QNB CORP. REPORTS EARNINGS FOR SECOND QUARTER 2026

QUAKERTOWN, PA (July 28, 2026) QNB Corp. (the “Company” or “QNB”) (OTCQX: QNBC), the parent company of QNB Bank (the “Bank”), reported net income for the second quarter of 2026 of $3,015,000 or $0.60 per share on a diluted basis. The acquisition of Victory Bancorp, Inc. ("Victory"), a highly complementary community banking franchise headquartered in Limerick, Pennsylvania, was officially closed on April 1, 2026, 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. Net income for the second quarter of 2026 included merger-related cost, net of tax, of $2,227,000. Excluding the impact of the merger-related costs, net income was $ 5,242,000 and adjusted diluted earnings per share was $1.05*. This compares to net income of $3,883,000, or $1.04 per share on a diluted basis, for the same period in 2025. For the six months ended June 30, 2026, QNB reported net income of $5,780,000, or $1.32 per share on a diluted basis. Net income included merger-related costs, net of tax, of $3,249,000. Excluding the impact of the merger-related cost, net income was $ 9,029,000 and adjusted diluted earnings per share was $2.06*. This compares to net income of $6,461,000, or $1.74 per share on a diluted basis, reported for the same period in 2025. The merger-related costs are significant one-time costs and are not normal recurring operating expenses.

For the second quarter ended June 30, 2026, the annualized rate of return on average assets (ROAA) and average shareholders’ equity (ROAE) was 0.50% and 6.65%, respectively. Adjusted ROAA and ROAE, excluding the impact of the merger-related cost, for the three-month period of 2026 was 0.88% and 11.56%, respectively*. This compares with 0.83% and 14.25%, respectively, for the second quarter 2025. For the six months ended June 30, 2026, QNB reported ROAA and ROAE was 0.54% and 7.38%, respectively. Adjusted ROAA and ROAE, excluding the impact of the merger-related cost, for the six-month period of 2026 was 0.85% and 11.54%, respectively*. This compares with 0.69% and 12.02%, respectively, for the same period in 2025.

* QNB 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. QNB believes that investors may use these non-GAAP measures to analyze QNB’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 attached table "Impact of Merger-Related Costs--GAAP to Non-GAAP Measure Reconciliation."

The operating performance of the Bank, a wholly-owned subsidiary of QNB Corp., 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 $400,000, related to the subordinated debt acquired in the acquisition, and an increase in non-interest expense of $790,000, primarily due to merger-related expenses of $407,000.

The following table presents disaggregated net income (loss):

Total assets as of June 30, 2026 were $2,398,970,000 compared with $1,906,005,000 at December 31, 2025. Loans receivable increased to $1,716,599,000 and total deposits increased to $2,067,151,000.

“Our second-quarter results reflect the strength of our core banking franchise and the successful completion of the Victory Bancorp acquisition,” said Dave Freeman, President and Chief Executive Officer. “While reported earnings were impacted by merger-related expenses, adjusted results demonstrated meaningful earnings growth driven by higher net interest income, improved net interest margin, and the addition of a quality loan and deposit portfolio. We are pleased with the early results of the integration and remain focused on delivering long-term value for our shareholders, customers, and communities.”

Net Interest Income and Net Interest Margin

Net interest income for the quarter ended June 2026 totaled $18,351,000, an increase of $5,699,000, from the same period in 2025. Tax-equivalent net interest margin was 3.16% for the second quarter of 2026 and 2.69% for the same period in 2025, an increase of 47 basis points. Tax-equivalent net interest margin was 3.00% for the six months ended June 30, 2026, compared with 2.60% for the same period in 2025.

The yield on earning assets was 5.26% for the second quarter of 2026 compared to 4.90% for the second quarter of 2025, an increase of 36 basis points. For the six-month period ended June 30, 2026, the yield on earning assets was 5.06%, compared with 4.85% for the same period in 2025; an increase of 21 basis points.

The cost of interest-bearing liabilities was 2.54% for the second quarter ended June 30, 2026, compared with 2.68% for the same period in 2025, a decrease of 14 basis points. For the six-month period ended June 30, 2026, the cost of interest-bearing liabilities was 2.49%, compared with 2.72% for the same period in 2025, a decrease of 23 basis points.

Quarterly average loan growth of $493,981,000 was offset by an increase in average deposits of $426,776,000 an increase in subordinated debt of $14,850,000 and an increase in shareholders' equity of $72,612,000, primarily due to the acquisition as $408,379,000 in loans, $409,165,000 in deposits and $47,101,000 in equity were added upon the close of the Victory merger. Loan growth was primarily in commercial real estate, which comprised 54.4% of average earning assets in the second quarter of 2026 compared with 45.5% for the same period in 2025, and the increases in both rates and volume in commercial real estate loans contributed to the 29 basis-point increase in the yield on loans. The average rate paid on interest-bearing deposits decreased 12 basis points. The ten basis point decrease in the rate on subordinated debt was due to volume.

Asset Quality, Provision for Credit Losses on Loans and Allowance for Credit Losses QNB recorded a $218,000 provision for credit losses on loans in the second quarter of 2026 compared to a $145,000 reversal of provision in the second quarter of 2025. QNB recorded a $521,000 provision for credit losses on loans in the six months ended June 30, 2026 compared to a $406,000 provision in the same period of 2025. QNB added $3,020,00 in allowance for credit losses due to the acquisition. QNB's allowance for credit losses on loans of $12,770,000 represents 0.74% of loans receivable at June 30, 2026, compared to $9,215,000, or 0.73% of loans receivable at December 31, 2025. Net loan recoveries were $1,000 for the quarter ended June 30, 2026, compared with recoveries of $16,000 for the same period in 2025. Net recoveries for the six months ended June 30, 2026 were $14,000 compared with recoveries of $19,000 for the same period of 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 $10,418,000, or 0.61% of loans receivable at June 30, 2026, compared with $8,793,000, or 0.70% of loans receivable at December 31, 2025. The increase was primarily due to two commercial and one retail customer. In cases where there is a collateral shortfall on non-accrual loans, specific reserves have been established based on updated collateral values even if the borrower continues to pay in accordance with the terms of the agreement. 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. Commercial loans classified as substandard or doubtful loans totaled $49,159,000 at June 30, 2026, compared with $39,516,000 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.

Non-Interest Income

Total non-interest income for 2026 includes three months of impact from the acquisition. Noninterest income was $2,139,000 for the second quarter of 2026 compared with $1,652,000 for the same period in 2025; and $3,940,000 for the six months ended June 30, 2026 compared with $3,236,000 for the same period of 2025. The Bank also 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- and six-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.

Fees for services to customers increased $173,000 for the quarter ended June, 2026, as overdraft fees increased $44,000 and other deposit-related fees increased $127,000. ATM and debit card income increased $87,000. Retail brokerage and advisory income increased $8,000 for the same period. Other non-interest income increased $126,000 for the same period due to an increase in bank-owned life insurance of $52,000, an increase in letter of credit fees of $44,000 and an increase in gains on sales of loans of $32,000.

Fees for services to customers increased $239,000 for the six months ended June, 2026, as overdraft fees increased $97,000 and other deposit-related fees increased $142,000. ATM and debit card income increased $172,000. Retail brokerage and advisory income increased $70,000 for the same six-month period. Other non-interest income increased $140,000 for the six-month period due to an increase in bank-owned life insurance of $57,000, an increase in letter of credit fees of $43,000 and an increase in gains on sales of loans of $22,000.

Non-Interest Expense

Total non-interest expense for 2026 includes three months of impact from the acquisition. Total non-interest expense was $16,436,000 for the second quarter of 2026 compared with $9,562,000 for the same period in 2025. Excluding pre-tax merger-related costs of $3,084,000, non-interest expense increased $3,790,000 for the second quarter of 2026, compared to the same period in 2025. Total non-interest expense was $27,574,000 for the six months ended June 30, 2026 compared with $18,931,000 for the same period in 2025. Excluding pre-tax merger-related costs of $3,972,000, non-interest 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 $1,949,000 to $7,200,000 in the second quarter of 2026, compared to the same period in 2025. Salary expense and related payroll taxes increased $1,570,000 to $6,017,000 and benefits expense increased $379,000 to $1,183,000 when comparing the two periods.

For the second quarter of 2026, net occupancy and furniture and equipment expense increased $508,000 to $2,189,000; software maintenance increased $291,000, rental expense increased $135,000 and other maintenance, utilities and costs increased $82,000. Other non-interest expense for the second quarter increased $1,333,000 due to an increase in third-party services of $405,000, core deposit amortization of $332,000, bank shares tax increased $205,000, business development cost increased $82,000, director fees increased $65,000, debit card expense increased $50,000, courier expense increased $36,000, FDIC insurance increased $33,000, communications and supplies increased $30,000, additional make-whole agreement reserve of $23,000 related the Visa stock exchange, regulatory assessments increased $22,000 and various other expenses increased a net total of $50,000. Six-month results for non-interest expense are similar to those discussed for the second quarter of 2026.

Income Taxes

Provision for income taxes decreased $188,000 to $817,000 in the second quarter of 2026 and decreased $105,000 to $1,524,000 for the six months ended June 30, 2026, due to lower taxable income, compared with the same periods in 2025. The effective tax rate increased for both the three- and six-month periods ended June 30, 2026 to 21.3% and 20.9%, respectively, from 20.6% and 20.1% for the same periods in 2025, respectively, due non-taxable merger-related costs.

About the Company

QNB Corp. is the holding company for QNB Bank, which is headquartered in Quakertown, Pennsylvania. QNB Bank currently operates fourteen branches in Bucks, Lehigh and Montgomery Counties along with two loan production offices in Montgomery and Berks Counties. The Bank offers commercial, small business, and personal customers banking services, borrowing solutions, and cash management tools in the communities they serve. In addition, the Company provides securities and advisory services under the name of QNB Financial Services through a registered Broker/Dealer and Registered Investment Advisor, and title insurance as a member of Laurel Abstract Company LLC. More information about QNB Corp. and QNB Bank is available at QNBBank.com.

Forward Looking Statement

This press release may contain forward-looking statements as defined in the Private Securities Litigation Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various factors. Such factors include the possibility that increased demand or prices for the Company’s financial services and products may not occur, changing economic and competitive conditions, technological developments, and other risks and uncertainties, including those detailed in the Company’s filings with the Securities and Exchange Commission, including "Item lA. Risk Factors," set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.