Executive Summary

Q3 2025 GAAP EPS was $0.98 (vs. $1.04 in Q2 and $0.91 in Q3’24) on net income of $3.65M; net interest margin expanded to 2.72% (vs. 2.69% in Q2 and 2.48% in Q3’24) as loan yields rose and deposit costs eased .
Core operating trends improved YoY: net interest income +$1.87M YoY, non-interest income ex-securities +15.4%, and lower provision vs. Q3’24; however, expenses rose on salary, IT and $519K merger costs, lifting the efficiency ratio to 68.09% (vs. 65.27% in Q3’24) .
Asset quality remains manageable despite a single commercial relationship driving NPLs to $8.95M (0.72% of loans); charge-offs were ~$12K with annualized net charge-offs at 0.00% for the quarter .
Strategic catalyst: all‑stock acquisition of The Victory Bancorp (0.5500 QNBC shares per Victory share; pro-forma assets nearly $2.4B; expected close Q4’25 or Q1’26), positioning for scale and earnings leverage post-integration .
No S&P Global consensus EPS or revenue estimates were available for Q3 2025; dividend maintained at $0.38/share (declared Aug 26, payable Sep 26) .

What Went Well and What Went Wrong

What Went Well
- Net interest margin expansion to 2.72% from 2.48% YoY on higher loan yields and lower deposit costs, driving a $1.87M YoY increase in net interest income .
- Non-interest income quality improved excluding markets: +15.4% YoY ex securities gains/losses as fees, cards, and brokerage strengthened .
- CEO tone constructive: “another quarter of strong performance, fueled by sustained growth in Net Interest Income… stable credit environment… strategic merger with Victory Bancorp” (David W. Freeman) .
What Went Wrong
- Expense pressure: total non‑interest expense rose to $10.18M on salary/benefits, software, and $519K merger costs; efficiency ratio worsened to 68.09% vs. 65.27% in Q3’24 .
- Asset quality optics: NPLs increased to $8.95M (0.72% of loans) from $1.98M at 12/31/24 due to one commercial relationship, though most are current or <30 days past due .
- Sequential earnings drift: net income eased to $3.65M from $3.88M in Q2 as higher opex offset NIM gains; corporate entity loss widened (subordinated debt drag, lower non-interest income YoY comps) .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Net Interest Income ($000)	11,127	11,537	12,652	12,998
Non-Interest Income ($000)	1,967	1,584	1,652	1,847
Provision for Credit Losses ($000)	159	550	(146)	93
Non-Interest Expense ($000)	8,636	9,369	9,562	10,182
Net Income ($000)	3,338	2,578	3,883	3,648
Diluted EPS ($)	0.91	0.69	1.04	0.98
Net Interest Margin (%)	2.48%	2.51%	2.69%	2.72%
Efficiency Ratio (%)	65.27%	70.65%	66.39%	68.09%
ROA (%)	0.74%	0.54%	0.83%	0.76%
ROE (%)	13.25%	6.24%	14.25%	12.49%

Note: The narrative section cites $98K provision for credit losses on loans in Q3; the consolidated selected financial data table shows $93K provision for credit losses—this small variance likely reflects timing/mix of loans and unfunded commitments .

Segment/disaggregation (Net Income, $000)

QNB Bank vs QNB Corp (loss) vs Consolidated

Entity	Q1 2025	Q2 2025	Q3 2025
QNB Bank	3,292	4,679	4,837
QNB Corp	(714)	(796)	(1,189)
Consolidated	2,578	3,883	3,648

KPIs and Asset Quality (period-end unless noted)

KPI	Q1 2025	Q2 2025	Q3 2025
Non-Performing Loans ($000)	8,651	8,947	8,947
NPL / Loans (%)	0.71%	0.73%	0.72%
Allowance / Loans (%)	0.77%	0.75%	0.74%
Net Charge-offs (Recoveries) ($000, quarterly)	(3)	(16)	12
Deposits ($000)	1,664,555	1,651,667	1,681,540
Loans Receivable ($000)	1,212,162	1,218,539	1,246,529
Cash & Equivalents ($000)	81,557	66,471	66,331

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend per Share	Q3 2025	$0.38 (Q2’25 actual)	$0.38 declared; payable Sep 26, 2025	Maintained
Merger Timeline (Victory Bancorp)	Q3 2025	N/A	Expected close Q4 2025 or Q1 2026	New disclosure
Pro-forma Assets Post-Merger	Q3 2025	N/A	“Nearly $2.4B” expected at close	New disclosure

No formal quantitative revenue/EPS guidance was provided in the quarter .

Earnings Call Themes & Trends

No Q3 2025 earnings call transcript was available; themes reflect Management’s press releases.

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
Net interest margin and NII	NIM expanding; NII growth at “all-time high” in Q1; continued expansion in Q2	NIM 2.72%; NII +$1.87M YoY on higher loan yields, lower deposit costs	Improving
Credit quality	Reserve build in Q1; NPLs elevated from single relationship; mostly current; modest recoveries in Q2	NPLs steady at $8.95M (0.72%); minimal charge-offs; stable environment	Stable with isolated issue
Operating expenses	Rising IT/software and fraud write-offs in H1	Higher salaries/benefits; $519K merger costs; IT/consulting up	Pressure from growth & merger
Macro	Customers cautious amid uncertainty in Q2	“Economic pressures, including tariffs and inflation,” but resilience cited	Mixed, cautious optimism
Strategic actions	None	Definitive agreement to acquire Victory; 0.5500 exchange ratio	Positive catalyst

Management Commentary

“We are pleased to share another quarter of strong performance, fueled by sustained growth in Net Interest Income and continued increases in both loan and deposit balances… our stable credit environment reflects the continued resilience of consumers and businesses… This quarter also marked a pivotal milestone… strategic merger with Victory Bancorp” — David W. Freeman, CEO .
Q2 tone: “operating performance continued to improve… expanding net interest margin… customers’ continued cautious borrowing and spending amid ongoing economic uncertainty” — David W. Freeman .
Q1 tone: “growth in net interest income at an all-time high… increase in average interest rates received on our loan portfolio… prudent to modestly increase loan loss reserves… watch asset quality” — David W. Freeman .

Q&A Highlights

No earnings call transcript was available for Q3 2025; no Q&A items to report [ListDocuments showed none for earnings-call-transcript in 2025].

Estimates Context

S&P Global (Capital IQ) consensus for Q3 2025 EPS and revenue was unavailable; coverage depth appears limited for QNBC, and the API returned no consensus figures for EPS or target price (and revenue consensus showed only actuals, not estimates) [GetEstimates].
Implication: We cannot characterize the quarter as a consensus beat/miss; estimate revisions may be limited by sparse coverage. Values retrieved from S&P Global.

Key Takeaways for Investors

NIM momentum sustained: NIM rose to 2.72% (from 2.69% in Q2 and 2.48% in Q3’24) on higher loan yields and lower deposit costs, supporting core earnings power even as opex rose .
Operating leverage headwind near term: total non‑interest expense increased to $10.18M, including $519K merger costs and IT/consulting spend; efficiency ratio ticked up to 68.09% vs. 66.39% in Q2 .
Asset quality manageable: NPLs are elevated due to one relationship (0.72% of loans), but 87% are current or <30 days past due and net charge-offs were de minimis in Q3, limiting P&L impact .
Growth footing intact: Loans reached $1.25B (+2.5% YTD) and deposits $1.68B (+3.3% YTD), with cash strengthening and long-term debt paid down $30M year-to-date .
Strategic M&A catalyst: Victory Bancorp deal adds scale (pro-forma nearly $2.4B assets); all-stock structure (0.5500 exchange ratio) with expected close in Q4’25/Q1’26 offers medium-term earnings/efficiency upside post-integration .
Dividend stability: $0.38/share declared for Q3; ongoing return of capital alongside organic and inorganic growth initiatives .
Near-term focus: monitor expense trajectory (merger and IT), integration milestones, and normalization of the single-name NPL while leveraging NIM tailwinds and fee momentum ex-securities .

Additional Notes on Drivers

YoY revenue mix: non-interest income was lower due to lapping prior-year securities gains; excluding markets, fee lines rose double digits YoY, particularly cards and brokerage .
Corporate drag: QNB Corp net loss widened to $(1.19)M (subordinated debt costs, lower non-interest income vs. prior-year equity gains); expect this to normalize as growth scale and funding mix evolve .

QNB CORP. (QNBC)·Q3 2025 Earnings Summary