009 to 100,000 shares, and subsequently increased on April 27, 2021 up to 200,000 shares of common stock in the open market or privately negotiated transactions. The repurchase authorization has no termination date. There were no shares repurchased during the six months ended June 30, 2026 and 2025. As of June 30, 2026, 102,000 shares were repurchased under this authorization at an average price of $24.93 and a total cost of approximately $2,543,000.

6. COMPREHENSIVE INCOME (LOSS)

The following shows the components of accumulated other comprehensive loss at June 30, 2026 and December 31, 2025:


	June 30,			December 31,
	2026			2025
Unrealized net holding losses on available-for-sale securities	$	(55,800	)	$	(59,217	)
Tax effect		12,012			12,747
Accumulated other comprehensive loss, net of tax	$	(43,788	)	$	(46,470	)

The following table presents amounts reclassified out of accumulated other comprehensive loss for the three and six months ended June 30, 2026 and 2025:


For the Three Months Ended June 30,	Amount reclassified from accumulated other comprehensive gain
Details about accumulated other comprehensive income	2026			2025		Affected line item in statement of income
Unrealized net holding loss on available-for-sale securities	$	96		$	—	Net gain (loss) on sales of investments available-for-sale
Tax effect		(20	)		—	Provision for income taxes
Total reclassification out of accumulated other comprehensive gain, net of tax	$	76		$	—	Net of tax


For the Six Months Ended June 30,	Amount reclassified from accumulated other comprehensive loss
Details about accumulated other comprehensive income	2026			2025		Affected line item in statement of income
Unrealized net holding gains on available-for-sale securities	$	96		$	—	Net gain (loss) on sales of investments available-for-sale
Tax effect		(20	)		—	Provision for income taxes
Total reclassification out of accumulated other comprehensive gain, net of tax	$	76		$	—	Net of tax

7. INVESTMENT SECURITIES

Available-For-Sale Securities

The amortized cost and estimated fair values of investment securities available-for-sale at June 30, 2026 and December 31, 2025 were as follows:


	Fair		Gross unrealized holding		Gross unrealized holding			Gross unrealized fair value hedge		Amortized
June 30, 2026	value		gains		losses			gains (1)		cost
U.S. Treasury	$	17,990	$	—	$	(2	)	$	—	$	17,992
U.S. Government agency		70,762		—		(5,211	)		—		75,973
State and municipal		89,597		—		(15,500	)		841		104,256
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		172,676		—		(26,132	)		1,659		197,149
Collateralized mortgage obligations (CMOs)		136,756		162		(11,503	)		—		148,097
Corporate debt and money market funds		29,197		337		(451	)		—		29,311
Total investment debt securities available-for-sale	$	516,978	$	499	$	(58,799	)	$	2,500	$	572,778

(1) See Note 13


			Gross		Gross			Gross
			unrealized		unrealized			unrealized
	Fair		holding		holding			fair value hedge			Amortized
December 31, 2025	value		gains		losses			losses (1)			cost
U.S. Treasury	$	21,583	$	6	$	—		$	—		$	21,577
U.S. Government agency		70,850		—		(5,118	)		—			75,968
State and municipal		88,787		—		(15,326	)		(583	)		104,696
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		182,208		—		(25,767	)		(1,109	)		209,084
Collateralized mortgage obligations (CMOs)		149,203		19		(11,170	)		—			160,354
Corporate debt and money market funds		30,199		314		(483	)		—			30,368
Total investment debt securities available-for-sale	$	542,830	$	339	$	(57,864	)	$	(1,692	)	$	602,047

(1) See Note 13

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at June 30, 2026 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.



June 30, 2026	Fair value		Amortized cost
Due in one year or less	$	25,461	$	25,505
Due after one year through five years		74,206		79,459
Due after five years through ten years		54,284		57,286
Due after ten years		53,595		65,282
		207,546		227,532
Residential mortgage-backed securities		172,676		197,149
Collateralized mortgage obligations		136,756		148,097
Total	$	516,978	$	572,778

Proceeds from sales of investment securities available-for-sale were approximately $6,752,000 and $0 for the six months ended June 30, 2026 and 2025, respectively.

At June 30, 2026 and December 31, 2025, investment securities available-for-sale totaling approximately $296,472,000 and $234,159,000, 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:


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2026			2025		2026			2025
Gross realized gains	$	109		$	—	$	109		$	—
Gross realized losses		(13	)		—		(13	)		—
Impairment		—			—		—			—
Total net gains (losses) on AFS securities	$	96		$	—	$	96		$	—

The tax applicable to the net realized gains for the three-month periods ended June 30, 2026 and 2025 was $21,000 and $0, respectively. The tax applicable to the net realized gains for the six-month periods ended June 30, 2026 and 2025 was $21,000 and $0, 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, 2026 and 2025, respectively.

The following table indicates the length of time individual debt securities have been in a continuous unrealized loss position as of June 30, 2026 and December 31, 2025:



			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
June 30, 2026	securities		value		losses			value		losses			value		losses
U.S. Treasury		1	$	3,000	$	(2	)	$	—	$	—		$	3,000	$	(2	)
U.S. Government agency		35		—		—			70,762		(5,211	)		70,762		(5,211	)
State and municipal		188		1,508		(19	)		87,172		(15,481	)		88,680		(15,500	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		153		34		—			170,838		(26,132	)		170,872		(26,132	)
Collateralized mortgage obligations (CMOs)		150		58,651		(281	)		78,104		(11,222	)		136,755		(11,503	)
Corporate debt and money market funds		26		26,053		(447	)		2,652		(4	)		28,705		(451	)
Total		553	$	89,246	$	(749	)	$	409,528	$	(58,050	)	$	498,774	$	(58,799	)



			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2025	securities		value		losses			value		losses			value		losses
U.S. Treasury		—	$	—	$	—		$	—	$	—		$	—	$	—
U.S. Government agency		35		—		—			70,850		(5,118	)		70,850		(5,118	)
State and municipal		187		—		—			89,085		(15,326	)		89,085		(15,326	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		151		—		—			183,138		(25,767	)		183,138		(25,767	)
Collateralized mortgage obligations (CMOs)		149		22,618		(91	)		111,962		(11,079	)		134,580		(11,170	)
Corporate debt and money markets		6		9,232		(404	)		1,421		(79	)		10,653		(483	)
Total		528	$	31,850	$	(495	)	$	456,456	$	(57,369	)	$	488,306	$	(57,864	)

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, 2026 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.

Marketable Equity Securities

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.

Visa, Inc. commenced their second exchange offer for all of its outstanding shares of Class B-2 common stock for a combination of Class B-3 and Class C common shares. The exchange offer was optional for current Class B-2 holders and expired at 11:59 pm on May 8, 2026. QNB elected to participate in the exchange offer including a required makewhole agreement pursuant which participating Class B-2 stockholders agree to reimburse Visa for future obligations relating to certain litigation which, but for participation in the exchange offer, would have otherwise been the responsibility of the Class B-2 stockholder as a result of its ownership of the Class B-2 common stock. QNB had 3,251 Class B-2 common shares with a cost basis of $0. Under the exchange offer, received 1,625 if Class B-3 common shares and 612 Class C shares. The Class C shares are convertible to Class A shares. 204 of the Class C shares were

converted to 204 Class A shares in the second quarter. QNB recorded an unrealized gain on the Class A shares in the second quarter of 2026 of $268,000 and a reserve of the makewhole agreement of $23,000.

8. RESTRICTED INVESTMENTS IN STOCK

Restricted investment in stocks includes Federal Home Loan Bank of Pittsburgh (“FHLB”) with a carrying cost of $3,453,000, Atlantic Community Bankers Bank (“ACBB”) stock with a carrying cost of $72,000, VISA Class B-3 and Class C stock with a carrying cost of $0, and Senior Housing Crime Prevention Investment Corporation ("SHCPFIC") preferred stock of $1,000,000 at June 30, 2026. FHLB and ACBB stock were issued to the Bank as a requirement to facilitate the Bank’s participation in borrowing and other banking services. Due to the Victory Merger, QNB acquired $611,000 of FHLB and $60,000 of ACBB stock. QNB also acquired $781,000 of Federal Reserve Bank stock which was redeemed during the second quarter of 2026. The SHCPFIC stock was issued to the Bank to enable its participation in a Community Reinvestment Act qualified investment. The Bank owns 100 shares of preferred stock of SHCPFIC. These shares are not transferable without the consent of SHCPFIC and do not have a readily-determinable fair value. The Bank’s investment in FHLB stock may fluctuate, as it is based on the member banks’ use of FHLB’s services.

The Bank has a $2,762,000 non-controlling investment in a discrete class of non-voting limited liability company membership interests issued by National Energy Improvement Fund, LLC (“NEIF”), a Pennsylvania limited liability company licensed in Pennsylvania as a consumer discount company. The proceeds of the investment will be used by NEIF to fund a State-sponsored consumer loan program, the KEEP Home Energy Loan Program, designed to assist Pennsylvania homeowners in reducing their energy costs.

As noted in Footnote 7 above, Visa, Inc. commenced their second exchange offer for all of its outstanding shares of Class B-2 common stock for a combination of Class B-2 and Class C common shares. At June 30, 2026, QNB held 1,625 Class B-3 and 408 Class C common shares; the original shares were necessary to participate in Visa services in support of the Bank’s credit card, debit card, and related payment programs (permissible activities under banking regulations) as a member institution. Following the resolution of Visa’s covered litigation, shares of Visa’s Class B-3 stock will be converted to Visa Class A shares using a conversion factor (1.4953 as of June 25, 2026), which is periodically adjusted to reflect VISA’s ongoing litigation costs. There is a very limited market for this stock, as only current owners of Class B-3 shares are permitted to transact in Class B-3. The Class C shares are restricted and will converted to marketable Class A shares over the next quarter as the restrictions are released. Due to the lack of orderly trades and public information of such trades, Visa Class B-3 stock did not have a readily determinable fair value at June 30, 2026. Due to the restrictions on the Class C shares, they will not have a readily determinable fair value until they are converted to Class A shares.

These restricted investments are carried at cost and evaluated for impairment periodically. As of June 30, 2026, there was no impairment associated with these shares.

9. LOANS & ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at the principal amount outstanding, net of deferred loan fees and costs. Interest income is accrued on the principal amount outstanding. Loan origination and commitment fees and related direct costs are deferred and amortized to income over the term of the respective loan and loan commitment period as a yield adjustment.

Loans held-for-sale consists of residential mortgage loans that are carried at the lower of aggregate cost or fair value. Net unrealized losses, if any, are recognized through a valuation allowance charged to income. Gains and losses on residential mortgages held-for-sale are included in non-interest income.

The Company maintains an allowance for credit losses on loans (ACL), which is intended to absorb estimated lifetime losses in the outstanding loan portfolio. The allowance is reduced by actual credit losses and is increased or decreased by the provision (reversal) for loan losses and increased by recoveries of previous losses. The provisions or reversals for credit losses are charged to earnings to bring the total ACL to a level considered necessary by management.

The ACL is measured on a pool basis when similar risk characteristics exist; these pools are identified in the first table below. The Company establishes a general valuation allowance for performing loans, including non-accrual student loans. QNB calculates each segment's historical loss rate using a full economic cycle of loan balance and historical loss experienced. The level of the allowance is determined by assigning specific reserves to all non-accrual loans, except the homogeneous pool of student loans which are measured in the general reserve. An allowance on these non-accrual loans is established when the discounted cash flows (or collateral value) of the loan is lower than the carrying value of that loan. The portion of the allowance that is allocated to non-accrual loans is determined

by estimating the inherent loss on each credit after giving consideration to the value of underlying collateral. The general component is adjusted for qualitative factors. These qualitative risk factors include:

Concentrations: The Company adjusts historic loss for concentrations in the current commercial portfolio that were not present during the down-turn of the economic cycle.

Economic Forecast: The Company utilizes an entire economic cycle of data to determine loss rates by segment. This approach reflects an inherent reversion to the historical losses during the life of the loans within the pool considering prepayments and loss experience throughout an entire economic cycle. However, the Company feels it is prudent to maintain a floor in its model to assure that there is enough reserve on hand to sustain any losses upon an upcoming recession.

Management emphasizes loan quality and close monitoring of potential problem credits. Credit risk identification and review processes are utilized in order to assess and monitor the degree of risk in the loan portfolio. The Company’s lending and credit administration staff are charged with reviewing the loan portfolio and identifying changes in the economy or in a borrower’s circumstances which may affect the ability to repay debt or the value of pledged collateral. A loan classification and review system exists that identifies those loans with a higher-than-normal risk of collectability. Each commercial loan is assigned a grade based upon an assessment of the borrower’s financial capacity to service the debt and the presence and value of collateral for the loan. An independent firm reviews risk assessment and evaluates the adequacy of the ACL. Management meets monthly to review the credit quality of the loan portfolio and quarterly to review the ACL

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for credit losses on loans. Such agencies may require the Company to recognize additions to the allowance based on their judgments using information available to them at the time of their examination.

Management believes that it uses the best information available to make determinations about the adequacy of the allowance and that it has established its existing ACL in accordance with Accounting Principles Generally Accepted in the United States of America (U.S. GAAP.) If circumstances differ substantially from the current calculation, future adjustments to the allowance for credit losses on loans may be necessary and results of operations could be affected. Because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that increases to the ACL will not be necessary should the quality of any loans deteriorate.

Major classes of loans are as follows and are inclusive of net unaccreted purchase discounts of $1,476,000 at June 30, 2026; there were no purchase discounts at December 31, 2025:


	June 30,			December 31,
	2026			2025
Commercial:
Commercial and industrial	$	168,849		$	139,452
Construction and land development		139,253			93,862
Real estate secured by multi-family properties		211,485			153,319
Real estate secured by owner-occupied properties		258,205			161,130
Real estate secured by other commercial properties		476,718			364,486
Revolving real estate secured by 1-4 family properties-business		11,475			8,065
Real estate secured by 1st lien on 1-4 family properties-business		190,410			115,114
Real estate secured by junior lien on 1-4 family properties-business		7,279			5,248
State and political subdivisions		21,128			20,646
Retail:
1-4 family residential mortgages		120,878			119,759
Construction-individual		2,343			2,307
Revolving home equity secured by 1-4 family properties-personal		85,526			56,073
Real estate secured by 1st lien on 1-4 family properties-personal		6,468			7,178
Real estate secured by junior lien on 1-4 family properties-personal		12,178			12,937
Student loans		1,713			1,228
Overdrafts		582			252
Other consumer		2,576			1,455
Total loans		1,717,066			1,262,511
Net unearned (fees) costs		(467	)		(437	)
Allowance for credit losses on loans		(12,770	)		(9,215	)
Loans receivable, net	$	1,703,829		$	1,252,859

Loans secured by commercial real estate include all loans collateralized at least in part by commercial real estate. These loans may not be for the express purpose of conducting commercial real estate transactions.

QNB generally lends in Bucks, Lehigh, and Montgomery counties in southeastern Pennsylvania. To a large extent, QNB makes loans collateralized at least in part by real estate. Its lending activities could be affected by changes in the general economy, the regional economy, or real estate values.

The Company engages in a variety of lending activities, including commercial, residential real estate and consumer transactions. The Company focuses its lending activities on individuals, professionals and small to medium-sized businesses. Risks associated with lending activities include economic conditions and changes in interest rates, which can adversely impact both the ability of borrowers to repay their loans and the value of the associated collateral.

Commercial and industrial loans, commercial real estate loans, construction loans and residential real estate loans with a business purpose are generally perceived as having more risk of default than residential real estate loans with a personal purpose and consumer loans. These types of loans involve larger loan balances to a single borrower or groups of related borrowers and are more susceptible to a risk of loss during a downturn in the business cycle. These loans may involve greater risk because the availability of funds to repay these loans depends on the successful operation of the borrower’s business. The assets financed are used within the business for its ongoing operation. Repayment of these kinds of loans generally comes from the cash flow of the business or the ongoing conversions of assets, such as accounts receivable and inventory, to cash. Typical collateral for commercial and industrial loans includes the borrower’s accounts receivable, inventory and machinery and equipment. Commercial real estate and residential real estate loans secured for a business purpose are originated primarily within the eastern Pennsylvania market area at conservative loan-to-value ratios and often backed by the individual guarantees of the borrowers or owners. Repayment of this kind of loan is dependent upon either the ongoing cash flow of the borrowing entity or the resale or lease of the subject property. Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, as well as the factors affecting residential real estate borrowers.

Loans to state and political subdivisions are tax-exempt or taxable loans to municipalities, school districts and housing and industrial development authorities. These loans can be general obligations of the municipality or school district repaid through their taxing authority, revenue obligations repaid through the income generated by the operations of the authority, such as a water or sewer authority, or loans issued to a housing and industrial development agency, for which a private corporation is responsible for payments on the loans.

The Company originates fixed-rate and adjustable-rate real estate-residential mortgage loans for personal purposes that are secured by first liens on the underlying 1-4 family residential properties. Credit risk exposure in this area of lending is minimized by the evaluation of the credit worthiness of the borrower, including debt-to-income ratios, credit scores and adherence to underwriting policies that emphasize conservative loan-to-value ratios of generally no more than 80%. Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion are generally insured by private mortgage insurance.

The real estate-home equity portfolio consists of fixed-rate home equity loans and variable-rate home equity lines of credit. Risks associated with loans secured by residential properties are generally lower than commercial loans and include general economic risks, such as the strength of the job market, employment stability and the strength of the housing market. Since most loans are secured by a primary or secondary residence, the borrower’s continued employment is the greatest risk to repayment.

The Company offers a variety of loans to individuals for personal and household purposes. Consumer loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or, if they are secured, the value of the collateral may be difficult to assess and is more likely to decrease in value than real estate. Credit risk in this portfolio is controlled by conservative underwriting standards that consider debt-to-income levels and the creditworthiness of the borrower and, if secured, collateral values.

The Company employs a ten-grade risk rating system related to the credit quality of commercial loans and loans to state and political subdivisions of which the first six categories are pass categories (credits not adversely rated). The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating.

Excellent - no apparent risk

Good - minimal risk

Acceptable - lower risk

Acceptable - average risk

Acceptable – higher risk

Pass watch

Special Mention - potential weaknesses

Substandard - well defined weaknesses

Doubtful - full collection unlikely

10.

Loss - considered uncollectible

The Company maintains a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential problem loans. Each loan officer assigns a risk rating to all loans in the portfolio at the time the loan is originated. Loans are generally reviewed annually based on the borrower’s fiscal year and the dollar amount of the relationship. Loans with risk ratings of seven through ten are reviewed at least quarterly, and as often as monthly, at management’s discretion. The Company also utilizes an outside loan review firm to review the portfolio on a semi-annual basis to provide the Board of Directors and senior management with an independent review of the Company’s loan portfolio on an ongoing basis. These reviews are designed to recognize deteriorating credits in their earliest stages in an effort to reduce and control risk in the lending function as well as identifying potential shifts in the quality of the loan portfolio. The examinations by the outside loan review firm include the review of lending activities with respect to underwriting and processing new loans, monitoring the risk of existing loans and to provide timely follow-up and corrective action for loans showing signs of deterioration in quality. In addition, the outside firm reviews the adequacy of the allowance for credit losses on loans.

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of June 30, 2026 and December 31, 2025:


	Term Loans by Origination Year
June 30, 2026		2026		2025	2024		2023		2022		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	9,330	$	21,664	$	13,846	$	8,845	$	9,213	$	18,351	$	77,394	$	158,643
Special mention		—		—		—		338		1,277		—		2,720		4,335
Substandard		201		1,833		537		1,598		67		1,011		624		5,871
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	9,531	$	23,497	$	14,383	$	10,781	$	10,557	$	19,362	$	80,738	$	168,849
Construction and land development:
Risk rating
Pass	$	23,565	$	49,099	$	39,777	$	13,667	$	2,260	$	4,445	$	—	$	132,813
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		6,421		—		19		—		6,440
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	23,565	$	49,099	$	39,777	$	20,088	$	2,260	$	4,464	$	—	$	139,253
Real estate secured by multi-family properties:
Risk rating
Pass	$	23,092	$	36,968	$	20,021	$	17,567	$	34,375	$	70,561	$	—	$	202,584
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		6,200		452		—		2,249		—		8,901
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	23,092	$	36,968	$	26,221	$	18,019	$	34,375	$	72,810	$	—	$	211,485
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	13,694	$	42,027	$	31,225	$	26,429	$	41,056	$	83,134	$	—	$	237,565
Special mention		59		—		—		—		—		628		—		687
Substandard		50		10,228		2,275		346		1,628		5,426		—		19,953
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	13,803	$	52,255	$	33,500	$	26,775	$	42,684	$	89,188	$	—	$	258,205
Real estate secured by other commercial properties:
Risk rating
Pass	$	38,025	$	70,432	$	66,389	$	59,377	$	86,331	$	151,422	$	—	$	471,976
Special mention		—		—		—		—		—		—		—		—
Substandard		500		—		822		636		—		2,784		—		4,742
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	38,525	$	70,432	$	67,211	$	60,013	$	86,331	$	154,206	$	—	$	476,718
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	11,425	$	11,425
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		50		50
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	11,475	$	11,475
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	14,085	$	34,401	$	25,845	$	25,955	$	39,550	$	47,664	$	—	$	187,500
Special mention		—		—		—		—		—		—		—		—
Substandard		—		150		—		1,477		321		962		—		2,910
Doubtful		—		—		—		—		—		—		—		—


	Term Loans by Origination Year
June 30, 2026		2026		2025	2024		2023		2022		Prior		Revolving		Total
Total real estate secured by 1st lien on 1-4 family properties-business	$	14,085	$	34,551	$	25,845	$	27,432	$	39,871	$	48,626	$	—	$	190,410
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	1,458	$	2,756	$	268	$	493	$	555	$	1,460	$	—	$	6,990
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		276		—		13		—		—		289
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	1,458	$	2,756	$	544	$	493	$	568	$	1,460	$	—	$	7,279
State and political subdivisions:
Risk rating
Pass	$	2,599	$	2,816	$	1,960	$	2,218	$	—	$	11,535	$	—	$	21,128
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total state and political subdivision	$	2,599	$	2,816	$	1,960	$	2,218	$	—	$	11,535	$	—	$	21,128
Total Commercial Loans:
Risk rating
Pass	$	125,848	$	260,163	$	199,331	$	154,551	$	213,340	$	388,572	$	88,819	$	1,430,624
Special mention		59		—		—		338		1,277		628		2,720		5,022
Substandard		751		12,211		10,110		10,930		2,029		12,451		674		49,156
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	126,658	$	272,374	$	209,441	$	165,819	$	216,646	$	401,651	$	92,213	$	1,484,802

Current Period Gross Charge-Offs:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


	Term Loans by Origination Year
December 31, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	17,291	$	14,966	$	8,183	$	7,424	$	2,600	$	6,993	$	77,629	$	135,086
Special mention		—		—		357		—		—		—		1,702		2,059
Substandard		916		—		518		77		34		74		688		2,307
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	18,207	$	14,966	$	9,058	$	7,501	$	2,634	$	7,067	$	80,019	$	139,452
Construction and land development:
Risk rating
Pass	$	21,131	$	45,435	$	16,140	$	938	$	1,405	$	2,492	$	—	$	87,541
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		6,296		—		—		25		—		6,321
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	21,131	$	45,435	$	22,436	$	938	$	1,405	$	2,517	$	—	$	93,862
Real estate secured by multi-family properties:
Risk rating
Pass	$	36,520	$	11,313	$	9,415	$	26,537	$	21,516	$	39,548	$	—	$	144,849
Special mention		—		—		—		—		—		—		—		—
Substandard		—		5,729		458		—		—		2,283		—		8,470
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	36,520	$	17,042	$	9,873	$	26,537	$	21,516	$	41,831	$	—	$	153,319
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	21,614	$	13,606	$	12,974	$	23,265	$	21,711	$	49,785	$	—	$	142,955
Special mention		—		—		—		—		—		722		—		722
Substandard		10,001		—		—		1,883		—		5,569		—		17,453
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	—	$	13,606	$	12,974	$	25,148	$	21,711	$	56,076	$	—	$	161,130
Real estate secured by other commercial properties:
Risk rating
Pass	$	63,437	$	47,036	$	41,150	$	73,158	$	39,243	$	96,950	$	—	$	360,974
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		645		—		—		2,867		—		3,512
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	63,437	$	47,036	$	41,795	$	73,158	$	39,243	$	99,817	$	—	$	364,486
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	8,065	$	8,065
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	8,065	$	8,065
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	21,377	$	8,649	$	15,925	$	23,651	$	16,550	$	28,060	$	—	$	114,212
Special mention		—		—		—		—		—		—		—		—


	Term Loans by Origination Year
December 31, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Total
Substandard		—		—		—		327		317		258		—		902
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by 1st lien on 1-4 family properties-business	$	21,377	$	8,649	$	15,925	$	23,978	$	16,867	$	28,318	$	—	$	115,114
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	2,362	$	207	$	507	$	432	$	153	$	1,333	$	—	$	4,994
Special mention		—		—		—		—		—		—		—		—
Substandard		—		239		—		15		—		—		—		254
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	2,362	$	446	$	507	$	447	$	153	$	1,333	$	—	$	5,248
State and political subdivisions:
Risk rating
Pass	$	1,959	$	3,511	$	2,257	$	—	$	3,248	$	9,671	$	—	$	20,646
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total state and political subdivisions	$	1,959	$	3,511	$	2,257	$	—	$	3,248	$	9,671	$	—	$	20,646
Total Commercial Loans:
Risk rating
Pass	$	185,691	$	144,723	$	106,551	$	155,405	$	106,426	$	234,832	$	85,694	$	1,019,322
Special mention		—		—		357		—		—		722		1,702		2,781
Substandard		10,917		5,968		7,917		2,302		351		11,076		688		39,219
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	196,608	$	150,691	$	114,825	$	157,707	$	106,777	$	246,630	$	88,084	$	1,061,322

Current Period Gross Charge-Offs:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

For retail loans, the Company evaluates credit quality based on the performance of the individual credits. The following tables present the recorded investment in the retail classes of the loan portfolio based on payment activity as of June 30, 2026 and December 31, 2025:


	Term Loans by Origination Year
June 30, 2026		2026		2025	2024		2023		2022		Prior		Revolving		Total
Retail Loans
1-4 family residential mortgages:
Payment performance
Performing	$	4,954	$	12,670	$	10,994	$	11,539	$	11,963	$	67,078	$	—	$	119,198
Nonperforming		—		2		4		2		902		770		—		1,680
Total 1-4 family residential mortgages	$	4,954	$	12,672	$	10,998	$	11,541	$	12,865	$	67,848	$	—	$	120,878
Construction-individual:
Payment performance
Performing	$	429	$	1,914	$	—	$	—	$	—	$	—	$	—	$	2,343
Nonperforming		—		—		—		—		—		—		—		—
Total construction-individual	$	429	$	1,914	$	—	$	—	$	—	$	—	$	—	$	2,343
Revolving home equity secured by 1-4 family properties-personal:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	85,230	$	85,230
Nonperforming		—		—		—		—		—		—		296		296
Total revolving home equity secured by 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	—	$	85,526	$	85,526
Real estate secured by 1st lien on 1-4 family properties-personal:
Payment performance
Performing	$	376	$	1,685	$	400	$	509	$	796	$	2,591	$	—	$	6,357
Nonperforming		—		—		—		—		90		21		—		111
Total real estate secured by 1st lien on 1-4 family properties-personal	$	376	$	1,685	$	400	$	509	$	886	$	2,612	$	—	$	6,468
Real estate secured by junior lien on 1-4 family properties-personal:
Payment performance
Performing	$	925	$	2,270	$	3,723	$	1,839	$	534	$	2,873	$	—	$	12,164
Nonperforming		—		—		—		—		14		—		—		14
Total real estate secured by junior lien on 1-4 family properties-personal	$	925	$	2,270	$	3,723	$	1,839	$	548	$	2,873	$	—	$	12,178
Student loans:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	1,702	$	—	$	1,702
Nonperforming		—		—		—		—		—		11		—		11
Total student loans	$	—	$	—	$	—	$	—	$	—	$	1,713	$	—	$	1,713
Overdrafts:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	582	$	582
Nonperforming		—		—		—		—		—		—		—		—
Total overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	582	$	582
Other consumer:
Payment performance
Performing	$	261	$	372	$	458	$	230	$	24	$	96	$	1,119	$	2,560
Nonperforming		—		—		—		—		—		16		—		16
Total other consumer	$	261	$	372	$	458	$	230	$	24	$	112	$	1,119	$	2,576
Total Retail Loans:
Payment performance
Performing	$	6,945	$	18,911	$	15,575	$	14,117	$	13,317	$	74,340	$	86,931	$	230,136
Nonperforming		—		2		4		2		1,006		818		296		2,128
Total Retail Loans	$	6,945	$	18,913	$	15,579	$	14,119	$	14,323	$	75,158	$	87,227	$	232,264

Current Period Gross Charge-Offs:
Real estate secured by junior lien on 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	4	$	—	$	4
Student loans		—		—		—		—		—		2		—		2
Overdrafts		—		—		—		—		—		—		26		26


	Term Loans by Origination Year
June 30, 2026		2026	2025	2024		2023		2022		Prior		Revolving		Total
Other consumer		—	9		—		—		—		—		3		12


	Term Loans by Origination Year
December 31, 2025	2025		2024		2023		2022		2021		Prior		Revolving		Total
Retail Loans
1-4 family residential mortgages:
Payment performance
Performing	$	12,930	$	11,088	$	11,643	$	13,202	$	26,786	$	43,295	$	—	$	118,944
Nonperforming		—		—		—		—		—		815		—		815
Total 1-4 family residential mortgages	$	12,930	$	11,088	$	11,643	$	13,202	$	26,786	$	44,110	$	—	$	119,759
Construction-individual:
Payment performance
Performing	$	2,307	$	—	$	—	$	—	$	—	$	—	$	—	$	2,307
Nonperforming		—		—		—		—		—		—		—		—
Total construction-individual	$	2,307	$	—	$	—	$	—	$	—	$	—	$	—	$	2,307
Revolving home equity secured by 1-4 family properties-personal:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	55,768	$	55,768
Nonperforming		—		—		—		—		—		—		305		305
Total revolving home equity secured by 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	—	$	56,073	$	56,073
Real estate secured by 1st lien on 1-4 family properties-personal:
Payment performance
Performing	$	2,206	$	437	$	544	$	852	$	924	$	2,102	$	—	$	7,065
Nonperforming		—		—		—		90		—		23		—		113
Total real estate secured by 1st lien on 1-4 family properties-personal	$	2,206	$	437	$	544	$	942	$	924	$	2,125	$	—	$	7,178
Real estate secured by junior lien on 1-4 family properties-personal:
Payment performance
Performing	$	2,545	$	4,366	$	2,015	$	599	$	592	$	2,805	$	—	$	12,922
Nonperforming		—		—		—		15		—		—		—		15
Total real estate secured by junior lien on 1-4 family properties-personal	$	2,545	$	4,366	$	2,015	$	614	$	592	$	2,805	$	—	$	12,937
Student loans:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	1,228	$	—	$	1,228
Nonperforming		—		—		—		—		—		—		—		—
Total student loans	$	—	$	—	$	—	$	—	$	—	$	1,228	$	—	$	1,228
Overdrafts:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	252	$	252
Nonperforming		—		—		—		—		—		—		—		—
Total overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	252	$	252
Other consumer:
Payment performance
Performing	$	369	$	528	$	269	$	41	$	29	$	18	$	181	$	1,435
Nonperforming		—		—		—		—		—		20		—		20
Total other consumer	$	369	$	528	$	269	$	41	$	29	$	38	$	181	$	1,455
Total Retail Loans:
Payment performance
Performing	$	20,357	$	16,419	$	14,471	$	14,694	$	28,331	$	49,448	$	56,201	$	199,921
Nonperforming		—		—		—		105		—		858		305		1,268
Total Retail Loans	$	20,357	$	16,419	$	14,471	$	14,799	$	28,331	$	50,306	$	56,506	$	201,189

Current Period Gross Charge-Offs:
Overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	92	$	92
Other consumer		—		—		7		—		3		—		8		18

Revolving home equity lines of credit secured by 1-4 family properties termed out during 2026 and 2025 were $133,330 and $1,095,000 all of which are performing.

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of June 30, 2026 and December 31, 2025:


June 30, 2026	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	24	$	90	$	—	$	114	$	168,735	$	168,849
Construction and land development		1,676		—		—		1,676		137,577		139,253
Real estate secured by multi-family properties		1,536		—		—		1,536		209,949		211,485
Real estate secured by owner-occupied properties		1,181		—		—		1,181		257,024		258,205
Real estate secured by other commercial properties		—		—		822		822		475,896		476,718
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		11,475		11,475
Real estate secured by 1st lien on 1-4 family properties-business		413		—		534		947		189,463		190,410
Real estate secured by junior lien on 1-4 family properties-business		—		—		—		—		7,279		7,279
State and political subdivisions		—		—		—		—		21,128		21,128
Retail:
1-4 family residential mortgages		—		—		1,103		1,103		119,775		120,878
Construction-individual		—		—		—		—		2,343		2,343
Revolving home equity secured by 1-4 family properties-personal		63		—		136		199		85,327		85,526
Real estate secured by 1st lien on 1-4 family properties-personal		26		—		90		116		6,352		6,468
Real estate secured by junior lien on 1-4 family properties-personal		—		—		—		—		12,178		12,178
Student loans		157		3		11		171		1,542		1,713
Overdrafts		24		39		—		63		519		582
Other consumer		17		—		—		17		2,559		2,576
Total	$	5,117	$	132	$	2,696	$	7,945	$	1,709,121	$	1,717,066


December 31, 2025	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	—	$	—	$	—	$	—	$	139,452	$	139,452
Construction and land development		—		—		—		—		93,862		93,862
Real estate secured by multi-family properties		—		—		—		—		153,319		153,319
Real estate secured by owner-occupied properties		—		—		—		—		161,130		161,130
Real estate secured by other commercial properties		—		—		—		—		364,486		364,486
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		8,065		8,065
Real estate secured by 1st lien on 1-4 family properties-business		—		—		129		129		114,985		115,114
Real estate secured by junior lien on 1-4 family properties-business		—		239		—		239		5,009		5,248
State and political subdivisions		—		—		—		—		20,646		20,646
Retail:
1-4 family residential mortgages		582		296		127		1,005		118,754		119,759
Construction-individual		—		—		—		—		2,307		2,307
Revolving home equity secured by 1-4 family properties-personal		—		—		134		134		55,939		56,073
Real estate secured by 1st lien on 1-4 family properties-personal		26		—		90		116		7,062		7,178
Real estate secured by junior lien on 1-4 family properties-personal		101		—		—		101		12,836		12,937
Student loans		—		12		—		12		1,216		1,228
Overdrafts		18		—		—		18		234		252
Other consumer		—		9		—		9		1,446		1,455
Total	$	727	$	556	$	480	$	1,763	$	1,260,748	$	1,262,511

As previously discussed, the Company maintains a loan review system, which includes a continuous review of the loan portfolio by internal and external parties to aid in the early identification of potential problem loans. A loan is considered collateral dependent when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as collateral dependent. When placing a loan on non-accrual status, management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. All non-accrual loans, except student loans, are individually evaluated for an ACL. This ACL is measured using either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral less costs to sell if the loan is collateral dependent.

An ACL is established for a non-accrual loan if its carrying value exceeds its estimated fair value. The estimated fair values of the majority of the Company’s non-accrual loans are measured based on the estimated fair value of the loan’s collateral less costs to sell.

For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes individually evaluated, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. The following tables discloses the recorded investment in loans receivable that are either on non-accrual status or past due 90 days or more and still accruing interest as of June 30, 2026 and December 31, 2025:


June 30, 2026	90 Days or More Past Due-Still Accruing		Nonaccrual With No Specifically-Related ACL		Nonaccrual With Related ACL		Total Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	496	$	19	$	515
Construction and land development		—		6,421		—		6,421
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		122		—		122
Real estate secured by other commercial properties		—		822		—		822
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		179		—		179
Real estate secured by junior lien on 1-4 family properties-business		—		—		231		231
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		1,680		—		1,680
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		279		17		296
Real estate secured by 1st lien on 1-4 family properties-personal		—		111		—		111
Real estate secured by junior lien on 1-4 family properties-personal		—		14		—		14
Student loans		—		11		—		11
Other consumer		—		16		—		16
Total	$	—	$	10,151	$	267	$	10,418


December 31, 2025	90 Days or More Past Due-Still Accruing		Nonaccrual With No Specifically-Related ACL		Nonaccrual With Related ACL		Total Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	—	$	539	$	539
Construction and land development		—		—		6,296		6,296
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		134		—		134
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		317		—		317
Real estate secured by junior lien on 1-4 family properties-business		—		—		239		239
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		815		—		815
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		290		15		305
Real estate secured by 1st lien on 1-4 family properties-personal		—		113		—		113
Real estate secured by junior lien on 1-4 family properties-personal		—		15		—		15
Student loans		—		—		—		—
Other consumer		—		20		—		20
Total	$	—	$	1,704	$	7,089	$	8,793

QNB recognized interest income of $10,000 and $0 on non-accrual loans during the six months ended June 30, 2026 and 2025, respectively.

The following tables present the collateral-dependent loans by loan category at June 30, 2026 and December 31, 2025:


June 30, 2026	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	496	$	19	$	515
Construction and land development		6,421		—		—		6,421
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		122		—		—		122
Real estate secured by other commercial properties		822		—		—		822
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		179		—		—		179
Real estate secured by junior lien on 1-4 family properties-business		98		—		133		231
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		1,680		—		—		1,680
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		281		—		15		296
Real estate secured by 1st lien on 1-4 family properties-personal		111		—		—		111
Real estate secured by junior lien on 1-4 family properties-personal		14		—		—		14
Other consumer		—		16		—		16
Total	$	9,728	$	512	$	167	$	10,407

(1) Secured by business assets, personal property and equipment or guarantees


December 31, 2025	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	405	$	—	$	134	$	539
Construction and land development		4,925		—		1,371		6,296
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		134		—		—		134
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		317		—		—		317
Real estate secured by junior lien on 1-4 family properties-business		110		—		129		239
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		815		—		—		815
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		290		—		15		305
Real estate secured by 1st lien on 1-4 family properties-personal		113		—		—		113
Real estate secured by junior lien on 1-4 family properties-personal		15		—		—		15
Other consumer		—		20		—		20
Total	$	7,124	$	20	$	1,649	$	8,793

Activity in the allowance for credit losses on loans for the three and six months ended June 30, 2026 and 2025 are as follows:


For the Three Months Ended June 30, 2026	Balance, beginning of period		ACL on PSLs at acquisition		ACL on PCD loans at acquisition		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	775	$	83	$	39	$	144		$	—		$	8	$	1,049
Construction and land development		2,471		227		2		(1,260	)		—			—		1,440
Real estate secured by multi-family properties		2,269		638		8		(219	)		—			—		2,696
Real estate secured by owner-occupied properties		697		470		55		372			—			—		1,594
Real estate secured by other commercial properties		1,041		376		28		729			—			—		2,174
Revolving real estate secured by 1-4 family properties-business		30		10		—		19			—			—		59
Real estate secured by 1st lien on 1-4 family properties-business		1,297		781		36		(66	)		—			3		2,051
Real estate secured by junior lien on 1-4 family properties-business		150		5		—		7			—			—		162
State and political subdivisions		23		—		—		47			—			—		70
Retail:								—
1-4 family residential mortgages		308		1		1		186			—			—		496
Construction-individual		2		—		—		6			—			—		8
Revolving home equity secured by 1-4 family properties-personal		125		72		4		178			—			—		379
Real estate secured by 1st lien on 1-4 family properties-personal		27		—		—		11			—			—		38
Real estate secured by junior lien on 1-4 family properties-personal		56		—		—		21			—			2		79
Student loans		205		85		—		(3	)		(2	)		6		291
Overdrafts		20		—		—		32			(10	)		6		48
Other consumer		35		94		5		14			(12	)		—		136
Total	$	9,531	$	2,842	$	178	$	218		$	(24	)	$	25	$	12,770


For the Three Months Ended June 30, 2025	Balance, beginning of period		Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	810	$	4		$	—		$	7	$	821
Construction and land development		1,099		36			—			—		1,135
Real estate secured by multi-family properties		1,977		(139	)		—			—		1,838
Real estate secured by owner-occupied properties		845		56			—			—		901
Real estate secured by other commercial properties		2,028		(67	)		—			30		1,991
Revolving real estate secured by 1-4 family properties-business		22		9			—			—		31
Real estate secured by 1st lien on 1-4 family properties-business		1,471		(107	)		—			2		1,366
Real estate secured by junior lien on 1-4 family properties-business		9		7			—			—		16
State and political subdivisions		36		6			—			—		42
Retail:
1-4 family residential mortgages		320		36			—			—		356
Construction-individual		—		—			—			—		—
Revolving home equity secured by 1-4 family properties-personal		140		20			—			—		160
Real estate secured by 1st lien on 1-4 family properties-personal		32		1			—			—		33
Real estate secured by junior lien on 1-4 family properties-personal		79		1			—			—		80
Student loans		278		(26	)		—			5		257
Overdrafts		30		18			(31	)		4		21
Other consumer		122		-			(1	)		—		121
Total	$	9,298	$	(145	)	$	(32	)	$	48	$	9,169


For the Six Months Ended June 30, 2026	Balance, beginning of period		ACL on PSLs at acquisition		ACL on PCD loans at acquisition		Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	744	$	83	$	39	$	167		$	—		$	16	$	1,049
Construction and land development		2,165		227		2		(954	)		—			—		1,440
Real estate secured by multi-family properties		2,344		638		8		(294	)		—			—		2,696
Real estate secured by owner-occupied properties		716		470		55		353			—			—		1,594
Real estate secured by other commercial properties		1,042		376		28		728			—			—		2,174
Revolving real estate secured by 1-4 family properties-business		29		10		—		20			—			—		59
Real estate secured by 1st lien on 1-4 family properties-business		1,252		781		36		(23	)		—			5		2,051
Real estate secured by junior lien on 1-4 family properties-business		140		5		—		17			—			—		162
State and political subdivisions		25		—		—		45			—			—		70
Retail:
1-4 family residential mortgages		248		1		1		246			—			—		496
Construction-individual		3		—		—		5			—			—		8
Revolving home equity secured by 1-4 family properties-personal		138		72		4		165			—			—		379
Real estate secured by 1st lien on 1-4 family properties-personal		28		—		—		10			—			—		38
Real estate secured by junior lien on 1-4 family properties-personal		58		—		—		22			(4	)		3		79
Student loans		226		85		—		(39	)		(2	)		21		291
Overdrafts		21		—		—		40			(26	)		13		48
Other consumer		36		94		5		13			(12	)		—		136
Total	$	9,215	$	2,842	$	178	$	521		$	(44	)	$	58	$	12,770


For the Six Months Ended June 30, 2025	Balance, beginning of period		Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	829	$	(25	)	$	—		$	17	$	821
Construction and land development		1,336		(201	)		—			—		1,135
Real estate secured by multi-family properties		2,012		(174	)		—			—		1,838
Real estate secured by owner-occupied properties		853		48			—			—		901
Real estate secured by other commercial properties		1,142		819			—			30		1,991
Revolving real estate secured by 1-4 family properties-business		24		7			—			—		31
Real estate secured by 1st lien on 1-4 family properties-business		1,238		123			—			5		1,366
Real estate secured by junior lien on 1-4 family properties-business		339		(323	)		—			—		16
State and political subdivisions		34		8			—			—		42
Retail:
1-4 family residential mortgages		323		33			—			—		356
Construction-individual		—		—			—			—		—
Revolving home equity secured by 1-4 family properties-personal		143		17			—			—		160
Real estate secured by 1st lien on 1-4 family properties-personal		31		2			—			—		33
Real estate secured by junior lien on 1-4 family properties-personal		77		3			—			—		80
Student loans		310		(66	)		—			13		257
Overdrafts		18		37			(44	)		10		21
Other consumer		35		98			(12	)		—		121
Total	$	8,744	$	406		$	(56	)	$	75	$	9,169

Since the implementation of ASC 326 on January 1, 2023, the Company may give loan modifications to borrowers experiencing financial difficulty ("FDM"). A FDM could involve principal forgiveness, term extension, an other-than-insignificant payment delay, interest rate reduction or exchanging or paying off existing debt for new debt with the Company. The effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. Any amount forgiven would be charged to the allowance for credit losses. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses. In some cases, modifications could include multiple types of concessions. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

The following table shows the amortized cost basis during the periods ended June 30, 2026 and December 31, 2025 of the loans modified to borrowers experiencing financial difficulty, disaggregated by loan class, type of concession granted and the financial effect of the modification:


During the period ended:	June 30, 2026						December 31, 2025
	Amortized Cost Basis		% of Total Loan Class			Financial Effect	Amortized Cost Basis		% of Total Loan Class			Financial Effect
	Payment Modification to Interest Only for Three Months and Deferal of Payment for One Month
Commercial:
C&I Other	$	764		0.45	%	Temporary reduction of three principal payments and one principal and interest payment with no extension of term
Total	$	764					$	—

	Payment Modification to Interest Only for 12 Months
Commercial:
C&I Other							$	518		0.37	%	Temporary reduction of principal payments with no extension of term
Construction Other and Land Development								6,296		6.71	%	Temporary reduction of principal payments with no extension of term
Total	$	—					$	6,814

There were no payment defaults during the six months ended June 30, 2026 and 2025 on FDMs. However, FDMs of $6,917,000 modified in 2025 remain on nonaccrual status with no related allowance due to collateral surplus. At June 30, 2026, there were $2,160,000 in commitments to extend credit on the FDMs.

The Company has five relationships with mortgage loans secured by residential real estate totaling $714,000 for which foreclosure proceedings are in process at June 30, 2026.

10. FAIR VALUE MEASUREMENTS AND DISCLOSURES

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (fair values are not adjusted for transaction costs). ASC 820 also establishes a framework (fair value hierarchy) for measuring fair value under U.S. GAAP and expands disclosures about fair value measurements.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The measurement of fair value should be consistent with one of the following valuation techniques: market approach, income approach, and/or cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the security’s relationship to other benchmark quoted securities.

The following tables sets forth QNB’s financial assets measured at fair value on a recurring and nonrecurring basis and the fair value measurements by level within the fair value hierarchy as of June 30, 2026 and December 31, 2025:


June 30, 2026	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Securities available-for-sale
U.S. Treasury securities	$	—	$	17,990	$	—	$	17,990
U.S. Government agency securities		—		70,762		—		70,762
State and municipal securities (1)		—		89,597		—		89,597
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed securities (1)		—		172,676		—		172,676
Collateralized mortgage obligations (CMOs)		—		136,756		—		136,756
Corporate debt securities and money market funds		—		29,148		49		29,197
Equity securities		268						268
Total available-for-sale and equity securities		268		516,929		49		517,246
Total recurring fair value measurements	$	268	$	516,929	$	49	$	517,246

Nonrecurring fair value measurements
Collateral dependent loans	$	—	$	—	$	100	$	100
Total nonrecurring fair value measurements	$	—	$	—	$	100	$	100


December 31, 2025	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Securities available-for-sale
U.S. Treasury securities	$	—	$	21,583	$	—	$	21,583
U.S. Government agency securities		—		70,850		—		70,850
State and municipal securities (1)		—		88,787		—		88,787
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed securities (1)		—		182,208		—		182,208
Collateralized mortgage obligations (CMOs)		—		149,203		—		149,203
Corporate debt securities and money market funds		—		30,149		50		30,199
Total securities available-for-sale		—		542,780		50		542,830
Total recurring fair value measurements	$	—	$	542,780	$	50	$	542,830

Nonrecurring fair value measurements
Collateral dependent loans	$	—	$	—	$	5,440	$	5,440
Mortgage servicing rights		—		—		1		1
Total nonrecurring fair value measurements	$	—	$	—	$	5,441	$	5,441

(1) Includes derivatives designated as fair value hedges.

There were no transfers in and out of Level 1, Level 2, or Level 3 fair value measurements during the six months ended June 30, 2026. There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the three- or six-month periods ended June 30, 2026.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which QNB has utilized Level 3 inputs to determine fair value:

          
         Quantitative information about Level 3 fair value measurements

         June 30, 2026

         Fair value

         Valuation
techniques

         Unobservable
inputs

         Value or range
of values

Collateral dependent loans

100

Appraisal of collateral

(1)

Appraisal adjustments

(2)

-20% to -100%

Liquidation expenses

(3)

-10

          
         Quantitative information about Level 3 fair value measurements

         December 31, 2025

         Fair value

         Valuation
techniques

         Unobservable
inputs

         Value or range
of values

Collateral dependent loans

5,440

Appraisal of collateral

(1)

Appraisal adjustments

(2)

-10 to -100%

Liquidation expenses

(3)

10

Mortgage servicing rights

1

Discounted cash flow

Remaining term

2.8 to 29.1 yrs

          
         Prepayment speeds

         92% to 199%

          
         Discount rate

         12.0% to 12.5%

(1)

Fair value is primarily determined through appraisals of the underlying collateral by independent parties, which generally includes various Level 3 inputs which are not always identifiable.

(2)

Appraisals may be adjusted by management for qualitative factors such as economic conditions and the age of the appraisal. The range is presented as a percentage of the initial appraised value.

(3)

Appraisals and pending agreements of sale are adjusted by management for estimated liquidation expenses. The range is presented as a percentage of the initial appraised value.

The following table presents additional information about the available-for-sale securities measured at fair value on a recurring basis and for which QNB utilized significant unobservable inputs (Level 3 inputs) to determine fair value for the six months ended June 30, 2026 and 2025:


	Fair value measurements using significant unobservable inputs (Level 3)
	2026			2025
Balance, January 1,	$	50		$	52
Payments received		(1	)		(2	)
Total gains or losses (realized/unrealized)
Included in earnings		—			—
Included in other comprehensive (loss) income		—			—
Transfers in and/or out of Level 3		—			—
Balance, June 30,	$	49		$	50

The Level 3 securities consist of one collateralized debt obligation security, the PreTSL security, which is backed by trust preferred securities issued by banks. The market for this security at June 30, 2026 was not active and markets for similar securities also are not active. The new issue market is also inactive and there are currently very few market participants who are willing and able to transact for these securities.

Given conditions in the debt markets today and the absence of observable transactions in the secondary and new issue markets, we determined:

•

The few observable transactions and market quotations that are available are not reliable for purposes of determining fair value at June 30, 2026;

•

An income valuation approach technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs will be equally or more representative of fair value than the market approach valuation technique used at prior measurement dates; and

•

The PreTSL will be classified within Level 3 of the fair value hierarchy because significant adjustments are required to determine fair value at the measurement date.

QNB used an independent third party to value this security using a discounted cash flow analysis. Based on management’s review of the bond’s three underlying issuers, there are no expected credit losses or prepayments; cashflows used were contractual based on the Bloomberg YA screen. The assumed cashflows have been discounted using an estimated market discount rate based on the 30-year swap rate. The 30-year is used as the reference rate since it is indicative of market expectation for short-term rates in the future. This is consistent with the 30-year nature of the PreTSL security, which is priced using the 3-month LIBOR as a reference rate. The discount rate of 8.89% includes the risk-free rate, a credit component and a spread for illiquidity.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of QNB’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between QNB’s disclosures and those of other companies may not be meaningful.

The following methods and assumptions were used to estimate the fair values of each major classification of financial instrument and non-financial asset at June 30, 2026 and December 31, 2025:

Cash and cash equivalents, accrued interest receivable and accrued interest payable (carried at cost): The carrying amounts reported in the balance sheet approximate those assets’ fair value.

Investment securities (including derivative instruments) (carried at fair value): The fair value of securities is primarily determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. Level 2 debt securities are valued by a third-party pricing service commonly used in the banking industry. Level 2 fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution date, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.

The fair value of derivatives instruments designated as fair value hedges are based on estimates QNB would receive or pay to terminate the contracts or agreement, taking into account current interest rates and when appropriate, the credit-worthiness of the counterparties; these values are included in Level 2.

Restricted investment in stocks (carried at cost): The fair value of stock in Atlantic Community Bankers Bank, the Federal Home Loan Bank, VISA Class B-2 SHCPFIC and NEIF is the carrying amount, based on redemption provisions, and considers the limited marketability of and restrictions on such securities.

Loans Held for Sale (carried at lower of cost or fair value): The fair value of loans held for sale is determined, when possible, using quoted secondary market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for the specific attributes of that loan.

Loans Receivable (carried at cost): The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the liquidity, credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Collateral Dependent Loans (generally collateral value less cost to sell): Collateral dependent loans are loans for which the Company has measured generally based on the fair value of the loan’s collateral, less cost to sell. The value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Mortgage Servicing Rights (carried at lower of cost or fair value): The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated net servicing income. The mortgage servicing rights are stratified into tranches based on predominant characteristics, such as interest rate, loan type and investor type. The valuation incorporates assumptions that market participants would use in estimating future net servicing income.

Deposit liabilities (carried at cost): The fair value of deposits with no stated maturity (e.g. demand deposits, interest-bearing demand accounts, money market accounts and savings accounts) are by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts). Deposits with a stated maturity (time deposits) have been valued using the present value of cash flows discounted at rates approximating the current market for similar deposits.

Short-term borrowings (carried at cost): The carrying amount of short-term borrowings approximates their fair values.

Long-term debt (carried at cost): Long-term debt has stated maturities and have been valued using the present value of cash flows discounted at rates approximating the current market for similar debt instruments.

Subordinated debt (carried at cost): Subordinated debt has stated maturities and call dates and have been valued using the present value of cash flows discounted at rates approximating the current market for similar debt instruments.

Off-balance-sheet instruments (disclosed at cost): The fair values for QNB’s off-balance sheet instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in sales transaction on the dates indicated. The estimated fair value amounts have been measured as of the respective period ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period end.

The estimated fair values and carrying amounts of the Company’s financial and off-balance sheet instruments are summarized as follows:


					Fair value measurements
June 30, 2026	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	79,340	$	79,340	$	79,340	$	—	$	—
Investment securities:
Available-for-sale (1)		516,978		516,978		—		516,929		49
Equity securities		268		268		268		—		—
Restricted investment in bank stocks		7,287		7,287		—		7,287		—
Loans held for sale		395		396		—		396		—
Net loans		1,703,829		1,706,522		—		—		1,706,522
Mortgage servicing rights		344		527		—		—		527
Accrued interest receivable		6,399		6,399		—		6,399		—

Financial liabilities
Deposits with no stated maturities	$	1,633,420	$	1,633,420	$	1,633,420	$	—	$	—
Deposits with stated maturities		433,731		433,342		—		433,342		—
Short-term borrowings		75,428		75,428		75,428		—		—
Subordinated debt		54,018		56,673		—		56,673		—
Accrued interest payable		4,337		4,337		—		4,337		—

Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		51		—		51		—


					Fair value measurements
December 31, 2025	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	50,297	$	50,297	$	50,297	$	—	$	—
Investment securities:
Available-for-sale (1)		542,830		542,830		—		542,780		50
Restricted investment in bank stocks		6,663		6,663		—		6,663		—
Loans held for sale		246		249		—		249		—
Net loans		1,252,859		1,265,478		—		—		1,265,478
Mortgage servicing rights		346		530		—		—		530
Accrued interest receivable		4,839		4,839		—		4,839		—

Financial liabilities
Deposits with no stated maturities	$	1,266,714	$	1,266,714	$	1,266,714	$	—	$	—
Deposits with stated maturities		375,797		374,988		—		374,988		—
Short-term borrowings		80,601		80,601		80,601		—		—
Subordinated debt		39,268		40,541		—		40,541		—
Accrued interest payable		5,050		5,050		—		5,050		—

Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		74		—		74		—

(1) Includes derivatives designated as fair value hedges.

11. COMMITMENTS AND CONTINGENCIES

Financial Instruments with off-balance sheet risk:

In the normal course of business there are various legal proceedings, commitments, and contingent liabilities which are not reflected in the consolidated financial statements. Management does not anticipate any material losses as a result of these transactions and activities. They include, among other things, commitments to extend credit and standby letters of credit. The maximum exposure to credit loss, which represents the possibility of sustaining a loss due to the failure of the other parties to a financial instrument to perform according to the terms of the contract, is represented by the contractual amount of these instruments. QNB uses the same lending standards and policies in making credit commitments as it does for on-balance sheet instruments. The activity is controlled through credit approvals, control limits, and monitoring procedures. QNB applies the resulting loss factors under the allowance for credit losses on loans to its unused commitments, assuming: additional funding for commercial lines up to the average line usage for non-pass rated lines with no current usage; and, additional funding up to the average line usage for retail lines with no current usage. This resulted in an allowance for credit losses on unused commitments of $221,000, inclusive of $144,000 related to the acquisition of Victory, at June 30, 2026 and $76,000 at December 31, 2025, which is included in other liabilities on the Consolidated Balance Sheets.

A summary of the Company's financial instrument commitments is as follows:


	June 30,		December 31,
	2026		2025
Commitments to extend credit and unused lines of credit	$	510,477	$	401,073
Standby letters of credit		21,188		19,522
Total financial instrument commitments	$	531,665	$	420,595

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. QNB evaluates each customer’s creditworthiness on a case-by-case basis.

Standby letters of credit are conditional commitments issued by the Company to guarantee the financial or performance obligation of a customer to a third party. QNB’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making conditional obligations as it does for on-balance sheet instruments. Standby letters of credit of $17,681,000 will expire within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Company requires collateral and personal guarantees supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral and the enforcement of personal guarantees would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. The amount of the liability as of June 30, 2026 and December 31, 2025 for guarantees under standby letters of credit issued is not material.

The amount of collateral obtained for letters of credit and commitments to extend credit is based on management’s credit evaluation of the customer. Collateral varies, but may include real estate, accounts receivable, marketable securities, pledged deposits, inventory or equipment.

Other commitments:

QNB has committed to various operating leases for several of their branch and office facilities. Some of these leases include specific provisions relating to rent increases. Some of the leases contain renewal options to extend the initial terms of the lease for periods ranging from five to ten years and certain leases allow for multiple extensions. There was one new lease during the six months ended June 30, 2026 and there were three leases assumed in the acquisition of Victory; QNB recorded right-of-use assets of $3,420,000.

12. REGULATORY RESTRICTIONS

Dividends payable by QNB and the Bank are subject to various limitations imposed by statutes, regulations and policies adopted by bank regulatory agencies. Under Federal and Pennsylvania banking law, the Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. Under Federal Reserve regulations, the Bank is limited as to the amount it may lend affiliates, including QNB, unless such loans are collateralized by specific obligations.

Both QNB and the Bank are subject to regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate actions by regulators that could have an effect on the financial statements. Under the

framework for prompt corrective action, the Bank must meet capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items. The capital amounts and classification are also subject to qualitative judgments by the regulators. Management believes, as of June 30, 2026, that QNB and the Bank met capital adequacy requirements to which they were subject.

As of the most recent notification, the primary regulator of the Bank considered it to be “well capitalized” under the regulatory framework. There are no conditions or events since that notification that management believes have changed the classification. To be categorized as well capitalized, bank holding companies and insured depository institutions must maintain minimum ratios as set forth in the following table below.

The Company and the Bank’s actual capital amounts and ratios are presented as follows:


	Capital levels
	Actual					Adequately capitalized					Well capitalized
At June 30, 2026	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	271,546		14.30	%	$	151,933		8.00	%	$	189,916		10.00	%
Bank		249,126		13.13			151,769	8.00				189,711	10.00

Tier 1 capital (to risk-weighted assets):
The Company	$	209,705		11.04			113,949	6.00				113,949	6.00
Bank		236,135		12.45			113,826	6.00				151,769	8.00

Common equity tier 1 capital (to risk-weighted assets):
The Company		209,705		11.04			85,462	4.50			N/A		N/A
Bank		236,135		12.45			85,370	4.50				123,312	6.50

Tier 1 capital (to average assets):
The Company		209,705		8.65			96,955	4.00			N/A		N/A
Bank		236,135		9.84			95,972	4.00				119,965	5.00


	Capital levels
	Actual					Adequately capitalized					Well capitalized
At December 31, 2025	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	225,324		15.86	%	$	113,675		8.00	%	$	142,093		10.00	%
Bank		201,024		14.15			113,623	8.00				142,029	10.00

Tier 1 capital (to risk-weighted assets):
The Company	$	176,033		12.39			85,256	6.00				85,256	6.00
Bank		191,733		13.50			85,217	6.00				113,623	8.00

Common equity tier 1 capital (to risk-weighted assets):
The Company	$	176,033		12.39			63,942	4.50			N/A		N/A
Bank		191,733		13.50			63,913	4.50				92,319	6.50

Tier 1 capital (to average assets):
The Company	$	176,033		9.02			78,045	4.00			N/A		N/A
Bank		191,733		9.94			77,131	4.00				96,414	5.00

13. DERIVATIVES AND HEDGING ACTIVITIES

QNB's risk management objective with respect to derivative financial instruments is to hedge the risk of changes in the fair value of certain fixed-rate investment securities, included in a closed portfolio, for changes in the Secured Overnight Financing Rate ("SOFR"). The effective portions of changes in the fair value of each derivative financial instrument are reported in accumulated other comprehensive (loss) income, net of tax, and are reclassified to interest income as interest payments are made or received on the hedged portfolios. QNB assesses the effectiveness of each hedging relationship using a regression analysis of prior periodic changes in fair

value of both the hedge and the hedged item. In the assessment of hedge effectiveness, QNB will consider the likelihood of the counterparty's compliance with the contractual terms of the hedging derivative that could require the counterparty to make payments (counterparty default risk). If the likelihood that the counterparty will not default ceases to be probable, the hedge may no longer be highly effective and hedge ineffectiveness due to counterparty payment risk will be assessed.

The following tables present the notional amounts of derivatives designated as fair value hedging instruments at June 30, 2026, and December 31, 2025. QNB pledges cash or securities to cover the negative fair value of derivatives instruments. Cash collateral associated with the derivative instruments are not added to or netted against the fair value amounts.


	Interest Rate Swaps-Fair Value Hedges
	At June 30, 2026						At December 31, 2025
Balance Sheet Classification	Notional Amount		Amortized Cost of Hedged Portfolio		Cumulative Amount of Fair Value Hedging Adjustment Included in Carrying Amount of Hedged Asset		Notional Amount		Amortized Cost of Hedged Portfolio		Cumulative Amount of Fair Value Hedging Adjustment Included in Carrying Amount of Hedged Asset
Investment Securities Available-for-sale:
State and municipal securities	$	75,000	$	95,706	$	841	$	75,000	$	96,037	$	(583	)
U.S. Government agencies and GSE mortgage-backed securities		183,535		260,796		1,659		201,364		276,329		(1,109	)
Total	$	258,535	$	356,502	$	2,500	$	276,364	$	372,366	$	(1,692	)

The following table presents amounts included in the Consolidated Statements of Income for derivatives designated as fair value hedging instruments for the three and six months ended June 30, 2026 and 2025.


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
Income Sheet Classification	2026			2025			2026			2025
Interest and dividends on available-for-sale and equity securities:
State and municipal securities
Recognized on fair value hedge	$	(668	)	$	815		$	(1,342	)	$	1,646
Recognized on hedge portfolio		683			(668	)		1,385			(1,343	)
Recognized on remeasurement of fair value hedge		1			25			(8	)		40
U.S. Government agencies and GSE mortgage-backed securities
Recognized on fair value hedge		(1,715	)		2,430			(3,529	)		4,898
Recognized on hedge portfolio		1,715			(2,034	)		3,552			(4,094	)
Recognized on remeasurement of fair value hedge		2			33			(34	)		29
Total	$	18		$	601		$	24		$	1,176

QNB assumed an interest-rate swap due to the Victory acquisition. This $30,000,000 notional value swap hedged the interest-rate on loans where the Bank paid a fixed rate and received a variable SOFR. QNB decided to terminate the swap in lieu of redesignation and recorded a loss of $303,000 in the second quarter of 2026.

14. SUBORDINATED DEBT

On August 30, 2024, the Company entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers and accredited investors (collectively, the "Subordinated Note Purchasers") pursuant to which the Company issued and sold $40.0 million in aggregate principal amount of its 8.875% Fixed-to-Floating Rate Subordinated Notes due 2034 (the "Subordinated Notes"). The Subordinated Notes were offered and sold by the Company to the Subordinated Note Purchasers in a private offering in reliance on the Section 4(a)(2) exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the

provisions of Regulation D thereunder. The Company intends to use the proceeds from the offering for general corporate purposes and potential future strategic opportunities.

The Subordinated Notes mature on September 1, 2034 and bear interest at a fixed annual rate of 8.875%, payable semi-annually in arrears, to but excluding September 1, 2029. From and including September 1, 2029 to but excluding the maturity date or early redemption date, the interest rate will reset quarterly to an interest rate per annum initially equal to the then-current three-month Secured Overnight Financing Rate published by the Federal Reserve Bank of New York plus 545 basis points, payable quarterly in arrears. The Company is entitled to redeem the Subordinated Notes, in whole or in part, at any time on or after September 1, 2029, and to redeem the Subordinated Notes at any time in whole upon certain other events. Any redemption of the Subordinated Notes will be subject to prior regulatory approval to the extent required.

QNB acquired $17,650,000 of subordinated debt upon the completion of the Victory Merger. QNB had owned $3,000,000 of Victory's 2024 Subordinated Notes which was cancelled upon acquisition. The following table summarizes the details of the subordinated debt acquired and still remaining at June 30, 2026:

         ($ in thousands)

         Balance at June 30, 2026

         Original Issue Date

         Maturity Date

         Rate

         Reedemable

2019 Subordinated Notes

3,000

March 14, 2019

March 14, 2029

3-Month SOFR + 390 bp

Yes, in whole or part upon occurrence of specific events with the agreement

2020 Subordinated Notes

10,000

June 23 2020

June 30, 2030

3-Month SOFR + 613 bp

Yes, in whole or part upon occurrence of specific events with the agreement; or in integral multiples of $100,000

2024 Subordinated Notes

1,650

December 5, 2024

December 31, 2027

Fixed rate of 8.5% through 2026; 3-Month SOFR + 442 bp thereafter

Yes, in whole or part upon occurrence of specific events with the agreement; or in integral multiples of $100,000 after December 31, 2027

Total

14,650

The Subordinated Notes are not subject to any sinking fund and are not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries. The Subordinated Notes are not subject to redemption at the option of the holders. The Subordinated Notes are unsecured, subordinated obligations of the Company only and are not obligations of, and are not guaranteed by, any subsidiary of the Company. The Subordinated Notes rank junior in right to payment to the Company's current and future senior indebtedness. The Subordinated Notes are intended to qualify as Tier 2 capital for regulatory capital purposes.

At June 30, 2026, the carrying cost of the Subordinated Notes on the consolidated balance sheet represents the outstanding balance of the notes net of unamortized origination costs of $632,000 which are amortized to interest expense through September 1, 2029.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

QNB Corp. is a bank holding company headquartered in Quakertown, Pennsylvania. QNB Corp., through its wholly-owned subsidiary, the Bank, has been serving the residents and businesses of upper Bucks, northern Montgomery and southern Lehigh counties in Pennsylvania since 1877. Due to its limited geographic area, growth is pursued through expansion of existing customer relationships and building new relationships by stressing a consistent high level of service at all points of contact. The Bank is a locally managed community bank that provides a full range of commercial and retail banking and retail brokerage services. The consolidated entity is referred to herein as “QNB” or the “Company”.

On April 1, 2026, QNB closed the acquisition of Victory Bancorp, Inc. ("Victory"), a highly complementary community banking franchise headquartered in Limerick, Pennsylvania, creating a franchise with nearly $2.4 billion in assets and expanding our presence deeper into Montgomery County. This strategic combination brings together two relationship-focused institutions with shared values, similar operating cultures, and strong community ties. Results for the three and six months of 2026 include three months of post-merger activity related to the acquisition of Victory.

Tabular information presented throughout management’s discussion and analysis, other than share and per share data, is presented in thousands of dollars.

The Company uses non-GAAP financial information in its analysis of performance. These non-GAAP ratios and calculations provide a better understanding of ongoing operations and comparability with prior period results by showing the effects of significant gains and charges in the periods presented. The Company believes that investors may use these non-GAAP measures to analyze the Company's financial performance without the impact of unusual items or events that may obscure trends. This non-GAAP data is not a substitute for GAAP results and should be considered in addition to results prepared in accordance with GAAP. Non-GAAP financial measures

include risks as companies might calculate these measures differently and persons might disagree as to the appropriateness of items included in these measures. Please see table under the RESULTS OF OPERATIONS - OVERVIEW section,"Impact of Merger-Related Costs--GAAP to Non-GAAP Measure Reconciliation."

FORWARD-LOOKING STATEMENTS

In addition to historical information, this document contains forward-looking statements. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions. The U.S. Private Securities Litigation Reform Act of 1995 provides a safe harbor in regard to the inclusion of forward-looking statements in this document and documents incorporated by reference.

Shareholders should note that many factors, some of which are discussed elsewhere in this document and in the documents that are incorporated by reference, including the risk factors identified in Item 1A of QNB’s 2025 Form 10-K, could affect the future financial results of QNB and could cause those results to differ materially from those expressed in the forward-looking statements contained or incorporated by reference in this document. These factors include, but are not limited, to the following:

•

Volatility in interest rates and shape of the yield curve;

•

Credit risk;

•

Liquidity risk;

•

Operating, legal and regulatory risks;

•

Economic, political and competitive forces affecting QNB’s business, including the effects of inflation;

•

The effects of unforeseen external events, including acts of terrorism, natural disasters, and pandemics; and

•

The risk that the analysis of these risks and forces could be incorrect, and/or that the strategies developed to address them could be unsuccessful.

QNB cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, all of which change over time, and QNB assumes no duty to update forward-looking statements. Management cautions readers not to place undue reliance on any forward-looking statements. These statements speak only as of the date of this report on Form 10-Q, even if subsequently made available by QNB on its website or otherwise, and they advise readers that various factors, including those described above, could affect QNB’s financial performance and could cause actual results or circumstances for future periods to differ materially from those anticipated or projected. Except as required by law, QNB does not undertake, and specifically disclaims any obligation, to publicly release any revisions to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Disclosure of our significant accounting policies is included in Note 1 to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated herein by reference. Some of these policies were impacted by the acquisition of Victory; the updates are details in Note 2 of this Form 10-Q. Some of these policies are particularly sensitive requiring significant judgments, estimates and assumptions.

RESULTS OF OPERATIONS - OVERVIEW

Results for the three and six months of 2026 include three months of post-merger activity related to the acquisition of Victory. QNB reported net income for the second quarter of 2026 of $3,015,000, or $0.60 per share on a diluted basis, compared to net income of $3,883,000, or $1.04 per share on a diluted basis, for the same period in 2025. For the three-month period of 2026, net income included after-tax merger-related cost of $2,227,000. The merger-related costs are significant one-time costs, related to the acquisition of Victory and are not normal recurring operating expenses. Adjusted diluted earnings per share excluding the impact of the merger-related cost for the three-month period of 2026 was $1.05.

QNB reported net income for the six months ended June 2026 of $5,780,000, or $1.32 per share on a diluted basis, compared to net income of $6,461,000, or $1.74 per share on a diluted basis, for the same period in 2025. For the six-month period of 2026, net income included after-tax merger-related cost of $3,249,000. Adjusted diluted earnings per share excluding the impact of the merger-related cost for the six-month period of 2026 was $2.06.

The following table shows calculated impact of the merger-related costs on net income and ratios, reconciling GAAP to non-GAAP measurements:


Impact of Merger-Related Costs--GAAP to Non-GAAP Measure Reconciliation
(Dollars in thousands, except per share data)
	For the Three Months Ended June 30,									For the Six Months Ended June 30,
For the period:	2026			2025			Variance			2026			2025			Variance
Net income (GAAP)	$	3,015		$	3,883		$	(868	)	$	5,780		$	6,461		$	(681	)
Merger-related costs		3,084			—			3,084			3,972			—			3,972
Income tax benefit		(857	)		—			(857	)		(723	)		—			(723	)
Merger-related costs, net of tax		2,227			—			2,227			3,249			—			3,249
Net income excluding impact of merger-related costs (Non-GAAP)	$	5,242		$	3,883		$	1,359		$	9,029		$	6,461		$	2,568

Share and Per Share Data:
Basic:
EPS using Net income (GAAP)	$	0.61		$	1.05		$	(0.44	)	$	1.32		$	1.74		$	(0.42	)
EPS using Net income excluding impact of merger-related costs (Non-GAAP)	$	1.06		$	1.05		$	0.01		$	2.07		$	1.74		$	0.33
Fully-diluted:
EPS using Net income (GAAP)	$	0.60		$	1.04		$	(0.44	)	$	1.32		$	1.74		$	(0.42	)
EPS using Net income excluding impact of merger-related costs (Non-GAAP)	$	1.05		$	1.04		$	0.01		$	2.06		$	1.74		$	0.32

Average common shares outstanding:
Basic		4,968,665			3,710,878						4,368,001			3,705,396
Diluted		5,001,610			3,724,808						4,390,153			3,718,513

Selected Ratios:
Return on Average Assets (ROAA):
ROAA using Net income (GAAP)		0.50	%		0.83	%	-33 bp				0.54	%		0.69	%	-15 bp
ROAA using Net income excluding impact of merger-related costs (Non-GAAP)		0.88	%		0.83	%	5 bp				0.85	%		0.69	%	16 bp
Return on Average Equity (ROAE):
ROAE using Net income (GAAP)		6.65	%		14.25	%	-760 bp				7.38	%		12.02	%	-464 bp
ROAE using Net income excluding impact of merger-related costs (Non-GAAP)		11.56	%		14.25	%	-269 bp				11.54	%		12.02	%	-48 bp

Average Assets	$	2,395,752		$	1,887,138					$	2,154,199		$	1,880,127
AverageEquity	$	181,911		$	109,299					$	157,846		$	108,406

The Bank contributed $4,575,000 to net income for the three months ended June 30, 2026 compared to $4,679,000 for the same period 2025; and the holding company had a negative contribution of $1,560,000 to net income for the three months ended June 30, 2026 compared to a negative contribution of $796,000 for the same period of 2025. The operating performance of the Bank included three months of post-merger activity and improved for the quarter ended June 30, 2026, in comparison with the same period in 2025, due primarily to improvement in the interest margin causing a $6,072,000 increase in net interest income and a $499,000 increase in non-interest income; this was partly offset by an increase in non-interest expense of $6,377,000 of which $2,677,000 was due to

merger-related costs. The contribution from QNB Corp., which included three months of post-merger activity, for the quarter ended June 30, 2026, declined compared with the same period in 2025, primarily due to a decrease in net interest income of $373,000, related to the subordinated debt acquired in the acquisition, and an increase in non-interest expense of $509,000, primarily due to merger-related expenses of $407,000.

The Bank contributed $8,334,000 of net income for the six months ended June 30 2026 compared to $7,971,000 for the same period 2025; and the holding company had a negative contribution of $2,554,000 to net income for the six months ended June 30, 2026 compared to a negative contribution of $1,510,000 for the same period 2025. The improved results at the Bank were primarily due to improvement in the interest margin causing a $7,671,000 increase in net interest income and a $728,000 increase in non-interest income; this was partly offset by and an increase in non-interest expense of $7,877,000, of which $3,299,000 was related to merger-related costs. The change in contribution from QNB Corp. is primarily due to a decrease in net interest income of $400,000 and an increase in non-interest expense of $790,000, primarily due to merger-related expenses of $673,000.

Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.50% and 6.65%, respectively, for the quarter ended June 30, 2026, compared with 0.83% and 14.25%, respectively, for the quarter ended June 30, 2025. Return on average assets and return on average shareholders’ equity, excluding the impact of the merger-related cost, for the three-month period of 2026 was 0.88% and 11.56%, respectively. Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.54% and 7.38%, respectively, for the six months ended June 30, 2026, compared with 0.69% and 12.02%, respectively, for the six months ended June 30, 2025. Return on average assets and return on average shareholders’ equity, excluding the impact of the merger-related cost, for the six-month period of 2026 was 0.85% and 11.54%, respectively.

Total assets as of June 30, 2026 were $2,398,970,000, compared with $1,906,005,000 at December 31, 2025. Loans receivable at June 30, 2026 were $1,716,599,000; excluding the $408,379,000 in acquired loans, QNB recognized a $46,146,000, or 3.7%, increase from $1,262,074,000 at December 31, 2025. Total deposits of $2,067,151,000 at June 30, 2026 increased $15,475,000, excluding the $409,165,000 in deposits acquired, compared with total deposits of $1,642,511,000 at December 31, 2025.

Results for the three and six months ended June 30, 2026 include the following significant components:

•

Net interest income increased $5,699,000 to $18,351,000 and increased $7,271,000 to $31,460,000 for the three and six months ended June 30, 2026, respectively, and includes three months of post-merger activity related to the acquisition of Victory.

•

Net interest margin on a tax-equivalent basis increased 47 basis points for the quarter to 3.16% compared to 2.69% for the same period in 2025. Net interest margin on a tax-equivalent basis increased 40 basis points for the six months ended June 30, 2026 to 3.00% compared to 2.60% for the same period in 2025.

•

QNB recorded a $218,000 provision for credit losses on loans for the second quarter of 2026, compared with a $145,000 reversal of its provision for credit losses on loans for the second quarter of 2025. QNB recorded $521,000 in its provision for credit losses on loans for the six months ended June 30, 2026, compared with $406,000 for the same period in 2025.

•

Non-interest income increased $487,000, to $2,139,000 for the second quarter and $704,000, to $3,940,000 for the six months ended June 30, 2026 compared with the same periods in 2025. Excluding realized and unrealized gains on securities and swap termination loss, non-interest income increased $426,000 to $2,078,000 for the second quarter of 2026 compared to $1,652,000 for the same period in 2025; and increased $643,000, to $3,879,000 for the six months ended June 30, 2026 compared with $3,236,000 the same period in 2025.

•

Non-interest expense increased $6,874,000 to $16,436,000 for the second quarter of 2026 compared with the same period in 2025. Non-interest expense, excluding merger-related costs increased $3,790,000 to $13,352,000 for the second quarter of 2026 compared with the same period in 2025. Non-interest expense increased $1,769,000 to $11,138,000 for the second quarter of 2026 compared with the same period in 2025. Non-interest expense, excluding merger-related costs increased $4,671,000 to $23,602,000 for the six months ended June 30, 2026 compared with the same period in 2025. Non-interest expense includes three months of post-merger activity related to the acquisition of Victory.

•

Total non-performing loans, comprised of loans on non-accrual status, were $10,418,000, or 0.61% of loans receivable at June 30, 2026, compared to $8,793,000, or 0.70% of loans receivable at December 31, 2025. Net loan recoveries for the six months ended June 30, 2026 were $14,000, compared with net recoveries of $19,000 for the same period in 2025.

These items, as well as others, are explained more thoroughly in the next sections.

NET INTEREST INCOME

QNB earns its net income primarily through the Bank. Net interest income, or the spread between the interest, dividends, and fees earned on loans and investment securities and the expense incurred on deposits and other interest-bearing liabilities, is the primary source of operating income for QNB. Management seeks to achieve sustainable and consistent earnings growth while maintaining adequate levels of capital and liquidity and limiting its exposure to credit and interest rate risk levels approved by the Board of Directors.

The following table presents the adjustment to convert net interest income to net interest income on a fully taxable-equivalent basis for the three- and six-month periods ended June 30, 2026 and 2025.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2026		2025		2026		2025
Total interest income	$	30,631	$	23,110	$	53,107	$	45,308
Total interest expense		12,280		10,458		21,647		21,119
Net interest income		18,351		12,652		31,460		24,189
Tax-equivalent adjustment		83		100		230		240
Net interest income (fully taxable-equivalent)	$	18,434	$	12,752	$	31,690	$	24,429

Net interest income is the primary source of operating income for QNB. Net interest income is interest income, dividends, fees on earning assets and the amortization and accretion of fair value premiums and discounts on acquired earnings assets, less interest expense incurred funding sources and the amortization and accretion of fair value premiums and discounts on acquired interest-bearing liabilities. Earning assets primarily include loans, investment securities, interest-bearing balances at the Federal Reserve Bank and Federal funds sold. Sources used to fund these assets include deposits and borrowed funds. Net interest income is affected by changes in interest rates, the volume and mix of earning assets and interest-bearing liabilities, and the amount of earning assets funded by non-interest-bearing deposits.

For purposes of this discussion, interest income and the average yield earned on loans and investment securities are adjusted to a tax-equivalent basis as detailed in the tables that appear above. This adjustment to interest income is made for analysis purposes only. Interest income is increased by the amount of savings of Federal income taxes, which QNB realizes by investing in certain tax-exempt state and municipal securities and by making loans to certain tax-exempt organizations. In this way, the ultimate economic impact of earnings from various assets can be more easily compared.

The net interest rate spread is the difference between average rates received on earning assets and average rates paid on interest-bearing liabilities, while the net interest rate margin, which includes interest-free sources of funds, is net interest income expressed as a percentage of average interest-earning assets. The Asset/Liability and Investment Management Committee works to manage and maximize the net interest margin for the Company.

Average Balances, Rate, and Interest Income and Expense Summary (Tax-Equivalent Basis)


	For the Three Months Ended
	June 30, 2026								June 30, 2025
	Average			Average					Average			Average
	Balance			Rate			Interest		Balance			Rate			Interest
Assets
Federal funds sold	$	1,163			3.63	%	$	11	$	—			—	%	$	—
Investment securities (AFS & Equity):
U.S. Treasury securities		20,812			3.68			191		21,032			4.24			223
U.S. Government agencies		75,972			1.18			224		75,963			1.18			224
State and municipal		104,927			2.35			617		105,090			2.88			756
Mortgage-backed and CMOs		318,255			1.95			1,551		354,349			2.46			2,184
Corporate debt securities and money market funds		67,798			5.90			1,000		64,694			6.38			1,031
Equity securities		103			—			—		—			—			—
Total investment securities		587,867			2.44			3,583		621,128			2.84			4,418
Loans:
Commercial real estate		1,276,622			6.31			20,097		863,096			5.94			12,775
Residential real estate		122,950			4.63			1,424		114,600			4.38			1,255
Home equity loans		102,997			6.13			1,575		70,666			6.41			1,130
Commercial and industrial		181,167			7.12			3,213		145,261			7.41			2,682
Consumer loans		5,328			7.59			101		3,355			7.70			65
Tax-exempt loans		21,242			5.31			281		19,347			4.23			205
Total loans, net of unearned income*		1,710,306			6.26			26,691		1,216,325			5.97			18,112
Other earning assets		45,439			4.05			429		61,355			4.45			680
Total earning assets		2,344,775			5.26			30,714		1,898,808			4.90			23,210
Cash and due from banks		28,030								13,806
Accumulated other comprehensive loss, net of tax		(45,720	)							(59,921	)
Allowance for credit losses on loans		(12,668	)							(9,376	)
Other assets		81,335								43,821
Total assets	$	2,395,752							$	1,887,138
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing demand	$	483,798			1.19	%		1,438	$	376,735			0.94	%		888
Municipals		150,200			3.26			1,222		146,214			3.92			1,427
Money market		386,952			2.79			2,691		259,621			2.88			1,862
Savings		352,087			1.55			1,361		281,076			1.29			901
Time < $250		358,826			3.30			2,956		334,437			3.79			3,159
Time > $250		82,968			3.56			736		51,832			4.08			527
Total interest-bearing deposits		1,814,831			2.30			10,404		1,449,915			2.42			8,764
Short-term borrowings		69,006			3.46			596		70,942			3.90			689
Long-term debt		—			—			—		5,495			4.79			67
Subordinated debt		53,991			9.48			1,280		39,141			9.58			938
Total borrowings		122,997			6.12			1,876		115,578			5.88			1,694
Total interest-bearing liabilities		1,937,828			2.54			12,280		1,565,493			2.68			10,458
Non-interest-bearing deposits		259,935								198,075
Other liabilities		16,078								14,271
Shareholders' equity		181,911								109,299
Total liabilities and shareholders' equity	$	2,395,752							$	1,887,138
Net interest rate spread					2.72	%							2.22	%
Margin/net interest income					3.16	%	$	18,434					2.69	%	$	12,752


	For the Six Months Ended June 30,
	June 30, 2026								June 30, 2025
	Average			Average					Average			Average
	Balance			Rate			Interest		Balance			Rate			Interest
Assets
Federal funds sold	$	585			3.63	%	$	11	$	—			—	%	$	—
Investment securities (AFS & Equity):
U.S. Treasury securities		20,819			3.70			382		20,596			4.31			440
U.S. Government agencies		75,971			1.18			448		75,962			1.18			448
State and municipal		104,727			2.33			1,220		105,172			2.87			1,510
Mortgage-backed and CMOs		321,556			1.93			3,099		358,969			2.45			4,392
Corporate debt securities		69,230			5.86			2,028		63,128			6.62			2,089
Equity securities		52			—			—		—			—			—
Total investment securities		592,355			2.42			7,177		623,827			2.85			8,879
Loans:
Commercial real estate		1,094,783			6.18			33,541		860,363			5.82			24,844
Residential real estate		122,661			4.59			2,816		114,436			4.36			2,493
Home equity loans		89,839			6.00			2,674		69,327			6.41			2,204
Commercial and industrial		161,296			7.08			5,661		146,962			7.41			5,399
Consumer loans		4,137			7.70			158		3,400			7.69			130
Tax-exempt loans		20,444			5.09			516		19,073			4.19			397
Total loans, net of unearned income*		1,493,160			6.13			45,366		1,213,561			5.89			35,467
Other earning assets		41,293			3.82			783		54,536			4.44			1,202
Total earning assets		2,127,393			5.06			53,337		1,891,924			4.85			45,548
Cash and due from banks		20,505								13,517
Accumulated other comprehensive loss, net of tax		(45,094	)							(59,954	)
Allowance for credit losses on loans		(10,992	)							(9,059	)
Other assets		62,387								43,699
Total assets	$	2,154,199							$	1,880,127
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing demand	$	441,756			1.08	%		2,369	$	378,504			0.98	%		1,832
Municipals		142,712			3.23			2,285		147,887			3.93			2,883
Money market		321,450			2.69			4,294		257,952			2.88			3,680
Savings		318,359			1.43			2,264		280,371			1.29			1,794
Time < $250		337,703			3.34			5,594		333,536			3.89			6,442
Time > $250		71,069			3.59			1,266		50,317			4.19			1,045
Total interest-bearing deposits		1,633,049			2.23			18,072		1,448,567			2.46			17,676
Short-term borrowings		76,249			3.59			1,358		59,300			3.90			1,145
Long-term debt		—			—			—		17,735			4.74			423
Subordinated debt		46,681			9.50			2,217		39,117			9.59			1,875
Total borrowings		122,930			5.86			3,575		116,152			5.98			3,443
Total interest-bearing liabilities		1,755,979			2.49			21,647		1,564,719			2.72			21,119
Non-interest-bearing deposits		224,958								192,067
Other liabilities		15,416								14,935
Shareholders' equity		157,846								108,406
Total liabilities and shareholders' equity	$	2,154,199							$	1,880,127
Net interest rate spread					2.57	%							2.13	%
Margin/net interest income					3.00	%	$	31,690					2.60	%	$	24,429

Tax-exempt securities and loans were adjusted to a tax-equivalent basis and are based on the marginal Federal corporate tax rate of 21 percent for three and six months ended June 30, 2026 and 2025.

Non-accrual loans are included in earning assets.

* Includes loans held-for-sale

Rate/Volume Analysis. The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense. Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated to changes in volume.


	For the Three Months Ended									For the Six Months Ended
	June 30, 2026 compared									June 30, 2026 compared
	to June 30, 2025									to June 30, 2025
	Total			Due to change in:						Total			Due to change in:
	Change			Volume			Rate			Change			Volume			Rate
Interest income:
Federal funds sold	$	11		$	11		$	—		$	11		$	11		$	—
Investment securities (AFS & Equity):
U.S. Treasury securities		(32	)		(3	)		(29	)		(58	)		5			(63	)
U.S. Government agencies		—			—			—			—			—			—
State and municipal		(139	)		(1	)		(138	)		(290	)		(7	)		(283	)
Mortgage-backed and CMOs		(633	)		(224	)		(409	)		(1,293	)		(458	)		(835	)
Corporate debt securities and money market funds		(31	)		49			(80	)		(61	)		202			(263	)
Equity securities		—			—			—			—			—			—
Total Investment securities (AFS & Equity)		(835	)		(179	)		(656	)		(1,702	)		(258	)		(1,444	)
Loans:
Commercial real estate		7,322			6,121			1,201			8,697			6,769			1,928
Residential real estate		169			92			77			323			179			144
Home equity loans		445			516			(71	)		470			651			(181	)
Commercial and industrial		531			663			(132	)		262			526			(264	)
Consumer loans		36			38			(2	)		28			28			—
Tax-exempt loans		76			19			57			119			28			91
Total Loans		8,579			7,449			1,130			9,899			8,181			1,718
Other earning assets		(251	)		(205	)		(46	)		(419	)		(292	)		(127	)
Total interest income		7,504			7,076			428			7,789			7,642			147
Interest expense:
Interest-bearing deposits:
Interest-bearing demand		550			252			298			537			306			231
Municipals		(205	)		39			(244	)		(598	)		(101	)		(497	)
Money market		829			913			(84	)		614			906			(292	)
Savings		460			228			232			470			243			227
Time < $250		(203	)		229			(432	)		(848	)		80			(928	)
Time > $250		209			316			(107	)		221			431			(210	)
Total interest-bearing deposits		1,640			1,977			(337	)		396			1,865			(1,469	)
Short-term borrowings		(93	)		(18	)		(75	)		213			328			(115	)
Long-term debt		(67	)		(67	)		—			(423	)		(423	)		—
Subordinated debt		342			356			(14	)		342			363			(21	)
Total borrowings		182			271			(89	)		132			268			(136	)
Total interest expense		1,822			2,248			(426	)		528			2,133			(1,605	)
Net interest income	$	5,682		$	4,828		$	854		$	7,261		$	5,509		$	1,752

Average earning assets and interest-bearing liabilities for the three and six months ended June 30, 2026 include the three-month impact of acquiring $434,318,000 in interest-earnings assets and $352,654,000 in interest-bearing liabilities which include the cancellation of

$3,000,0000 in subordinated notes owned by QNB and issued by Victory on the acquisition date. Additionally, total average assets, average liabilities and average equity for the three and six months ended June 30, 2026 include the three-month impact of the acquisition on non-earning assets of $37,735,000, non-interest bearing liabilities of $72,296,000 and equity of $47,103,000.

Net Interest Income and Net Interest Margin – Quarterly Comparison

Average earning assets for the second quarter of 2026 were $2,344,775,000, an increase of $445,967,000, or 23.5%, from the second quarter of 2025, with average loans increasing $493,981,000, or 40.6%, and average investment securities decreasing $33,261,000, or 5.4%, over the same period in 2025. Average loans as a percentage of average earning assets was 72.9% for the second quarter of 2026, compared to 64.1% for the second quarter of 2025. On the funding side, average deposits increased $426,776,000, or 25.9%, to $2,074,766,000 for the second quarter of 2026. Average short-term borrowed funds, which consisted primarily of average commercial repurchase agreements and FHLB borrowings, decreased $1,936,000 to $69,006,000 for the second quarter of 2026 compared to $70,942,000 for the same period in 2025. Subordinated debt increased $14,850,000, as a result of the Victory Merger, to $53,991,000.

The net interest margin for the second quarter of 2026 increased 47 basis points to 3.16% from 2.69% for the same period in 2025. Competition for quality loans and deposits in our local market continues to exert pressure on the net interest margin. Repricing strategies on loans and deposits have had a positive impact on the net interest margin.

The Rate-Volume Analysis tables, as presented on a tax-equivalent basis, highlight the impact of changing rates and volumes on interest income and interest expense. Total interest income on a tax-equivalent basis increased $7,504,000, or 32.3%, to $30,714,000 for the second quarter of 2026; and total interest expense increased $1,822,000, or 17.4%, to $12,280,000.

The yield on earning assets on a tax-equivalent basis increased 36 basis points to 5.26% from 4.90% for the same period in 2025. The cost of interest-bearing liabilities declined 14 basis points to 2.54% for the second quarter of 2026, compared with 2.68% for the same period in 2025.

QNB acquired $3,000,0000 in federal funds from Victory; these funds matured in the second quarter of 2026.

Interest income on investment securities decreased $835,000 when comparing the second quarters of 2026 and 2025. The average yield on the investment portfolio was 2.44% for the second quarter of 2026 compared with 2.84% for the same period in 2025, a decrease of 40 basis points. Average securities for the three and six months ended June 30, 2026 include the three-month impact of acquiring $15,605,000 in securities from the acquisition and the cancellation of $3,000,000 subordinated note owned by QNB and issued by Victory.

The yield on U.S. Treasury securities was 3.68% for the second quarter of 2026 compared to 4.24% for the same period in 2025. The 56 basis-point decline in rate and the average balances decrease of $220,000 caused the decrease in interest income of $32,000. The average balances of U.S. Government agency securities increased $9,000 as the average rate remained unchanged at 1.18%.

Interest income on municipal securities, which are primarily tax-exempt, decreased $139,000 due to a 53 basis-point decrease in rate, and a $163,000 decrease in average balances. Typically, QNB purchases municipal bonds with 10- to 20-year maturities and may have call dates between 2-10 years.

Interest income on mortgage-backed securities and CMOs decreased $633,000 and average balances decreased $36,094,000 and the yield decreased 51 basis points. This portfolio generally provides higher yields relative to agency bonds and also provides monthly cash flow which can be used for liquidity purposes or can be reinvested as interest rates increase. Since most of these securities were purchased at a premium, any prepayments result in a shorter amortization period of this premium and therefore a reduction in income.

Interest income on corporate debt and mutual funds decreased $31,000 as average balances increased $3,104,000 and the average yield decreased 48 basis points.

Average loans the three and six months ended June 30, 2026 include the three-month impact of acquiring $408,379,000 in loans from the acquisition of Victory. Income on loans increased $8,579,000 to $26,691,000 when comparing the second quarters of 2026 and 2025, with a $493,981,000 increase in average balances contributing to an increase in interest income of $7,449,000 and a 29-basis point increase in yield contributing to a $1,130,000 increase in interest income.

The largest category of the loan portfolio is commercial real estate loans. This category of loans includes commercial purpose loans secured by either commercial properties, such as office buildings, factories, warehouses, hotels and restaurants, medical facilities and retail establishments, or residential real estate, usually the residence of the business owner. The category also includes construction and land development loans. Income on commercial real estate loans increased $7,322,000 when comparing the second quarters of 2026 and

2025, primarily due to a $413,526,000 increase in average balances contributing to an increase in interest income of $6,121,000 and a 37-basis point increase in rate from 5.94% in 2025 to 6.31% contributing to an increase of $1,201,000 to interest income.

Income on commercial and industrial loans increased $531,000 when comparing the second quarters of 2026 and 2025. The average yield on these loans decreased 29 basis points to 7.12% resulting in a decrease in income of $132,000; this was offset by an average balances increased $35,906,000, to $181,167,000 for the second quarter of 2026 resulting in a $663,000 increase in interest income. Many of the loans in this category are indexed to the prime interest rate.

Tax-exempt loan income increased $76,000 for the second quarter of 2026 compared to the same period in 2025. Average balances increased $1,895,000 to $21,242,000 for the second quarter of 2026. The yield on municipal loans increased 108 basis points, to 5.31% for the second quarter of 2026, compared with the same period in 2025.

QNB desires to be the “local consumer lender of choice”, focusing its retail lending efforts on product offerings and marketing and promotion. Interest income on residential mortgage loans secured by first lien 1-4 family increased $169,000 when comparing the second quarter of 2026 to the same period in 2025. Average residential mortgage loan balances increased by $8,350,000, or 7.3%, to $122,950,000 for the second quarter of 2026 compared to the same period in 2025, which contributed a $92,000 increase in interest income. The average yield on the portfolio increased 25 basis points and contributed an increase of $77,000 to interest income. QNB chose to retain certain mortgage loans instead of selling them in the secondary market, as the yield on our originated mortgages was higher than comparable mortgage-backed securities. Average home equity loans increased during the 2026 period by $32,331,000 to $102,997,000, contributing to a $516,000 increase in interest income; this was partly offset by an average yield decrease of 28 basis points causing a $71,000 decrease in interest income. The yield on the consumer portfolio decreased 11 basis points to 7.59% for the second quarter of 2026 and there was a $1,973,000 increase in average balances resulting in a net $36,000 increase in interest income.

Earning assets are funded by deposits and borrowed funds. Average interest-bearing deposits for the three and six months ended June 30, 2026 include the three-month impact of acquiring $338,004,000 from the acquisition of Victory. Average borrowings for the three and six months ended June 30, 2026 include the three-month impact of acquiring $14,650,000 in subordinated debt from the acquisition of Victory. Interest expense increased $1,822,000, when comparing the second quarter of 2026 to the same period in 2025. Interest expense on interest-bearing deposits increased $1,640,000 to $10,404,000 when comparing the second quarters of 2026 and 2025, with a net $364,916,000 increase in average balances contributing to a net increase in interest expense of $1,977,000 and a 12-basis point decrease in yield contributing to a $337,000 decrease in interest expense.

Average interest-bearing demand accounts increased $107,063,000 to $483,798,000 for the second quarter of 2026 and the average rate paid on these deposits increased 25 basis points; interest expense on interest-bearing demand accounts increased $550,000 to $1,438,000 for the same period. Average non-interest-bearing demand accounts increased $61,860,000 to $259,935,000 for the second quarter of 2026. Average money market accounts increased $127,331,000 to $386,952,000 for the second quarter of 2026 compared with the same period in 2025. Interest expense on money market accounts increased $829,000 to $2,691,000, and the average interest rate paid on money market accounts decreased nine basis points to 2.79% for the second quarter of 2026. Most of the balances in this category are in products that pay tiered rates based on account balances.

Interest expense on municipal interest-bearing demand accounts decreased $205,000 to $1,222,000 for the second quarter of 2026. The average interest rate paid on municipal interest-bearing demand accounts decreased 66 basis points to 3.26% for the second quarter of 2026 over the same quarter of 2025, and average balances increased $3,986,000 to $150,200,000. Many of these accounts are indexed to the Federal funds rate with rate floors. Municipal deposits are seasonal in nature and are received during the second and third quarters as tax receipts are collected and are withdrawn over the course of the year.

Interest expense on savings accounts increased $460,000 when comparing the second quarter of 2026 to the same quarter of 2025. The average interest rate paid on savings accounts increased 26 basis points to 1.55% for the second quarter of 2026 compared to 1.29% for the same period in 2025. Average savings balances increased $71,011,000 to $352,087,000 for the second quarter of 2026. QNB’s online e-Savings product is the largest category of savings deposits, with average balances for the second quarter of 2026 of $216,625,000 compared to $208,239,000 in the same period of 2025. The average yield paid on these accounts was 1.70% for the both second quarters of 2026 and 2025. Other savings account average balances, increased $62,625,000 when comparing the second quarter of 2026 compared to the same period in 2025 and interest expense increased $423,000.

Interest expense on time deposits totaled $3,692,000 for the second quarter of 2026 compared to $3,686,000 in 2025. Average total time deposits increased $55,525,000 to $441,794,000 for the second quarter of 2026. As with fixed-rate loans and investment securities, these deposits reprice over time and, therefore, have less of an immediate impact on costs in either a rising or falling rate environment; however, the maturity and repricing characteristics of time deposits tend to be shorter.

Approximately $416,806,000, or 96%, of time deposits at June 30, 2026 will mature over the next 12 months. The average rate paid on these time deposits is approximately 3.34%. The yield on the time deposit portfolio may change in the next quarter as short-term time deposits reprice; however, given the short-term nature of these deposits, interest expense may increase if short-term time deposit rates were to increase suddenly or if customers select higher paying time deposits.

Short-term borrowings are comprised of sweep accounts structured as repurchase agreements with our commercial customers and short-term FHLB borrowing. Interest expense on short-term borrowings decreased $93,000 for the second quarter of 2026 to $596,000 when compared to the same period in 2025. When comparing these same periods, average balances decreased $1,936,000 to $69,006,000 and average rate decreased 46 basis points to 3.45%.

Average long-term borrowings decreased $5,495,000 as short-term borrowing were used to payoff maturing long-term borrowings during the past year.

QNB Corp. issued $40,000,000 of subordinated debt in 2024 and acquired $17,650,000 of subordinated debt from Victory in the Victory Merger; $3,000,0000 of subordinated debt issued by Victory was owned by QNB and cancelled as of the merger date. The average carrying value net of deferred costs was $53,991,000 for the second quarter of 2026 compared to $39,141,000 for same period in 2025. The average yield decreased ten basis points from 9.58% to 9.48%.

Net Interest Income and Net Interest Margin – Six-Month Comparison

For the six-month period ended June 30, 2026 average earnings assets increased $235,469,000, or 12.4%, to $2,127,393,000, with average loans increasing 23.0%, average investment securities decreasing 5.0%, and average total deposits increasing $217,373,000, or 13.2%, to $1,858,007,000, compared to the same period in 2025. The net interest margin on a tax-equivalent basis was 3.00% for the six-month period ended June 30, 2026, a 40-basis point increase from the same period in 2025.

Total interest income on a tax-equivalent basis increased $7,789,000, or 17.1%, to $53,337,000, when comparing the six-month periods ended June 30, 2026 and June 30, 2025 due to an increase in volume and rate on loans. Interest income on loans increased $8,181,000 as a result of volume and increased $1,718,000 as a result of yields. The analysis of the six-month periods is similar to what was described in the quarterly analysis. The yield on earning assets increased from 4.85% to 5.06% for the six-month periods with the yield on loans up 24 basis points to 6.13%.

Total interest expense increased $528,000 for the six-month period ended June 30, 2026 compared with the same period in 2025 attributable to an increase in volume. Average interest-bearing liabilities increased $191,260,000 and the average rate paid on interest-bearing liabilities decreased 23 basis points to 2.49% for the six-month period ended June 30, 2026 versus the same period in 2025.

Average interest-bearing deposits increased $184,482,000 and the related interest expense increased $396,000 for the six-month period ended June 30, 2026 versus the same period in 2025. The average balance of total short-term borrowings increased $16,949,000 primarily due to an increase in FHLB borrowings of $19,667,000. Long-term borrowing average balance decreased $17,735,000 and interest expense decreased $423,000 due to maturity. Subordinated debt average balance increased $7,564,000 and interest expense increased $342,000 for the six-month period ended June 30, 2026 compared to the same period of 2025.

PROVISION FOR CREDIT LOSSES, ALLOWANCE FOR CREDIT LOSSES ON LOANS AND ALLOWANCE FOR CREDIT LOSSES ON UNUSED COMMITMENTS

The provision for credit losses represents management's determination of the amount necessary to be charged to operations to bring the allowance for credit losses on loans and the allowance for credit losses on unused commitments to amounts that are intended to absorb historical loss experience, current conditions and reasonable and supportable forecasts, in the outstanding loan portfolio and the unused commitments. Management believes that it uses the best information available to make determinations about the adequacy of these allowances and that it has established its existing allowances for credit losses on loan and on unused commitments in accordance with U.S. GAAP. The determination of an appropriate level for the allowance for credit losses on loans and the allowance for credit losses on unused commitments are based upon an analysis of the risks inherent in QNB’s loan portfolio.

Since the allowance for credit losses on loans and the reserve on unused commitments is dependent, to a great extent, on conditions that may be beyond QNB’s control, it is at least reasonably possible that management’s calculations and actual results could differ. In addition, various regulatory agencies, as an integral part of their examination process, periodically review QNB’s allowance for credit losses on loans. Such agencies may require QNB to recognize changes to the allowance based on their judgments about information available to them at the time of their examination. Actual loan losses, net of recoveries, serve to reduce the allowance.

Based on this analysis, QNB recorded a $521,000 provision for credit losses on loans for the six months ended June 30, 2026, through the allowance for credit losses on loans, compared to a $406,000 provision for credit losses for the same period in 2025. QNB recorded a provision of $1,000 for the allowance for credit losses for unused commitments in the six months ended June 30, 2026 compared to a reversal in provision of $2,000 for the same period in 2025.

QNB recorded a $3,020,000 allowance for credit losses on loans and a $144,000 allowance for credit losses on unused commitments due to the Victory Merger.

QNB's allowance for credit losses on loans of $12,770,000 represents 0.74% of loans receivable at June 30, 2026 compared with an allowance for credit losses on loans of $9,215,000, or 0.73% of loans receivable, at December 31, 2025, and $9,169,000, or 0.75%, at June 30, 2025. Management believes the allowance for credit losses on loans at June 30, 2026 is adequate as of that date based on its analysis of historical loss experience, current conditions and reasonable and supportable forecasts in the portfolio.

Net recoveries were $14,000 for the six months ended June 30, 2026 compared to net recoveries of $19,000 for the six months ended June 30, 2025. Charge-offs of $44,000 during the six months ended June 30, 2026 consisted of overdrafts of $26,000, a real estate loan secured by junior lien on 1-4 family property of $4,000 and other consumer and student loans of $14,000. Recoveries of approximately $58,000 during the six months ended June 30, 2026 consisted of $45,000 in repayments from borrowers of previously charged-off credits and overdrafts recoveries of $13,000.

Non-performing assets were $10,418,000 at June 30, 2026 compared to $8,793,000 as of December 31, 2025 and $8,947,000 at June 30, 2025. Total non-performing loans, which represent loans on non-accrual status and loans past due 90 days or more and still accruing interest, were 0.61% of loans receivable at June 30, 2026, 0.70% at December 31, 2025 and 0.73% of loans receivable at June 30, 2025. The increase was primarily due to two commercial and one retail customer. At June 30, 2026, $7,832,000, or approximately 75% of the loans classified as non-accrual, are current or past due less than 30 days. In cases where there is a collateral shortfall on non-accrual loans, specific impairment 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 $49,156,000 at June 30, 2026, compared with $39,219,000 at December 31, 2025, an increase of $9,937,000 which includes $6,475,000 of commercial real estate loans and $3,808,000 of commercial and industrial loans acquired.

QNB had no loans past due 90 days or more and still accruing interest at June 30, 2026, December 31, 2025, or June 30, 2025. Total loans 30 days or more past due, which includes non-accrual loans by actual number of days delinquent, represented 0.46% of loans receivable at June 30, 2026 compared with 0.14% at December 31, 2025, and 0.98% at June 30, 2025.

There was one loan modification to a borrower experiencing financial difficulty identified during the six months ended June 30, 2026. The loan continues to be reported as accruing. The loan was modified to interest only payments for three months and one month deferred payment. QNB had no other real estate owned or repossessed assets at June 30, 2026, December 31, 2025 or June 30, 2025.

A loan is considered collateral dependent, based on current information and events, if it is probable that QNB will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining if a loan is collateral dependent include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not collateral dependent. Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Deficiency is measured on a loan-by-loan basis for all non-accrual loans, except student loans, by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

The following table shows detailed information and ratios pertaining to the Company’s loan and asset quality:


	June 30,			December 31,			June 30,
	2026			2025			2025
Non-accrual loans	$	10,418		$	8,793		$	8,947
Loans past due 90 days or more and still accruing interest		—			—			—
Total non-performing loans		10,418			8,793			8,947
Total non-performing assets	$	10,418		$	8,793		$	8,947

Total loans (excluding loans held-for-sale):
Average total loans (YTD)	$	1,492,696		$	1,225,178		$	1,213,173
Total loans		1,716,599			1,262,074			1,218,539

Allowance for credit losses on loans		12,770			9,215			9,169

Allowance for loan losses to:
Non-performing loans		122.58	%		104.80	%		102.48	%
Total loans (excluding held-for-sale)		0.74	%		0.73	%		0.75	%
Average total loans (excluding held-for-sale)		0.86	%		0.75	%		0.76	%

Non-performing loans / total loans (excluding held-for-sale)		0.61	%		0.70	%		0.73	%
Non-performing assets / total assets		0.43	%		0.46	%		0.47	%

An analysis of net loan charge-offs (recoveries) for the three and six months ended June 30, 2026 compared to the same periods in

2025 is as follows:


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2026			2025			2026			2025
Net charge-offs (recoveries)	$	(1	)	$	(16	)	$	(14	)	$	(19	)

Net annualized charge-offs (recoveries) to:
Total loans		0.00	%		(0.01	)%		0.00	%		0.00	%
Average total loans excluding held-for-sale		0.00	%		(0.01	)%		0.00	%		0.00	%
Allowance for loan losses		(0.03	)%		(0.70	)%		(0.22	)%		(0.42	)%

At June 30, 2026 and December 31, 2025, the recorded investment in collateral dependent loans totaled $10,418,000 and $8,793,000 of which $10,151,000 and $1,704,000, respectively, required no specific allowance for loan loss. The recorded investment in collateral dependent loans requiring an allowance for loan losses was $267,000 and $7,089,000 at June 30, 2026 and December 31, 2025, respectively, and the related allowance for loan losses associated with these loans was $167,000 and $1,649,000, respectively. See Note 9 to the Notes to Consolidated Financial Statements for additional detail of collateral dependent loans.

NON-INTEREST INCOME

Total non-interest income for 2026 includes three months of impact from the acquisition of Victory.


Non-Interest Income Comparison
	For the Three Months Ended June 30,					Change from prior year						For the Six Months Ended June 30,					Change from prior year
	2026			2025		Amount			Percent			2026			2025		Amount			Percent
Fees for services to customers	$	658		$	485	$	173			35.7	%	$	1,171		$	932	$	239			25.6	%
ATM and debit card		811			724		87			12.0			1,552			1,380		172			12.5
Retail brokerage and advisory		148			140		8			5.7			351			281		70			24.9
Bank-owned life insurance		133			81		52			64.2			225			168		57			33.9
Merchant		81			82		(1	)		(1.2	)		163			157		6			3.8
Net gain on sale of securities		96			—		96			100.0			96			—		96			100.0
Net unrealized gain on equity securities		268			—		268			100.0			268			—		268			100.0
Net loss on interest-rate swap termination		(303	)		—		(303	)		(100.0	)		(303	)		—		(303	)		(100.0	)
Net gain on sale of loans		36			4		32			800.0			44			22		22		N/M
Other		211			136		75			55.1			373			296		77			26.0
Total	$	2,139		$	1,652	$	487			29.5	%	$	3,940		$	3,236	$	704			21.8	%

Quarter to Quarter Comparison

Total non-interest income was $2,139,000 for the second quarter of 2026 compared with $1,652,000 for the same period in 2025. The Bank completed the exchange offer to convert its Visa B-2 shares to B-3 and C shares; the Bank subsequently converted one-third of the Visa C shares to Visa A shares and recorded a $268,000 unrealized gain. Non-interest income for the three-months ended June 30, 2026 also included $96,000 of realized gains on the sales of investment securities and a $303,000 loss on the termination of an interest-rate swap acquired in the acquisition.

QNB originates residential mortgage loans for sale in the secondary market. Net gain on sale of loans was $36,000 for the second quarter of 2026 compared to a net gain $4,000 in the second quarter of 2025. The net gain or loss on residential mortgage sales is directly related to the volume of mortgages sold and the timing of the sales relative to the interest rate environment and includes any lower-of-cost-market on the loans held-for-sale. Residential mortgage loans to be sold are identified at origination.

Fees for services to customers increased $173,000 for the quarter ended June, 2026, as overdraft fees increased $46,000 and other deposit-related fees increased $127,000.

QNB provides securities and advisory services under the name QNB Financial Services. Retail brokerage and advisory fees increased $8,000 for the second quarter of 2026 compared to the same period in 2025. Advisory fees increased $31,000 and transactional fees decreased $23,000 for the second quarter of 2026 compared with the same period in 2025.

ATM and debit card income increased $87,000 due to usage and merchant fees remained level for the second quarter of 2026 compared with the same period in 2025. Bank-owned life insurance income increased $52,000. Other non-interest income increased $75,000 primarily due to increases in letter of credit fees of $44,000, mortgage and other loan servicing fees of $7,000, and credit card income of $7,000.

Six-Month Comparison

Total non-interest income was $3,940,000 for the six months ended June 30, 2026 compared with $3,236,000 for the same period of 2025, an increase of $704,000, compared to the same period of 2025. There was a $268,000 gain related to the conversion of Visa shares, $96,000 of realized gains on the sales of investment securities and a $303,000 loss on the termination of an interest-rate swap as discussed in the three-month comparison.

Net gain on sale of loans was $44,000 for the six months ended June 30, 2026 compared to a net gain $22,000 for the same period of 2025. Fees for service to customers increased $239,000 for the six months ended June 30, 2026, as overdraft fees increased $97,000 and other deposit-related fees increased $142,000.

Retail brokerage and advisory fees increased $70,000 for the six months ended June 30, 2026 compared to the same period in 2025. Advisory fees increased $57,000 and transactional fees increased $13,000 for the six months ended June 30, 2026 compared with the same period in 2025.

ATM and debit card income increased $172,000 due to usage and merchant fees increased $6,000 for the six months ended June 30, 2026 compared with the same period in 2025. Other non-interest income increased $77,000, primarily due to increases in letter of credit fees of $44,000, title company income of $17,000 and credit card income of $13,000.

NON-INTEREST EXPENSE

Total non-interest expense for 2026 includes three months of impact from the acquisition of Victory.


Non-Interest Expense Comparison
	For the Three Months Ended June 30,				Change from prior year						For the Six Months Ended June 30,				Change from prior year
	2026		2025		Amount			Percent			2026		2025		Amount			Percent
Salaries and employee benefits	$	7,200	$	5,251	$	1,949			37.1	%	$	12,816	$	10,283	$	2,533			24.6	%
Net occupancy		767		546		221			40.5			1,452		1,160		292			25.2
Furniture and equipment		1,422		1,135		287			25.3			2,629		2,257		372			16.5
Marketing		242		250		(8	)		(3.2	)		600		439		161			36.7
Third-party services		1,193		788		405			51.4			2,007		1,450		557			38.4
Telephone, postage and supplies		150		120		30			25.0			273		244		29			11.9
State taxes		441		236		205			86.9			646		503		143			28.4
FDIC insurance premiums		302		269		33			12.3			494		543		(49	)		(9.0	)
Merger-related expenses		3,084		—		3,084		N/M				3,972		—		3,972		N/M
Other		1,635		967		668			69.1			2,685		2,052		633			30.8
Total	$	16,436	$	9,562	$	6,874			71.9	%	$	27,574	$	18,931	$	8,643			45.7	%

Quarter to Quarter Comparison

Total non-interest expense was $16,436,000 for the second quarter of 2026, an increase of $6,874,000 compared to the second quarter of 2025. For the three-month period of 2026, non-interest expense included merger-related cost of $3,084,000. Excluding merger-related costs, noninterest expense increased $3,790,000 for the second quarter of 2026, compared to the same period in 2025.

Salaries and benefits comprise the largest component of non-interest expense. QNB monitors, through the use of various surveys, the competitive salary and benefit information in its markets and makes adjustments when appropriate. Salaries and benefits expense increased $1,949,000 to $7,200,000 when comparing the two quarters. Salary expense and related payroll taxes increased $1,570,000 to $6,017,000 during the second quarter of 2026 compared to the same period in 2025. Medical and dental premiums, net of employee contributions, increased $253,000 and retirement expense increased $121,000 when comparing the two quarters.

Net occupancy and furniture and equipment expenses combined increased $508,000 when comparing the second quarters of 2026 and 2025. This is due primarily to increased software maintenance expense. Marketing expense remained fairly flat.

Third-party services are comprised of professional services, including legal, accounting, auditing and consulting services, as well as fees paid to outside vendors for support services of day-to-day operations. These support services include correspondent banking services, IT services, statement printing and mailing, investment security safekeeping and supply management services. Third party services expense increased $405,000 due to consulting costs. State taxes increased $205,000 due to the timing of tax credits received for qualified charitable contributions. FDIC insurance premiums increased $33,000.

Other non-interest expense increased $668,000 due to the amortization of the core deposit intangible related to the Victory acquisition of $332,000, and increase in director fees of $65,000, business development of $82,000, debit card expense of $50,000, bank service fees of $42,000, courier expense of $36,000, and make-whole agreement reserve related to the Visa share exchange of $23,000.

Six-Month Comparison

Total non-interest expense was $27,574,000 for the six months ended June 30, 2026, an increase of $8,643,000 compared to the same period of 2025. For the six-month period of 2026, non-interest expense included merger-related cost of $3,972,000. Excluding merger-related costs, noninterest expense increased $4,671,000 for the six months ended June 30, 2026, compared to the same period in 2025.

Salaries and benefits expense increased $2,533,000 to $12,816,000 when comparing the six months ended June 30, 2026 to the same period in 2025. Salary expense and related payroll taxes increased $2,031,000 to $10,822,000 during the six months ended June 30, 2026 compared to the same period in 2025. Medical and dental premiums, net of employee contributions, increased $365,000 and retirement expense increased $135,000 when comparing the six-month periods.

Net occupancy and furniture and equipment expenses combined increased $664,000 when comparing the six months ended June 30, 2026 to the same period in 2025. This is due primarily to increased software maintenance expense. Marketing expense increased $161,000 due public relations and advertising expense when comparing the six-month periods.

Third party services expense increased $557,000 due to consulting costs. State taxes increased $143,000 due to the timing of tax credits received for qualified charitable contributions. FDIC insurance premiums decreased $49,000 due to a decrease in the assessment rate.

Other non-interest expense increased $633,000, due to the reasons described above in the quarter-to-quarter comparison.

INCOME TAXES

QNB utilizes an asset and liability approach for financial accounting and reporting of income taxes. As of June 30, 2026, QNB’s net deferred tax asset was $13,384,000. The primary components of deferred taxes are deferred tax assets of which $12,550,000 relates to investment securities fair value adjustments, $2,749,000 relates to the allowance for credit losses on loans and $974,000 related to a federal net operating loss related to the acquisition of Victory, partly offset by a deferred tax liability on the core deposit intangible, resulting from the acquisition of Victory, of $1,546,000, deferred loan costs of $609,000 and depreciation of $597,000. As of December 31, 2025, QNB’s net deferred tax asset was $13,993,000 of which $12,747,000 is related to investment securities fair value adjustment and $1,984,000 related to the allowance for credit losses on loans, partly offset by a deferred tax liability on deferred loan costs of $581,000. The decrease in the balance of net deferred tax assets when comparing June 30, 2026 to December 31, 2025 was $609,000.

The realizability of deferred tax assets is dependent upon a variety of factors, including the generation of future taxable income, the existence of taxes paid and recoverable, the reversal of deferred tax liabilities and tax planning strategies. Based upon these and other factors, management believes it is more likely than not that QNB will realize the benefits of these remaining deferred tax assets except for a $1,112,000 deferred tax asset related to a state net operating loss.

Applicable income tax expense was $817,000 for the quarter ended June 30, 2026, compared to $1,005,000 for the quarter ended June 30, 2025. The effective tax rate for the second quarter of 2026 was 21.3% compared with 20.6% for the same period in 2025. Applicable income tax expense was $1,524,000 for the six months ended June 30, 2026, compared to $1,629,000 for the same period in 2025. The effective tax rate for the six months ended June 30, 2026 was 20.9% compared with 20.1% for the same period in 2025. The increase in the tax rates for 2026 were due to non-taxable merger-related expenses.

FINANCIAL CONDITION ANALYSIS

Financial service organizations are challenged to demonstrate they can generate sustainable and consistent earnings growth in a dynamic operating environment. Rate competition for quality loans is anticipated to continue through 2026. It is also anticipated that the rate competition for attracting and retaining deposits may increase in the remainder of 2026, which could result in a lower net interest margin and a decline in net interest income.

QNB’s primary business is accepting deposits and making loans to meet the credit needs of the communities it serves. Loans are the most significant component of earning assets and growth in loans to small businesses and residents of these communities has been a primary focus of QNB. Inherent within the lending function is the evaluation and acceptance of credit risk and interest rate risk. QNB manages credit risk associated with its lending activities through portfolio diversification, underwriting policies and procedures and loan monitoring practices. QNB is committed to make credit available to its customers.

Total assets at June 30, 2026 were $2,398,970,000 compared with $1,906,005,000 at December 31, 2025. QNB acquired $475,053,000 in assets due to the Victory Merger. Cash and cash equivalents increased $29,043,000 from $50,297,000 at December 31, 2025 to $79,340,000 at June 30, 2026; QNB acquired $20,550,000, net of cash paid for fractional shares due to the Victory Merger.

The fixed-income securities portfolio represents a significant portion of QNB’s earning assets and is also a primary tool in liquidity and asset/liability management. QNB actively manages its fixed income portfolio to take advantage of changes in the shape of the yield curve and changes in spread relationships in different sectors and for liquidity purposes. Management continually reviews strategies that will result in an increase in the yield or improvement in the structure of the investment portfolio, including monitoring credit and concentration risk in the portfolio. The available-for-sale securities portfolio decreased $25,852,000, due to maturities and prepayments of $68,094,000 and sales of $6,752,000; this was partly offset by purchases of $33,449,000; additionally, QNB acquired $12,605,000 in securities from Victory, which is net of the cancellation of $3,000,000 in subordinated notes issued by Victory and owned by QNB on the date on the merger.

Loans receivable increased $454,525,000; QNB acquired $408,379,000 in loans in the Victory Merger. Commercial loans increased $423,480,000, to $1,484,802,000 at June 30, 2026 compared to $1,061,322,000 at year-end 2025, and retail loans increased $31,075,000 to $232,264,000 at June 30, 2026, compared with $201,189,000 at year-end 2025.

Deposits grew $424,640,000 from December 31, 2025 to June 30, 2026; QNB acquired $409,165,000 in deposits in the Victory Merger. Non-interest-bearing demand deposits increased $76,163,000, with balances of $266,120,000 at June 30, 2026 compared with $189,957,000 at year-end 2025. Interest-bearing demand balances, excluding municipal deposits, increased $67,830,000 to $465,099,000, with increases in both business and retail interest-bearing checking products. Money market accounts increased $127,584,000, with increases in both personal and business customers. Savings increased $70,916,000 to $352,077,000 at June 30, 2026. Municipal deposit balances increased $24,213,000, to $161,798,000 from $137,585,000 at year-end. Municipal deposits can be volatile depending on the timing of deposits and withdrawals, and the cash flow needs of the school districts or municipalities. Municipal deposits increase as tax money is received from the local school districts during second and third quarters and it is anticipated that these funds will flow out for the subsequent twelve months as the schools use the funds for operations. These deposits provide an incremental funding source as they are used to fund loans as opposed to borrowing at a higher rate; this improves the net interest margin as it increases the spread related to the net interest margin.

Short-term borrowings decreased 6.4%, from $80,601,000 at December 31, 2025 to $75,428,000 at June 30, 2026. FHLB borrowings decreased $9,542,000. Commercial sweep accounts increased $4,369,000; these funds may be volatile based on businesses’ receipt and disbursement of funds and are offset by business non-interest-bearing demand accounts.

Subordinated debt increased $14,750,000; QNB acquired subordinated debt of $14,650,00 in the Victory Merger, which is net of the cancellation of $3,000,000 of subordinated notes issued by Victory and owned by QNB at the time of the Victory Merger.

LIQUIDITY

Liquidity represents an institution’s ability to generate cash or otherwise obtain funds at reasonable rates to satisfy demand for loans and deposit withdrawals. QNB attempts to manage its mix of cash and interest-bearing balances, Federal funds sold and investment securities to match the volatility, seasonality, interest sensitivity and growth trends of its loans and deposits. The Company manages its liquidity risk by measuring and monitoring its liquidity sources and estimated funding needs. Liquidity is provided from asset sources through repayments and maturities of loans and investment securities. The portfolio of investment securities classified as available for sale and QNB's policy of selling certain residential mortgage originations in the secondary market also provide sources of liquidity. Core deposits and cash management repurchase agreements have historically been the most significant funding source for QNB. These deposits and repurchase agreements are generated from a base of consumers, businesses and public funds primarily located in the Company’s market area.

Additional sources of liquidity are provided by the Bank’s membership in the FHLB. At June 30, 2026, the Bank had a maximum remaining borrowing availability with the FHLB of approximately $434,069,000, which is net of short-term borrowing outstanding of $56,458,000 and accrued interest payable. The maximum borrowing depends upon qualifying collateral assets and the Bank’s asset quality and capital adequacy. In addition, the Bank maintains unsecured Federal funds lines with four correspondent banks totaling $86,000,000. At June 30, 2026, there were no outstanding borrowings under these lines. Future availability under these lines is subject to the policies of the granting banks and may be withdrawn.

Liquid sources of funds, including cash, available-for-sale and equity investment securities, and loans held-for-sale have increased $3,608,000 since December 31, 2025, totaling $596,981,000 at June 30, 2026. The increase in the liquid sources of funds is primarily due to an increase in cash, partly offset by decrease in investments. Cashflows from investments of $41,397,0000 provided funding for loan growth of $45,540,000. Management expects these liquid sources will be adequate to meet normal fluctuations in loan demand or deposit withdrawals. The investment portfolio is expected to continue to provide sufficient liquidity, as municipal bonds are called or mature and cash flow on mortgage-backed and CMO securities continue to be steady.

Approximately $296,472,000 and $234,159,000 of available-for-sale debt securities at June 30, 2026 and December 31, 2025, respectively, were pledged as collateral for repurchase agreements and deposits of public funds and the FRB short-term borrowing. The level of pledged securities corresponds with the municipal deposit and repurchase agreement balances.

QNB is a member of the Certificate of Deposit Account Registry Services (CDARS) program offered by the Promontory Interfinancial Network, LLC. CDARS is a funding and liquidity management tool used by banks to access funds and manage their balance sheet. It enables financial institutions to provide customers with full FDIC insurance on time deposits over $250,000 that are placed in the program. QNB also has available Insured Cash Sweep (ICS), another program through Promontory Interfinancial Network, LLC, which is a product similar to CDARS, but one that provides liquidity like a money market or savings account.

CAPITAL ADEQUACY

A strong capital position is fundamental to support continued growth and profitability and to serve the needs of depositors. QNB's shareholders' equity at June 30, 2026 was $183,514,000, or 7.65% of total assets, compared with shareholders' equity of $129,563,000, or 6.80% of total assets, at December 31, 2025. Shareholders’ equity at June 30, 2026 included a negative adjustment of $43,788,000 compared to a negative adjustment of $46,470,000 at December 31, 2025, related to net unrealized holding losses, net of taxes, on investment securities available-for-sale. Without these adjustments, shareholders' equity to total assets would have been 9.31% and 9.02% at June 30, 2026 and December 31, 2025, respectively.

Average shareholders' equity and average total assets, both impacted with three months post-merger activity, were $157,846,000 and $2,154,199,000 for the six months ended June 30, 2026, an increase of 45.6% and 14.6%, respectively, from the averages for the six months ended June 30, 2025. The ratio of average total equity to average total assets was 7.33% for the six months ended June 30, 2026 compared to 5.77% for the same period in 2025.

Retained earnings at June 30, 2026 were impacted by six months of net income totaling $5,780,000 offset by dividends declared and paid of $3,41,000 for the six-month period. Stock issued for the Victory Merger totaled $47,103,000. QNB offers a Dividend Reinvestment and Stock Purchase Plan (the “DRIP”) to provide participants a convenient and economical method for investing cash dividends paid on the Company’s common stock in additional shares. The DRIP also allows participants to make additional cash purchases of stock. Stock purchases under the DRIP contributed $396,000 to capital during the six months ended June 30, 2026. The exercise of stock options contributed $1,019,000 to capital during the six months ended June 30, 2026.

The Board of Directors has authorized the repurchase of up to 200,000 shares of QNB common stock in open market or privately negotiated transactions. The repurchase authorization does not bear a termination date. As of June 30, 2026, 102,000 shares have been repurchased since the initial authorization in 2008 at an average price of $24.93 and a total cost of $2,543,000. There were no shares repurchased during the six months ended June 30, 2026 and 2025.

QNB is subject to various regulatory capital requirements as issued by Federal regulatory authorities. Regulatory capital is defined in terms of Tier 1 capital and Tier 2 capital. Risk-based capital ratios are expressed as a percentage of risk-weighted assets. Risk-weighted assets are determined by assigning various weights to all assets and off-balance sheet arrangements, such as letters of credit and loan commitments, based on associated risk.

The required minimum Common equity Tier 1 capital to risk-weighted assets ratio is 4.5%, the required minimum ratio of Tier 1 capital to risk-weighted assets is 6.0%, the required minimum ratio of Total Capital to risk-weighted assets is 8.0%, and the required minimum Tier 1 leverage ratio is 4.0%. A capital conservation buffer of 2.5% of risk-weighted assets also applies to avoid limitations on certain capital distributions.

The following table sets forth consolidated information for QNB:


	June 30,			December 31,
Capital Analysis	2026			2025
Regulatory Capital
Shareholders' equity	$	183,514		$	129,563
Net unrealized securities losses, net of tax		43,788			46,470
Deferred tax assets on net operating loss		(974	)		—
Disallowed intangible assets		(16,623	)		—
Common equity tier I capital		209,705			176,033

Tier 1 capital		209,705			176,033
Allowable portion:
Subordinated debt		48,850			40,000
Allowance for credit losses on loans and unfunded commitments		12,991			9,291
Total regulatory capital	$	271,546		$	225,324
Risk-weighted assets	$	1,899,158		$	1,420,934
Quarterly average assets for leverage capital purposes	$	2,423,875		$	1,951,115


	June 30,			December 31,
Capital Ratios	2026			2025
Common equity tier I capital / risk-weighted assets		11.04	%		12.39	%
Tier 1 capital / risk-weighted assets		11.04	%		12.39	%
Total regulatory capital / risk-weighted assets		14.30	%		15.86	%
Tier 1 capital / average assets (leverage ratio)		8.65	%		9.02	%

The capital ratios at June 30, 2026 include the impact of the Victory Merger and three months of post merger activity. At June 30, 2026, all capital ratios decreased since December 31, 2025 primarily due to the apportionment of equity acquired, net of disallowed intangible assets, to risk-based assets acquired. The Company remains well-capitalized by all applicable regulatory requirements as of June 30, 2026.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

MARKET RISK MANAGEMENT

Market risk reflects the risk of economic loss resulting from changes in interest rates and market prices. QNB’s primary market risk exposure is interest rate risk and liquidity risk. QNB’s liquidity position was discussed in a prior section.

QNB’s largest source of revenue is net interest income, which is subject to changes in market interest rates. Interest rate risk management seeks to minimize the effect of interest rate changes on net interest margins and interest rate spreads and to provide growth in net interest income through periods of changing interest rates. QNB’s Asset/Liability and Investment Management Committee (ALCO) is responsible for managing interest rate risk and for evaluating the impact of changing interest rate conditions on net interest income.

QNB uses computer simulation analysis to measure the sensitivity of projected earnings to changes in interest rates. Simulation considers current balance sheet volumes and the scheduled repricing dates, instrument level optionality, and maturities of assets and liabilities. It incorporates assumptions for growth, changes in the mix of assets and liabilities, prepayments, and average rates earned and paid. Based on this information, management uses the model to project net interest income under multiple interest rate scenarios.

A balance sheet is considered asset sensitive when its assets (investment securities and loans) reprice faster than its interest-bearing liabilities (deposits and borrowings). An asset sensitive balance sheet will produce relatively higher net interest income when interest rates rise and less net interest income when they decline. A balance sheet is considered liability sensitive when its liabilities (deposits and borrowings) reprice faster than its earning assets (investments securities and loans). A liability sensitive balance sheet will produce relatively less net interest income when interest rates rise and more net interest income when they decline. Based on our simulation analysis, management believes QNB’s interest sensitivity position at June 30, 2026 is asset sensitive.

The following table shows the estimated impact of changes in interest rates on net interest income as of June 30, 2026 and 2025 assuming instantaneous rate shocks, and consistent levels of assets and liabilities. Net interest income for the subsequent twelve months is projected to decrease when interest rates are higher than current rates.


Estimated Change in Net Interest Income
Changes in Interest rates	June 30,
(in basis points)	2026			2025
+300		1.30	%		3.61	%
+200		0.76	%		2.39	%
+100		0.23	%		1.40	%
-100		(0.52	)%		(1.78	)%
-200		(1.38	)%		(3.91	)%
-300		(3.38	)%		(7.12	)%

Computations of future effects of hypothetical interest rate changes are based on numerous assumptions and should not be relied upon as indicative of actual results. Assets and liabilities may react differently than projected to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag changes in market interest rates. Interest rate shifts may not be parallel.

Changes in interest rates can cause substantial changes in the amount of prepayments of loans and mortgage-backed securities, which may in turn affect QNB’s interest rate sensitivity position. Additionally, credit risk may rise if an interest rate increase adversely affects the ability of borrowers to service their debt. At June 30, 2026 QNB had two derivatives designated as fair value hedging instruments; these interest rate swaps had a notional value of $258,535,000.

QNB is not subject to foreign currency exchange or commodity price risk.

ITEM 4. CONTROLS AND PROCEDURES

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the consolidated financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition.

On April 1, 2026, QNB Corp. completed the acquisition of The Victory Bancorp, Inc. and its subsidiary. Management completed its process of integrating the acquired operations into its overall financial reporting process and has extended its oversight and monitoring processes that support internal control over financial reporting to include the acquired operations.

We evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report. No changes were made to our internal control over financial reporting during the three-month period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

QNB CORP. AND SUBSIDIARY

PART II. OTHER INFORMATION

June 30, 2026

Item 1. Legal Proceedings

No material proceedings.

Item 1A. Risk Factors

There were no material changes to the Risk Factors described in Item 1A in QNB’s Annual Report on Form 10-K for the period ended December 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

QNB did not repurchase shares of its common stock during the quarter ended June 30, 2026. The following provides certain information relating to QNB's stock repurchase plan.


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan		Maximum Number of Shares that may yet be Purchased Under the Plan

April 1, 2026 through April 30, 2026		—	$	—		—		98,000
May 1, 2026 through May 31, 2026		—		—		—		98,000
June 1, 2026 through June 30, 2026		—		—		—		98,000
Total		—	$	—		—		98,000

(1)

Transactions are reported as of trade dates.

(2)

QNB’s current stock repurchase plan was approved by its Board of Directors and announced on January 24, 2008, increased on February 9, 2009 and subsequently increased on April 27, 2021.

(3)

The total number of shares approved for repurchase under QNB’s current stock repurchase plan is 200,000.

(4)

QNB’s current stock repurchase plan has no expiration date.

(5)

QNB has no stock repurchase plan that it has determined to terminate or under which it does not intend to make further purchases.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

(a)

None.

(b)

None.

(c)

During the six months ended June 30, 2026, no director or officer of QNB adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits


Exhibit 3.1		Articles of Incorporation of Registrant, as amended. (Incorporated by reference to Exhibit 3(i) of Registrant’s Annual Report on Form 10-K, SEC File No. 0-17706, filed with the Commission on September 13, 2015.)

Exhibit 3.2		By-laws of Registrant, as amended March 24, 2026. (Incorporated by reference to Exhibit 3.1 of the Registrant's Report on Form 8-K, SEC File No. 0-17706, filed with the Commission on April 8, 2026.)

Exhibit 31.1		Section 302 Certification of Chief Executive Officer

Exhibit 31.2		Section 302 Certification of Chief Financial Officer

Exhibit 32.1		Section 1350 Certification of Chief Executive Officer

Exhibit 32.2		Section 1350 Certification of Chief Financial Officer

The following Exhibits are being furnished* as part of this report:


No.		Description

101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents*
104		Cover Page Interactive Data File (formatted as inline iXBRL and contained in Exhibit 101)

* These interactive data files are being furnished as part of this Quarterly Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


	QNB Corp.

Date: August 10, 2026	By:	/s/ David W. Freeman
		David W. Freeman
		Chief Executive Officer

Date: August 10, 2026	By:	/s/ Jeffrey Lehocky
		Jeffrey Lehocky
		Chief Financial Officer

Date: August 10, 2026	By:	/s/ Mary E. Liddle
		Mary E. Liddle
		Chief Accounting Officer, QNB Bank