UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
April 1, 2026
QNB Corp.
(Exact name of registrant as specified in its charter)
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Pennsylvania |
0-17706 |
23-2318082 |
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
15 North Third Street, P.O. Box 9005, Quakertown, PA 18951-9005
(Address of principal executive offices, including zip code)
(215) 538-5600
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act: None.
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock |
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QNBC |
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N/A |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ |
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
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Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
Effective April 1, 2026, QNB Corp., a Pennsylvania corporation (the “Company”), completed its previously announced acquisition of The Victory Bancorp, Inc., a Pennsylvania corporation (“Victory”), pursuant to the Agreement and Plan of Merger, dated as of September 23, 2025 (the "Merger Agreement"), between the Company and Victory, Victory merged with and into the Company with the Company continuing as the surviving corporation (the "Merger"), as previously disclosed in the Company's Report on Form 8-K filed on April 7, 2026 (the "Original 8-K"). This Current Report is being filed to amend Item 9.01 of the Original 8-K to include the financial statements of Victory and pro forma financial information required by Item 9.01 of Form 8-K (this "Amendment No. 1").
The pro forma financial information included in this Amendment No. 1 has been presented for informational purposes only, as required by Form 8-K. It does not purport to represent the actual results of operations that the Company and Victory would have achieved had the companies been combined during the periods presented in the pro forma financial information and is not intended to project the future results of operations that the combined company may achieve after completion of the Merger. Except as described above, this Amendment No. 1 does not otherwise amend, modify, or update the disclosures contained in the Original 8-K.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The audited consolidated financial statements of Victory as of December 31, 2025 and 2024, and for each of the fiscal years ended December 31, 2025 and 2024 are filed as Exhibit 99.1 hereto and incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma condensed combined balance sheet of the Company as of March 31, 2026, giving effect to the Merger as if it had occurred on March 31 2026, and the unaudited pro forma condensed combined statements of income of the Company for the three months ended March 31, 2026 and for the year ended December 31, 2025, in each case giving effect to the Merger as if it had occurred on January 1, 2025, are filed as Exhibit 99.2 hereto and incorporated herein by reference.
(d) Exhibits
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Exhibit No. |
Description |
23.1 |
Consent of Crowe LLP independent auditor (with respect to The Victory Bancorp, Inc.) |
99.1 |
Audited consolidated financial statements of The Victory Bancorp, Inc. as of December 31, 2025 and 2024, and for each of the fiscal years ended December 31, 2025 and 2024 |
99.2 |
Unaudited pro forma condensed combined balance sheet of the Company as of March 31, 2026 and the unaudited pro forma condensed combined statements of income of the Company for the three months ended March 31, 2026 and the fiscal year ended December 31, 2025. |
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* |
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K but the Company will provide them to the SEC upon request. |
D
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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QNB Corp. |
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By: |
/s/ Jeffrey Lehocky |
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Jeffrey Lehocky |
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Chief Financial Officer |
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Dated: June 8, 2026 |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements have been prepared in accordance with Article 11 of Regulation S‑X, Pro Forma Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 21, 2020, which requires the depiction of the accounting for the transaction, which we refer to as “transaction accounting adjustments,” and allows, but does not require, presentation of the reasonably estimable cost savings and revenue enhancements and other transaction effects that have occurred or are reasonably expected to occur, which we refer to as “management’s adjustments.” QNB has elected not to present management’s adjustments and will only be presenting transaction accounting adjustments in the following unaudited pro forma condensed combined financial information. Pro forma adjustments are included only to the extent they are (1) directly attributable to the merger, (2) factually supportable and (3) with respect to the unaudited pro forma combined statement of income, expected to have a continuing impact on the combined results. The pro forma adjustments are based on estimates made for the purpose of preparing these pro forma statements and are described in the accompanying notes. QNB’s management believes that the estimates used in these pro forma financial statements are reasonable under the circumstances.
The unaudited pro forma combined consolidated balance sheet combines the historical consolidated balance sheets of QNB and Victory, giving effect to the merger as if it had been consummated on March 31, 2026. The unaudited pro forma combined consolidated statements of income for the three months ended March 31, 2026 and for the year ended December 31, 2025 combine the historical consolidated statements of income of QNB and Victory, giving effect to the merger as if it had been consummated on January 1, 2025.
The following unaudited pro forma combined financial information is presented to illustrate the estimated effects of the merger based on the historical financial statements and accounting records of QNB and Victory after giving effect to the merger, including the issuance of common shares of QNB common stock to Victory’s shareholders pursuant to the merger agreement, and the merger-related pro forma adjustments as described in the notes below. The unaudited pro forma combined condensed consolidated financial information has been prepared using the acquisition method of accounting. Under this method, Victory’s assets and liabilities as of the date of the acquisition will be recorded at their respective fair values and added to those of QNB. Any difference between the purchase price for Victory and the fair value of the identifiable net assets acquired (including core deposit intangibles) will be recorded as goodwill. The goodwill resulting from the acquisition will not be amortized to expense but instead will be reviewed for impairment at least annually. Any core deposit intangible and other intangible assets with estimated useful lives to be recorded by QNB in connection with the acquisition will be amortized to expense over their estimated useful lives. The financial statements of QNB issued after the acquisition will reflect the results attributable to the acquired operations of Victory beginning on the date of completion of the acquisition, April 1, 2026.
The pro forma adjustments included herein are subject to change as additional information becomes available and additional analyses are performed. The final allocation of the purchase price will be determined after further valuation analyses under GAAP are performed with respect to the fair values of certain tangible and intangible assets and liabilities as of the date of acquisition. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein. In addition, the pro forma income statement information does not include anticipated cost savings or revenue enhancements, which management believes will result from combining certain operating procedures, nor does it include future one-time merger-related expenses which will be expensed against income.
Increases or decreases in the estimated fair values of the net assets as compared with the information shown in the unaudited pro forma combined condensed consolidated financial information may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact QNB’s consolidated statement of operations due to adjustments in yield and/or amortization of the adjusted assets or liabilities.
The unaudited pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings or opportunities to earn additional revenue and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had our companies been combined during this period.
The unaudited pro forma condensed combined consolidated financial information has been derived from, and should be read in conjunction with: (i) the historical audited consolidated financial statements of QNB and the related notes in QNB's Annual Report on Form 10-K for the year ended December 31, 2025, and the unaudited historical consolidated financial statements of QNB and the
related notes in QNB's Quarterly Report on Form 10-Q for the period ended March 31, 2026, and (ii) the historical audited financial statements of Victory and related notes which are filed herewith as Exhibit 99.1.
The unaudited pro forma data are qualified by the statements set forth under this caption and should not be considered indicative of the market value of QNB common stock or the actual or future results of operations of QNB for any period. Actual results may be materially different than the pro forma information presented.
The merger is being accounted for as a business combination using the acquisition method with QNB as the accounting acquirer in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations. The aggregate purchase consideration will be allocated to Victory's assets and liabilities assumed based on their estimated fair values and the date of completion of the merger. The process of valuing the net assets of Victory immediately prior to the merger, as well as evaluating accounting policies for conformity, is preliminary. Any differences between the estimated fair value of the purchase consideration and the estimated fair value of the assets acquired and liabilities assumed will be recorded as goodwill,
Upon completion of the merger, a final determination of the fair value of Victory assets acquired and liabilities assumed will be performed. Any changes in the fair values of the net assets or total purchase consideration as compared with the information shown in the unaudited pro forma condensed combines financial information may change the amount of the total purchase consideration allocated to goodwill and other assets and liabilities and may impact the combined Company's statement of income. The final purchase consideration allocation may be materially different than the preliminary purchase consideration allocation presented in the unaudited pro forma condensed combined financial information.
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QNB CORP. AND SUBSIDIARIES |
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET |
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AT MARCH 31, 2026 |
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($ in thousands) |
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QNB |
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Victory |
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Combined |
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Pro Forma Adjustments |
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Notes |
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Pro Forma Combined |
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ASSETS |
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Cash and due from banks |
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$ |
17,632 |
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$ |
8,671 |
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$ |
26,303 |
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$ |
(2 |
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A |
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$ |
26,301 |
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Fed Funds sold |
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— |
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3,000 |
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3,000 |
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— |
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3,000 |
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Interest-bearing deposits in banks |
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38,971 |
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8,882 |
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47,853 |
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— |
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47,853 |
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Cash and equivalents |
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56,603 |
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20,553 |
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77,156 |
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(2 |
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77,154 |
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Investment securities available-for-sale, at fair value |
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528,007 |
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8,261 |
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536,268 |
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4,344 |
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B, I |
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540,612 |
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Investment securities held-to-maturity, at amortized cost |
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— |
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7,393 |
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7,393 |
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(7,393 |
) |
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B |
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— |
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Restricted investment in stocks |
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7,427 |
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1,452 |
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8,879 |
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— |
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8,879 |
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Loans held for sale |
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1,199 |
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— |
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1,199 |
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— |
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1,199 |
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Loans |
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1,282,773 |
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409,434 |
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1,692,207 |
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(542 |
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C |
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1,691,665 |
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Allowance for Credit Losses |
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(9,531 |
) |
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(3,434 |
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(12,965 |
) |
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413 |
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D |
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(12,552 |
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Loans, net |
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1,273,242 |
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406,000 |
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1,679,242 |
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(129 |
) |
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1,679,113 |
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Premises and equipment |
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17,947 |
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3,196 |
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21,143 |
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817 |
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N |
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21,960 |
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Goodwill |
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— |
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— |
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— |
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11,145 |
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E |
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11,145 |
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Other intangible assets |
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— |
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— |
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— |
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7,916 |
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F |
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7,916 |
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Bank-owned life insurance |
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12,367 |
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6,128 |
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18,495 |
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— |
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18,495 |
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Net deferred tax assets |
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13,963 |
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402 |
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14,365 |
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(1,697 |
) |
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G |
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12,668 |
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Other assets |
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12,368 |
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3,818 |
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16,186 |
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— |
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16,186 |
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Total Assets |
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$ |
1,923,123 |
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$ |
457,203 |
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$ |
2,380,326 |
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$ |
15,001 |
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$ |
2,395,327 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Liabilities: |
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Deposits |
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Noninterest Bearing |
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$ |
187,580 |
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$ |
71,161 |
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$ |
258,741 |
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— |
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$ |
258,741 |
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Interest Bearing |
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1,465,851 |
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338,060 |
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1,803,911 |
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(56 |
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H |
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1,803,855 |
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Total Deposits |
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1,653,431 |
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409,221 |
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2,062,652 |
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(56 |
) |
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2,062,596 |
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Short-term borrowings |
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86,806 |
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— |
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86,806 |
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— |
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86,806 |
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Subordinated debt |
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39,318 |
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17,392 |
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56,710 |
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(2,718 |
) |
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I |
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53,992 |
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Other liabilities |
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12,184 |
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828 |
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13,012 |
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433 |
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N |
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13,445 |
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Total Liabilities |
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1,791,739 |
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427,441 |
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2,219,180 |
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(2,341 |
) |
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2,216,839 |
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Stockholders’ equity: |
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Common stock |
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2,496 |
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2,142 |
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4,638 |
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(1,406 |
) |
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J |
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3,232 |
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Paid in capital |
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30,268 |
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15,801 |
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46,069 |
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30,567 |
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K |
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76,636 |
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Retained earnings |
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149,689 |
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12,135 |
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161,824 |
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(12,135 |
) |
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L |
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149,689 |
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Accumulated other comprehensive loss, net of taxes |
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(47,032 |
) |
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(316 |
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(47,348 |
) |
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316 |
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M |
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(47,032 |
) |
Treasury stock, at cost |
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(4,037 |
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— |
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(4,037 |
) |
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— |
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(4,037 |
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Total Stockholders’ Equity |
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131,384 |
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29,762 |
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161,146 |
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17,342 |
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178,488 |
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Total Liabilities and Stockholders’ Equity |
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$ |
1,923,123 |
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$ |
457,203 |
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$ |
2,380,326 |
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$ |
15,001 |
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$ |
2,395,327 |
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See accompanying notes to unaudited pro forma condensed combined financial statements |
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QNB CORP. AND SUBSIDIARIES |
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UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT |
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FOR THE YEAR ENDED DECEMBER 31, 2025 |
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($ in thousands, except per share data) |
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QNB |
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Victory |
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Pro Forma
Adjustments |
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Notes |
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Pro Forma
Combined |
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Interest income |
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Loans, including fees |
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$ |
73,052 |
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$ |
26,352 |
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$ |
789 |
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A |
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$ |
100,193 |
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Deposits with other banks & short-term investments |
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2,656 |
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|
709 |
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— |
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3,365 |
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Investment securities |
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16,930 |
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1,863 |
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67 |
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B |
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18,860 |
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Total interest income |
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92,638 |
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28,924 |
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|
856 |
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122,418 |
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Interest expense |
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Deposits |
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35,133 |
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12,916 |
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(42 |
) |
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C |
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48,007 |
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Interest on borrowed funds |
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|
2,526 |
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|
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— |
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— |
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|
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2,526 |
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Interest on subordinated debt |
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|
3,750 |
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|
1,632 |
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(16 |
) |
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D |
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5,366 |
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Total interest expense |
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41,409 |
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14,548 |
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(58 |
) |
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55,899 |
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Net interest income |
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51,229 |
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14,376 |
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|
914 |
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66,519 |
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Provision (reversal of) for credit losses |
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449 |
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(106 |
) |
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— |
|
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|
343 |
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Net interest income after (reversal of) provision for credit losses |
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|
50,780 |
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14,482 |
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|
914 |
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66,176 |
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Noninterest income |
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Fees for services to customers |
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1,986 |
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|
625 |
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|
|
— |
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2,611 |
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ATM and debit card |
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|
2,991 |
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|
— |
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|
2,991 |
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Retail brokerage and advisory |
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|
648 |
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|
— |
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— |
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|
648 |
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Loss on sale of securities |
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|
— |
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|
|
— |
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|
— |
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|
|
— |
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BOLI income |
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|
338 |
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|
|
— |
|
|
|
— |
|
|
|
|
|
338 |
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Other noninterest income |
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|
994 |
|
|
|
289 |
|
|
|
— |
|
|
|
|
|
1,283 |
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Total noninterest income |
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|
6,957 |
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|
|
914 |
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|
|
— |
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|
|
|
|
7,871 |
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Noninterest expense |
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|
|
|
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|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
21,261 |
|
|
|
7,401 |
|
|
|
— |
|
|
|
|
|
28,662 |
|
Occupancy and equipment |
|
|
6,754 |
|
|
|
746 |
|
|
|
13 |
|
|
G |
|
|
7,513 |
|
Third party services |
|
|
3,069 |
|
|
|
1,161 |
|
|
|
— |
|
|
|
|
|
4,230 |
|
Amortization of intangibles |
|
|
— |
|
|
|
— |
|
|
|
1,439 |
|
|
E |
|
|
1,439 |
|
Acquisition related expenses |
|
|
1,138 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
1,138 |
|
Other noninterest expense |
|
|
7,585 |
|
|
|
3,490 |
|
|
|
— |
|
|
|
|
|
11,075 |
|
Total Noninterest expense |
|
|
39,807 |
|
|
|
12,798 |
|
|
|
1,452 |
|
|
|
|
|
54,057 |
|
Income before income taxes |
|
|
17,930 |
|
|
|
2,598 |
|
|
|
(538 |
) |
|
|
|
|
19,990 |
|
Income taxes |
|
|
3,840 |
|
|
|
556 |
|
|
|
(116 |
) |
|
H |
|
|
4,280 |
|
Net Income |
|
$ |
14,090 |
|
|
$ |
2,042 |
|
|
$ |
(422 |
) |
|
|
|
$ |
15,710 |
|
Net income per share of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
3.79 |
|
|
$ |
1.02 |
|
|
|
|
|
|
|
$ |
2.72 |
|
Diluted |
|
$ |
3.78 |
|
|
$ |
0.98 |
|
|
|
|
|
|
|
$ |
2.72 |
|
Weighted average shares outstanding, basic |
|
|
3,715,806 |
|
|
|
1,992,465 |
|
|
|
(814,283 |
) |
|
|
|
|
4,893,988 |
|
Weighted average shares outstanding, diluted |
|
|
3,729,246 |
|
|
|
2,086,279 |
|
|
|
(908,097 |
) |
|
|
|
|
4,907,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited pro forma condensed combined financial statements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QNB CORP. AND SUBSIDIARIES |
|
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT |
|
FOR THE THREE MONTHS ENDED MARCH 31, 2026 |
|
($ in thousands, except per share data) |
|
QNB |
|
|
Victory |
|
|
Pro Forma
Adjustments |
|
|
Notes |
|
Pro Forma
Combined |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
18,626 |
|
|
$ |
6,733 |
|
|
$ |
189 |
|
|
A |
|
$ |
25,548 |
|
Deposits with other banks and short-term
investments |
|
|
352 |
|
|
|
26 |
|
|
|
— |
|
|
|
|
|
378 |
|
Investment securities |
|
|
3,498 |
|
|
|
368 |
|
|
|
45 |
|
|
B |
|
|
3,911 |
|
Total interest income |
|
|
22,476 |
|
|
|
7,127 |
|
|
|
234 |
|
|
|
|
|
29,837 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
7,668 |
|
|
|
2,725 |
|
|
|
(2 |
) |
|
C |
|
|
10,391 |
|
Interest on borrowed funds |
|
|
762 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
762 |
|
Interest on subordinated debt |
|
|
937 |
|
|
|
472 |
|
|
|
(3 |
) |
|
D |
|
|
1,406 |
|
Total interest expense |
|
|
9,367 |
|
|
|
3,197 |
|
|
|
(5 |
) |
|
|
|
|
12,559 |
|
Net interest income |
|
|
13,109 |
|
|
|
3,930 |
|
|
|
239 |
|
|
|
|
|
17,278 |
|
Provision for (reversal of) credit losses |
|
|
300 |
|
|
|
(21 |
) |
|
|
— |
|
|
|
|
|
279 |
|
Net interest income after provision for (reversal of) credit losses |
|
|
12,809 |
|
|
|
3,951 |
|
|
|
239 |
|
|
|
|
|
16,999 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees for services to customers |
|
|
513 |
|
|
|
141 |
|
|
|
— |
|
|
|
|
|
654 |
|
ATM and debit card |
|
|
741 |
|
|
|
21 |
|
|
|
— |
|
|
|
|
|
762 |
|
Retail brokerage and advisory |
|
|
203 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
203 |
|
Gain (loss) on sale of securities |
|
|
— |
|
|
|
(719 |
) |
|
|
— |
|
|
|
|
|
(719 |
) |
BOLI income |
|
|
92 |
|
|
|
47 |
|
|
|
— |
|
|
|
|
|
139 |
|
Other noninterest income |
|
|
252 |
|
|
|
40 |
|
|
|
— |
|
|
|
|
|
292 |
|
Total noninterest income |
|
|
1,801 |
|
|
|
(470 |
) |
|
|
— |
|
|
|
|
|
1,331 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
5,616 |
|
|
|
2,217 |
|
|
|
— |
|
|
|
|
|
7,833 |
|
Occupancy and equipment |
|
|
1,892 |
|
|
|
193 |
|
|
|
3 |
|
|
G |
|
|
2,088 |
|
Third party services |
|
|
814 |
|
|
|
438 |
|
|
|
— |
|
|
|
|
|
1,252 |
|
Amortization of intangibles |
|
|
— |
|
|
|
— |
|
|
|
360 |
|
|
E |
|
|
360 |
|
Acquisition related expenses |
|
|
888 |
|
|
|
5,018 |
|
|
|
1,317 |
|
|
F |
|
|
7,223 |
|
Other noninterest expense |
|
|
1,928 |
|
|
|
401 |
|
|
|
— |
|
|
|
|
|
2,329 |
|
Total noninterest expense |
|
|
11,138 |
|
|
|
8,267 |
|
|
|
1,680 |
|
|
|
|
|
21,085 |
|
Income before income taxes |
|
|
3,472 |
|
|
|
(4,786 |
) |
|
|
(1,441 |
) |
|
|
|
|
(2,755 |
) |
Income taxes |
|
|
707 |
|
|
|
(1,007 |
) |
|
|
(310 |
) |
|
H |
|
|
(610 |
) |
Net Income |
|
$ |
2,765 |
|
|
$ |
(3,779 |
) |
|
$ |
(1,131 |
) |
|
|
|
$ |
(2,145 |
) |
Net income per share of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.74 |
|
|
$ |
(1.85 |
) |
|
|
|
|
|
|
$ |
(0.43 |
) |
Diluted |
|
$ |
0.73 |
|
|
$ |
(1.85 |
) |
|
|
|
|
|
|
$ |
(0.43 |
) |
Weighted average shares outstanding, basic |
|
|
3,760,664 |
|
|
|
2,038,969 |
|
|
|
(860,787 |
) |
|
|
|
|
4,938,846 |
|
Weighted average shares outstanding, diluted |
|
|
3,775,579 |
|
|
|
2,038,969 |
|
|
|
(860,787 |
) |
|
|
|
|
4,953,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to unaudited pro forma condensed combined financial statements |
|
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENT
1. Basis of Presentation
The accompanying unaudited pro forma condensed combined financial information and related notes have been prepared in accordance with Article 11 of Regulation S-X. As discussed in following notes, certain adjustments were made to align Victory with QNB’s accounting policies and financial statement presentation. The review of Victory’s accounting policies and financial statement presentation is preliminary, and additional differences could be identified prior to completion of the merger.
The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting under the provisions of ASC Topic 805, Business Combinations, with QNB identified as the accounting acquirer. The fair value concepts applied are consistent with ASC Topic 820, Fair Value Measurement. Under ASC 805, the assets acquired and liabilities assumed in a business combination are generally recognized and measured at their estimated fair values as of the acquisition date. Transaction costs associated with the merger are expensed as incurred. Any excess of the purchase consideration over the estimated fair value of net assets acquired will be allocated to goodwill.
On November 12, 2025, the Financial Accounting Standards Board (FASB) issues ASU 2025-08, amending ASC 326 to expand use of the gross-up approach in ASC 326, Credit Losses, to all purchased seasoned loans. This approach was previously only applied to purchased credit deteriorated (PCD) assets. Purchased seasoned loans are defined as loans that are not PCD assets, credit card receivables, debt securities or trade receivables that are acquired in a business combination, or obtained through a transfer that is not a business combination or initially recognized through the consolidation of a variable interest entity, if certain seasoning criteria are met.
A loan is considered seasoned if it is obtained more than 90 days after its origination date and the transferee was not involved in the origination. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those years.
Entities are required to apply the guidance prospectively. Early adoption is permitted; therefore, QNB adopted ASU 2025-08 as of the acquisition date of the merger.
The pro forma allocation of the purchase price is based on preliminary estimates and assumptions and is subject to change. QNB has not finalized its analysis on the fair value of Victory’s assets and liabilities. Preliminary estimates have been developed for certain intangible assets and select financial assets and liabilities. Other assets and liabilities are presented at their historical carrying amounts and should be considered preliminary. The final allocation of the purchase price will be completed within the 12-month measurement period following the acquisition date, in accordance with ASC Topic 805. A final determination of fair values will be based on Victory’s actual assets and liabilities as of the closing date of the merger and may differ materially from the preliminary estimates presented herein.
The unaudited pro forma condensed combined balance sheet as of March 31, 2026 combines the historical consolidated balance sheets of QNB and Victory, giving effect to the merger as if it had occurred on March 31, 2026. The unaudited pro forma condensed combined statements of income for the three months ended March 31, 2026 and for the year ended December 31, 2025 combine the historical results of QNB and Victory, giving effect to the merger as if it had occurred on January 1, 2025.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been achieved had the merger been completed on the dates indicated, nor is it indicative of future results or financial position of QNB following the merger.
2. Purchase Price and Preliminary Allocation
The following table summarized the purchase price for Victory:
|
|
|
|
|
Supporting Details on Valuation and Calculation of Purchase Price |
|
|
|
QNB Corp. Share price (Close of business on March 31, 2026) |
|
$ |
39.98 |
|
The Victory Bancorp, Inc. shares outstanding |
|
|
2,142,269 |
|
Exchange ratio |
|
|
0.550 |
|
Converted Company Common Shares |
|
|
1,178,248 |
|
Fractional shares |
|
|
(66 |
) |
QNB Corp shares issued to The Victory Bancorp, Inc. shareholders |
|
|
1,178,182 |
|
Cash in leiu of fractional shares ($39.446 per share) |
|
$ |
2 |
|
Value of stock issued |
|
|
47,104 |
|
Transaction Value |
|
$ |
47,106 |
|
|
|
|
|
QNB Corp. par value per share and allocation (consolidated): |
|
|
|
J) Common stock ($0.625 par) |
|
$ |
736 |
|
J) Paid in Capital |
|
$ |
46,368 |
|
The following table summarizes the allocation of the preliminary estimated purchase consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of Victory, as if the merger had been completed on March 31, 2026, with the excess recorded to goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
|
Supporting Details on Calculation of Goodwill |
|
Victory Book Value |
|
|
Fair Value Adjustments |
|
|
Fair Value |
|
Purchase price |
|
|
|
|
|
|
|
$ |
47,106 |
|
Recognized amounts of identifiable assets acquired and liabilities assumed: |
|
|
|
|
|
|
|
|
|
Cash and equivalents |
|
$ |
20,553 |
|
|
$ |
— |
|
|
$ |
20,553 |
|
Investment securities |
|
|
15,654 |
|
|
|
(49 |
) |
|
|
15,605 |
|
Loans, net |
|
|
406,000 |
|
|
|
(129 |
) |
|
|
405,871 |
|
Premises and equipment |
|
|
3,196 |
|
|
|
817 |
|
|
|
4,013 |
|
Core deposit intangible |
|
|
— |
|
|
|
7,916 |
|
|
|
7,916 |
|
Other assets |
|
|
11,800 |
|
|
|
(1,697 |
) |
|
|
10,103 |
|
Deposits |
|
|
(409,221 |
) |
|
|
56 |
|
|
|
(409,165 |
) |
Borrowings |
|
|
(17,392 |
) |
|
|
(282 |
) |
|
|
(17,674 |
) |
Other liabilities |
|
|
(828 |
) |
|
|
(433 |
) |
|
|
(1,261 |
) |
Total identifiable net assets |
|
|
29,762 |
|
|
|
6,199 |
|
|
|
35,961 |
|
Goodwill |
|
|
— |
|
|
|
11,145 |
|
|
|
11,145 |
|
Total Allocation |
|
$ |
29,762 |
|
|
$ |
17,344 |
|
|
$ |
47,106 |
|
3. Adjustments to the Pro Forma Condensed Combined Balance Sheet
The following are descriptions of the pro forma adjustments reflected in the unaudited pro forma condensed combined balance sheet. All adjustments are based on preliminary assumptions and valuations, which are subject to change.
1.Cash paid in lieu of fractional shares upon conversion of Victory shares to QNB shares
2.Includes reclassification of held-to-maturity securities to available-for-sale and negative fair value adjustment on reclassified assets of $49,000.
3.Reflects purchase accounting adjustment to record Victory’s loans at fair value, as well as, the gross-up for estimated lifetime credit losses on purchase credit deteriorated (“PCD”) loans, and reflects gross-up for the estimated lifetime credit losses on non‑purchased credit-deteriorated (“non‑PCD”) loans.
4.Adjustment of Victory’s Allowance for Credit Losses (“ACL”) to reflect elimination of Victory’s ACL at closing, reflect the estimated lifetime credit losses on purchase credit deteriorated (“PCD”) loan, and reflect the estimated lifetime credit losses on non‑PCD loans.
5.Please see Note 2 for the supporting documentation on the calculation of goodwill associated with the merger.
6.Adjustment to record an estimated core deposit intangible of $7.9 million related to the merger.
7.Adjustment to recognize net deferred tax associated with the fair value adjustments recorded in the merger.
8.Adjustment to record estimated fair value adjustments on acquired certificates of deposits.
9.Cancellation of $3.0 million of Victory Subordinated Debt owned by QNB and fair value adjustments.
10.Adjustments to common stock to eliminate Victory’s common stock of $2.1 million par value and record the issuance of QNB common stock to Victory’s common stockholders of $736,000 par value based on the details of the purchase price presented in Note 2.
11.Adjustments to paid in capital to eliminate Victory’s capital surplus of $15.8 million and record the issuance of QNB common stock in excess of par value to Victory’s common stockholders of $46.4 million (See Note 2).
12.Adjustments to eliminate Victory’s retained earnings of $12.1 million.
13.Adjustment to eliminate Victory’s accumulated other comprehensive loss of $316,000.
14.Record the net positive fair value of land and building acquired of $520,000. Write-off obsolete fixed assets of $136,000. Record right-of-use asset of $433,000 and related lease liability of $433,000 to conform Victory's accounting treatment of operating lease to QNB's accounting policy.
4. Adjustments to the Pro Form Condensed Combined Statements of Income
The following are descriptions of the pro forma adjustments reflected in the unaudited pro forma condensed combined statements of income. All adjustments are based on preliminary assumptions and valuations, which are subject to change.
1.Adjustment to interest income to record the estimated accretion for the net discount on acquired loans and leases.
2.Adjustment to interest income to record the accretion of the fair value adjustments on acquired investment securities.
3.Adjustment to interest expense to record the accretion of the fair value adjustment on acquired time deposits.
4.Adjustment to interest expense to record the accretion of the fair value adjustment on acquired subordinated debt.
5.Adjustment reflects the net increase in amortization of other intangible assets for the acquired core deposit intangible asset.
6.Adjustment to reflect expected one-time merger related charges post-merger.
7.Adjustments to occupancy and equipment expense to record the amortization of fair value adjustments on building acquired and leases assumed.
8.Income taxes were adjusted to reflect the tax effects of Victory’s being taxed using QNB’s Federal and State statutory rate of 21.5%.
