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QNB CORP. (QNBC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 diluted EPS was $1.04, up 55% YoY from $0.67 and up 51% QoQ from $0.69, driven by a 2.69% net interest margin (vs 2.46% YoY; 2.51% QoQ) and net interest income growth; efficiency ratio improved to 66.39% from 70.65% in Q1 .
  • Consolidated net income rose to $3.883M (+58% YoY), with Bank net income of $4.679M and holding company loss of $(0.796)M, reflecting higher subordinated debt costs; ROE increased to 14.25% (vs 9.73% QoQ) .
  • Asset quality mixed: non-performing loans rose to 0.73% of loans due to one commercial relationship, but ~88% of non-accruals were current or <30 days past due; allowance coverage improved to 0.75% .
  • Dividend maintained at $0.38 per share in Q2 (payable 6/27/25); focus remains on cautious growth amid economic uncertainty, with management “cautiously optimistic” for H2 .
  • Wall Street consensus estimates were unavailable via S&P Global this quarter; revenue actual from S&P Global recorded at $14.45M*, consistent with reported NII + non-interest income [GetEstimates]* .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 2.69% (vs 2.51% QoQ; 2.46% YoY) on higher loan yields and corporate debt securities, lifting net interest income to $12.652M (+$2.060M YoY) .
  • Management tone constructive: “operating performance continued to improve… driven by an expanding net interest margin,” with stable loan and deposit balances and a strengthening pipeline, “cautiously optimistic about the second half” (David W. Freeman, CEO) .
  • Efficiency improved: tax‑equivalent efficiency ratio declined to 66.39% from 70.65% in Q1 and 73.26% YoY, reflecting operating leverage from NIM expansion .

What Went Wrong

  • Non-performing loans/loans rose to 0.73% (from 0.71% in Q1 and 0.16% in Q4) due to one commercial relationship, raising investor focus on credit normalization despite specific reserves and current pay status for most exposures .
  • Non-interest expense increased to $9.562M (+7% YoY), with IT services/consultants and fraud-related write-offs contributing; occupancy/equipment up on software maintenance and depreciation .
  • Holding company’s net loss widened to $(0.796)M (vs $(0.714)M in Q1), primarily from higher subordinated debt expense, tempering consolidated earnings contribution .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue (NII + Non-interest income) ($USD Millions)$12.06 $12.62 $13.12 $14.30
Net Income ($USD Millions)$2.47 $3.05 $2.58 $3.88
Diluted EPS ($USD)$0.67 $0.83 $0.69 $1.04
Net Interest Income ($USD Millions)$10.59 $10.98 $11.54 $12.65
Net Interest Margin (%)2.46% 2.38% 2.51% 2.69%
Efficiency Ratio (tax‑equiv) (%)73.26% 71.16% 70.65% 66.39%
ROA (%)0.57% 0.64% 0.54% 0.83%
ROE (%)10.73% 7.36% 6.24% 14.25%
Consensus Revenue Estimate ($USD Millions)N/A*N/A*N/A*N/A*
Revenue (S&P Global Actual) ($USD Millions)———$14.45*

Values marked with * retrieved from S&P Global.

Segment breakdown:

Segment Net IncomeQ2 2024Q4 2024Q1 2025Q2 2025
QNB Bank ($USD Millions)$1.94 $3.77 $3.29 $4.68
QNB Corp. ($USD Millions)$(0.52) $(0.72) $(0.71) $(0.80)
Consolidated ($USD Millions)$2.47 $3.05 $2.58 $3.88

KPIs and balance sheet metrics (period end):

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Loans Receivable ($USD Millions)$1,162.31 $1,216.05 $1,212.16 $1,218.54
Deposits ($USD Millions)$1,572.84 $1,628.54 $1,664.56 $1,651.67
NPL / Loans (%)0.18% 0.16% 0.71% 0.73%
ACL / Loans (%)0.76% 0.72% 0.77% 0.75%
Net Charge-offs (Recoveries) ($000)$12 $1 $(3) $(16)
Book Value ($)$25.57 $27.96 $29.17 $30.46

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash Dividend per ShareQ2 2025$0.38 (Q1 2025) $0.38 (declared 5/20/25; payable 6/27/25) Maintained

No formal revenue, margin, OpEx, OI&E, tax rate, or segment-specific guidance was provided in Q2 materials .

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available; themes tracked using press releases.

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Net Interest MarginNIM 2.38% in Q4; improvement cited from higher loan yields/higher-yield securities NIM expanded to 2.69%; loan yields and corporate debt securities drove uplift Improving
Loan/Deposit Growth2024 deposits +9.4% YoY; Q1 deposits +2.2% QoQ; loans slightly down QoQ Loan and deposit balances “remained stable, with modest increases” Stable/slight growth
Asset QualityNPL/loans 0.16% in Q4; rose to 0.69% in Q1 (one commercial relationship) NPL/loans 0.73%; ~88% of non-accruals current/<30 days; ACL 0.75% Mixed (elevated NPLs, strong coverage)
Operating Costs (IT/Fraud)Q1: higher bank shares tax, fraud, director fees; IT maintenance/depreciation higher Q2: higher IT services/consultants and fraud write-offs; occupancy/equipment up Cost pressure
Tax RateQ1 ETR 19.5% Q2 ETR 20.6% Slightly higher

Management Commentary

  • “Consistent with the first quarter, the Bank’s operating performance continued to improve in the second quarter, primarily driven by an expanding net interest margin that positively impacted net interest income… Looking ahead, we remain cautiously optimistic about the second half of the year” — David W. Freeman, President & CEO .
  • Commentary highlights: Loan growth primarily in commercial real estate; corporate debt securities increased portfolio yields; average rate paid on interest-bearing deposits decreased, while subordinated debt raised cost of funds modestly .

Q&A Highlights

No Q2 2025 earnings call transcript or Q&A was available in the document set; no Q&A highlights to report [ListDocuments earnings-call-transcript: none].

Estimates Context

  • S&P Global consensus estimates for EPS and revenue were unavailable for Q2 2025; # of estimates fields were blank [GetEstimates]*.
  • S&P Global recorded revenue actual (bank total revenue definition) at $14.45M for Q2 2025*, broadly consistent with reported net interest income plus non‑interest income [GetEstimates]* .
  • Implication: With no published consensus, sell‑side revisions will likely focus on NIM trajectory, asset quality normalization, and expense run‑rate; we expect models to reflect higher NIM and slightly higher credit costs based on disclosed trends .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings momentum: EPS up 55% YoY and 51% QoQ; NIM expansion and higher net interest income drove results despite elevated NPLs tied to a single relationship .
  • Credit watch: NPL ratio increased to 0.73%; however, ~88% of non-accruals remain current/<30 days and ACL coverage improved to 0.75% — monitor resolution of the flagged commercial relationship .
  • Cost discipline vs modernization: Efficiency improved, but IT services/consulting/fraud expenses rose; sustaining efficiency gains will require continued revenue leverage and cost control .
  • Balance sheet: Deposits stable and loans modestly higher QoQ; corporate debt securities boosted yields — continued cautious growth strategy in a challenging macro backdrop .
  • Capital returns: Dividend maintained at $0.38; book value climbed to $30.46 — supports total return while preserving flexibility .
  • Near-term trading: Positive narrative around NIM expansion could be offset by scrutiny on NPL uptick; lack of consensus estimates reduces “beat/miss” catalysts — watch management updates and any credit developments .
  • Medium-term thesis: Margin tailwinds from asset mix and securities strategy, stable deposit funding, and prudent credit reserving underpin earnings trajectory; key risks are credit normalization and expense creep in IT/fraud mitigation .