QNB Corp. Reports Earnings For First Quarter 2024
- The Bank reported net income of $2,594,000 for the first quarter of 2024, a decrease from $4,118,000 in the same period in 2023.
- Net interest income decreased by $249,000, leading to a net interest margin of 2.39% for the first quarter of 2024.
- Total assets increased to $1,716,081,000, with loans receivable growing by $29,083,000 and total deposits increasing by $47,475,000.
- Non-interest income rose to $1,836,000, driven by a net realized gain on the sale of investments.
- Total non-interest expenses were $8,833,000, with significant increases in salaries and benefits expenses.
- The provision for income taxes decreased to $663,000 for the first quarter of 2024.
- Net income and net interest income declined compared to the same period in 2023.
- Interest margin compression and increased non-interest expenses affected the operating performance.
- There was a decrease in the provision for credit losses on loans, but net loan charge-offs were reported.
- Short-term borrowing declined significantly, impacting the financial position of the Bank.
- Non-interest expenses, specifically salaries and benefits, saw substantial increases, affecting overall expenses.
QUAKERTOWN, Pa., April 23, 2024 (GLOBE NEWSWIRE) -- QNB Corp. (the “Company” or “QNB”) (OTC Bulletin Board: QNBC), the parent company of QNB Bank (the “Bank”), reported net income for the first quarter of 2024 of
For the quarter ended March 31, 2024, the annualized rate of return on average assets and average shareholders’ equity was
The operating performance of the Bank, a wholly-owned subsidiary of QNB Corp., declined for the quarter ended March 31, 2024, in comparison with the same period in 2023, due primarily to interest margin compression causing a
The following table presents disaggregated net income:
Three months ended, | |||||||||||
3/31/2024 | 3/31/2023 | Variance | |||||||||
QNB Bank | $ | 2,331,000 | $ | 4,287,000 | $ | (1,956,000 | ) | ||||
QNB Corp | 263,000 | (169,000 | ) | 432,000 | |||||||
Consolidated net income | $ | 2,594,000 | $ | 4,118,000 | $ | (1,524,000 | ) | ||||
Total assets as of March 31, 2024 were
"Looking at our fundamentals, the Bank showed solid core performance for the first quarter of 2024, including deposit growth, loan growth, and a significant reduction in short-term borrowings,” stated David W. Freeman, President and Chief Executive Officer. Freeman continued, “We are seeing an equilibrium in the demand for higher rates paid on deposits, and our variable rate loans are beginning to reprice from historic lows, which should help with the interest margin pressure we have been experiencing. The credit quality of our loan book remains consistently strong. Areas impacting our earnings include our securities portfolio, increased expenses for salaries and benefits, and necessary fixed expenses. We are stewarding the company in the best interest of our stakeholders, focusing on continued core performance in alignment with long-term strategic objectives.”
Net Interest Income and Net Interest Margin
Net interest income for the quarter ended March 31, 2024 totaled
The yield on earning assets was
Proceeds from the growth in average deposits and proceeds from payments received on investment securities over the past year were invested in loans and other interest earning assets, and used to pay down short-term borrowings. Loan growth was primarily in commercial real estate, which comprised
Asset Quality, Provision for Credit Losses on Loans and Allowance for Credit Losses
QNB reversed
Total non-performing loans, which represent loans on non-accrual status, loans past due 90 days or more and still accruing interest and modified loans, were
Non-Interest Income
Total non-interest income was
Fees for service to customers increased
Non-Interest Expense
Total non-interest expense was
Net occupancy and furniture and equipment expense increased
Provision for income taxes decreased
About the Company
QNB Corp. is the holding company for QNB Bank, which is headquartered in Quakertown, Pennsylvania. QNB Bank currently operates twelve branches in Bucks, Montgomery and Lehigh Counties and offers commercial and retail banking services in the communities it serves. 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, 2023. 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.
QNB Corp. | |||||||||||||||||||
Consolidated Selected Financial Data (unaudited) | |||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Balance Sheet (Period End) | 3/31/24 | 12/31/23 | 9/30/23 | 6/30/23 | 3/31/23 | ||||||||||||||
Assets | $ | 1,716,081 | $ | 1,706,318 | $ | 1,684,392 | $ | 1,650,586 | $ | 1,626,499 | |||||||||
Cash and cash equivalents | 50,963 | 62,657 | 55,141 | 34,824 | 14,201 | ||||||||||||||
Investment securities | |||||||||||||||||||
Debt securities, AFS | 481,596 | 490,181 | 505,390 | 527,741 | 537,904 | ||||||||||||||
Equity securities | 6,217 | 5,910 | 4,765 | 5,424 | 11,908 | ||||||||||||||
Loans held-for-sale | — | 549 | 446 | 810 | 388 | ||||||||||||||
Loans receivable | 1,122,616 | 1,093,533 | 1,060,450 | 1,029,744 | 1,011,956 | ||||||||||||||
Allowance for loan losses | (8,738 | ) | (8,852 | ) | (8,542 | ) | (8,365 | ) | (8,191 | ) | |||||||||
Net loans | 1,113,878 | 1,084,681 | 1,051,908 | 1,021,379 | 1,003,765 | ||||||||||||||
Deposits | 1,536,188 | 1,488,713 | 1,483,333 | 1,449,765 | 1,424,590 | ||||||||||||||
Demand, non-interest bearing | 188,260 | 185,098 | 192,226 | 212,396 | 212,259 | ||||||||||||||
Interest-bearing demand, money market and savings | 990,451 | 988,634 | 1,000,921 | 962,042 | 962,315 | ||||||||||||||
Time | 357,477 | 314,981 | 290,186 | 275,327 | 250,016 | ||||||||||||||
Short-term borrowings | 55,088 | 94,094 | 96,703 | 90,845 | 110,192 | ||||||||||||||
Long-term debt | 20,000 | 20,000 | 20,000 | 20,000 | — | ||||||||||||||
Shareholders' equity | 93,686 | 90,824 | 74,081 | 80,945 | 83,874 | ||||||||||||||
Asset Quality Data (Period End) | |||||||||||||||||||
Non-accrual loans | $ | 2,001 | $ | 1,940 | $ | 1,893 | $ | 4,794 | $ | 4,561 | |||||||||
Loans past due 90 days or more and still accruing | — | — | — | — | — | ||||||||||||||
Modified/restructured loans | — | — | — | — | — | ||||||||||||||
Non-performing loans | 2,001 | 1,940 | 1,893 | 4,794 | 4,561 | ||||||||||||||
Other real estate owned and repossessed assets | — | — | — | — | — | ||||||||||||||
Non-performing assets | $ | 2,001 | $ | 1,940 | $ | 1,893 | $ | 4,794 | $ | 4,561 | |||||||||
Allowance for loan losses | $ | 8,738 | $ | 8,852 | $ | 8,542 | $ | 8,365 | $ | 8,191 | |||||||||
Non-performing loans / Loans excluding held-for-sale | 0.18 | % | 0.18 | % | 0.18 | % | 0.47 | % | 0.45 | % | |||||||||
Non-performing assets / Assets | 0.12 | % | 0.11 | % | 0.11 | % | 0.29 | % | 0.28 | % | |||||||||
Allowance for loan losses / Loans excluding held-for-sale | 0.78 | % | 0.81 | % | 0.81 | % | 0.81 | % | 0.81 | % | |||||||||
QNB Corp. | |||||||||||||||
Consolidated Selected Financial Data (unaudited) | |||||||||||||||
(Dollars in thousands, except per share data) | Three months ended, | ||||||||||||||
For the period: | 3/31/24 | 12/31/23 | 9/30/23 | 6/30/23 | 3/31/23 | ||||||||||
Interest income | $ | 19,569 | $ | 19,257 | $ | 18,497 | $ | 15,865 | $ | 15,463 | |||||
Interest expense | 9,401 | 9,065 | 8,284 | 6,532 | 5,046 | ||||||||||
Net interest income | 10,168 | 10,192 | 10,213 | 9,333 | 10,417 | ||||||||||
Provision for credit losses | (86 | ) | 293 | 459 | 209 | (1,805 | ) | ||||||||
Net interest income after provision for credit losses | 10,254 | 9,899 | 9,754 | 9,124 | 12,222 | ||||||||||
Non-interest income: | |||||||||||||||
Fees for services to customers | 420 | 414 | 421 | 414 | 402 | ||||||||||
ATM and debit card | 636 | 687 | 685 | 704 | 659 | ||||||||||
Retail brokerage and advisory income | 93 | 207 | 219 | 202 | 234 | ||||||||||
Net realized (loss) gain on investment securities | 377 | (2,262 | ) | 131 | 519 | (465 | ) | ||||||||
Unrealized gain (loss) on equity securities | (30 | ) | 904 | (138 | ) | (573 | ) | 57 | |||||||
Net gain on sale of loans | 15 | 11 | 4 | (5 | ) | 6 | |||||||||
Other | 325 | 322 | 433 | 319 | 326 | ||||||||||
Total non-interest income | 1,836 | 283 | 1,755 | 1,580 | 1,219 | ||||||||||
Non-interest expense: | |||||||||||||||
Salaries and employee benefits | 4,974 | 4,717 | 4,971 | 4,775 | 4,563 | ||||||||||
Net occupancy and furniture and equipment | 1,515 | 1,477 | 1,504 | 1,467 | 1,377 | ||||||||||
Other | 2,344 | 2,552 | 2,196 | 2,250 | 2,260 | ||||||||||
Total non-interest expense | 8,833 | 8,746 | 8,671 | 8,492 | 8,200 | ||||||||||
Income before income taxes | 3,257 | 1,436 | 2,838 | 2,212 | 5,241 | ||||||||||
Provision for income taxes | 663 | 302 | 494 | 325 | 1,123 | ||||||||||
Net income | $ | 2,594 | $ | 1,134 | $ | 2,344 | $ | 1,887 | $ | 4,118 | |||||
Share and Per Share Data: | |||||||||||||||
Net income - basic | $ | 0.71 | $ | 0.31 | $ | 0.65 | $ | 0.52 | $ | 1.15 | |||||
Net income - diluted | $ | 0.71 | $ | 0.31 | $ | 0.65 | $ | 0.52 | $ | 1.15 | |||||
Book value | $ | 25.57 | $ | 24.86 | $ | 20.35 | $ | 22.42 | $ | 23.32 | |||||
Cash dividends | $ | 0.37 | $ | 0.37 | $ | 0.37 | $ | 0.37 | $ | 0.37 | |||||
Average common shares outstanding -basic | 3,655,176 | 3,642,096 | 3,613,230 | 3,598,545 | 3,588,363 | ||||||||||
Average common shares outstanding -diluted | 3,655,176 | 3,642,096 | 3,613,230 | 3,598,545 | 3,588,363 | ||||||||||
Selected Ratios: | |||||||||||||||
Return on average assets | 0.59 | % | 0.25 | % | 0.54 | % | 0.44 | % | 0.96 | % | |||||
Return on average shareholders' equity | 6.53 | % | 2.85 | % | 5.93 | % | 4.90 | % | 11.11 | % | |||||
Net interest margin (tax equivalent) | 2.39 | % | 2.38 | % | 2.27 | % | 2.55 | % | 2.68 | % | |||||
Efficiency ratio (tax equivalent) | 72.73 | % | 82.39 | % | 71.58 | % | 76.78 | % | 69.57 | % | |||||
Average shareholders' equity to total average assets | 8.98 | % | 8.91 | % | 9.12 | % | 8.99 | % | 8.65 | % | |||||
Net loan charge-offs (recoveries) | $ | 21 | $ | (19 | ) | $ | 275 | $ | 38 | $ | (532 | ) | |||
Net loan charge-offs (recoveries) - annualized / Average loans excluding held-for-sale | 0.01 | % | -0.01 | % | 0.11 | % | 0.01 | % | -0.21 | % | |||||
Balance Sheet (Average) | |||||||||||||||
Assets | $ | 1,778,585 | $ | 1,773,138 | $ | 1,719,368 | $ | 1,719,167 | $ | 1,737,679 | |||||
Investment securities (AFS & Equities) | 578,615 | 624,423 | 636,110 | 649,231 | 673,117 | ||||||||||
Loans receivable | 1,108,836 | 1,039,351 | 1,026,881 | 1,021,265 | 1,020,102 | ||||||||||
Deposits | 1,497,692 | 1,488,632 | 1,427,238 | 1,414,764 | 1,462,654 | ||||||||||
Shareholders' equity | 159,739 | 158,063 | 156,890 | 154,503 | 150,281 | ||||||||||
QNB Corp. (Consolidated) | |||||||||||||||
Average Balances, Rate, and Interest Income and Expense Summary (Tax-Equivalent Basis) | |||||||||||||||
Three Months Ended | |||||||||||||||
March 31, 2024 | March 31, 2023 | ||||||||||||||
Average | Average | Average | Average | ||||||||||||
Balance | Rate | Interest | Balance | Rate | Interest | ||||||||||
Assets | |||||||||||||||
Investment securities: | |||||||||||||||
U.S. Treasury | $ | 6,782 | 5.33 | % | $ | 90 | $ | 269 | 1.49 | % | $ | 1 | |||
U.S. Government agencies | 84,951 | 1.17 | 248 | 101,943 | 1.11 | 283 | |||||||||
State and municipal | 108,173 | 3.42 | 924 | 111,150 | 2.23 | 621 | |||||||||
Mortgage-backed and CMOs | 365,983 | 2.59 | 2,373 | 417,137 | 1.62 | 1,685 | |||||||||
Corporate debt securities and mutual funds | 6,707 | 5.59 | 94 | 6,636 | 4.40 | 73 | |||||||||
Equities | 6,019 | 3.71 | 56 | 12,096 | 3.39 | 101 | |||||||||
Total investment securities | 578,615 | 2.62 | 3,785 | 649,231 | 1.70 | 2,764 | |||||||||
Loans: | |||||||||||||||
Commercial real estate | 775,135 | 5.34 | 10,300 | 681,615 | 4.52 | 7,602 | |||||||||
Residential real estate | 108,922 | 3.92 | 1,066 | 105,698 | 3.55 | 937 | |||||||||
Home equity loans | 62,269 | 6.81 | 1,055 | 56,645 | 6.23 | 870 | |||||||||
Commercial and industrial | 140,293 | 7.50 | 2,615 | 152,756 | 8.22 | 3,096 | |||||||||
Consumer loans | 3,644 | 8.10 | 73 | 4,089 | 6.73 | 68 | |||||||||
Tax-exempt loans | 18,641 | 3.82 | 177 | 20,591 | 3.49 | 177 | |||||||||
Total loans, net of unearned income* | 1,108,904 | 5.54 | 15,286 | 1,021,394 | 5.06 | 12,750 | |||||||||
Other earning assets | 46,645 | 5.51 | 639 | 7,001 | 5.71 | 99 | |||||||||
Total earning assets | 1,734,164 | 4.57 | 19,710 | 1,677,626 | 3.77 | 15,613 | |||||||||
Cash and due from banks | 12,769 | 12,881 | |||||||||||||
Allowance for loan losses | (8,946 | ) | (9,937 | ) | |||||||||||
Other assets | 40,598 | 38,597 | |||||||||||||
Total assets | $ | 1,778,585 | $ | 1,719,167 | |||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||
Interest-bearing deposits: | |||||||||||||||
Interest-bearing demand | $ | 321,904 | 0.80 | % | 643 | $ | 317,615 | 0.39 | % | 302 | |||||
Municipals | 131,887 | 4.81 | 1,577 | 111,954 | 3.89 | 1,075 | |||||||||
Money market | 227,872 | 3.56 | 2,015 | 130,627 | 1.06 | 342 | |||||||||
Savings | 298,353 | 1.28 | 949 | 406,072 | 1.08 | 1,077 | |||||||||
Time < | 157,712 | 3.76 | 1,473 | 101,208 | 1.53 | 382 | |||||||||
Time | 127,613 | 4.34 | 1,377 | 97,617 | 3.02 | 727 | |||||||||
Time > | 49,756 | 4.22 | 522 | 27,723 | 1.80 | 123 | |||||||||
Total interest-bearing deposits | 1,315,097 | 2.62 | 8,556 | 1,192,816 | 1.37 | 4,028 | |||||||||
Short-term borrowings | 87,441 | 2.88 | 625 | 134,918 | 2.99 | 995 | |||||||||
Long-term debt | 20,000 | 4.36 | 220 | 5,833 | 1.57 | 23 | |||||||||
Total interest-bearing liabilities | 1,422,538 | 2.66 | 9,401 | 1,333,567 | 1.53 | 5,046 | |||||||||
Non-interest-bearing deposits | 182,595 | 221,948 | |||||||||||||
Other liabilities | 13,713 | 9,149 | |||||||||||||
Shareholders' equity | 159,739 | 154,503 | |||||||||||||
Total liabilities and | |||||||||||||||
shareholders' equity | $ | 1,778,585 | $ | 1,719,167 | |||||||||||
Net interest rate spread | 1.91 | % | 2.24 | % | |||||||||||
Margin/net interest income | 2.39 | % | $ | 10,309 | 2.55 | % | $ | 10,567 | |||||||
Tax-exempt securities and loans were adjusted to a tax-equivalent basis and are based on the Federal corporate tax rate of | |||||||||||||||
Non-accrual loans and investment securities are included in earning assets. | |||||||||||||||
* Includes loans held-for-sale |
FAQ
What was QNB Corp.'s net income for the first quarter of 2024?
How did net interest income change in the first quarter of 2024 compared to the same period in 2023?
What were the total assets as of March 31, 2024, and how did they change from December 31, 2023?
What factors contributed to the increase in non-interest income for QNB Corp. in the first quarter of 2024?
How did total non-interest expenses change in the first quarter of 2024 compared to the same period in 2023?