QNB CORP. (QNBC)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 EPS of $0.69 was flat year over year (Q1 2024: $0.71) as margin expansion and higher non-interest income at the bank level were offset by higher provision expense and holding-company interest from 2024 sub-debt; no formal Street consensus appears available to grade a beat/miss .
• Net interest margin expanded to 2.51% (from 2.38% in Q4 and 2.39% in Q1’24) and net interest income rose to $11.54MM, a quarterly high, driven by higher loan yields and lower average deposit rates, partly offset by higher cost of funds from sub-debt .
• Asset quality mixed: allowance coverage rose to 0.77% of loans, but non-performing loans spiked to 0.71% of loans (narrative references 0.69%), largely due to one commercial relationship; management increased reserves prudently and is monitoring closely .
• Capital return and visibility improved: dividend raised to $0.38 (from $0.37 in Q4) and shares upgraded to the OTCQX market in March, potential incremental liquidity/visibility catalysts .
• Near-term stock drivers: continued NIM expansion and dividend growth vs. watch items around nonperformer resolution and fraud/other expense line trends .

What Went Well and What Went Wrong

• What Went Well

  • Margin and NII: NIM expanded to 2.51% and net interest income increased to $11.54MM; CEO: “growth in net interest income at an all-time high in the first quarter,” aided by higher loan yields and lower deposit rates .
  • Balance sheet momentum: Average loans grew to $1.21B and deposits held steady at $1.63B; period-end deposits rose 2.2% q/q to $1.665B with cash up 61% q/q improving liquidity .
  • Capital & shareholder returns: Dividend increased to $0.38 and OTCQX listing enhances trading visibility .

• What Went Wrong

  • Credit: Provision of $0.55MM (vs. a $0.09MM reversal in Q1’24) and jump in non-performers to 0.71% of loans (narrative references 0.69%) on one commercial relationship; management added specific reserves .
  • Expense pressure: Total non-interest expense rose 6.1% y/y on bank shares tax timing/capital, higher software maintenance/depreciation, fraud write-offs, and director fees .
  • Holding company drag: Subordinated debt issued in 2024 reduced holding-company net interest income, weighing on consolidated results vs. bank-only strength .

Financial Results

Balance sheet and asset quality

Note: Management narrative also cites NPLs of $8.41MM (0.69%) at 3/31/25, “primarily due to one commercial customer,” versus 0.71% in the data table .

Segment breakdown (Net income)

Estimates vs. Actuals (S&P Global)

Guidance Changes

Earnings Call Themes & Trends

Note: No Q1 2025 earnings call transcript was filed; themes reflect press-release commentary.

Management Commentary

• “We are pleased with the growth in net interest income at an all-time high in the first quarter, driven by an increase in average interest rates received on our loan portfolio, combined with a decrease in average interest rates paid on deposit balances.” — David W. Freeman, President & CEO .
• “We believed it prudent to modestly increase our loan loss reserves in the first quarter and will continue to closely watch asset quality as the economic environment develops…” — David W. Freeman .
• Prior quarter tone: “We are focused on top-line growth, prudent use of capital, and managing our balance sheet… optimistic moving into 2025.” — CEO on Q4 2024 .
• Prior quarter emphasis: “Successful Sub-Debt issuance has further strengthened our Capital position and will enable continued growth in the future.” — CEO on Q3 2024 .

Q&A Highlights

• No Q1 2025 earnings-call transcript or Q&A was filed; no call highlights available for this quarter [earnings-call-transcript: none found].

Estimates Context

• S&P Global shows no published consensus for Q1 2025 EPS or revenue for QNB Corp.; as such, results cannot be graded against Street estimates this quarter (S&P Global).
• Where investors typically benchmark “revenue” for community banks as NII + fee income, QNB delivered NII of $11.54MM and non-interest income of $1.58MM in Q1 2025, reflecting core spread improvement and stable fees, absent securities gains/losses .

Key Takeaways for Investors

• Core spread improvement is the key positive: NIM expanded to 2.51% and NII hit a quarterly high, driven by loan repricing and lower deposit costs; sustaining this trajectory is central to the bull case .
• Credit watch item: Non-performers rose sharply (to 0.71% of loans; narrative 0.69%) tied to a single commercial relationship; management increased reserves and highlighted collateral and specific reserves—monitor resolution timing and migration closely .
• Expense discipline required: Bank shares tax timing/capital, software maintenance/depreciation, fraud write-offs, and higher director fees pushed non-interest expense higher; watch efficiency ratio and fraud trends in subsequent quarters .
• Balance sheet/liquidity: Deposits rose 2.2% q/q and cash increased 61% q/q; stable funding at lower average deposit rates supports further NIM resilience if credit normalizes .
• Capital & return: Dividend increased to $0.38 and OTCQX uplisting may broaden investor access/visibility; incremental catalysts if credit normalizes and margin expansion persists .
• Near-term setup: Without Street estimates, stock narrative likely hinges on NIM sustainability vs. credit headlines; a clean credit update could be a positive catalyst, whereas further nonperformer migration would be an overhang .
• Medium-term thesis: Commercial real estate–led loan mix and disciplined balance sheet management can compound NII if deposit costs remain contained; monitor sub-debt cost drag at the holding company and any incremental securities repositioning .