QNB CORP. REPORTS EARNINGS FOR FIRST QUARTER 2026 (Form 8-K)

QNB CORP. REPORTS

EARNINGS FOR FIRST QUARTER 2026

QUAKERTOWN, PA (April 28, 2026) QNB Corp. (the "Company" or "QNB") (OTCQX: QNBC), the parent company of QNB Bank (the "Bank"), reported net income for the first quarter of 2026 of $2,765,000 or $0.73 per share on a diluted basis. This compares to net income of $2,578,000, or $0.69 per share on a diluted basis, for the same period in 2025. For the three-month period of 2026, net income included after-tax merger-related cost of $754,000. The merger-related costs are significant one-time costs and are not normal recurring operating expenses. Adjusted diluted earnings per share excluding the impact of the merger-related cost for the three-month period of 2026 was $0.93*.

For the first quarter ended March 31, 2026, the annualized rate of return on average assets (ROAA) and average shareholders' equity (ROAE) was 0.59% and 8.40%, respectively, compared with 0.56% and 9.73%, respectively, for the first quarter 2025. ROAA, excluding the impact of the merger-related cost, for the three-month period of 2026 was 0.75%*. ROAE, excluding the impact of the merger-related cost, for the three-month period of 2026 was 10.69%*.

* 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 merger-related expenses relate to the previously announced acquisition of Victory Bancorp, Inc, a highly complementary community banking franchise headquartered in Limerick, Pennsylvania. This strategic combination brings together two relationship-focused institutions with shared values, similar operating cultures, and strong community ties. The transaction officially closed on April 1, 2026, creating a franchise with nearly $2.4 billion in assets and expanding our presence deeper into Montgomery County.

The operating performance of the Bank, a wholly-owned subsidiary of QNB Corp., improved for the quarter ended March 31, 2026, in comparison with the same period in 2025, due primarily to improvement in the interest margin causing a $1,849,000 increase in net interest income and a $229,000 increase in non-interest income; this was partly offset by an increase in non-interest expense of $1,500,000 of which $622,000 was due to merger-related costs. The change in contribution from QNB Corp. for the quarter ended March 31, 2026, compared with the same period in 2025, is primarily due to a decrease in net interest income of $27,000, related to the subordinated debt issuance in 2024,

and an increase in non-interest expense of $281,000, primarily due to merger-related expenses of $266,000.

The following table presents disaggregated net income (loss):

Total assets as of March 31, 2026 were $1,923,123,000 compared with $1,906,005,000 at December 31, 2025. Loans receivable increased $20,699,000, or 1.6%, to $1,282,773,000. Total deposits increased $10,920,000, or 0.7%, to $1,653,431,000.

"We reported solid first-quarter earnings growth driven by improved margins, higher net interest income, and continued loan growth," said Dave Freeman, President and Chief Executive Officer. "While merger-related costs impacted reported earnings, our performance remained strong. The closing of the Victory Bancorp transaction ultimately strengthens our balance sheet, broadens our market presence, and positions QNB for sustainable growth in the periods ahead."

Net Interest Income and Net Interest Margin

Net interest income for the quarter ended March 31, 2026 totaled $13,109,000, an increase of $1,572,000, from the same period in 2025. Net interest margin was 2.82% for the first quarter of 2026 and 2.51% for the same period in 2025, an increase of 31 basis points.

The yield on earning assets was 4.81% for both the first quarter of 2026 and 2025. The cost of interest-bearing liabilities was 2.42% for the first quarter ended March 31, 2026, compared with 2.76% for the same period in 2025, a decrease of 34 basis points.

Average loan growth of $62,834,000 was primarily funded from payments on mortgage-backed securities and interest-earning deposits. Loan growth was primarily in commercial real estate, which comprised 47.8% of average earning assets in the first three months 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 majorly contributed to the 14 basis-point increase in the yield on loans. The 47 basis point decrease in the rate on total borrowings was due to long-term debt maturities being replaced with lower cost short-term borrowings. The average rate paid on interest-bearing deposits decreased 35 basis points.

Asset Quality, Provision for Credit Losses on Loans and Allowance for Credit Losses

QNB recorded a $303,000 provision for credit losses on loans in the first quarter of 2026 compared to a $550,000 provision in the first quarter of 2025. QNB's allowance for credit losses on loans of $9,531,000 represents 0.74% of loans receivable at March 31, 2026, compared to $9,215,000, or 0.73% of loans receivable at December 31, 2025. The one-basis point increase in the allowance for credit losses on loans was primarily due to reserves for collateral dependent loans. Net loan recoveries were $13,000 for the quarter ended March 31, 2026, compared with charge-offs of $3,000 for the same period in 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 $9,614,000, or 0.75% of loans receivable at March 31, 2026, compared with $8,793,000, or 0.70% of loans receivable at December 31, 2025. The increase was primarily due to 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 March 31, 2026, $7,563,000, or approximately 79% 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 $38,845,000 at March 31, 2026, compared with $39,516,000 at December 31, 2025; these were comprised primarily of commercial real estate loans.

Non-Interest Income

Total non-interest income was $1,801,000 for the first quarter of 2026 compared with $1,584,000 for the same period in 2025.

Fees for service to customers increased $66,000 for the quarter ended March 31, 2026, as overdraft fees increased $51,000 and other deposit-related fees increased $15,000. ATM and debit card income increased $85,000 due to volume. Retail brokerage and advisory income increased $62,000 to $203,000 for the same period. Other non-interest income increased $14,000 for the same period due to an increase in Merchant fees of $7,000 and an increase in bank-owned life insurance of $5,000.

Non-Interest Expense

Total non-interest expense was $11,138,000 for the first quarter of 2026 compared with $9,369,000 for the same period in 2025. Excluding pre-tax merger-related costs of $888,000, noninterest expense increased $881,000 or 9.4% for the first quarter of 2026, compared to the same period in 2025. Salaries and benefits expense increased $584,000, or 11.6%, to $5,616,000 when comparing for the first quarter of 2026, compared to the same period in 2025. Salary expense and related payroll taxes increased $461,000, or 10.6%, to $4,805,000 during the first quarter of 2026 compared to the same period in 2025, primarily due to bonus accruals and pay increases. Benefits expense increased $113,000, or 36.2%, when comparing the two periods primarily due to increase in medical costs.

Net occupancy and furniture and equipment expense increased $156,000 due to software maintenance costs. Other non-interest expense increased $141,000, or 5.4%, when comparing first quarter of 2026 with the same period in 2025 due to an increase in third-party services of $152,000 related to information technology services and consultant expense and an increase in marketing expense of $169,000; partly offset by decreases in FDIC insurance premiums of $82,000 and bank shares tax of $62,000.

Income Taxes

Provision for income taxes increased $83,000 to $707,000 in the first quarter of 2026 due to higher taxable income, compared with the same period in 2025. The effective tax rate for the quarter ended March 31, 2026 was 20.4% compared with 19.5% for the same period in 2025. The increase in the tax rate in 2026 was due to 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 twelve branches in Bucks, Lehigh and Montgomery 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.