10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-17706

QNB Corp.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	23-2318082
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

15 North Third Street, P.O. Box 9005 Quakertown, PA	18951-9005
(Address of Principal Executive Offices)	(Zip Code)

(215) 538-5600

Registrant's Telephone Number, Including Area Code

Not Applicable

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	QNBC	N/A

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
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 revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at October 27, 2023
Common Stock, par value $0.625	3,640,598

QNB CORP. AND SUBSIDIARY

FORM 10-Q

QUARTER ENDED September 30, 2023

INDEX

	PART I - FINANCIAL INFORMATION
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)	PAGE
	Consolidated Balance Sheets at September 30, 2023 and December 31, 2022	2
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2023 and 2022	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022	4
	Consolidated Statement of Shareholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	59
ITEM 4.	CONTROLS AND PROCEDURES	60
	PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	61
ITEM 1A.	RISK FACTORS	61
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	61
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	61
ITEM 4.	MINE SAFETY DISCLOSURES	61
ITEM 5.	OTHER INFORMATION	61
ITEM 6.	EXHIBITS	62
SIGNATURES		63
CERTIFICATIONS

1

QNB Corp. and Subsidiary

CONSOLIDATED BALANCE SHEETS

	(in thousands, except share data)
	(current period unaudited)
	September 30, 2023			December 31, 2022
Assets
Cash and due from banks	$	12,148		$	14,657
Interest-bearing deposits in banks		42,993			1,242
Total cash and cash equivalents		55,141			15,899
Investments:
Available-for-sale (amortized cost $612,408 and $649,217)		505,390			546,525
Equity securities (cost of $5,454 and $12,091)		4,765			12,056
Restricted investment in stocks		2,730			5,193
Loans held-for-sale		446			—
Loans receivable		1,060,450			1,039,385
Allowance for credit losses on loans		(8,542	)		(10,531	)
Loans receivable, net		1,051,908			1,028,854
Bank-owned life insurance		11,871			11,625
Premises and equipment, net		15,256			15,463
Accrued interest receivable		5,590			5,038
Net deferred tax assets		23,859			23,077
Other assets		7,436			4,767
Total assets	$	1,684,392		$	1,668,497
Liabilities
Deposits
Demand, non-interest bearing	$	192,226		$	231,849
Interest-bearing demand		469,919			452,927
Money market		218,149			127,043
Savings		312,853			431,101
Time less than $100		137,043			91,329
Time $100 through $250		110,670			59,650
Time greater than $250		42,473			24,470
Total deposits		1,483,333			1,418,369
Short-term borrowings		96,703			161,327
Long-term debt		20,000			10,000
Accrued interest payable		3,278			467
Other liabilities		6,997			7,376
Total liabilities		1,610,311			1,597,539
Shareholders' Equity
Common stock, par value $0.625 per share;
authorized 10,000,000 shares; 3,849,284 shares and 3,796,948
shares issued; 3,640,598 and 3,588,262 shares outstanding		2,406			2,373
Surplus		26,096			24,798
Retained earnings		134,160			128,951
Accumulated other comprehensive loss, net of tax		(84,544	)		(81,127	)
Treasury stock, at cost; 208,686 and 208,686 shares		(4,037	)		(4,037	)
Total shareholders' equity		74,081			70,958
Total liabilities and shareholders' equity	$	1,684,392		$	1,668,497

The accompanying notes are an integral part of the consolidated financial statements.

2

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands, except per share data - unaudited)	2023			2022			2023			2022
Interest income
Interest and fees on loans	$	13,833		$	10,624		$	39,399		$	29,018
Interest and dividends on available-for-sale & equity securities:
Taxable		3,443			2,376			8,179			7,065
Tax-exempt		362			485			1,101			1,504
Interest on interest-bearing balances and other interest income		859			61			1,146			95
Total interest income		18,497			13,546			49,825			37,682
Interest expense
Interest on deposits
Interest-bearing demand		2,437			818			5,390			1,346
Money market		1,527			170			2,913			401
Savings		1,038			608			3,208			1,312
Time less than $100		947			168			1,960			522
Time of $100 through $250		996			118			2,676			280
Time greater than $250		377			56			767			143
Interest on short-term borrowings		740			189			2,518			341
Interest on long-term debt		222			40			430			119
Total interest expense		8,284			2,167			19,862			4,464
Net interest income		10,213			11,379			29,963			33,218
Provision (reversal) for credit losses on loans		459			—			(1,137	)		—
Net interest income after provision for loan losses		9,754			11,379			31,100			33,218
Non-interest income
Net gain on sales and calls of available-for-sale and equity securities		131			—			185			493
Unrealized loss on investment equity securities		(138	)		(1,174	)		(654	)		(2,628	)
Fees for services to customers		421			423			1,237			1,210
ATM and debit card		685			669			2,048			2,015
Retail brokerage and advisory		219			194			655			604
Bank-owned life insurance		81			121			245			277
Merchant		99			98			298			302
Net (loss) gain on sale of loans		4			6			5			6
Other		253			147			535			455
Total non-interest income		1,755			484			4,554			2,734
Non-interest expense
Salaries and employee benefits		4,971			4,371			14,309			12,842
Net occupancy		594			535			1,683			1,663
Furniture and equipment		910			779			2,665			2,190
Marketing		216			141			678			632
Third party services		592			582			1,837			1,839
Telephone, postage and supplies		134			187			434			555
State taxes		60			272			244			732
FDIC insurance premiums		274			177			745			574
Other		920			770			2,768			2,346
Total non-interest expense		8,671			7,814			25,363			23,373
Income before income taxes		2,838			4,049			10,291			12,579
Provision for income taxes		494			634			1,942			2,105
Net income	$	2,344		$	3,415		$	8,349		$	10,474
Earnings per share - basic	$	0.65		$	0.96		$	2.32		$	2.94
Earnings per share - diluted	$	0.65		$	0.96		$	2.32		$	2.94
Cash dividends per share	$	0.37		$	0.36		$	1.11		$	1.08
The accompanying notes are an integral part of the consolidated financial statements.

3

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	(in thousands - unaudited)
	2023									2022
For the Three Months Ended September 30,	Before tax amount			Tax expense			Net of tax amount			Before tax amount			Tax expense			Net of tax amount
Net income	$	2,838		$	494		$	2,344		$	4,049		$	634		$	3,415
Other comprehensive income (loss):
Net unrealized holding losses on available-for-sale securities:
Unrealized holding losses arising during the period		(19,229	)		(4,038	)		(15,191	)		(35,419	)		(7,438	)		(27,981	)
Reclassification adjustment for losses (gains) included in net income (1)		—			—			—			—			—			—
Net unrealized holding gains on fair value hedge:
Unrealized holding gains arising during the period		8,350			1,753			6,597			—			—			—
Reclassification adjustment for fair value remeasurements included in net income (2)		26			5			21			—			—			—
Other comprehensive loss:		(10,853	)		(2,280	)		(8,573	)		(35,419	)		(7,438	)		(27,981	)
Total comprehensive loss	$	(8,015	)	$	(1,786	)	$	(6,229	)	$	(31,370	)	$	(6,804	)	$	(24,566	)

For the Nine Months Ended September 30,	2023									2022
	Before tax amount			Tax expense (benefit)			Net of tax amount			Before tax amount			Tax expense (benefit)			Net of tax amount
Net income	$	10,291		$	1,942		$	8,349		$	12,579		$	2,105		$	10,474
Other comprehensive income (loss):
Net unrealized holding losses on available-for-sale securities:
Unrealized holding losses arising during the period		(15,206	)		(3,193	)		(12,013	)		(108,518	)		(22,789	)		(85,729	)
Reclassification adjustment for losses included in net income (1)		257			54			203			(4	)		(1	)		(3	)
Net unrealized holding gains on interest rate swaps:
Unrealized holding gains arising during the period		10,559			2,217			8,342			—			—			—
Reclassification adjustment for fair value remeasurements included in net income (2)		64			13			51			—			—			—
Other comprehensive loss		(4,326	)		(909	)		(3,417	)		(108,522	)		(22,790	)		(85,732	)
Total comprehensive income (loss)	$	5,965		$	1,033		$	4,932		$	(95,943	)	$	(20,685	)	$	(75,258	)

(1) Included in Net gain on sales and calls of available-for-sale and equity securities on the Consolidated Statements of Income

(2) Included in Interest and dividends on available-for-sale & equity securities on the Consolidated Statements of Income

The accompanying notes are an integral part of the consolidated financial statements.

4

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

For the Three Months Ended September 30, 2023 and 2022
											Accumulated
	Number of										Other
(unaudited)	Shares		Common					Retained			Comprehensive			Treasury
(in thousands, except share and per share data)	Outstanding		Stock		Surplus			Earnings			Loss			Stock			Total
Balance, July 1, 2023		3,610,920	$	2,387	$	25,414		$	133,152		$	(75,971	)	$	(4,037	)	$	80,945
Net income				—		—			2,344			—			—			2,344
Other comprehensive loss, net of tax				—		—			—			(8,573	)		—			(8,573	)
Cash dividends declared ($0.37 per share)				—		—			(1,336	)		—			—			(1,336	)
Stock issued in connection with dividend    reinvestment and stock purchase plan		27,938		18		640			—			—			—			658
Stock issued for employee stock purchase plan				—		—			—			—			—			—
Stock issued for Non-Employee Director Compensation		1,740		1		(1	)		—			—			—			—
Stock-based compensation expense				—		43			—			—			—			43
Balance, September 30, 2023		3,640,598	$	2,406	$	26,096		$	134,160		$	(84,544	)	$	(4,037	)	$	74,081
											Accumulated
	Number of										Other
(unaudited)	Shares		Common					Retained			Comprehensive			Treasury
(in thousands, except share and per share data)	Outstanding		Stock		Surplus			Earnings			Loss			Stock			Total
Balance, July 1, 2022		3,567,894	$	2,360	$	24,244		$	122,662		$	(61,491	)	$	(4,037	)	$	83,738
Net income				—		—			3,415			—			—			3,415
Other comprehensive loss, net of tax				—		—			—			(27,981	)		—			(27,981	)
Cash dividends declared ($0.36 per share)				—		—			(1,285	)		—			—			(1,285	)
Stock issued in connection with dividend    reinvestment and stock purchase plan		8,517		6		227			—			—			—			233
Stock issued for employee stock purchase plan				—		—			—			—			—			—
Stock-based compensation expense				—		4			—			—			—			4
Balance, September 30, 2022		3,576,411	$	2,366	$	24,475		$	124,792		$	(89,472	)	$	(4,037	)	$	58,124
The accompanying notes are an integral part of the consolidated financial statements.

5

For the Nine Months Ended September 30, 2023 and 2022
												Accumulated
												Other
	Number of											Comprehensive
(unaudited)	Shares			Common					Retained			Income			Treasury
(in thousands, except share and per share data)	Outstanding			Stock		Surplus			Earnings			(Loss)			Stock			Total
Balance, January 1, 2023		3,588,262		$	2,373	$	24,798		$	128,951		$	(81,127	)	$	(4,037	)	$	70,958
Cumulative change in accounting principle							—			857			—			—			857
Balance at Janaury 2, 2023 (as adjusted for change in accounting principle)					2,373		24,798			129,808			(81,127	)		(4,037	)		71,815
Net income					—		—			8,349			—			—			8,349
Other comprehensive loss, net of tax					—		—			—			(3,417	)		—			(3,417	)
Cash dividends declared ($1.11 per share)					—		—			(3,997	)		—			—			(3,997	)
Stock issued in connection with dividend    reinvestment and stock purchase plan		47,409			30		1,101			—			—			—			1,131
Stock issued for employee stock purchase plan		3,187			2		64			—			—			—			66
Stock issued for Non-Employee Director Compensation		1,740			1		(1	)		—			—			—			—
Stock-based compensation expense		—			—		134			—			—			—			134
Balance, September 30, 2023		3,640,598		$	2,406	$	26,096		$	134,160		$	(84,544	)	$	(4,037	)	$	74,081
												Accumulated
	Number of											Other
(unaudited)	Shares			Common					Retained			Comprehensive			Treasury
(in thousands, except share and per share data)	Outstanding			Stock		Surplus			Earnings			Income			Stock			Total
Balance, January 1, 2022		3,553,629		$	2,350	$	23,683		$	118,163		$	(3,740	)	$	(3,962	)	$	136,494
Net income					—		—			10,474			—			—			10,474
Other comprehensive loss, net of tax					—		—			—			(85,732	)		—			(85,732	)
Cash dividends declared ($1.08 per share)					—		—			(3,845	)		—			—			(3,845	)
Stock issued in connection with dividend    reinvestment and stock purchase plan		22,496			15		669			—			—			—			684
Stock issued for employee stock purchase plan		2,286			1		66			—			—			—			67
Stock-based compensation expense					—		57			—			—			—			57
Treasury stock purchase		(2,000	)		—		—			—			—			(75	)		(75	)
Balance, September 30, 2022		3,576,411		$	2,366	$	24,475		$	124,792		$	(89,472	)	$	(4,037	)	$	58,124
The accompanying notes are an integral part of the consolidated financial statements.

6

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS

	(in thousands, unaudited)
For the Nine Months Ended September 30,	2023			2022
Operating Activities
Net income	$	8,349		$	10,474
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,246			1,268
Reversal of provision for credit losses		(1,137	)		—
Net gain on calls and sales of debt and equity securities		(185	)		(493	)
Net unrealized loss on equity securities		654			2,628
Net gain on sale of loans		(5	)		(6	)
Proceeds from sales of residential mortgages held-for-sale		640			304
Origination of residential mortgages held-for-sale		(1,081	)		(298	)
Increase in cash surrender value of bank-owned life insurance		(245	)		(277	)
Stock-based compensation expense		134			57
Deferred income tax benefit		(102	)		(646	)
Net decrease in income taxes payable		(1,189	)		(422	)
Net (increase) decrease in accrued interest receivable		(552	)		478
Fair value remeasurements on interest rate swap		64			—
Amortization of mortgage servicing rights and change in valuation allowance		44			58
Net amortization of premiums and discounts on investment securities		1,289			1,721
Net increase (decrease) in accrued interest payable		2,812			(7	)
Operating lease payments		(469	)		(464	)
Increase in other assets		(1,595	)		(669	)
Decrease in other liabilities		(247	)		(843	)
Net cash provided by operating activities		8,425			12,863
Investing Activities
Proceeds from payments, maturities and calls of investments available-for-sale		38,040			61,413
Proceeds from the sale of investments available-for-sale		9,081			—
Proceeds from the sale of equity securities		8,180			1,541
Purchases of investments available-for-sale		(11,922	)		(35,001	)
Purchases of equity securities		(1,101	)		(1,715	)
Proceeds from redemption of investment in restricted stock		7,629			7,476
Purchases of restricted stock		(5,166	)		(9,019	)
Net increase in loans		(20,847	)		(81,682	)
Net purchases of premises and equipment		(617	)		(456	)
Redemption of Bank Owned Life Insurance investment		—			234
Net cash provided by (used in) investing activities		23,277			(57,209	)
Financing Activities
Net decrease in non-interest bearing deposits		(39,623	)		(6,839	)
Net increase in interest-bearing deposits		104,587			33,762
Net (decrease) increase in short-term borrowings		(64,624	)		24,420
Proceeds from long-term debt		20,000			—
Repayment of long-term debt		(10,000	)		—
Cash dividends paid, net of reinvestment		(3,485	)		(3,379	)
Purchase of treasury shares		—			(75	)
Proceeds from issuance of common stock		685			285
Net cash provided by financing activities		7,540			48,174
Increase in cash and cash equivalents		39,242			3,828
Cash and cash equivalents at beginning of year		15,899			13,390
Cash and cash equivalents at end of period	$	55,141		$	17,218
Supplemental Cash Flow Disclosures
Interest paid	$	17,051		$	4,471
Net income taxes paid		3,232			3,174
Non-cash transactions:
Cumulative change in accounting principal		857			—
Right-of-use assets obtained in exchange for new operating lease liabilities		369			43
The accompanying notes are an integral part of the consolidated financial statements.

7

QNB CORP. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of QNB Corp. and its wholly-owned subsidiary, QNB Bank (the “Bank”). The consolidated entity is referred to herein as “QNB” or the “Company”. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in QNB's 2022 Annual Report incorporated in the Form 10-K. Operating results for the three- and nine-month periods ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The unaudited consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of operations for the period and are of a normal and recurring nature.

Tabular information, other than share and per share data, is presented in thousands of dollars.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from such estimates.

QNB has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2023 for items that should potentially be recognized or disclosed in these consolidated financial statements.

2. RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 2023, the Company adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), as amended ("ASU 326"), which replaces the incurred loss methodology with an expected credit losses (“CECL”) for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The measurement under CECL is applicable to loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Additionally, ASU 326 made changes to the accounting for available-for-sale debt securities, requiring credit losses to be presented as an allowance rather as a write-down on available-for-sale debt securities management does not intend to sell or believes it is more-likely-than-not they will be required to sell. The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans, available for sale securities, and held to maturity securities. Accrued interest receivable is reported as a component of accrued interest receivable on the Consolidated Statement of Financial Condition.

The Company adopted CECL using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for reporting periods beginning after December 31, 2022 are presented under ASU 326 while prior period amounts continue to be reported in accordance with previously applicable US GAAP. The Company recorded a net increase of $857,000 to retained earnings as of January 1, 2023 for the cumulative effect of adopting ASU 326.

8

The following table illustrates the impact of ASC 326:

January 1, 2023
	As Reported under ASC 326			Pre-ASC 326 Adoption			Impact of ASC 326 Adoption
Assets:
Commercial loans:
Revolving real estate secured by 1-4 family properties	$	5,255		$	—		$	5,255
Retail loans:
1-4 family residential mortgages		105,524			105,654			(130	)
Construction-individual		130			—			130
Revolving home equity secured by 1-4 family properties		36,732			41,987			(5,255	)
Allowance for credit losses on loans (ACL):
Commercial:
Commercial and industrial		(1,246	)		(1,316	)		70
Construction and land development		(745	)		(755	)		10
Real estate secured by multi-family properties		(1,679	)		(995	)		(684	)
Real estate secured by owner-occupied properties		(1,175	)		(1,549	)		374
Real estate secured by other commercial properties		(1,330	)		(2,458	)		1,128
Revolving real estate secured by 1-4 family properties-business		(32	)		(25	)		(7	)
Real estate secured by 1st lien on 1-4 family properties-business		(1,700	)		(1,210	)		(490	)
Real estate secured by junior lien on 1-4 family properties-business		(16	)		(30	)		14
State and political subdivisions		(74	)		(94	)		20
Retail:
1-4 family residential mortgages		(486	)		(682	)		196
Construction-individual		(1	)		(1	)		—
Revolving home equity secured by 1-4 family properties-personal		(292	)		(299	)		7
Real estate secured by 1st lien on 1-4 family properties-personal		(72	)		(57	)		(15	)
Real estate secured by junior lien on 1-4 family properties-personal		(84	)		(55	)		(29	)
Student loans		(466	)		(454	)		(12	)
Overdrafts		(11	)		(8	)		(3	)
Other consumer		(33	)		(41	)		8
Unallocated		—			(502	)		502
Total ACL		(9,442	)		(10,531	)		1,089
Deferred tax assets		4,540			4,767			(227	)
Liabilities:
Allowance for credit losses on unused commitments	$	122		$	117		$	5
Equity:
Retained earnings	$	129,808		$	128,951		$	857

The Company adopted ASU 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging--Portfolio Layer Method ("ASC 2022-01") as of the first fiscal year beginning after 12/15/2022. ASC 2022-01 allows for the use of an amortizing notional swap when entering a portfolio layer method hedge. This guidance now allows the interest rate swap to be considered a hedge of a single layer of portfolio.

9

3. STOCK-BASED COMPENSATION AND SHAREHOLDERS’ EQUITY

QNB maintains a 2015 Stock Incentive Plan (the "2015 Plan"), administered by a Board committee (the “Committee”), under which both qualified and non-qualified stock options may be granted periodically to certain employees. Compensation cost has been measured using the fair value of an award on the grant date and is recognized over the service period, which is usually the vesting period.

Stock-based compensation expense related to the 2015 Plan was $23,000 and $4,000 for the three months ended September 30, 2023 and 2022, respectively. Stock-based compensation expense related to the 2015 Plan was $67,000 and $50,000 for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023, there was approximately $190,000 of unrecognized compensation cost related to unvested share-based compensation award grants that is expected to be recognized over the next 53 months.

Options are granted to certain employees at prices equal to the market value of the stock on the date the options are granted. The 2015 Plan authorized the issuance of 300,000 shares. The time period during which any option is exercisable under the 2015 Plan is determined by the Committee but shall not commence before the expiration of six months after the date of grant or continue beyond the expiration of five years after the date the option is awarded. The granted options vest after a three-year period. The 2015 Plan was amended, effective January 1, 2023, to increase the maximum term of any options granted under the plan from five years to ten years, and to also require that awards granted under the Plan will vest 20% each consecutive year commencing on the first anniversary date of the award unless otherwise specified in an award agreement. As of September 30, there were 212,550 options granted, 120,875 options forfeited, 20,825 options exercised, and 121,550 options outstanding under this Plan. The 2015 Plan expires on February 24, 2025.

The following assumptions were used in the option pricing model in determining the fair value of options granted during the period:

For the Nine Months Ended September 30,	2023			2022
Risk free interest rate		3.64	%		1.25	%
Dividend yield		4.80	%		3.64	%
Volatility		20.36	%		22.68	%
Expected life (years)		8.35			4.05

The risk-free interest rate was selected based upon yields of U.S. Treasury securities with a term approximating the expected life of the option being valued. Historical information was the basis for the selection of the expected dividend yield, expected volatility and expected lives of the options.

The fair market value of options granted in the nine months ended September 30, 2023 and 2022 was $4.11 and $5.20, respectively.

Stock option activity during the nine months ended September 30, 2023 and 2022 is as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2022		109,150		$	37.65
Granted		35,000			29.51
Exercised		—			—
Forfeited		(22,600	)		43.15
Outstanding at September 30, 2023		121,550		$	34.29		4.09	$	—
Exercisable at September 30, 2023		41,375		$	37.37		0.85	$	—

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2021		113,950		$	37.58
Granted		29,350			37.26
Exercised		—			—
Forfeited		(33,450	)		36.99
Outstanding at September 30, 2022		109,850		$	37.68		2.19	$	—
Exercisable at September 30, 2022		43,925		$	40.82		0.64	$	—

10

QNB maintains a 2021 Employee Stock Purchase Plan (the "2021 ESPP") offering eligible employees an opportunity to purchase shares of QNB Corp. common stock at a 10% discount from the lesser of fair market value on the first or last day of each offering period (as defined by the Plan). Stock-based compensation expense related to the 2021 ESPP was $7,000 and $7,000 for the nine months ended September 30, 2023 and 2022, respectively. The 2021 ESPP authorized the issuance of 30,000 shares. As of September 30, 2023, 10,451 shares were issued under the 2021 ESPP Plan. The 2021 ESPP Plan expires May 31, 2026.

The QNB Corp. 2023 Non-Employee Director Compensation Plan was approved by shareholders on May 23, 2023 (The "Director Compensation Plan"). The Director Compensation Plan authorized the issuance of 50,000 shares, is effective January 1, 2023 and expires on January 1, 2033. The Plan requires each non-employee director of the QNB, or any subsidiary of QNB designated by the Board (including QNB Bank), to receive $8,000 of their total annual compensation for service as a director in the form of the QNB’s common stock. Under the Director Compensation Plan, commencing with the six-month period ended June 30, 2023, each non-employee director will receive, in addition to any cash compensation otherwise payable, a semi-annual grant of such number of shares of the QNB’s common stock determined by dividing (i) the Semi-Annual Stock Payment Amount of $4,000 by (ii) the market value of a share of common stock determined as of June 30 or December 31 of any year, as applicable. Payments will be made under the Director Compensation Plan only to non-employee directors in office on the applicable payment date. As of September 30, 2023, 1,740 shares were issued to non-employee directors and there were 48,260 shares remaining under the Plan. Stock-based compensation expense related to the Director Compensation Plan was $20,000 for the three months ended September 30, 2023 and $60,000 for the nine months ended September 30, 2023.

4. EARNINGS PER SHARE & SHARE REPURCHASE PLAN

The following sets forth the computation of basic and diluted earnings per share:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator for basic and diluted earnings per share - net income	$	2,344	$	3,415	$	8,349	$	10,474
Denominator for basic earnings per share - weighted    average shares outstanding		3,613,230		3,567,987		3,600,137		3,560,064
Effect of dilutive securities - employee stock options		—		—		—		—
Denominator for diluted earnings per share - adjusted    weighted average shares outstanding		3,613,230		3,567,987		3,600,137		3,560,064
Earnings per share - basic	$	0.65	$	0.96	$	2.32	$	2.94
Earnings per share - diluted		0.65		0.96		2.32		2.94

There were 121,550 and 109,850 stock options that were anti-dilutive for the three-month periods ended September 30, 2023 and 2022, respectively. There were 121,550 and 109,850 stock options that were anti-dilutive for the nine-month periods ended September 30, 2023 and 2022, respectively. These stock options were not included in the above calculation.

QNB’s current stock repurchase plan was originally approved by the Board of Directors on January 21, 2008, increased in amount on February 9, 2009 to 100,000 shares, and subsequently increased on April 29, 2021 to up to 200,000 shares of common stock in the open market or privately negotiated transactions. The repurchase authorization has no termination date. There were 0 and 2,000 shares repurchased during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, 102,000 shares were repurchased under this authorization at an average price of $24.93 and a total cost of approximately $2,543,000.

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5. COMPREHENSIVE INCOME (LOSS)

The following shows the components of accumulated other comprehensive loss at September 30, 2023 and December 31, 2022:

	September 30,			December 31,
	2023			2022
Unrealized net holding losses on available-for-sale    securities	$	(117,641	)	$	(102,692	)
Unrealized gains (losses) on available-for-sale securities    for which a portion of an other-than-temporary    impairment loss has been recognized in earnings		—			—
Unrealized net holding gains (losses) on interest rate swaps		10,623			—
Accumulated other loss		(107,018	)		(102,692	)
Tax effect		22,474			21,565
Accumulated other comprehensive loss, net of tax	$	(84,544	)	$	(81,127	)

The following table presents amounts reclassified out of accumulated other comprehensive loss for the three and nine months ended September 30, 2023 and 2022:

For the Three Months Ended September 30,	Amount reclassified from accumulated other comprehensive loss
Details about accumulated other comprehensive loss	2023			2022		Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	—		$	—	Net gain (loss) on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—	Net other-than-temporary impairment losses on investment securities
Fair value remeasurements on fair value hedges		(26	)		—	Interest and dividends on available-for-sale & equity securities
		(26	)		—
Tax effect		5			—	Provision for income taxes
Total reclassification out of accumulated other comprehensive loss, net of tax	$	(21	)	$	—	Net of tax

For the Nine Months Ended September 30,	Amount reclassified from accumulated other comprehensive loss
Details about accumulated other comprehensive loss	2023			2022			Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	(257	)	$	4		Net gain (loss) on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—		Net other-than-temporary impairment losses on investment securities
Fair value remeasurements on fair value hedges		(64	)		—		Interest and dividends on available-for-sale & equity securities
		(321	)		4
Tax effect		67			(1	)	Provision for income taxes
Total reclassification out of accumulated other comprehensive loss, net of tax	$	(254	)	$	3		Net of tax

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6. INVESTMENT SECURITIES

Available-For-Sale Securities

The amortized cost and estimated fair values of investment securities available-for-sale at September 30, 2023 and December 31, 2022 were as follows:

	Fair		Gross unrealized holding		Gross unrealized holding			Gross unrealized fair value hedge		Amortized
September 30, 2023	value		gains		losses			gains (1)		cost
U.S. Treasury	$	6,922	$	—	$	(2	)	$	—	$	6,924
U.S. Government agency		86,226		—		(15,722	)		—		101,948
State and municipal		83,630		—		(28,471	)		3,041		109,060
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		233,361		—		(52,645	)		7,582		278,424
Collateralized mortgage obligations (CMOs)		89,185		—		(20,154	)		—		109,339
Corporate debt and money market funds		6,066		—		(647	)		—		6,713
Total investment debt securities available-for-sale	$	505,390	$	—	$	(117,641	)	$	10,623	$	612,408
(1) See Footnote 13

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
December 31, 2022	value		gains		losses			cost
U.S. Treasuries	$	301	$	2	$	—		$	299
U.S. Government agency		86,709		—		(15,233	)		101,942
State and municipal		95,367		—		(23,494	)		118,861
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		256,161		—		(45,303	)		301,464
Collateralized mortgage obligations (CMOs)		101,672		—		(18,338	)		120,010
Corporate debt		6,315		—		(326	)		6,641
Total investment debt securities available-for-sale	$	546,525	$	2	$	(102,694	)	$	649,217

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at September 30, 2023 is shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities are assigned to categories based on contractual maturity except for mortgage-backed securities and CMOs which are based on the estimated average life of these securities and municipal securities that have been pre-refunded.

September 30, 2023	Fair value		Amortized cost
Due in one year or less	$	10,261	$	10,417
Due after one year through five years		118,489		135,377
Due after five years through ten years		301,129		372,883
Due after ten years		75,511		93,731
Total investment debt securities available-for-sale	$	505,390	$	612,408

There were no proceeds from the sale of investment securities available-for-sale for the three months ended September 30, 2023 and 2022. Proceeds from sales of investment securities available-for-sale were approximately $9,081,000 and $0 for the nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023 and December 31, 2022, investment securities available-for-sale totaling approximately $294,104,000 and $237,645,000, respectively, were pledged as collateral for repurchase agreements and deposits of public funds.

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The following table presents information related to the Company’s gains and losses on the sales and calls of securities available-for-sale, and losses recognized for the impairment of these investments. Gains and losses on available-for-sale securities are computed on the specific identification method and included in non-interest income. Gross realized losses on debt securities are net of impairment charges:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023			2022
Gross realized gains	$	—	$	—	$	—		$	4
Gross realized losses		—		—		(257	)		—
Impairment		—		—		—			—
Total net gains (losses) on AFS securities	$	—	$	—	$	(257	)	$	4

The tax applicable to the net realized gains for both of the three-month periods ended September 30, 2023 and 2022 was $0 and $0, respectively. The tax applicable to the net realized gains for both of the nine-month periods ended September 30, 2023 and 2022 was $54,000 and $1,000, respectively.

QNB recognizes impairment for debt securities classified as available-for-sale in accordance with FASB ASC 320, Investments – Debt and Equity Securities, which requires an assessment of whether QNB intends to sell or it is more likely than not that QNB will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that QNB does not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, the amount of the impairment is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and, therefore, is not required to be recognized as a loss in the statement of income but is recognized in other comprehensive income. QNB believes that it will fully collect the carrying value of securities on which it has recorded a non-credit related impairment in other comprehensive income. No credit impairments were recognized on debt securities during the three or nine months ended September 30, 2023 and 2022, respectively.

The following table indicates the length of time individual debt securities have been in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022:

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2023	securities		value		losses			value		losses			value		losses
U.S. Treasury		13	$	6,922	$	(2	)	$	—	$	—		$	6,922	$	(2	)
U.S. Government agency		46		—		—			86,226		(15,722	)		86,226		(15,722	)
State and municipal		192		369		(11	)		80,254		(28,460	)		80,623		(28,471	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		191		2		—			225,807		(52,645	)		225,809		(52,645	)
Collateralized mortgage obligations (CMOs)		127		—		—			89,185		(20,154	)		89,185		(20,154	)
Corporate debt and money market funds		4		98		(7	)		5,969		(640	)		6,067		(647	)
Total		573	$	7,391	$	(20	)	$	487,441	$	(117,621	)	$	494,832	$	(117,641	)

14

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2022	securities		value		losses			value		losses			value		losses
U.S. Government agency		46	$	3,647	$	(353	)	$	83,062	$	(14,880	)	$	86,709	$	(15,233	)
State and municipal		216		50,156		(7,816	)		45,210		(15,678	)		95,366		(23,494	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		197		58,811		(6,775	)		197,351		(38,528	)		256,162		(45,303	)
Collateralized mortgage obligations (CMOs)		129		35,797		(3,983	)		65,875		(14,355	)		101,672		(18,338	)
Corporate debt		4		6,262		(318	)		53		(8	)		6,315		(326	)
Total		592	$	154,673	$	(19,245	)	$	391,551	$	(83,449	)	$	546,224	$	(102,694	)

Management evaluates debt securities, which are comprised of U.S. Treasury, U.S. Government agencies, state and municipalities, mortgage-backed securities, CMOs and corporate debt securities, for other-than-temporary impairment and considers the current economic conditions, the length of time and the extent to which the fair value has been less than cost, interest rates and the bond rating of each security. The unrealized losses at September 30, 2023 in U.S. Treasury, U.S. Government agency securities, state and municipal securities, mortgage-backed securities, and CMOs are primarily the result of interest rate fluctuations. If held to maturity, these bonds will mature at par, and QNB will not realize a loss. QNB has the intent to hold the securities and does not believe it will be required to sell the securities before recovery occurs.

QNB holds one pooled trust preferred security as of September 30, 2023. This security has a total amortized cost of approximately $60,000 and a fair value of $52,000. The pooled trust preferred security is available-for-sale and is carried at fair value.

Marketable Equity Securities

The Company’s investment in marketable equity securities primarily consists of investments with readily determinable fair values in large cap stock companies. Changes in fair value is recorded in unrealized gain/(losses) in non-interest income.

At September 30, 2023 and December 31, 2022, the Company had $4,765,000 and $12,056,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2023 and 2022:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net (loss) gains recognized during the period on equity securities	$	(7	)	$	(1,174	)	$	(212	)	$	(2,139	)
Less: Net (losses) gains recognized during the period on equity securities sold during the period		131			—			442			489
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	(138	)	$	(1,174	)	$	(654	)	$	(2,628	)

Taxes applicable to the net gains (losses) recognized for the three months ended September 30, 2023 resulted in an benefit of $2,000 compared to a benefit of $339,000 for the three months ended September 30, 2022. Taxes applicable to the net gains (losses) recognized for the nine months ended September 30, 2023 and 2022 was a benefit of $61,000 and a benefit of $618,000, respectively. Proceeds from sales of investment equity securities were $8,180,000 and $1,541,000 for the nine months ended September 30, 2023 and 2022, respectively.

7. RESTRICTED INVESTMENT IN STOCKS

Restricted investment in stocks includes Federal Home Loan Bank of Pittsburgh (“FHLB”) with a carrying cost of $1,718,000, Atlantic Community Bankers Bank (“ACBB”) stock with a carrying cost of $12,000, VISA Class B stock with a carrying cost of $0 and Senior Housing Crime Prevention Investment Corporation ("SHCPFIC") preferred stock of $1,000,000 at September 30, 2023. FHLB and ACBB stock was issued to the Bank as a requirement to facilitate the Bank’s participation in borrowing and other banking services. The SHCPFIC stock was issued to the Bank to enable its participation in a Community Reinvestment Act qualified investment. The Bank’s investment in FHLB stock may fluctuate, as it is based on the member banks’ use of FHLB’s services.

15

The Bank owns 6,502 shares of Visa Class B stock, which was necessary to participate in Visa services in support of the Bank’s credit card, debit card, and related payment programs (permissible activities under banking regulations) as a member institution. Following the resolution of Visa’s covered litigation, shares of Visa’s Class B stock will be converted to Visa Class A shares using a conversion factor (1.5875 as of September 28, 2023), which is periodically adjusted to reflect VISA’s ongoing litigation costs. There is a very limited market for this stock, as only current owners of Class B shares are permitted to transact in Class B. Due to the lack of orderly trades and public information of such trades, Visa Class B stock does not have a readily determinable fair value.

The Bank owns 100 shares of preferred stock of SHCPFIC. These shares are not transferable without the consent of SHCPFIC and does not have a readily determinable fair value.

These restricted investments are carried at cost and evaluated for impairment periodically. As of September 30, 2023, there was no impairment associated with these shares.

8. LOANS & ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at the principal amount outstanding, net of deferred loan fees and costs. Interest income is accrued on the principal amount outstanding. Loan origination and commitment fees and related direct costs are deferred and amortized to income over the term of the respective loan and loan commitment period as a yield adjustment.

Loans held-for-sale consists of residential mortgage loans that are carried at the lower of aggregate cost or fair value. Net unrealized losses, if any, are recognized through a valuation allowance charged to income. Gains and losses on residential mortgages held-for-sale are included in non-interest income.

The Company maintains an allowance for credit losses on loans, which is intended to absorb probable known and inherent losses in the outstanding loan portfolio. The allowance is reduced by actual credit losses and is increased or decreased by the provision (reversal) for loan losses and increased by recoveries of previous losses. The provisions or reversals for credit losses are charged to earnings to bring the total allowance for loan losses to a level considered necessary by management.

The allowance for credit losses is measured on a pool basis when similar risk characteristics exist; these pools are identified in the first table below. The Company establishes a general valuation allowance for performing loans, including non-accrual student loans. QNB calculates each segment's historical loss rate using a full economic cycle of loan balance and historical loss experienced. The level of the allowance is determined by assigning specific reserves to all non-accrual loans, except the homogeneous pool of student loans which are measured in the general reserve. An allowance on these non-accrual loans is established when the discounted cash flows (or collateral value) of the loan is lower than the carrying value of that loan. The portion of the allowance that is allocated to non-accrual loans is determined by estimating the inherent loss on each credit after giving consideration to the value of underlying collateral. The general component is adjusted for qualitative factors. These qualitative risk factors include:

1.Concentrations: The Company adjusts historic loss for concentrations in the current portfolio that were not present during the down-turn of economic cycle.

2.Economic Forecast: The Company utilizes an entire economic cycle of data to determine loss rates by segment. This approach reflects an inherent reversion to the historical losses during life of the loans within the pool considering prepayments and loss experience throughout an entire economic cycle. However, the Company feels it is prudent to maintain a floor in its model to assure that there is enough reserve on hand to sustain any losses upon an upcoming recession.

Management emphasizes loan quality and close monitoring of potential problem credits. Credit risk identification and review processes are utilized in order to assess and monitor the degree of risk in the loan portfolio. The Company’s lending and credit administration staff are charged with reviewing the loan portfolio and identifying changes in the economy or in a borrower’s circumstances which may affect the ability to repay debt or the value of pledged collateral. A loan classification and review system exists that identifies those loans with a higher than normal risk of collectability. Each commercial loan is assigned a grade based upon an assessment of the borrower’s financial capacity to service the debt and the presence and value of collateral for the loan. An independent firm reviews risk assessment and evaluates the adequacy of the allowance for loan losses. Management meets monthly to review the credit quality of the loan portfolio and quarterly to review the allowance for loan losses.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for credit losses on loans. Such agencies may require the Company to recognize additions to the allowance based on their judgments using information available to them at the time of their examination.

Management believes that it uses the best information available to make determinations about the adequacy of the allowance and that it has established its existing allowance for credit losses on loans in accordance with U.S. GAAP. If circumstances differ substantially

16

from the current calculation, future adjustments to the allowance for credit losses on loans may be necessary and results of operations could be affected. Because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that increases to the allowance will not be necessary should the quality of any loans deteriorate.

Major classes of loans are as follows:

	September 30,
	2023
Commercial:
Commercial and industrial	$	129,425
Construction and land development		99,958
Real estate secured by multi-family properties		106,644
Real estate secured by owner-occupied properties		163,163
Real estate secured by other commercial properties		261,539
Revolving real estate secured by 1-4 family properties-business		6,960
Real estate secured by 1st lien on 1-4 family properties-business		99,047
Real estate secured by junior lien on 1-4 family properties-business		3,457
State and political subdivisions		19,854
Retail:
1-4 family residential mortgages		108,304
Construction-individual		328
Revolving home equity secured by 1-4 family properties-personal		33,151
Real estate secured by 1st lien on 1-4 family properties-personal		11,651
Real estate secured by junior lien on 1-4 family properties-personal		13,522
Student loans		1,746
Overdrafts		171
Other consumer		1,773
Total loans		1,060,693
Net unearned (fees) costs		(243	)
Allowance for credit losses on loans		(8,542	)
Loans receivable, net	$	1,051,908

	December 31,
	2022
Commercial:
Commercial and industrial	$	160,875
Construction		62,955
Secured by commercial real estate		518,070
Secured by residential real estate		103,419
State and political subdivisions		20,971
Retail:
1-4 family residential mortgages		105,654
Home equity loans and lines		63,580
Consumer		4,113
Total loans		1,039,637
Net unearned (fees) costs		(252	)
Allowance for loan losses		(10,531	)
Loans receivable, net	$	1,028,854

Overdrafts are reclassified as loans and at December 31, 2022 are included in consumer loans above and total loans receivable on the Consolidated Balance Sheets. At December 31, 2022, overdrafts were approximately $132,000. Loans secured by commercial real estate include all loans collateralized at least in part by commercial real estate. These loans may not be for the express purpose of conducting commercial real estate transactions.

QNB generally lends in Bucks, Lehigh, and Montgomery counties in southeastern Pennsylvania. To a large extent, QNB makes loans collateralized at least in part by real estate. Its lending activities could be affected by changes in the general economy, the regional economy, or real estate values.

17

The Company engages in a variety of lending activities, including commercial, residential real estate and consumer transactions. The Company focuses its lending activities on individuals, professionals and small to medium sized businesses. Risks associated with lending activities include economic conditions and changes in interest rates, which can adversely impact both the ability of borrowers to repay their loans and the value of the associated collateral.

Commercial and industrial loans, commercial real estate loans, construction loans and residential real estate loans with a business purpose are generally perceived as having more risk of default than residential real estate loans with a personal purpose and consumer loans. These types of loans involve larger loan balances to a single borrower or groups of related borrowers and are more susceptible to a risk of loss during a downturn in the business cycle. These loans may involve greater risk because the availability of funds to repay these loans depends on the successful operation of the borrower’s business. The assets financed are used within the business for its ongoing operation. Repayment of these kinds of loans generally comes from the cash flow of the business or the ongoing conversions of assets, such as accounts receivable and inventory, to cash. Typical collateral for commercial and industrial loans includes the borrower’s accounts receivable, inventory and machinery and equipment. Commercial real estate and residential real estate loans secured for a business purpose are originated primarily within the eastern Pennsylvania market area at conservative loan-to-value ratios and often backed by the individual guarantees of the borrowers or owners. Repayment of this kind of loan is dependent upon either the ongoing cash flow of the borrowing entity or the resale or lease of the subject property. Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, as well as the factors affecting residential real estate borrowers.

Loans to state and political subdivisions are tax-exempt or taxable loans to municipalities, school districts and housing and industrial development authorities. These loans can be general obligations of the municipality or school district repaid through their taxing authority, revenue obligations repaid through the income generated by the operations of the authority, such as a water or sewer authority, or loans issued to a housing and industrial development agency, for which a private corporation is responsible for payments on the loans.

The Company originates fixed-rate and adjustable-rate real estate-residential mortgage loans for personal purposes that are secured by first liens on the underlying 1-4 family residential properties. Credit risk exposure in this area of lending is minimized by the evaluation of the credit worthiness of the borrower, including debt-to-income ratios, credit scores and adherence to underwriting policies that emphasize conservative loan-to-value ratios of generally no more than 80%. Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion are generally insured by private mortgage insurance.

The real estate-home equity portfolio consists of fixed-rate home equity loans and variable-rate home equity lines of credit. Risks associated with loans secured by residential properties are generally lower than commercial loans and include general economic risks, such as the strength of the job market, employment stability and the strength of the housing market. Since most loans are secured by a primary or secondary residence, the borrower’s continued employment is the greatest risk to repayment.

The Company offers a variety of loans to individuals for personal and household purposes. Consumer loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or, if they are secured, the value of the collateral may be difficult to assess and is more likely to decrease in value than real estate. Credit risk in this portfolio is controlled by conservative underwriting standards that consider debt-to-income levels and the creditworthiness of the borrower and, if secured, collateral values.

The Company employs a ten-grade risk rating system related to the credit quality of commercial loans and loans to state and political subdivisions of which the first six categories are pass categories (credits not adversely rated). The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating.

1.Excellent - no apparent risk

2.Good - minimal risk

3.Acceptable - lower risk

4.Acceptable - average risk

5.Acceptable – higher risk

6.Pass watch

7.Special Mention - potential weaknesses

8.Substandard - well defined weaknesses

18

9.Doubtful - full collection unlikely

10.Loss - considered uncollectible

The Company maintains a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential problem loans. Each loan officer assigns a rating to all loans in the portfolio at the time the loan is originated. Loans with risk ratings of one through five are reviewed annually based on the borrower’s fiscal year. Loans with risk ratings of six are reviewed every six to twelve months based on the dollar amount of the relationship with the borrower. Loans with risk ratings of seven through ten are reviewed at least quarterly, and as often as monthly, at management’s discretion. The Company also utilizes an outside loan review firm to review the portfolio on a semi-annual basis to provide the Board of Directors and senior management an independent review of the Company’s loan portfolio on an ongoing basis. These reviews are designed to recognize deteriorating credits in their earliest stages in an effort to reduce and control risk in the lending function as well as identifying potential shifts in the quality of the loan portfolio. The examinations by the outside loan review firm include the review of lending activities with respect to underwriting and processing new loans, monitoring the risk of existing loans and to provide timely follow-up and corrective action for loans showing signs of deterioration in quality. In addition, the outside firm reviews the methodology for the allowance for loan losses to determine compliance to policy and regulatory guidance.

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of September 30, 2023 and December 31, 2022:

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	11,675	$	15,261	$	9,197	$	6,624	$	6,179	$	7,696	$	71,556	$	128,188
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		1,237		1,237
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	11,675	$	15,261	$	9,197	$	6,624	$	6,179	$	7,696	$	72,793	$	129,425
Construction and land development:
Risk rating
Pass	$	32,038	$	42,023	$	14,091	$	3,275	$	4,078	$	4,408	$	—	$	99,913
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		45		—		45
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	32,038	$	42,023	$	14,091	$	3,275	$	4,078	$	4,453	$	—	$	99,958
Real estate secured by multi-family properties:
Risk rating
Pass	$	7,358	$	29,036	$	23,565	$	9,909	$	5,848	$	28,049	$	—	$	103,765
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		709		2,170		—		2,879
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	7,358	$	29,036	$	23,565	$	9,909	$	6,557	$	30,219	$	—	$	106,644
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	12,648	$	29,879	$	28,325	$	19,262	$	12,158	$	55,004	$	—	$	157,276
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—				—		—		5,887		—		5,887
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	12,648	$	29,879	$	28,325	$	19,262	$	12,158	$	60,891	$	—	$	163,163
Real estate secured by other commercial properties:

19

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Risk rating
Pass	$	21,258	$	44,999	$	43,063	$	19,829	$	29,232	$	102,282	$	—	$	260,663
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		876		—		876
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	21,258	$	44,999	$	43,063	$	19,829	$	29,232	$	103,158	$	—	$	261,539
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	6,960	$	6,960
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	6,960	$	6,960
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	7,685	$	29,096	$	21,313	$	10,510	$	8,771	$	20,763	$	—	$	98,138
Special mention		—		—		138		—		—		—		—		138
Substandard		—		157		—		—		277		337		—		771
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by 1st lien on 1-4 family properties-business	$	7,685	$	29,253	$	21,451	$	10,510	$	9,048	$	21,100	$	—	$	99,047
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	479	$	611	$	551	$	592	$	41	$	964	$	—	$	3,238
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		219		—		219
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	479	$	611	$	551	$	592	$	41	$	1,183	$	—	$	3,457
State and political subdivisions:
Risk rating
Pass	$	678	$	—	$	4,565	$	21	$	5,931	$	8,659	$	—	$	19,854
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	678	$	—	$	4,565	$	21	$	5,931	$	8,659	$	—	$	19,854
Total Commercial Loans:
Risk rating
Pass	$	93,819	$	190,905	$	144,670	$	70,022	$	72,238	$	227,825	$	78,516	$	877,995
Special mention		—		—		138		—		—		—		—		138
Substandard		—		157		—		—		986		9,534		1,237		11,914
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	93,819	$	191,062	$	144,808	$	70,022	$	73,224	$	237,359	$	79,753	$	890,047

December 31, 2022	Pass		Special mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	157,914	$	23	$	2,938	$	—	$	160,875
Construction		62,955		—		—		—		62,955
Secured by commercial real estate		505,657		2,597		9,816		—		518,070
Secured by residential real estate		102,295		194		930		—		103,419
State and political subdivisions		20,971		—		—		—		20,971
Total	$	849,792	$	2,814	$	13,684	$	—	$	866,290

20

For retail loans, the Company evaluates credit quality based on the performance of the individual credits. The following tables present the recorded investment in the retail classes of the loan portfolio based on payment activity as of September 30, 2023 and December 2022:

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Retail Loans
1-4 family residential mortgages:
Payment performance
Performing	$	10,775	$	14,739	$	30,773	$	20,757	$	4,567	$	25,891	$	—	$	107,502
Nonperforming		—		—		—		—		—		802		—		802
Total 1-4 family residential mortgages	$	10,775	$	14,739	$	30,773	$	20,757	$	4,567	$	26,693	$	—	$	108,304
Construction-individual:
Payment performance
Performing	$	—	$	—	$	328	$	—	$	—	$	—	$	—	$	328
Nonperforming		—		—		—		—		—		—		—		—
Total construction-individual	$	—	$	—	$	328	$	—	$	—	$	—	$	—	$	328
Revolving home equity secured by 1-4 family properties-personal:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	32,979	$	32,979
Nonperforming		—		—		—		—		—		—		172		172
Total revolving home equity secured by 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	—	$	33,151	$	33,151
Real estate secured by 1st lien on 1-4 family properties-personal:
Payment performance
Performing	$	2,277	$	1,657	$	3,053	$	1,095	$	960	$	2,488	$	—	$	11,530
Nonperforming		—		—		—		—		—		121		—		121
Total real estate secured by 1st lien Real estate secured by 1st lien on 1-4 family properties-personal	$	2,277	$	1,657	$	3,053	$	1,095	$	960	$	2,609	$	—	$	11,651
Real estate secured by junior lien on 1-4 family properties-personal:
Payment performance
Performing	$	4,029	$	1,690	$	2,357	$	1,232	$	721	$	3,474	$	—	$	13,503
Nonperforming		—		19		—		—		—		—		—		19
Total real estate secured by junior lien on 1-4 family properties-personal	$	4,029	$	1,709	$	2,357	$	1,232	$	721	$	3,474	$	—	$	13,522
Student loans:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	1,729	$	—	$	1,729
Nonperforming		—		—		—		—		—		17		—		17
Total student loans	$	—	$	—	$	—	$	—	$	—	$	1,746	$	—	$	1,746
Overdrafts:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	171	$	171
Nonperforming		—		—		—		—		—		—		—		—
Total overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	171	$	171
Other consumer:
Payment performance
Performing	$	636	$	329	$	300	$	107	$	96	$	52	$	215	$	1,735
Nonperforming		—		—		—		—		—		38		—		38
Total other consumer	$	636	$	329	$	300	$	107	$	96	$	90	$	215	$	1,773
Total Retail Loans:
Payment performance
Performing	$	17,717	$	18,415	$	36,811	$	23,191	$	6,344	$	33,634	$	33,365	$	169,477
Nonperforming		—		19		—		—		—		978		172		1,169
Total Retail Loans	$	17,717	$	18,434	$	36,811	$	23,191	$	6,344	$	34,612	$	33,537	$	170,646

21

December 31, 2022	Performing		Non-performing		Total
Retail:
1-4 family residential mortgages	$	105,193	$	461	$	105,654
Home equity loans and lines		63,178		402		63,580
Consumer		4,051		62		4,113
Total	$	172,422	$	925	$	173,347

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of September 30, 2023 and December 31, 2022:

September 30, 2023	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	83	$	—	$	—	$	83	$	129,342	$	129,425
Construction and land development		—		—		—		—		99,958		99,958
Real estate secured by multi-family properties		—		—		—		—		106,644		106,644
Real estate secured by owner-occupied properties		226		—		—		226		162,937		163,163
Real estate secured by other commercial properties		3,725		5,035		—		8,760		252,779		261,539
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		6,960		6,960
Real estate secured by 1st lien on 1-4 family properties-business		231		—		1		232		98,815		99,047
Real estate secured by junior lien on 1-4 family properties-business		7		—		—		7		3,450		3,457
State and political subdivisions		—		—		—		—		19,854		19,854
Retail:
1-4 family residential mortgages		—		362		385		747		107,557		108,304
Construction-individual		—		—		—		—		328		328
Revolving home equity secured by 1-4 family properties-personal		—		129		—		129		33,022		33,151
Real estate secured by 1st lien on 1-4 family properties-personal		—		—		—		—		11,651		11,651
Real estate secured by junior lien on 1-4 family properties-personal		18		—		19		37		13,485		13,522
Student loans		—		14		—		14		1,732		1,746
Overdrafts		16		3		—		19		152		171
Other consumer		5		—		—		5		1,768		1,773
Total	$	4,311	$	5,543	$	405	$	10,259	$	1,050,434	$	1,060,693

December 31, 2022	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	—	$	1,157	$	—	$	1,157	$	159,718	$	160,875
Construction		—		—		—		—		62,955		62,955
Secured by commercial real estate		—		—		—		—		518,070		518,070
Secured by residential real estate		—		—		13		13		103,406		103,419
State and political subdivisions		—		—		—		—		20,971		20,971
Retail:
1-4 family residential mortgages		703		168		216		1,087		104,567		105,654
Home equity loans and lines		95		—		—		95		63,485		63,580
Consumer		37		50		—		87		4,026		4,113
Total	$	835	$	1,375	$	229	$	2,439	$	1,037,198	$	1,039,637

22

As previously discussed, the Company maintains a loan review system, which includes a continuous review of the loan portfolio by internal and external parties to aid in the early identification of potential impaired loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. When placing a loan on non-accrual status, management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. All non-accrual loans, except student loans, are individually evaluated for an allowance for credit losses ("ACL"). This ACL is measured using either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

An allowance for credit loss is established for a non-accrual loan if its carrying value exceeds its estimated fair value. The estimated fair values of the majority of the Company’s non-accrual loans are measured based on the estimated fair value of the loan’s collateral.

For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. The following table disclose the recorded investment in loans receivable that are either on non-accrual status or past due 90 days or more and still accruing interest as of September 30, 2023:

September 30, 2023	90 Days or More Past Due-Still Accruing		Nonaccrual With No Specifically-Related ACL		Nonaccrual With Related ACL		Total Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	—	$	339	$	339
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		188		—		188
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		1		—		1
Real estate secured by junior lien on 1-4 family properties-business		—		—		196		196
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		802		—		802
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		23		149		172
Real estate secured by 1st lien on 1-4 family properties-personal		—		121		—		121
Real estate secured by junior lien on 1-4 family properties-personal		—		19		—		19
Student loans		—		17		—		17
Other consumer		—		38		—		38
Total	$	—	$	1,209	$	684	$	1,893

23

QNB recognized interest income of $557,000 on non-accrual loans during the nine months ended September 30, 2023.

The following table presents the collateral-dependent loans by loan category at September 30, 2023:

September 30, 2023	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	294	$	45	$	339
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		188		—		—		188
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		1						1
Real estate secured by junior lien on 1-4 family properties-business		—		—		196		196
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		802		—		—		802
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		66		—		106		172
Real estate secured by 1st lien on 1-4 family properties-personal		121		—		—		121
Real estate secured by junior lien on 1-4 family properties-personal		19		—		—		19
Other consumer		—		38		—		38
Total	$	1,197	$	332	$	347	$	1,876
(1) Secured by business assets, personal property and equipment or guarantees

The following tables disclose the recorded investment in loans receivable that are either on non-accrual status or past due 90 days or more and still accruing interest as of December 31, 2022:

December 31, 2022	90 days or more past due (still accruing)		Non-accrual
Commercial:
Commercial and industrial	$	—	$	1,575
Construction		—		—
Secured by commercial real estate		—		2,031
Secured by residential real estate		—		289
State and political subdivisions		—		—
Retail:
1-4 family residential mortgages		—		461
Home equity loans and lines		—		402
Consumer		—		62
Total	$	—	$	4,820

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The following table present the balance in the allowance for loan losses at December 31, 2022 disaggregated on the basis of the Company’s impairment method by class of loans receivable along with the balance of loans receivable by class, excluding unearned fees and costs, disaggregated on the basis of the Company’s impairment methodology:

	Allowance for Loan Losses						Loans Receivable
December 31, 2022	Balance		Balance related to loans individually evaluated for impairment		Balance related to loans collectively evaluated for impairment		Balance		Balance individually evaluated for impairment		Balance collectively evaluated for impairment
Commercial:
Commercial and industrial	$	1,316	$	125	$	1,191	$	160,875	$	1,821	$	159,054
Construction		755		—		755		62,955		—		62,955
Secured by commercial real estate		5,002		131		4,871		518,070		5,309		512,761
Secured by residential real estate		1,240		321		919		103,419		1,362		102,057
State and political subdivisions		94		—		94		20,971		—		20,971
Retail:
1-4 family residential mortgages		683		—		683		105,654		628		105,026
Home equity loans and lines		437		119		318		63,580		402		63,178
Consumer		502		—		502		4,113		45		4,068
Unallocated		502	N/A		N/A		N/A		N/A		N/A
Total	$	10,531	$	696	$	9,333	$	1,039,637	$	9,567	$	1,030,070

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The following table summarizes additional information, in regards to impaired loans by loan portfolio class, as of December 31, 2022:

	December 31, 2022
	Recorded investment (after charge-offs)		Unpaid principal balance		Related allowance
With no specific allowance recorded:
Commercial:
Commercial and industrial	$	1,402	$	1,694
Construction		—		—
Secured by commercial real estate		2,198		2,608
Secured by residential real estate		430		482
Retail:
1-4 family residential mortgages		628		678
Home equity loans and lines		240		296
Consumer		45		62
Total	$	4,943	$	5,820
With an allowance recorded:
Commercial:
Commercial and industrial	$	419	$	601	$	125
Construction		—		—		—
Secured by commercial real estate		3,111		3,312		131
Secured by residential real estate		932		1,065		321
Retail:
1-4 family residential mortgages		—		—		—
Home equity loans and lines		162		191		119
Consumer		—		—		—
Total	$	4,624	$	5,169	$	696
Total:
Commercial:
Commercial and industrial	$	1,821	$	2,295	$	125
Construction		—		—		—
Secured by commercial real estate		5,309		5,920		131
Secured by residential real estate		1,362		1,547		321
Retail:
1-4 family residential mortgages		628		678		—
Home equity loans and lines		402		487		119
Consumer		45		62		—
Total	$	9,567	$	10,989	$	696

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Activity in the allowance for credit losses on loans for the three and nine months ended September 30, 2023 and 2022 are as follows:

For the Three Months Ended September 30, 2023	Beginning balance prior to adoption of ASC 326		Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	795	$	256		$	(273	)	$	11	$	789
Construction and land development		854		234			—			—		1,088
Real estate secured by multi-family properties		1,624		85			—			—		1,709
Real estate secured by owner-occupied properties		985		20			—			—		1,005
Real estate secured by other commercial properties		1,228		(102	)		—			—		1,126
Revolving real estate secured by 1-4 family properties-business		37		(1	)		—			—		36
Real estate secured by 1st lien on 1-4 family properties-business		1,277		(2	)		—			3		1,278
Real estate secured by junior lien on 1-4 family properties-business		234		(24	)		—			—		210
State and political subdivisions		51		5			—			—		56
Retail:
1-4 family residential mortgages		433		(17	)		—			—		416
Construction-individual		—		—			—			—		—
Revolving home equity secured by 1-4 family properties-personal		234		(103	)		—			—		131
Real estate secured by 1st lien on 1-4 family properties-personal		67		3			—			—		70
Real estate secured by junior lien on 1-4 family properties-personal		86		109			—			2		197
Student loans		418		(36	)		—			2		384
Overdrafts		13		15			(21	)		7		14
Other consumer		29		10			(6	)		—		33
Total	$	8,365	$	452		$	(300	)	$	25	$	8,542

For the Three Months Ended September 30, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	2,710	$	(503	)	$	(30	)	$	83	$	2,260
Construction		687		(297	)		—			—		390
Secured by commercial real estate		4,336		834			—			—		5,170
Secured by residential real estate		1,181		50			—			36		1,267
State and political subdivisions		77		12			—			—		89
Retail:
1-4 family residential mortgages		680		7			—			—		687
Home equity loans and lines		412		51			—			2		465
Consumer		482		69			(62	)		12		501
Unallocated		732		(223	)	N/A			N/A			509
Total	$	11,297	$	—		$	(92	)	$	133	$	11,338

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For the Nine Months Ended September 30, 2023	Beginning balance prior to adoption of ASC 326		Impact of adopting ASC 326			Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	1,316	$	(70	)	$	(759	)	$	(313	)	$	615	$	789
Construction and land development		755		(10	)		343			—			—		1,088
Real estate secured by multi-family properties		995		684			30			—			—		1,709
Real estate secured by owner-occupied properties		1,549		(374	)		(170	)		—			—		1,005
Real estate secured by other commercial properties		2,458		(1,128	)		(204	)		—			—		1,126
Revolving real estate secured by 1-4 family properties-business		25		7			4			—			—		36
Real estate secured by 1st lien on 1-4 family properties-business		1,210		490			(430	)		—			8		1,278
Real estate secured by junior lien on 1-4 family properties-business		30		(14	)		194			—			—		210
State and political subdivisions		94		(20	)		(18	)		—			—		56
Retail:
1-4 family residential mortgages		682		(196	)		(70	)		—			—		416
Construction-individual		1		-			(1	)		—			—		—
Revolving home equity secured by 1-4 family properties-personal		299		(7	)		(161	)		—			—		131
Real estate secured by 1st lien on 1-4 family properties-personal		57		15			(2	)		—			—		70
Real estate secured by junior lien on 1-4 family properties-personal		55		29			107			—			6		197
Student loans		454		12			(45	)		(43	)		6		384
Overdrafts		8		3			54			(73	)		22		14
Other consumer		41		(8	)		9			(9	)		—		33
Unallocated		502		(502	)		—		N/A			N/A			—
Total	$	10,531	$	(1,089	)	$	(1,119	)	$	(438	)	$	657	$	8,542

For the Nine Months Ended September 30, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	3,368	$	(1,295	)	$	(38	)	$	225	$	2,260
Construction		363		27			—			—		390
Secured by commercial real estate		4,280		890			—			—		5,170
Secured by residential real estate		1,035		190			—			42		1,267
State and political subdivisions		69		20			—			—		89
Retail:
1-4 family residential mortgages		646		41			—			—		687
Home equity loans and lines		376		85			—			4		465
Consumer		542		38			(109	)		30		501
Unallocated		505		4		N/A			N/A			509
Total	$	11,184	$	—		$	(147	)	$	301	$	11,338

Since the implementation of ASU 326 on January 1, 2023, the Company measures loan modifications to borrowers in financial distress as a troubled debt modification ("TDM"). A TDM could involve principal forgiveness, term extension, an other-than-insignificant payment delay, interest rate reduction or exchanging or paying off existing debt for new debt with the Company. Any amount forgiven would be charged to the allowance for credit losses. There were no TDMs in 2023.

The Company had extended, restructured, or otherwise modified the terms of loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers that had been experiencing financial difficulties. A loan was considered to be a troubled debt restructuring (“TDR”) loan when the Company granted a concession to the borrower because of the borrower’s financial condition that it would not have otherwise considered. Such concessions included a reduction of interest rates, forgiveness of principal or interest, or other modifications of interest rates to less than the current market rate for new obligations with similar risk. Loans that

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had been classified as TDRs are considered non-performing. Under ASU 326, the accounting for these Legacy TDRs will continue until the loan paid off.

The concessions made for the Legacy TDRs reported in the following disclosures involve lowering the monthly payments on loans through periods of interest only payments, a reduction in interest rate below a market rate or an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these three methods. The restructurings rarely result in the forgiveness of principal or accrued interest. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible. TDR loans that are in compliance with their modified terms and that yield a market rate may be removed from the TDR status after a period of performance.The Company closely monitors the performance of loans that are modified to understand the effectiveness of its modification efforts. There were no payment default (60 days or more past due) during the nine months ended September 30, 2023 and 2022, respectively, on loans modified within 12 months prior to September 30, 2023 and 2022, respectively.

Performing Legacy TDRs (not reported as non-accrual or past due 90 days or more and still accruing) totaled $3,979,000 and $4,301,000 as of September 30, 2023 and December 31, 2022, respectively. Non-performing Legacy TDRs totaled $269,000 and $371,000 as of September 30, 2023 and December 31, 2022, respectively. Non-accrual Legacy TDRs are included in the specific reserve calculation in 2023. All legacy TDRs were included in the specific reserve calculation for 2022.

The following table illustrates the specific reserve for loan losses allocated to Legacy TDRs. These specific reserves are included in the allowance for loan losses for loans individually evaluated. There were no loans modified as TDMs during the period.

	September 30, 2023				December 31, 2022
	Unpaid principal balance		Related allowance		Unpaid principal balance		Related allowance
Legacy TDRs with no specific allowance recorded	$	4,052	$	—	$	1,272	$	—
Legacy TDRs with an allowance recorded		196		245		3,400		392
Total	$	4,248	$	245	$	4,672	$	392

As of September 30, 2023 and December 31, 2022, QNB had $14,000 and $5,000, respectively, in commitments to lend additional funds to customers with loans whose terms have been modified as TDRs. There were no charge-offs during the three or nine months ended September 30, 2023 and 2022, resulting from loans previously modified as TDRs.

The Company has no loans secured by residential real estate for which foreclosure proceedings are in process at September 30, 2023.

9. FAIR VALUE MEASUREMENTS AND DISCLOSURES

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (fair values are not adjusted for transaction costs). ASC 820 also establishes a framework (fair value hierarchy) for measuring fair value under U.S. GAAP and expands disclosures about fair value measurements.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

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The measurement of fair value should be consistent with one of the following valuation techniques: market approach, income approach, and/or cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the security’s relationship to other benchmark quoted securities.

The following table sets forth QNB’s financial assets measured at fair value on a recurring and nonrecurring basis and the fair value measurements by level within the fair value hierarchy as of September 30, 2023:

September 30, 2023	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Available-for-sale securities:
U.S. Treasury securities	$	—	$	6,922	$	—	$	6,922
U.S. Government agency securities		—		86,226		—		86,226
State and municipal securities (1)		—		83,630		—		83,630
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities (1)		—		233,361		—		233,361
Collateralized mortgage obligations (CMOs)		—		89,185		—		89,185
Corporate debt securities and money market funds		—		6,014		52		6,066
Total debt securities available-for-sale		—		505,338		52		505,390
Equity securities		4,765		—		—		4,765
Total recurring fair value measurements	$	4,765	$	505,338	$	52	$	510,155
Nonrecurring fair value measurements*
Loans individually evaluated for impairment	$	—	$	—	$	337	$	337
Mortgage loans held-for-sale		—		—		446		446
Mortgage servicing rights		—		—		7		7
Total nonrecurring fair value measurements	$	—	$	—	$	790	$	790
*Impairment
(1) Includes derivatives designated as fair value hedging instruments as discussed in Footnote 13

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December 31, 2022	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Debt securities available-for-sale
U.S. Treasuries	$	—	$	301	$	—	$	301
U.S. Government agency securities		—		86,709		—		86,709
State and municipal securities		—		95,367		—		95,367
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities		—		256,161		—		256,161
Collateralized mortgage obligations (CMOs)		—		101,672		—		101,672
Corporate debt securities		—		6,262		53		6,315
Total debt securities available-for-sale		—		546,472		53		546,525
Equity securities		12,056		—		—		12,056
Total recurring fair value measurements	$	12,056	$	546,472	$	53	$	558,581
Nonrecurring fair value measurements*
Impaired loans	$	—	$	—	$	3,928	$	3,928
Mortgage servicing rights		—		—		1		1
Total nonrecurring fair value measurements	$	—	$	—	$	3,929	$	3,929
*Impairment

There were no transfers in and out of Level 1, Level 2, or Level 3 fair value measurements during the three or nine months ended September 30, 2023. There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the three- or nine-month periods ended September 30, 2023.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which QNB has utilized Level 3 inputs to determine fair value:

	Quantitative information about Level 3 fair value measurements
September 30, 2023	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Loans individually evaluated for impairment	$	43	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-20% to -100%
					Liquidation expenses	(3)		-10	%
Loans individually evaluated for impairment		294	Financial statement values for UCC collateral		Financial statement value discounts	(4)	-30% to -100%
Mortgage servicing rights		7	Discounted cash flow		Remaining term		2 to 27 years
					Prepayment speeds		96% to 206%
					Discount rate		12.0% to 12.5%

	Quantitative information about Level 3 fair value measurements
December 31, 2022	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Impaired loans	$	3,634	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-15% to -100%
					Liquidation expenses	(3)		-10	%
Impaired loans		294	Financial statement values for UCC collateral		Financial statement value discounts	(4)	-30% to -100%
Mortgage servicing rights		1	Discounted cash flow		Remaining term		2 to 28 years
					Prepayment speeds		113% to 235%
					Discount rate		12.0% to 12.5%

(1)Fair value is primarily determined through appraisals of the underlying collateral by independent parties, which generally includes various Level 3 inputs which are not always identifiable.

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(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and the age of the appraisal. The range is presented as a percent of the initial appraised value.

(3)Appraisals and pending agreements of sale are adjusted by management for estimated liquidation expenses. The range is presented as a percent of the initial appraised value.

(4)Values obtained from financial statements for UCC collateral (fixed assets and inventory) are discounted to estimated realizable liquidation value.

The following table presents additional information about the available-for-sale securities measured at fair value on a recurring basis and for which QNB utilized significant unobservable inputs (Level 3 inputs) to determine fair value for the nine months ended September 30, 2023 and 2022:

	Fair value measurements using significant unobservable inputs (Level 3)
	2023			2022
Balance, January 1,	$	53		$	75
Payments received		(1	)		(21	)
Total gains or losses (realized/unrealized)
Included in earnings		—			—
Included in other comprehensive (loss) income		—			1
Transfers in and/or out of Level 3		—			—
Balance, September 30,	$	52		$	55

The Level 3 securities consist of one collateralized debt obligation security, the PreTSL security, which is backed by trust preferred securities issued by banks. The market for this security at September 30, 2023 was not active and markets for similar securities also are not active. The new issue market is also inactive and there are currently very few market participants who are willing and able to transact for these securities.

Given conditions in the debt markets today and the absence of observable transactions in the secondary and new issue markets, we determined:

•The few observable transactions and market quotations that are available are not reliable for purposes of determining fair value at September 30, 2023;

•An income valuation approach technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs will be equally or more representative of fair value than the market approach valuation technique used at prior measurement dates; and

•The PreTSL will be classified within Level 3 of the fair value hierarchy because significant adjustments are required to determine fair value at the measurement date.

QNB used an independent third party to value this security using a discounted cash flow analysis. Based on management’s review of the bond’s three underlying issuers, there are no expected credit losses or prepayments; cashflows used were contractual based on the Bloomberg YA screen. The assumed cashflows have been discounted using an estimated market discount rate based on the 30-year swap rate. The 30-year is used as the reference rate since it is indicative of market expectation for short-term rates in the future. This is consistent with the 30-year nature of the PreTSL security, which is priced using the 3-month LIBOR as a reference rate. The discount rate of 8.34% includes the risk-free rate, a credit component and a spread for illiquidity.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of QNB’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between QNB’s disclosures and those of other companies may not be meaningful.

The following methods and assumptions were used to estimate the fair values of each major classification of financial instrument and non-financial asset at September 30, 2023 and December 31, 2022:

Cash and cash equivalents, accrued interest receivable and accrued interest payable (carried at cost): The carrying amounts reported in the balance sheet approximate those assets’ fair value.

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Investment securities (including derivative instruments) (carried at fair value): The fair value of securities is primarily determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. Level 2 debt securities are valued by a third-party pricing service commonly used in the banking industry. Level 2 fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution date, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.

The fair value of derivatives instruments designated as fair value hedges are based on estimates QNB would receive or pay to terminate the contracts or agreement, taking into account current interest rates and when appropriate, the credit-worthiness of the counterparties; these values are included in Level 2.

Restricted investment in stocks (carried at cost): The fair value of stock in Atlantic Community Bankers Bank, the Federal Home Loan Bank, VISA Class B and SHCPFIC is the carrying amount, based on redemption provisions, and considers the limited marketability of and restrictions on such securities.

Loans Held for Sale (carried at lower of cost or fair value): The fair value of loans held for sale is determined, when possible, using quoted secondary market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for the specific attributes of that loan.

Loans Receivable (carried at cost): The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the liquidity, credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (generally carried at fair value): Impaired loans are loans for which the Company has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Mortgage Servicing Rights (carried at lower of cost or fair value): The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated net servicing income. The mortgage servicing rights are stratified into tranches based on predominant characteristics, such as interest rate, loan type and investor type. The valuation incorporates assumptions that market participants would use in estimating future net servicing income.

Deposit liabilities (carried at cost): The fair value of deposits with no stated maturity (e.g. demand deposits, interest-bearing demand accounts, money market accounts and savings accounts) are by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts). This approach to estimating fair value excludes the significant benefit that results from the low-cost funding provided by such deposit liabilities, as compared to alternative sources of funding. Deposits with a stated maturity (time deposits) have been valued using the present value of cash flows discounted at rates approximating the current market for similar deposits.

Short-term borrowings (carried at cost): The carrying amount of short-term borrowings approximates their fair values.

Long-term debt (carried at cost): Long-term debt has stated maturities and have been valued using the present value of cash flows discounted at rates approximating the current market for similar debt instruments.

Off-balance-sheet instruments (disclosed at cost): The fair values for QNB’s off-balance sheet instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in sales transaction on the dates indicated. The estimated fair

33

value amounts have been measured as of the respective period ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period end.

The estimated fair values and carrying amounts of the Company’s financial and off-balance sheet instruments are summarized as follows:

					Fair value measurements
September 30, 2023	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	55,141	$	55,141	$	55,141	$	—	$	—
Investment securities:
Available-for-sale (1)		505,390		505,390		—		505,338		52
Equities		4,765		4,765		4,765		—		—
Restricted investment in stocks		2,730		2,730		—		2,730		—
Loans held for sale		446		446		—		446		—
Net loans		1,051,908		1,023,811		—		—		1,023,811
Mortgage servicing rights		430		608		—		—		608
Accrued interest receivable		5,590		5,590		—		5,590		—
Financial liabilities
Deposits with no stated maturities	$	1,193,147	$	1,193,147	$	1,193,147	$	—	$	—
Deposits with stated maturities		290,186		284,757		—		284,757		—
Short-term borrowings		96,703		96,703		96,703		—		—
Long-term debt		20,000		19,718		19,718		—		—
Accrued interest payable		3,278		3,278		—		3,278		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		60		—		60		—
(1) Includes derivatives designated as fair value hedging instruments as discussed in Footnote 13

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					Fair value measurements
December 31, 2022	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	15,899	$	15,899	$	15,899	$	—	$	—
Investment securities:
Available-for-sale		546,525		546,525		—		546,472		53
Equities		12,056		12,056		12,056		—		—
Restricted investment in stocks		5,193		5,193		—		5,193		—
Net loans		1,028,854		1,001,103		—		—		1,001,103
Mortgage servicing rights		469		638		—		—		638
Accrued interest receivable		5,038		5,038		—		5,038		—
Financial liabilities
Deposits with no stated maturities	$	1,242,920	$	1,242,920	$	1,242,920	$	—	$	—
Deposits with stated maturities		175,449		168,554		—		168,554		—
Short-term borrowings		161,327		161,327		161,327		—		—
Long-term debt		10,000		10,000		10,000		—		—
Accrued interest payable		467		467		—		467		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		69		—		69		—

10. COMMITMENTS AND CONTINGENCIES

Financial Instruments with off-balance sheet risk:

In the normal course of business there are various legal proceedings, commitments, and contingent liabilities which are not reflected in the consolidated financial statements. Management does not anticipate any material losses as a result of these transactions and activities. They include, among other things, commitments to extend credit and standby letters of credit. The maximum exposure to credit loss, which represents the possibility of sustaining a loss due to the failure of the other parties to a financial instrument to perform according to the terms of the contract, is represented by the contractual amount of these instruments. QNB uses the same lending standards and policies in making credit commitments as it does for on-balance sheet instruments. The activity is controlled through credit approvals, control limits, and monitoring procedures.

A summary of the Company's financial instrument commitments is as follows:

	September 30,		December 31,
	2023		2022
Commitments to extend credit and unused lines of credit	$	375,448	$	339,312
Standby letters of credit		19,894		19,512
Total financial instrument commitments	$	395,342	$	358,824

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. QNB evaluates each customer’s creditworthiness on a case-by-case basis.

Standby letters of credit are conditional commitments issued by the Company to guarantee the financial or performance obligation of a customer to a third party. QNB’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making conditional obligations as it does for on-balance sheet instruments. Standby letters of credit of $14,817,000 will expire within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Company requires collateral and personal guarantees supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral and the enforcement of personal guarantees would be sufficient to

35

cover the maximum potential amount of future payments required under the corresponding guarantees. The amount of the liability as of September 30, 2023 and December 31, 2022 for guarantees under standby letters of credit issued is not material.

The amount of collateral obtained for letters of credit and commitments to extend credit is based on management’s credit evaluation of the customer. Collateral varies, but may include real estate, accounts receivable, marketable securities, pledged deposits, inventory or equipment.

Other commitments:

QNB has committed to various operating leases for several of their branch and office facilities. Some of these leases include specific provisions relating to rent increases. Some of the leases contain renewal options to extend the initial terms of the lease for periods ranging from five to ten years and certain leases allow for multiple extensions. During the nine months ended September 30, 2023, QNB renewed one lease and recorded an additional right-of-use asset in exchange for an operating lease liability of $369,000.

11. REGULATORY RESTRICTIONS

Dividends payable by QNB and the Bank are subject to various limitations imposed by statutes, regulations and policies adopted by bank regulatory agencies. Under Federal and Pennsylvania banking law, the Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. Under Federal Reserve regulations, the Bank is limited as to the amount it may lend affiliates, including QNB, unless such loans are collateralized by specific obligations.

Both QNB and the Bank are subject to regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate actions by regulators that could have an effect on the financial statements. Under the framework for prompt corrective action, the Bank must meet capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items. The capital amounts and classification are also subject to qualitative judgments by the regulators. Management believes, as of September 30, 2023, that QNB and the Bank met capital adequacy requirements to which they were subject.

As of the most recent notification, the primary regulator of the Bank considered it to be “well capitalized” under the regulatory framework. There are no conditions or events since that notification that management believes have changed the classification. To be categorized as well capitalized, bank holding companies and insured depository institutions must maintain minimum ratios as set forth in the following table below.

The Company and the Bank’s actual capital amounts and ratios are presented as follows:

	Capital levels
	Actual					Adequately capitalized					Well capitalized
September 30, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	167,262		13.31	%	$	100,569		8.00	%	$	125,711		10.00	%
Bank		154,116		12.41			99,353	8.00				124,191	10.00
Tier 1 capital (to risk-weighted assets):
The Company	$	158,617		12.62			75,427	6.00				75,427	6.00
Bank		145,471		11.71			74,515	6.00				99,353	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		158,617		12.62			56,570	4.50			N/A		N/A
Bank		145,471		11.71			55,886	4.50				80,724	6.50
Tier 1 capital (to average assets):
The Company		158,617		8.95			70,925	4.00			N/A		N/A
Bank		145,471		8.25			70,515	4.00				88,144	5.00

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	Capital levels
	Actual					Adequately capitalized					Well capitalized
As of December 31, 2022	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	162,725		13.19	%	$	98,701		8.00	%	$	123,376		10.00	%
Bank		149,908		12.52			95,796	8.00				119,746	10.00
Tier 1 capital (to risk-weighted assets):
The Company		152,077		12.33			74,025	6.00				74,025	6.00
Bank		139,260		11.63			71,847	6.00				95,896	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		152,077		12.33			55,519	4.50			N/A		N/A
Bank		139,260		11.63			53,886	4.50				77,835	6.50
Tier 1 capital (to average assets):
The Company		152,077		8.75			69,507	4.00			N/A		N/A
Bank		139,260		8.07			69,009	4.00				86,261	5.00

12. REVENUE RECOGNITION FROM CONTRACTS WITH CUSTOMERS

The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers. The main types of revenue contracts included in non-interest income within the consolidated statements of operations are as follows:

•Fees for services to customers—fees include service charges on deposits which are included as liabilities in the consolidated statement of financial position and consist of transaction-based fees, stop payment fees, Automated Clearing House (ACH) fees, account maintenance fees, and overdraft services fees for various retail and business checking customers. These fees are charged as earned on the day of the transaction or within the month of the service, with the exception of Enhanced Account Analysis Fees, which are calculated on the previous month’s activity and assessed on the following month. The Enhanced Account Analysis Fees are currently being accrued; the revenue is currently being recorded in the month it is earned. Service charges on deposits are withdrawn directly from the customer’s account balance.

•ATM and debit card – fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request.

•Retail brokerage and advisory—fee income and related expenses are accrued monthly to properly record the revenues in the month they are earned. Advisory fees are collected in advance on a quarterly basis. These advisory fees are recorded in the first month of the quarter for which the service is being performed. Fees that are transaction based are recognized at the point in time that the transaction is executed (i.e. trade date).

•Merchant – QNB earns interchange fees from credit/debit cardholder transactions conducted through VISA/MasterCard payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized monthly, concurrently with the transaction processing services provided to the cardholder within the month.

•Other—includes credit card fees, sales of checks to depositors, miscellaneous fees and gain/losses on sale of OREO.

•Credit card fees are recognized monthly, concurrently with the transaction processing services provided to the cardholder within the month.

•Sales of checks to depositors are commissions earned from a third-party who provides checks to QNB’s customers. There is a pre-paid incentive with the third party which is recognized over the term of the contract. Other commissions on the sales of checks are recorded weekly.

•Miscellaneous fees, such as wire, cashier check and garnishment fees, are charged as earned on the day of the transaction.

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•Gain (loss) on sales of OREO – QNB records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When QNB finances the sale of OREO to the buyer, QNB assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, QNB adjusts the transaction prices and related gain (loss) on sale if a significant financing component is present.

13. DERIVATIVES AND HEDGING ACTIVITIES

QNB's risk management objective with respect to derivative financial instruments is to hedge the risk of changes in the fair value of certain fixed-rate investment securities, included in a closed portfolio, for changes in the Secured Overnight Financing Rate ("SOFR"). The effective and ineffective portions of changes in the fair value of each derivative financial instrument is reported in accumulated other comprehensive (loss) income, net of tax, and are reclassified to interest income as interest payments are made or received on the hedged portfolios. QNB assesses the effectiveness of each hedging relationship using a regression analysis of prior periodic changes in fair value of both the hedge and the hedged item. In the assessment of hedge effectiveness, QNB will consider the likelihood of the counterparty's compliance with the contractual terms of the hedging derivative that could require the counterparty to make payments (counterparty default risk). If the likelihood that the counterparty will not default ceases to be probable, the hedge may no longer be highly effective and hedge ineffectiveness due to counterparty payment risk will be assessed.

The following table presents the notional amounts of derivatives designated as fair value hedging instruments at September 30, 2023. QNB pledges cash or securities to cover the negative fair value of derivatives instruments. Cash collateral associated with the derivative instruments are not added to or netted against the fair value amounts. QNB did not have any derivatives designated as fair value hedging instruments at December 31, 2022.

	At September 30, 2023
	Interest Rate Swaps-Fair Value Hedges
Balance Sheet Classification	Notional Amount		Fair Value
Investment Securities Available-for-sale:
State and municipal securities	$	75,000	$	3,041
U.S. Government agencies and GSE mortgage backed securities		225,000		7,582
Total	$	300,000	$	10,623

The following table presents amounts included in the Consolidated Statements on Income for derivatives designated as fair value hedging instruments for the three and nine months ended September 30, 2023.

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
Income Sheet Classification	2023		2023
Interest and dividends on available-for-sale and equity securities:
Taxable	$	1,190	$	1,370
Total	$	1,190	$	1,370

The following table presents amounts included in accumulated other comprehensive (loss) income for derivatives designated as fair value hedging instruments at September 30, 2023.

Balance Sheet Classification	At September 30, 2023
Accumulated other comprehensive loss, net of tax	$	8,392
Total	$	8,392

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

QNB Corp. is a bank holding company headquartered in Quakertown, Pennsylvania. QNB Corp., through its wholly-owned subsidiary, the Bank, has been serving the residents and businesses of upper Bucks, northern Montgomery and southern Lehigh counties in Pennsylvania since 1877. Due to its limited geographic area, growth is pursued through expansion of existing customer relationships and building new relationships by stressing a consistent high level of service at all points of contact. The Bank is a locally managed

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community bank that provides a full range of commercial and retail banking and retail brokerage services. The consolidated entity is referred to herein as “QNB” or the “Company”.

Tabular information presented throughout management’s discussion and analysis, other than share and per share data, is presented in thousands of dollars.

FORWARD-LOOKING STATEMENTS

In addition to historical information, this document contains forward-looking statements. Forward-looking statements are typically identified by words or phrases such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project” and variations of such words and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions. The U.S. Private Securities Litigation Reform Act of 1995 provides a safe harbor in regard to the inclusion of forward-looking statements in this document and documents incorporated by reference.

Shareholders should note that many factors, some of which are discussed elsewhere in this document and in the documents that are incorporated by reference, including the risk factors identified in Item 1A of QNB’s 2022 Form 10-K, could affect the future financial results of QNB and could cause those results to differ materially from those expressed in the forward-looking statements contained or incorporated by reference in this document. These factors include, but are not limited, to the following:

•Volatility in interest rates and shape of the yield curve;

•Credit risk;

•Liquidity risk;

•Operating, legal and regulatory risks;

•Economic, political and competitive forces affecting QNB’s business, including the effects of inflation;

•The effects of unforeseen external events, including acts of terrorism, natural disasters, and pandemics, including the COVID-19 Pandemic; and

•The risk that the analysis of these risks and forces could be incorrect, and/or that the strategies developed to address them could be unsuccessful.

QNB cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, all of which change over time, and QNB assumes no duty to update forward-looking statements. Management cautions readers not to place undue reliance on any forward-looking statements. These statements speak only as of the date of this report on Form 10-Q, even if subsequently made available by QNB on its website or otherwise, and they advise readers that various factors, including those described above, could affect QNB’s financial performance and could cause actual results or circumstances for future periods to differ materially from those anticipated or projected. Except as required by law, QNB does not undertake, and specifically disclaims any obligation, to publicly release any revisions to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of the financial condition and results of operations are based on the consolidated financial statements of QNB, which are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and predominant practices within the banking industry. The preparation of these consolidated financial statements requires QNB to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. QNB evaluates estimates on an on-going basis, including those related to the determination of the allowance for loan losses, the determination of the valuation of other real estate owned and foreclosed assets, other-than-temporary impairments on investment securities, the valuation of deferred tax assets, stock-based compensation and income taxes. QNB bases its estimates on historical experience and various other factors and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Investment Security Impairment

Securities are evaluated periodically to determine whether a decline in their value is impairment. Management utilizes criteria such as the magnitude and duration of the decline, in addition to the reasons underlying the decline, to determine whether the loss in value is other-than-temporary. The term impairment is not intended to indicate that the decline is permanent, it indicates that the prospect for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. For equity securities that do not have readily-determinable fair values, once a decline in value is determined to be impairment, the value of the equity security is reduced and a corresponding charge to earnings is recognized. There were no impairment charges recorded during the three or nine months ended September 30, 2023 and 2022, respectively.

The Company follows accounting guidance related to the recognition and presentation of impairment that specifies (a) if a company does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered impaired unless there is a credit loss. When an entity does not intend to sell the security, and it is more likely than not the entity will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an impairment of a debt security in earnings and the remaining portion in other comprehensive income. There were no credit-related impairment charges in the three or nine months ended September 30, 2023 or 2022, respectively.

Allowance for Credit Losses on Loans

The Company maintains an allowance for credit losses on loans, which is intended to absorb probable known and inherent losses in the outstanding loan portfolio. The allowance is reduced by actual credit losses and is increased or decreased by the provision (reversal) for loan losses and increased by recoveries of previous losses. The allowance for loan losses is calculated with the objective of maintaining a level believed by management to be sufficient to absorb probable known and inherent losses in the outstanding loan portfolio; the provisions or reversals for credit losses are charged to earnings.

The allowance for credit losses is measured on a pool basis when similar risk characteristics exist; these pools are identified in the first table below. The Company establishes a general valuation allowance for performing loans, including non-accrual student loans. QNB calculates each segment's historical loss rate using a full economic cycle of loan balance and historical loss experienced. The level of the allowance is determined by assigning specific reserves to all non-accrual loans, except the homogeneous pool of student loans which are measured in the general reserve. An allowance on these non-accrual loans is established when the discounted cash flows (or collateral value) of the loan is lower than the carrying value of that loan. The portion of the allowance that is allocated to non-accrual loans is determined by estimating the inherent loss on each credit after giving consideration to the value of underlying collateral. The general component is adjusted for qualitative factors. These qualitative risk factors include:

1.Concentrations: The Company adjusts historic loss for concentrations in the current portfolio that were not present during the down-turn of economic cycle.

2.Economic Forecast: The Company utilizes an entire economic cycle of data to determine loss rates by segment. This approach reflects an inherent reversion to the historical losses during life of the loans within the pool considering prepayments and loss experience throughout an entire economic cycle. However, the Company feels it is prudent to maintain a floor in its model to assure that there is enough reserve on hand to sustain any losses upon an upcoming recession.

Management emphasizes loan quality and close monitoring of potential problem credits. Credit risk identification and review processes are utilized to assess and monitor the degree of risk in the loan portfolio. QNB’s lending and credit administration staff are charged with reviewing the loan portfolio and identifying changes in the economy or in a borrower’s circumstances which may affect the ability to repay debt or the value of pledged collateral. A loan classification and review system exists that identifies those loans with a higher-than-normal risk of collection. Each commercial loan is assigned a grade based upon an assessment of the borrower’s financial capacity

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to service the debt and the presence and value of collateral for the loan. An independent loan review group tests risk assessments and evaluates the adequacy of the allowance for loan losses. Management meets monthly to review the credit quality of the loan portfolio and quarterly to review the allowance for loan losses.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review QNB’s allowance for loan losses. Such agencies may require QNB to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

Management believes that it uses the best information available to make determinations about the adequacy of the allowance and that it has established its existing allowance for loan losses in accordance with U.S. GAAP. If circumstances differ substantially from the assumptions used in making determinations, future adjustments to the allowance for loan losses may be necessary and results of operations could be affected. Because future events affecting borrowers and collateral cannot be predicted with certainty, increases to the allowance may be necessary should the quality of any loans deteriorate as a result of the factors discussed above.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure are held-for-sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses and changes in the valuation allowance are included in net expenses from foreclosed assets.

Stock-Based Compensation

QNB sponsors a stock-based compensation plan, administered by a Board committee, under which both qualified and non-qualified stock options may be granted periodically to certain employees. QNB accounts for all awards granted under stock-based compensation plans in accordance with ASC 718, Compensation-Stock Compensation. Compensation cost has been measured using the fair value of an award on the grant date and is recognized over the service period, which is usually the vesting period. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the option and each vesting date. QNB estimates the fair value of stock options on the date of the grant using the Black-Scholes option pricing model. The model requires the use of numerous assumptions, many of which are highly subjective in nature.

Income Taxes

QNB accounts for income taxes under the asset/liability method in accordance with income tax accounting guidance, ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when, in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent on matters that may, at least in part, be beyond QNB’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred tax assets could change in the near term.

RESULTS OF OPERATIONS - OVERVIEW

QNB reported net income for the third quarter of 2023 of $2,344,000, or $0.65 per share on a diluted basis, compared to net income of $3,415,000, or $0.96 per share on a diluted basis, for the same period in 2022. For the nine-month period ended September 30, 2023, QNB reported net income of $8,349,000, or $2.32 per share on a diluted basis, compared to net income of $10,474,000, or $2.94 per share on a diluted basis, for the same period in 2022. The Bank contributed $8,568,000 to net income for the nine months ended September 30, 2023 compared to $12,037,000 for the same period 2022; and the holding company contributed negative $219,000 to net income for the nine months ended September 30, 2023 compared to a negative $1,563,000 for the same period 2022. The results at the Bank were primarily due to net interest margin compression partly offset by the reversal for credit losses on loans of $1,119,000. The results at the holding company are due primarily to the change in the fair value of the equity securities included in the investment portfolio.

Net income expressed as an annualized rate of return on average assets and average shareholders’ equity was 0.52% and 5.88%, respectively, for the quarter ended September 30, 2023 compared with 0.78% and 9.20%, respectively, for the quarter ended September 30, 2022. For the nine months ended September 30, 2023, the annualized rate of return on average assets and average shareholders’ equity was 0.64% and 7.13%, respectively, compared with 0.82% and 9.68%, for the same period in 2022.

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Total assets as of September 30, 2023 were $1,684,392,000, compared with $1,668,497,000 at December 31, 2022. Loans receivable at September 30, 2023 were $1,060,450,000, a $21,065,000 increase from $1,039,385,000 at December 31, 2022. Total deposits of $1,483,333,000 at September 30, 2023 increased $64,964,000 compared with total deposits of $1,418,369,000 at December 31, 2022.

Results for the three and nine months ended September 30, 2023 include the following significant components:

•Net interest income decreased $1,166,000, or 10.3%, to $10,213,000 and decreased $3,255,000, or 9.8%, to $29,963,000 for the three and nine months ended September 30, 2023, respectively.

•Net interest margin on a tax-equivalent basis decreased 34 basis points for the quarter and 32 basis points for the nine months ended September 30, 2023, at 2.38% and 2.40% to compared to 2.72% and 2.72% for the same periods in September 30, 2022, respectively.

•QNB recorded $452,000 in its provision for credit losses on loans for the quarter ended September 30, 2023, compared with no provision for the same period in 2022. QNB reversed $1,119,000 in its provision for credit losses on loans for the nine months ended September 30, 2023, compared with no provision for the same period in 2022.

•Non-interest income increased $1,271,000, to $1,755,000 for the third quarter and increased $1,820,000, to $4,554,000 for the nine months ended September 30, 2023 compared with the same periods in 2022. Excluding realized and unrealized gains (losses) on securities, non-interest income increased $106,000, or 6.4%, to $1,762,000 for the quarter and increased $154,000, or 3.2%, to $5,023,000 for the nine months ended September 30, 2023, compared with the same periods in 2022.

•Non-interest expense increased $857,000 to $8,671,000 for the quarter and increased $1,990,000 to $25,363,000 for the nine months ended September 30, 2023 compared to the same periods in 2022.

•Total non-performing loans were $5,872,000, or 0.55% of loans receivable at September 30, 2023, compared to $9,121,000, or 0.88% of loans receivable at December 31, 2022. Loans on non-accrual status were $1,893,000 at September 30, 2023 compared with $4,820,000 at December 31, 2022. Net loan recoveries for the nine months ended September 30, 2023 were $219,000, compared with $154,000 for the same period in 2022.

These items, as well as others, are explained more thoroughly in the next sections.

NET INTEREST INCOME

QNB earns its net income primarily through the Bank. Net interest income, or the spread between the interest, dividends and fees earned on loans and investment securities and the expense incurred on deposits and other interest-bearing liabilities, is the primary source of operating income for QNB. Management seeks to achieve sustainable and consistent earnings growth while maintaining adequate levels of capital and liquidity and limiting its exposure to credit and interest rate risk levels approved by the Board of Directors.

The following table presents the adjustment to convert net interest income to net interest income on a fully taxable-equivalent basis for the three- and nine-month periods ended September 30, 2023 and 2022.

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Total interest income	$	18,497	$	13,546	$	49,825	$	37,682
Total interest expense		8,284		2,167		19,862		4,464
Net interest income		10,213		11,379		29,963		33,218
Tax-equivalent adjustment		144		177		442		541
Net interest income (fully taxable-equivalent)	$	10,357	$	11,556	$	30,405	$	33,759

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Net interest income is the primary source of operating income for QNB. Net interest income is interest income, dividends, and fees on earning assets, less interest expense incurred for funding sources. Earning assets primarily include loans, investment securities, interest bearing balances at the Federal Reserve Bank and Federal funds sold. Sources used to fund these assets include deposits and borrowed funds. Net interest income is affected by changes in interest rates, the volume and mix of earning assets and interest-bearing liabilities, and the amount of earning assets funded by non-interest-bearing deposits.

For purposes of this discussion, interest income and the average yield earned on loans and investment securities are adjusted to a tax-equivalent basis as detailed in the tables that appear above. This adjustment to interest income is made for analysis purposes only. Interest income is increased by the amount of savings of Federal income taxes, which QNB realizes by investing in certain tax-exempt state and municipal securities and by making loans to certain tax-exempt organizations. In this way, the ultimate economic impact of earnings from various assets can be more easily compared.

The net interest rate spread is the difference between average rates received on earning assets and average rates paid on interest-bearing liabilities, while the net interest rate margin, which includes interest-free sources of funds, is net interest income expressed as a percentage of average interest-earning assets. The Asset/Liability and Investment Management Committee works to manage and maximize the net interest margin for the Company.

43

Average Balances, Rate, and Interest Income and Expense Summary (Tax-Equivalent Basis)

	For the Three Months Ended
	September 30, 2023								September 30, 2022
	Average			Average					Average			Average
	Balance			Rate			Interest		Balance			Rate			Interest
Assets
Investment securities (AFS & Equity):
U.S. Treasury securities	$	7,111			5.17	%	$	92	$	831			1.32	%	$	3
U.S. Government agencies		101,947			1.11			283		101,938			1.11		283
State and municipal		109,157			3.30			901		127,929			2.38		761
Mortgage-backed and CMOs		394,607			2.53			2,500		441,952			1.61			1,783
Corporate debt securities and money market funds		6,648			4.40			73		6,658			4.37		72
Equities		4,953			4.70			59		11,702			3.36			99
Total investment securities		624,423			2.50			3,908		691,010			1.74			3,001
Loans:
Commercial real estate		722,833			5.10			9,288		650,118			4.22			6,917
Residential real estate		107,332			3.81			1,022		105,723			3.33			880
Home equity loans		57,694			6.65			967		56,669			4.65			665
Commercial and industrial		128,601			7.23			2,343		148,545			5.25			1,965
Consumer loans		3,823			7.53			73		4,401			5.76			64
Tax-exempt loans		19,630			3.59			178		19,535			3.43			169
Total loans, net of unearned income*		1,039,913			5.29			13,871		984,991			4.29			10,660
Other earning assets		62,420			5.48			862		8,038			3.02			62
Total earning assets		1,726,756			4.28			18,641		1,684,039			3.23			13,723
Cash and due from banks		15,679								15,544
Allowance for loan losses		(8,396	)							(11,323	)
Other assets		39,099								38,872
Total assets	$	1,773,138							$	1,727,132
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing demand	$	319,335			0.74	%		600	$	342,011			0.23	%		201
Municipals		157,391			4.63			1,837		138,187			1.77			617
Money market		201,277			3.01			1,527		134,591			0.50			170
Savings		325,567			1.27			1,038		451,871			0.53			608
Time < $100		128,884			2.92			947		90,129			0.74			168
Time $100 through $250		106,920			3.69			996		54,168			0.87			118
Time > $250		43,856			3.41			377		25,616			0.86			56
Total interest-bearing deposits		1,283,230			2.26			7,322		1,236,573			0.62			1,938
Short-term borrowings		95,568			3.07			740		85,943			0.87			189
Long-term debt		20,000			4.36			222		10,000			1.57			40
Total interest-bearing liabilities		1,398,798			2.35			8,284		1,332,516			0.65			2,167
Non-interest-bearing deposits		205,402								239,095
Other liabilities		10,875								8,225
Shareholders' equity		158,063								147,296
Total liabilities and shareholders' equity	$	1,773,138							$	1,727,132
Net interest rate spread					1.93	%							2.58	%
Margin/net interest income					2.38	%	$	10,357					2.72	%	$	11,556

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	For the Nine Months Ended
	September 30, 2023								September 30, 2022
	Average			Average					Average			Average
	Balance			Rate			Interest		Balance			Rate			Interest
Assets
Investment securities (AFS & Equity):
U.S. Treasury securities	$	3,618			4.97	%	$	134	$	600			1.12	%	$	5
U.S. Government agencies		101,945			1.11			849		101,292			1.10			836
State and municipal		109,877			2.64			2,173		129,343			2.40			2,325
Mortgage-backed and CMOs		405,979			1.96			5,971		453,833			1.56			5,322
Corporate debt securities		6,637			4.41			219		6,682			4.36			218
Equities		8,442			4.07			257		12,172			3.26			297
Total investment securities		636,498			2.01			9,603		703,922			1.71			9,003
Loans:
Commercial real estate		700,375			4.79			25,091		623,193			4.11			19,181
Residential real estate		106,817			2.76			2,943		103,841			2.47			2,564
Home equity loans		57,317			6.44			2,762		55,244			3.93			1,624
Commercial and industrial		141,176			7.55			7,977		143,354			4.73			5,075
Consumer loans		3,942			7.15			211		4,585			5.31			182
Tax-exempt loans		19,984			3.53			527		19,482			3.41			497
Total loans, net of unearned income*		1,029,611			5.13			39,511		949,699			4.10			29,123
Other earning assets		27,195			5.67			1,153		6,262			2.06			97
Total earning assets		1,693,304			3.97			50,267		1,659,883			3.08			38,223
Cash and due from banks		14,046								14,123
Allowance for loan losses		(8,871	)							(11,266	)
Other assets		38,938								38,532
Total assets	$	1,737,417							$	1,701,272
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing demand	$	314,012			0.52	%		1,227	$	342,955			0.20	%		521
Municipals		128,270			4.34			4,163		121,332			0.91			825
Money market		169,308			2.30			2,913		139,700			0.38			401
Savings		363,496			1.18			3,208		446,196			0.39			1,312
Time < $100		113,951			2.30			1,960		91,223			0.76			522
Time $100 through $250		104,697			3.42			2,676		49,656			0.75			280
Time > $250		36,590			2.80			767		25,361			0.75			143
Total interest-bearing deposits		1,230,324			1.84			16,914		1,216,423			0.44			4,004
Short-term borrowings		112,724			2.99			2,518		78,994			0.58			341
Long-term debt		14,267			3.98			430		10,000			1.57			119
Total interest-bearing liabilities		1,357,315			1.96			19,862		1,305,417			0.46			4,464
Non-interest-bearing deposits		213,492								243,239
Other liabilities		10,111								7,940
Shareholders' equity		156,499								144,676
Total liabilities and shareholders' equity	$	1,737,417							$	1,701,272
Net interest rate spread					2.01	%							2.62	%
Margin/net interest income					2.40	%	$	30,405					2.72	%	$	33,759

Tax-exempt securities and loans were adjusted to a tax-equivalent basis and are based on the marginal Federal corporate tax rate of 21 percent for three and nine months ended September 30, 2023 and 2022.

Non-accrual loans are included in earning assets.

* Includes loans held-for-sale

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Rate/Volume Analysis. The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense. Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated to changes in volume.

	For the Three Months Ended									For the Nine Months Ended
	September 30, 2023 compared									September 30, 2023 compared
	to September 30, 2022									to September 30, 2022
	Total			Due to change in:						Total			Due to change in:
	Change			Volume			Rate			Change			Volume			Rate
Interest income:
Investment securities (AFS & Equity):
U.S. Treasury securities	$	89		$	20		$	69		$	129		$	25		$	104
U.S. Government agencies		—			—			—			13			5			8
State and municipal		140			(111	)		251			(152	)		(350	)		198
Mortgage-backed and CMOs		717			(191	)		908			649			(560	)		1,209
Corporate debt securities and money market funds		1			1			—			1			(1	)		2
Equities		(40	)		(57	)		17			(40	)		(91	)		51
Total Investment securities (AFS & Equity)		907			(338	)		1,245			600			(972	)		1,572
Loans:
Commercial real estate		2,371			773			1,598			5,910			2,375			3,535
Residential real estate		142			13			129			379			150			229
Home equity loans		302			11			291			1,138			61			1,077
Commercial and industrial		378			(264	)		642			2,902			(76	)		2,978
Consumer loans		9			(8	)		17			29			(25	)		54
Tax-exempt loans		9			1			8			30			13			17
Total Loans		3,211			526			2,685			10,388			2,498			7,890
Other earning assets		800			413			387			1,056			322			734
Total interest income		4,918			601			4,317			12,044			1,848			10,196
Interest expense:
Interest-bearing deposits:
Interest-bearing demand		399			(12	)		411			706			(43	)		749
Municipals		1,220			86			1,134			3,338			47			3,291
Money market		1,357			86			1,271			2,512			85			2,427
Savings		430			(170	)		600			1,896			(243	)		2,139
Time < $100		779			71			708			1,438			129			1,309
Time $100 through $250		878			116			762			2,396			311			2,085
Time > $250		321			39			282			624			63			561
Total interest-bearing deposits		5,384			216			5,168			12,910			349			12,561
Short-term borrowings		551			20			531			2,177			145			2,032
Long-term debt		182			40			142			311			50			261
Total interest expense		6,117			276			5,841			15,398			544			14,854
Net interest income	$	(1,199	)	$	325		$	(1,524	)	$	(3,354	)	$	1,304		$	(4,658	)

Net Interest Income and Net Interest Margin – Quarterly Comparison

Average earning assets for the third quarter of 2023 were $1,726,756,000, an increase of $42,717,000, or 2.5%, from the third quarter of 2022, with average loans increasing $54,922,0000, or 5.6%, average other interest earning assets increasing $54,382,000, primarily interest-earnings cash at the Federal Reserve Bank, and average investment securities decreasing $66,587,000, or 9.6%, over the same period in 2022. Cash generated from maturities and sales in the investment portfolio and an increase in borrowed funds of $19,625,000 supported loan growth. Average loans as a percent of average earning assets was 60.2% for the third quarter of 2023, compared with 58.5% for the third quarter of 2022. On the funding side, average deposits increased $12,964,000, or 0.9%, to $1,488,632,000 for the third quarter of 2023 primarily due to an increase in time deposits and money market products. Average short-term borrowed funds, which consisted primarily of average commercial repurchase agreements, short-term Federal Reserve Bank ("FRB") borrowing and over-night FHLB borrowings, increased $9,625,000 to $95,568,000 during the third quarter of 2023 compared to $85,943,000 for the same period in 2022.

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The net interest margin for the third quarter of 2023 decreased 34 basis points to 2.38% from 2.72% or the same period in 2022. Competition for quality loans and deposits in our local market continues to exert pressure on the net interest margin. The increases in interest rates starting in March 2022 have compressed the net interest margin as QNB had been liability sensitive; QNB entered into interest rate hedging derivatives during the second quarter of 2023 moving QNB to be asset sensitive. The net interest margin is expected to improve as loans and securities reprice.

The Rate-Volume Analysis tables, as presented on a tax-equivalent basis, highlight the impact of changing rates and volumes on interest income and interest expense. Total interest income on a tax-equivalent basis increased $4,918,000, or 35.8%, to $18,641,000 for the third quarter of 2023; total interest expense increased $6,117,000 to $8,284,000.

The yield on earning assets on a tax-equivalent basis increased 105 basis points to 4.28% for the third quarter of 2023, from 3.23% for the third quarter of 2022. The cost of interest-bearing liabilities was 2.35% for the third quarter of 2023, compared with 0.65% for the same period in 2022.

Interest income on investment securities (available-for-sale and equity) increased $907,000 when comparing the quarters ended September 30, 2023 and 2022. The average yield on the investment portfolio was 2.50% for the third quarter of 2023 compared with 1.74% for the same period in 2022.

The yield on U.S. Treasury securities was 5.17% for the third quarter of 2023 compared to 1.32% for the same period in 2022. Income on U.S. Government agency securities remained flat as the average balances increased $9,000 and the rate remained the same.

Interest income on municipal securities, which are primarily tax-exempt, increased $140,000 due to a 92 basis-point increase in rate, partly offset by an $18,772,000 decrease in average balances. The rate and interest income increases on municipal securities was positively impact by an interest rate swap. Typically, QNB purchases municipal bonds with 10- to 20-year maturities and may have call dates between 2-10 years.

Interest income on mortgage-backed securities and CMOs increased $717,000 while average balances decreased $47,345,000 and yield increased 92 basis points. The rate and interest income increases on mortgage-backed securities were positively impacted by an interest rate swap. This portfolio generally provides higher yields relative to agency bonds and also provides monthly cash flow which can be used for liquidity purposes or can be reinvested as interest rates increase. Since most of these securities were purchased at a premium, any prepayments result in a shorter amortization period of this premium and therefore a reduction in income.

The dividend yield on equities increased 134 basis points as average balances decreased $6,749,000. Proceeds from sales of equities were reinvested in higher yielding treasury securities.

Income on loans increased $3,211,000 to $13,871,000 when comparing the third quarters of 2023 and 2022, with a $54,922,000 increase in average balances contributing to an increase in interest income of $526,000 and a 100-basis point increase in yield contributing to a $2,685,000 increase in interest income. Higher interest rates during the repricing period were partially offset by competitive pressures that compressed the yields on new loans.

The largest category of the loan portfolio is commercial real estate loans. This category of loans includes commercial purpose loans secured by either commercial properties such as office buildings, factories, warehouses, hotels and restaurants, medical facilities and retail establishments, or residential real estate, usually the residence of the business owner. The category also includes construction and land development loans. Income on commercial real estate loans increased $2,371,000 when comparing the third quarters of 2023 and 2022, primarily due to an 88-basis point increase in rate from 4.22% in 2022 to 5.10% and increased average balances of $72,715,000, or 11.2%.

Income on commercial and industrial loans increased $378,000 when comparing the third quarters of 2023 and 2022. The average yield on these loans increased 198 basis points to 7.23% resulting in an increase in income of $642,000; average balances decreased $19,944,000, to $128,601,000 for the third quarter of 2023 resulting in a $264,000 decrease in interest income. Many of the loans in this category are indexed to the prime interest rate.

Tax-exempt loan income was $178,000 for the third quarter of 2023, an increase of $9,000 from the same period in 2022. Average balances increased $95,000, or 0.5%, to $19,630,000 for the third quarter of 2023. The yield on municipal loans increased 16 basis points, to 3.59% for the third quarter of 2023, compared with the same period in 2022.

QNB desires to be the “local consumer lender of choice”, focusing its retail lending efforts on product offerings and marketing and promotion. Interest income on residential mortgage loans secured by first lien 1-4 family increased $142,000 when comparing the third quarter of 2023 to the same period in 2022. Average residential mortgage loan balances increased by $1,609,000, or 1.5%, to $107,332,000 for the third quarter of 2023 compared to the same period in 2022, which contributed a $13,000 increase in interest income.

47

The average yield on the portfolio increased 48 basis points and contributed an increase of $129,000 to interest income. QNB chose to retain certain mortgage loans instead of selling them in the secondary market, as the yield on our originated mortgages was higher than comparable mortgage-backed securities. Average home equity loans increased during the 2023 period by $1,025,000 to $57,694,000; interest income increased $302,000 as the average yield increased 200 basis points to 6.65%. The yield on the consumer portfolio increased 177 basis points to 7.53% for the third quarter of 2023 and there was a $578,000 decrease in average balances resulting in a net $9,000 increase in interest income.

Earning assets are funded by deposits and borrowed funds. Interest expense increased $6,117,000, when comparing the third quarter of 2023 to the same period in 2022. QNB experienced a decrease in accounts with greater liquidity and an increase in time deposits. Average non-interest-bearing demand accounts decreased $33,693,000 to $205,402,000 for the third quarter of 2023. QNB offered several new interest-bearing demand and money market products offering higher yields to retain large depositors and reduce the reliance on higher-cost short-term borrowings. Average interest-bearing demand accounts decreased $22,676,000, or 6.6%, to $319,335,000 for the third quarter of 2023; however interest expense on interest-bearing demand accounts increased $399,000 to $600,000 for the same period, as the average rate paid increased 51 basis points to 0.74% for the third quarter of 2023. Average money market accounts increased $66,686,000, or 49.5%, to $201,277,000 for the third quarter of 2023 compared with the same period in 2022. Interest expense on money market accounts increased $1,357,000 to $1,527,000, and the average interest rate paid on money market accounts increased 251 basis point to 3.01% for the third quarter of 2023. Most of the balances in this category are in products that pay tiered rates based on account balances.

Interest expense on municipal interest-bearing demand accounts increased $1,220,000 to $1,837,000 for the third quarter of 2023. The average interest rate paid on municipal interest-bearing demand accounts increased 286 basis points to 4.63% for the third quarter of 2023 over the same quarter of 2022, and average balances increased $19,204,000, or 13.9%, to $157,391,000. Many of these accounts are indexed to the Federal funds rate with rate floors. Municipal deposits are seasonal in nature and are received during the second and third quarters as tax receipts are collected and are withdrawn over the course of the year.

Interest expense on savings accounts increased $430,000 when comparing the third quarter of 2023 to the same quarter of 2022. The average interest rate paid on savings accounts increased 74 basis points to 1.27% for the third quarter of 2023. When comparing these same periods, average savings accounts decreased $126,304,000, or 28.0%, to $325,567,000 for the third quarter of 2023 primarily due to decreases in the e-Savings product. QNB’s online e-Savings product is the largest category of savings deposits, with average balances for the third quarter of 2023 of $236,589,000 compared to $342,334,000 in the same period of 2022. The average yield paid on these accounts was 1.68% for the third quarter of 2023 and 0.65% for the same period in 2022. Traditional statement savings accounts, passbook savings and club accounts are also included in the savings category and average balances in these types of savings accounts decreased $7,939,000 when comparing the third quarter of 2023 to the same period in 2022.

Interest expense on time deposits totaled $2,320,000 for the third quarter of 2023 compared to $342,000 in 2022. Average total time deposits increased $109,747,000 to $279,660,000 for the third quarter of 2023. As with fixed-rate loans and investment securities, these deposits reprice over time and, therefore, have less of an immediate impact on costs in either a rising or falling rate environment; however, the maturity and repricing characteristics of time deposits tend to be shorter. The average rate paid on total time deposits increased 249 basis points from 0.80% to 3.29% when comparing the third quarter of 2023 to the same period in 2022.

Approximately $224,457,000, or 77%, of time deposits at September 30, 2023 will mature over the next 12 months. The average rate paid on these time deposits is approximately 3.85%. The yield on the time deposit portfolio may change in the next quarter as short-term time deposits reprice; however, given the short-term nature of these deposits, interest expense may increase if short-term time deposit rates were to increase suddenly or if customers select higher paying time deposits.

Short-term borrowings are comprised of sweep accounts structured as repurchase agreements with our commercial customers, overnight FHLB borrowing and short-term FRB borrowing. Interest expense on short-term borrowings increased $551,000 for the third quarter of 2023 to $740,000 when compared to the same period in 2022. When comparing these same periods, average balances increased $9,625,000 to $95,568,000. The yield on customer repos increased 114 basis points for the third quarter of 2023 to 1.63%. The yield on the short-term FHLB borrowing was 2.48% for the third quarter of 2022. During the first quarter of 2023, QNB borrowed $50,000,000 from the FRB under its Bank Term Funding Program and locked in a rate of 4.39%; there are no pre-payment penalties. During 2020, QNB borrowed long-term debt of $10,000,000 to lock in borrowing at a lower yield than short-term borrowings at that time; this borrowing matured during the first quarter of 2023. During the second quarter of 2023, QNB borrowed long-term debt of $20,000,000 to lock in borrowing at a lower yield than short-term borrowings.

Net Interest Income and Net Interest Margin – Nine-Month Comparison

For the nine-month period ending September 30, 2023, average earning assets increased $33,421,000, or 2.0%, to $1,693,304,000, with average loans increasing $79,912,000 slightly offset by a decrease in average investment securities of $67,424,000. Other earning

48

assets, primarily interest-earning balances at the Federal Reserve Bank, increased $20,933,000. Average total deposits decreased $15,846,000, or 1.1%, to $1,443,816,000 for the nine-month period ended September 30, 2023 compared to the same period in 2022. The net interest margin on a tax-equivalent basis was 2.40% for the nine-month period ended September 30, 2023, a 32-basis point decrease from the same period in 2022.

Total interest income on a tax-equivalent basis increased $12,044,000, or 31.5%, to $50,267,000 from $38,223,000, when comparing the nine-month periods ended September 30, 2023 and September 30, 2022 due to an increase in volume and rate on loans. Interest income on loans increased $7,890,000 as a result of yields and increased $2,498,000 as a result of volume. The yield on investments increased 30 basis points from 1.71% to 2.01% when comparing the nine-month periods. The analysis of the nine-month comparison periods is similar to what was described in the quarterly analysis.

The yield on earning assets increased from 3.08% to 3.97% for the nine-month periods with the yield on loans up 103 basis points. QNB continues to experience pressure on yields due to competitive pressures on loan pricing.

Total interest expense increased $15,398,000 for the nine-month period ended September 30, 2023 compared with the same period in 2022, attributable to increases in rates. The average rate paid on interest bearing deposits increased 140 basis points to 1.84% for the nine-month period ended September 30, 2023 versus the same period in 2022. The average balance of total short-term borrowings increased $33,730,000 primarily due to overnight FHLB borrowing. The yield on interest-bearing liabilities increased 150 basis points to 1.96% for the nine months ended September 30, 2023. QNB invested proceeds from maturities of investment securities and growth in borrowings into loans.

PROVISION FOR CREDIT LOSSES, ALLOWANCE FOR CREDIT LOSSES ON LOANS AND ALLOWANCE FOR CREDIT LOSSES ON UNUSED COMMITMENTS

On January 1, 2023, the Company adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), as amended ("ASU 326"), which replaces the incurred loss methodology with an expected credit losses (“CECL”) for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. On January 1, 2023, QNB recorded a decrease to its allowance for credit losses on loans of $989,000 and an increase to its allowance for credit losses on unused commitments of $5,000.

The provision for credit losses represents management's determination of the amount necessary to be charged to operations to bring the allowance for credit losses on loans and the allowance for credit losses on unused commitments to amounts that are intended to absorb historical loss experience, current conditions and reasonable and supportable forecasts, in the outstanding loan portfolio and the unused commitments. Management believes that it uses the best information available to make determinations about the adequacy of these allowances and that it has established its existing allowances for credit losses on loan and on unused commitments in accordance with U.S. GAAP. The determination of an appropriate level for the allowance for credit losses on loans and the allowance for credit losses on unused commitments are based upon an analysis of the risks inherent in QNB’s loan portfolio.

Since the allowance for credit losses on loans and the reserve on unused commitments is dependent, to a great extent, on conditions that may be beyond QNB’s control, it is at least reasonably possible that management’s calculations and actual results could differ. In addition, various regulatory agencies, as an integral part of their examination process, periodically review QNB’s allowance for credit losses on loans. Such agencies may require QNB to recognize changes to the allowance based on their judgments about information available to them at the time of their examination. Actual loan losses, net of recoveries, serve to reduce the allowance.

Based on this analysis, QNB recorded a reversal of $1,119,000 for the nine months ended September 30, 2023, through the allowance for credit losses on loans, compared to no provision for the same period in 2022. QNB recorded a reversal of $18,000 for the allowance for credit losses for unused commitments in the nine months ended September 30, 2023 compared to a provision of $21,000 for the same period in 2022.

QNB's allowance for credit losses on loans of $8,542,000 represents 0.81% of loans receivable at September 30, 2023 compared with an allowance for loan losses of $10,531,000, or 1.01% of loans receivable, at December 31, 2022, and $11,338,000, or 1.12%, at September 30, 2022. Management believes the allowance for credit losses on loans at September 30, 2023 is adequate as of that date based on its analysis of historical loss experience, current conditions and reasonable and supportable forecasts in the portfolio.

Net charge-offs were $275,000 for the three months ended September 30, 2023 compared to net recoveries of $41,000 for the three months ended September 30, 2022. Charge-offs consisted of $273,000 in commercial loans and overdrafts of $21,000. Recoveries of approximately $25,000 during the three months ended September 30, 2023 consisted of $18,000 in repayments from borrowers of

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previously charged-off credits and overdrafts recoveries of $7,000. Annualized net charge-offs as a percentage of average loans receivable were 0.10% for the three months ended September 30, 2023, compared to annualized net recoveries of 0.02% for the three months ended September 30, 2022.

Net recoveries were $219,000 for the nine months ended September 30, 2023 compared to net recoveries of $154,000 for the nine months ended September 30, 2022. Charge-offs of approximately $438,000 during the nine months ended September 30, 2023 consisted primarily of commercial loans of $313,000, student loans of $43,000, consumer loans of $9,000 and overdrafts of $73,000. These were offset by $657,000 in recoveries comprising $635,000 in repayments from borrowers of previously charged-off credits, and $22,000 related to overdraft recoveries. Annualized net recoveries as a percentage of average loans receivable were 0.03% for the nine months ended September 30, 2023, compared to annualized net recoveries of 0.02% for the nine months ended September 30, 2022.

Non-performing assets were $5,872,000 at September 30, 2023 compared to $9,121,000 as of December 31, 2022 and $10,694,000 at September 30, 2022. Total non-performing loans, which represent loans on non-accrual status, loans past due 90 days or more and still accruing interest and restructured loans, were 0.55% of loans receivable at September 30, 2023, 0.88% at December 31, 2022, and 1.06% of loans receivable at September 30, 2022. In cases where there is a collateral shortfall on non-accrual loans, specific impairment 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 September 30, 2023, $1,489,000, 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 totaled $11,914,000, a decrease of $1,770,000 from the $13,684,000 reported at December 31, 2022 and a decrease of $5,640,000, or 32.1%, from the $17,554,000 reported at September 30, 2022. The decrease in classified loans since December 31, 2022 and September 30, 2022 is primarily due to repayments and pay-offs on existing substandard loans.

QNB had no loans past due 90 days or more and still accruing interest at September 30, 2023, December 31, 2022, or September 30, 2022. Total loans 30 days or more past due, which includes non-accrual loans by actual number of days delinquent, represented 0.97% of loans receivable at September 30, 2023 compared with 0.23% at December 31, 2022, and 0.30% at September 30, 2022.

Legacy troubled debt restructured loans, not classified as non-accrual loans or loans past due 90 days or more and accruing, were $3,979,000 at September 30, 2023, compared with $4,301,000 at December 31, 2022, and $4,357,000 at September 30, 2022. There were no troubled debt modifications identified during the nine months ended September 30, 2023. QNB had no other real estate owned or repossessed assets at September 30, 2023, December 31, 2022 or September 30, 2022.

A loan is considered impaired, based on current information and events, if it is probable that QNB will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and shortfalls on a case-by-case basis, taking into consideration all the circumstances surrounding the loan and the borrower, including length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for all non-accrual loans, except student loans, by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

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The following table shows detailed information and ratios pertaining to the Company’s loan and asset quality:

	September 30,			December 31,			September 30,
	2023			2022			2022
Non-accrual loans	$	1,893		$	4,820		$	6,337
Loans past due 90 days or more and still accruing interest		—			—			—
Troubled debt restructured loans (not already included above)		3,979			4,301			4,357
Total non-performing loans		5,872			9,121			10,694
Total non-performing assets	$	5,872		$	9,121		$	10,694
Total loans (excluding loans held-for-sale):
Average total loans (YTD)	$	1,029,042		$	967,438		$	949,691
Total loans		1,060,450			1,039,385			1,008,306
Allowance for credit losses on loans		8,542			10,531			11,338
Allowance for loan losses to:
Non-performing loans		145.47	%		115.46	%		106.02	%
Total loans (excluding held-for-sale)		0.81	%		1.01	%		1.12	%
Average total loans (excluding held-for-sale)		0.83	%		1.09	%		1.19	%
Non-performing loans / total loans (excluding held-for-sale)		0.55	%		0.88	%		1.06	%
Non-performing assets / total assets		0.35	%		0.55	%		0.65	%

An analysis of net loan charge-offs (recoveries) for the three and nine months ended September 30, 2023 compared to 2022 is as follows:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net charge-offs (recoveries)	$	275		$	(41	)	$	(219	)	$	(154	)
Net annualized charge-offs (recoveries) to:
Total loans		0.10	%		(0.02	%)		(0.03	%)		(0.02	%)
Average total loans excluding held-for-sale		0.10	%		(0.02	%)		(0.03	%)		(0.02	%)
Allowance for loan losses		12.77	%		(1.43	%)		(3.43	%)		(1.82	%)

At September 30, 2023 and December 31, 2022, the recorded investment in loans for which impairment has been identified totaled $1,893,000 and $9,567,000 of which $1,209,000 and $4,943,000, respectively, required no specific allowance for loan loss. The recorded investment in impaired loans requiring an allowance for loan losses was $684,000 and $4,624,000 at September 30, 2023 and December 31, 2022, respectively, and the related allowance for loan losses associated with these loans was $347,000 and $696,000, respectively. Most of the loans that have been identified as impaired are collateral-dependent. See Note 8 to the Notes to Consolidated Financial Statements for additional detail of impaired loans.

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NON-INTEREST INCOME

Non-Interest Income Comparison
	For the Three Months Ended September 30,						Change from prior year						For the Nine Months Ended September 30,						Change from prior year
	2023			2022			Amount			Percent			2023			2022			Amount			Percent
Net gain on sales of investment securities	$	131		$	—		$	131		N/M			$	185		$	493		$	(308	)		-62.5	%
Unrealized gain (loss) on investment equity securities		(138	)		(1,174	)		1,036			(88.2	)		(654	)		(2,628	)		1,974			(75.1	)
Fees for services to customers		421			423			(2	)		(0.5	)		1,237			1,210			27			2.2
ATM and debit card		685			669			16			2.4			2,048			2,015			33			1.6
Retail brokerage and advisory		219			194			25			12.9			655			604			51			8.4
Bank-owned life insurance		81			121			(40	)		(33.1	)		245			277			(32	)		(11.6	)
Merchant		99			98			1			1.0			298			302			(4	)		(1.3	)
Net gain on sale of loans		4			6			(2	)		(33.3	)		5			6			(1	)		(16.7	)
Other		253			147			106			72.1			535			455			80			17.6
Total	$	1,755		$	484		$	1,271			262.6	%	$	4,554		$	2,734		$	1,820			66.6	%

Quarter to Quarter Comparison

Total non-interest income for the third quarter of 2023 was $1,755,000, an increase of $1,271,000, compared to $484,000 for the third quarter of 2022. Excluding realized and unrealized gains (losses) on securities, non-interest income increased $106,000, or 6.4%, to $1,762,000 for the quarter ended September 30, 2023 compared with the same period in 2022.

During the third quarter of 2023, unrealized losses on investment equity securities of $138,000 were recorded compared to losses of $1,174,000 in the same period of 2022. The unrealized losses and gains for the three months ended September 30, 2023 and 2022 resulted from the change in the fair value of the equities included in the investment portfolio. The equities portfolio comprises blue-chip large-capitalized stocks, providing a year-to-date taxable equivalent dividend yield of 4.07%. The estimated cumulative contribution (realized and unrealized net gains (losses), plus dividends) of the equity portfolio to earnings per share from January 1, 2011 through September 30, 2023 is $2.39 per diluted share. Details of the equity portfolio’s contribution to net income since January 1, 2016 is detailed in the following table.

Net Income (Expense) on Equity Securities
	For the Year Ended December 31,																						For the Nine Months Ended September 30,
		2016			2017			2018			2019			2020			2021			2022			2023			2022
Equity Securities:
Tax-equivalent dividends*		$	233		$	249		$	300		$	274		$	392		$	437		$	399		$	257		$	297
Net gain (loss) on sales			758			1,557			(79	)		1,781			585			1,788			405			442			489
Impairment			(192	)		(80	)	N/A			N/A			N/A			N/A			N/A			N/A			N/A
Unrealized (loss) gain		N/A			N/A				(336	)		770			(47	)		926			(1,026	)		(654	)		(2,628	)
Tax-equivalent income before tax			799			1,726			(115	)		2,825			930			3,151			(222	)		45			(1,842	)
Tax expense (benefit)*			324			700			(33	)		816			269			910			(64	)		13			(532	)
Net income		$	475		$	1,026		$	(82	)	$	2,009		$	661		$	2,241		$	(158	)	$	32		$	(1,310	)
Earnings per share - basic		$	0.14		$	0.30		$	(0.02	)	$	0.57		$	0.19		$	0.63		$	(0.04	)	$	0.01		$	(0.37	)
Earnings per share - diluted		$	0.14		$	0.30		$	(0.02	)	$	0.57		$	0.19		$	0.63		$	(0.04	)	$	0.01		$	(0.37	)
Tax-equivalent yield*			3.13	%		3.49	%		3.08	%		3.31	%		3.54	%		3.02	%		3.32	%		4.07	%		3.26	%
*Based on Federal tax rates of 34% for the 2016 period and 21% for the 2017, 2018, 2019, 2020, 2021, 2022 and 2023 periods.

QNB originates residential mortgage loans for sale in the secondary market. Net gains on sale of loans was $4,000 for third quarter of 2023; compared to $6,000 in the third quarter of 2022. The net gain on residential mortgage sales is directly related to the volume of mortgages sold and the timing of the sales relative to the interest rate environment. Residential mortgage loans to be sold are identified at origination.

Fees for services to customers decreased $2,000 to $421,000 for the third quarter of 2023, due primarily to a decrease in net overdraft income. ATM and debit card income increased $16,000 to $685,000 for the third quarter of 2023, compared to the same period in 2022.

QNB provides securities and advisory services under the name QNB Financial Services. Retail brokerage and advisory fees increased for the third quarter of 2023 compared to the same period in 2022. Advisory fees increased $17,000 for the third quarter of 2023 compared with the same period in 2022 due to new clients and the value of assets under management; and transactional fees increased $8,000.

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Merchant fees remained flat for the third quarter of 2023 compared with the same period in 2022. Other non-interest income increased $106,000 primarily due to a sales tax refund of $115,000.

Nine-Month Comparison

Total non-interest income for the nine-month periods ended September 30, 2023 and 2022 was $4,554,000 and $2,734,000, respectively, an increase of $1,820,000. Excluding realized and unrealized gain and losses on securities, total non-interest income was $5,023,000 and $4,869,000, respectively, an increase of $154,000, or 3.2%.

Net investment securities gains decreased $308,000 to $185,000 for the nine months ended September 30, 2023 compared to $493,000 for the comparable nine months in 2022. Market conditions in the equities market for the nine months ended September 30, 2023 versus the same period in 2022 resulted in greater opportunities for profitable sales in 2022; these were partly offset by losses on debt securities. QNB recorded realized gains of $442,000 compared to gains of $489,000 on equity securities for the nine months ended September 30, 2023 and 2022, respectively. Losses on sales of debt securities were $257,000 as QNB sold securities to lower its market risk in a rising rate environment.

Net gains on sales of loans for the nine months ended September 30, 2023 were $5,000; there were $6,000 in gains no loan sales in the 2022 period. Proceeds from the sale of residential mortgages were $640,000 and $304,000 for the nine-month periods ended September 30, 2023 and 2022, respectively.

Fees for services to customers increased $27,000 to $1,237,000 for the first nine months of 2023, due primarily to an increase in net overdraft income. ATM and debit card increased $33,000 for the first nine months of 2023 compared to 2022, due to volume of transactions.

Retail brokerage and advisory fees increased $51,000, or 8.4%, to $655,000 for the nine months ended September 30, 2023 compared to the same period in 2022; advisory fees increased $4,000 and transaction-based fees increased $47,000.

Merchant income decreased $4,000. Other non-interest income increased $80,000 primarily due to a sales tax refund of $115,000 and an increase in credit card income of $20,000, partly offset by a decrease in title company income of $31,000 and $22,000 in broker-dealer conversion fees in 2022.

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NON-INTEREST EXPENSE

Non-Interest Expense Comparison
	For the Three Months Ended September 30,				Change from prior year						For the Nine Months Ended September 30,				Change from prior year
	2023		2022		Amount			Percent			2023		2022		Amount			Percent
Salaries and employee benefits	$	4,971	$	4,371	$	600			13.7	%	$	14,309	$	12,842	$	1,467			11.4	%
Net occupancy		594		535		59			11.0			1,683		1,663		20			1.2
Furniture and equipment		910		779		131			16.8			2,665		2,190		475			21.7
Marketing		216		141		75			53.2			678		632		46			7.3
Third-party services		592		582		10			1.7			1,837		1,839		(2	)		(0.1	)
Telephone, postage and supplies		134		187		(53	)		(28.3	)		434		555		(121	)		(21.8	)
State taxes		60		272		(212	)		(77.9	)		244		732		(488	)		(66.7	)
FDIC insurance premiums		274		177		97			54.8			745		574		171			29.8
Other		920		770		150			19.5			2,768		2,346		422			18.0
Total	$	8,671	$	7,814	$	857			11.0	%	$	25,363	$	23,373	$	1,990			8.5	%

Quarter to Quarter Comparison

Total non-interest expense was $8,671,000 for the third quarter of 2023, an increase of $857,000 compared to the third quarter of 2022.

Salaries and benefits comprise the largest component of non-interest expense. QNB monitors, through the use of various surveys, the competitive salary and benefit information in its markets and makes adjustments when appropriate. Salaries and benefits expense increased $600,000, or 13.7%, to $4,971,000 when comparing the two quarters. Salary expense and related payroll taxes increased $405,000 to $4,132,000 during the third quarter of 2023 compared to the same period in 2022 due to pay increases and filling open positions. Medical and dental premiums, net of employee contributions, increased $161,000 when comparing the two quarters due to timing of medical claims. Retirement and post-retirement costs increased $37,000.

Net occupancy and furniture and equipment expenses combined increased $190,000, or 14.5%, when comparing the third quarters of 2023 and 2022. This is due primarily to increased software maintenance expense. Marketing expense increased $75,000, or 53.2%, to $216,000 for the quarter ended September 30, 2023, due to timing of promotions and community support donations.

Third-party services are comprised of professional services, including legal, accounting, auditing and consulting services, as well as fees paid to outside vendors for support services of day-to-day operations. These support services include correspondent banking services, IT services, statement printing and mailing, investment security safekeeping and supply management services. Third party services expense increased $10,000. Telephone, postage and supplies expense decreased $53,000 primarily due to a reduction in postage and mailing expenses as there was an increase in the use of electronic delivery. State taxes decreased $212,000, or 77.9%, due to lower banks shares tax as there was a decline in capital from year-end 2021 to year-end 2022. FDIC insurance premiums increased $97,000 due to an increase in the assessment rate.

Other non-interest expense increased $150,000, or 19.5%, due to a $74,000 increase in write-offs primarily due to fraud on customer accounts, $46,000 in loan work-out costs as there was a large recovery in 2022 of $45,000 to reimburse the Bank for insurance costs, and an increase in director fees of $26,000.

Nine-Month Comparison

Total non-interest expense was $25,363,000 for the nine-month period ended September 30, 2023, an increase of $1,990,000, or 8.5%, compared to the nine months ended September 30, 2022.

Salaries and benefits expense increased $1,467,000 to $14,309,000 for the nine months ended September 30, 2023 compared to the same period in 2022. Salary and related payroll tax expense increased $1,209,000 during the period, to $12,078,000, medical expense increased $153,000 and retirement and post-retirement costs increased $102,000.

Net occupancy and furniture and equipment expense increased $495,000, or 12.8%, to $4,348,000, due to the reasons described in the quarter to quarter comparison. Marketing expense increased $46,000. FDIC insurance premiums increased $171,000, state taxes

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decreased $488,000, and telephone, postage and supplies decreased $121,000, due to the reasons described in the quarter to quarter comparison. Other non-interest expense increased due to the reasons described above in the quarter to quarter comparison.

INCOME TAXES

QNB utilizes an asset and liability approach for financial accounting and reporting of income taxes. As of September 30, 2023, QNB’s net deferred tax asset was $23,859,000. The primary components of deferred taxes are deferred tax assets of which $24,703,000 relates to investment securities fair value adjustments and $1,794,000 relates to the allowance for credit losses on loans, partly offset by a deferred tax liability on interest rate swap fair value adjustments of $2,231,000. As of December 31, 2022, QNB’s net deferred tax asset was $23,077,000 of which $21,565,000 related to investment securities fair value adjustments and $2,212,000 was related to the allowance for loan losses. The increase in the balance of net deferred tax assets when comparing September 30, 2023 to December 31, 2022 of $782,000 is due to the reduction in unrealized losses on available for sale securities contributing $3,138,000 of the increase, partly offset by the unrealized gains on interest rate swaps contributing a reduction of $2,231,000 and a decrease in the allowance for credit losses on loans contributing a reduction of $418,000.

The realizability of deferred tax assets is dependent upon a variety of factors, including the generation of future taxable income, the existence of taxes paid and recoverable, the reversal of deferred tax liabilities and tax planning strategies. Based upon these and other factors, management believes it is more likely than not that QNB will realize the benefits of these remaining deferred tax assets.

Applicable income tax expense was $494,000 for the quarter and $1,942,000 for the nine months ended September 30, 2023, compared to $634,000 for the quarter and $2,105,000 for the nine months ended September 30, 2022, respectively. The effective tax rate for the third quarter and nine-month period ended September 30, 2023 was 17.4% and 18.9%, respectively, compared with 15.7% and 16.7%, respectively, for the same period in 2022. The increase in the effective tax rate for the nine months ended September 30, 2023 is due to the state income tax at the parent company and there was a lower proportion of tax-exempt net interest income to income before taxes for 2023 over 2022.

FINANCIAL CONDITION ANALYSIS

Financial service organizations are challenged to demonstrate they can generate sustainable and consistent earnings growth in a dynamic operating environment. Rate competition for quality loans is anticipated to continue through 2023. It is also anticipated that the rate competition for attracting and retaining deposits may increase in the remainder of 2023, which could result in a lower net interest margin and a decline in net interest income.

QNB’s primary business is accepting deposits and making loans to meet the credit needs of the communities it serves. Loans are the most significant component of earning assets and growth in loans to small businesses and residents of these communities has been a primary focus of QNB. Inherent within the lending function is the evaluation and acceptance of credit risk and interest rate risk. QNB manages credit risk associated with its lending activities through portfolio diversification, underwriting policies and procedures and loan monitoring practices. QNB is committed to make credit available to its customers.

Total assets at September 30, 2023 were $1,684,392,000 compared with $1,668,497,000 at December 31, 2022. Cash and cash equivalents increased $39,242,000 from $15,899,000 at December 31, 2022 to $55,141,000 at September 30, 2023.

The fixed-income securities portfolio represents a significant portion of QNB’s earning assets and is also a primary tool in liquidity and asset/liability management. QNB actively manages its fixed income portfolio to take advantage of changes in the shape of the yield curve and changes in spread relationships in different sectors and for liquidity purposes. Management continually reviews strategies that will result in an increase in the yield or improvement in the structure of the investment portfolio, including monitoring credit and concentration risk in the portfolio. The available-for-sale securities portfolio decreased $41,135,000, due to maturities and prepayments of $38,040,000, sales of $9,081,000 and a negative adjustment in the fair value mark of $4,326,000; this was partly offset by purchases of $11,922,000.

Loans receivable increased $21,065,000 with commercial loans increasing $18,502,000 to $890,047,000 at September 30, 2023, compared with $871,545,000 at year-end 2022.

Deposits grew $64,964,000 from December 31, 2022 to September 30, 2023. Non-interest-bearing demand deposits decreased $39,623,000, with balances of $192,226,000 at September 30, 2023 compared with $231,849,000 at year-end 2022. Interest-bearing demand balances, excluding municipal deposits, decreased $14,469,000, or 4.3%, to $320,117,000, with decreases in personal interest-bearing checking products as customers used funds to paydown higher-yielding loans or moving funds to high-yielding products. The $91,106,000 increase in money market accounts was primarily to a new premium money market product offered to both personal and

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business customers. The $118,248,000 decrease in savings was primarily due to declines in the E-Savings on-line product as some of these funds moved to higher-yield certificates of deposit or the new premium money market accounts. Total time deposits increased $114,737,000 from December 31, 2022 to September 30, 2023 as customers took advantage of higher-yielding time deposits, moving from lower-yielding products. Municipal deposit balances increased $31,461,000, to $149,802,000, during the first nine months of 2023. Municipal deposits can be volatile depending on the timing of deposits and withdrawals, and the cash flow needs of the school districts or municipalities. Municipal deposits increase as tax money is received from the local school districts during second and third quarters and it is anticipated that these funds will flow out for the subsequent twelve months as the schools use the funds for operations. These deposits provide an incremental funding source as they are used to fund loans as opposed to borrowing at a higher rate; this improves the net interest margin as it increases the spread related to the net interest margin.

Short-term borrowings decreased 40.1%, from $161,327,000 at December 31, 2022 to $96,703,000 at September 30, 2023. Commercial sweep accounts decreased $22,606,000; these funds may be volatile based on businesses’ receipt and disbursement of funds and is offset by business non-interest-bearing demand accounts. There were $92,018,000 in overnight borrowings from FHLB at December 31, 2022, and none at September 30, 2023; however, during the first quarter of 2023, QNB borrowed $50,000,000 from the FRB under its Bank Term Funding Program and locked in a rate of 4.39%; there are no pre-payment penalties. During the nine months ended September 2023, QNB borrowed long-term debt from the FHLB of $20,000,000 to lock in a low yield. In 2020, QNB borrowed long-term debt from the FHLB of $10,000,000 to lock in a rate at a low yield; this debt matured during the first three months of 2023.

LIQUIDITY

Liquidity represents an institution’s ability to generate cash or otherwise obtain funds at reasonable rates to satisfy demand for loans and deposit withdrawals. QNB attempts to manage its mix of cash and interest-bearing balances, Federal funds sold and investment securities to match the volatility, seasonality, interest sensitivity and growth trends of its loans and deposits. The Company manages its liquidity risk by measuring and monitoring its liquidity sources and estimated funding needs. Liquidity is provided from asset sources through repayments and maturities of loans and investment securities. The portfolio of investment securities classified as available for sale and QNB's policy of selling certain residential mortgage originations in the secondary market also provide sources of liquidity. Core deposits and cash management repurchase agreements have historically been the most significant funding source for QNB. These deposits and repurchase agreements are generated from a base of consumers, businesses and public funds primarily located in the Company’s market area.

Additional sources of liquidity are provided by the Bank’s membership in the FHLB. At September 30, 2023 the Bank had a maximum borrowing availability with the FHLB of approximately $289,114,000, which is net of long-term borrowing outstanding of $20,000,000, a $283,000 letter of credit and accrued interest payable. The maximum borrowing depends upon qualifying collateral assets and the Bank’s asset quality and capital adequacy. In addition, the Bank maintains unsecured Federal funds lines with six correspondent banks totaling $91,000,000. At September 30, 2023 there were no outstanding borrowings under these lines. Future availability under these lines is subject to the policies of the granting banks and may be withdrawn. Additional funding is available at the FRB Discount Window under its Bank Term Funding Program; QNB had $50,000,000 in outstandings at September 30, 2023.

Liquid sources of funds, including cash, available-for-sale and equity investment securities, and loans held-for-sale have decreased $8,738,000 since December 31, 2022, totaling $565,742,000 at September 30, 2023. The reduction in the liquid sources of funds is primarily due to maturities and sales of available-for-sale securities. Growth in deposits provided cash flows of $64,964,000, net proceeds from available-for-sale investment activities provided $35,199,000 and net proceeds from long-term debt provided $10,000,000 in net proceeds; combined, the proceeds enabled the net paydown on short-term borrowings of $64,624,000 and funding for the net growth in loans of $20,847,000. Management expects these liquid sources will be adequate to meet normal fluctuations in loan demand or deposit withdrawals. The investment portfolio is expected to continue to provide sufficient liquidity, as municipal bonds are called or mature and cash flow on mortgage-backed and CMO securities continues to be steady.

Approximately $294,104,000 and $237,645,000 of available-for-sale debt securities at September 30, 2023 and December 31, 2022, respectively, were pledged as collateral for repurchase agreements and deposits of public funds and the FRB short-term borrowing. The level of pledged securities corresponds with the municipal deposit and repurchase agreement balances.

QNB is a member of the Certificate of Deposit Account Registry Services (CDARS) program offered by the Promontory Interfinancial Network, LLC. CDARS is a funding and liquidity management tool used by banks to access funds and manage their balance sheet. It enables financial institutions to provide customers with full FDIC insurance on time deposits over $250,000 that are placed in the program. QNB also has available Insured Cash Sweep (ICS), another program through Promontory Interfinancial Network, LLC, which is a product similar to CDARS, but one that provides liquidity like a money market or savings account.

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CAPITAL ADEQUACY

A strong capital position is fundamental to support continued growth and profitability and to serve the needs of depositors. QNB's shareholders' equity at September 30, 2023 was $74,081,000, or 4.40% of total assets, compared with shareholders' equity of $70,958,000, or 4.25% of total assets, at December 31, 2022. Shareholders’ equity at September 30, 2023 included a negative adjustment of $84,544,000 compared to a negative adjustment of $81,127,000 at December 31, 2022, related to net unrealized holding losses, net of taxes, on investment securities available-for-sale and gains on fair value hedges, net of tax. Without these adjustments, shareholders' equity to total assets would have been 8.97% and 8.69% at September 30, 2023 and December 31, 2022, respectively.

Average shareholders' equity and average total assets were $156,499,000 and $1,737,417,000 for the nine months ended September 30, 2023, an increase of 8.2% and 2.1%, respectively, from the averages for the nine months ended September 30, 2022. The ratio of average total equity to average total assets was 9.01% for the nine months ended September 30, 2023 compared to 8.50% for the same period in 2022.

Retained earnings at September 30, 2023 were impacted by nine months of net income totaling $8,349,000 and the cumulative effect of a change in accounting policy of $857,0000, offset by dividends declared and paid of $3,997,000 for the nine-month period. QNB offers a Dividend Reinvestment and Stock Purchase Plan (the “Plan”) to provide participants a convenient and economical method for investing cash dividends paid on the Company’s common stock in additional shares. The Plan also allows participants to make additional cash purchases of stock. Stock purchases under the Plan contributed $1,131,000 to capital during the nine months ended September 30, 2023.

The Board of Directors has authorized the repurchase of up to 200,000 shares of QNB common stock in open market or privately negotiated transactions. The repurchase authorization does not bear a termination date. As of September 30, 2023, 102,000 shares have been repurchased since the initial authorization at an average price of $24.93 and a total cost of $2,543,000.

QNB is subject to various regulatory capital requirements as issued by Federal regulatory authorities. Regulatory capital is defined in terms of Tier 1 capital and Tier 2 capital. Risk-based capital ratios are expressed as a percentage of risk-weighted assets. Risk-weighted assets are determined by assigning various weights to all assets and off-balance sheet arrangements, such as letters of credit and loan commitments, based on associated risk.

The required minimum Common equity Tier 1 capital to risk-weighted assets ratio is 4.5%, the required minimum ratio of Tier 1 capital to risk-weighted assets is 6.0%, the required minimum ratio of Total Capital to risk-weighted assets is 8.0%, and the required minimum Tier 1 leverage ratio is 4.0%. A capital conservation buffer of 2.5% of risk-weighted assets also applies to avoid limitations on certain capital distributions.

The following table sets forth consolidated information for QNB:

	September 30,			December 31,
Capital Analysis	2023			2022
Regulatory Capital
Shareholders' equity	$	74,081		$	70,958
Net unrealized securities losses, net of tax		84,544			81,127
Deferred tax assets on net operating loss		—			—
Disallowed intangible assets		(8	)		(8	)
Common equity tier I capital		158,617			152,077
Tier 1 capital		158,617			152,077
Allowable portion: Allowance for loan losses and reserve    for unfunded commitments		8,645			10,648
Total regulatory capital	$	167,262		$	162,725
Risk-weighted assets	$	1,257,110		$	1,233,758
Quarterly average assets for leverage capital purposes	$	1,773,130		$	1,737,671

	September 30,			December 31,
Capital Ratios	2023			2022
Common equity tier I capital / risk-weighted assets		12.62	%		12.33	%
Tier 1 capital / risk-weighted assets		12.62			12.33
Total regulatory capital / risk-weighted assets		13.31			13.19
Tier 1 capital / average assets (leverage ratio)		8.95			8.75

57

At September 30, 2023, common equity Tier 1, Tier 1 capital, and total regulatory capital ratios improved since December 31, 2022. The Company remains well-capitalized by all applicable regulatory requirements as of September 30, 2023.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

MARKET RISK MANAGEMENT

Market risk reflects the risk of economic loss resulting from changes in interest rates and market prices. QNB’s primary market risk exposure is interest rate risk and liquidity risk. QNB’s liquidity position was discussed in a prior section.

QNB’s largest source of revenue is net interest income, which is subject to changes in market interest rates. Interest rate risk management seeks to minimize the effect of interest rate changes on net interest margins and interest rate spreads and to provide growth in net interest income through periods of changing interest rates. QNB’s Asset/Liability and Investment Management Committee (ALCO) is responsible for managing interest rate risk and for evaluating the impact of changing interest rate conditions on net interest income.

QNB uses computer simulation analysis to measure the sensitivity of projected earnings to changes in interest rates. Simulation considers current balance sheet volumes and the scheduled repricing dates, instrument level optionality, and maturities of assets and liabilities. It incorporates assumptions for growth, changes in the mix of assets and liabilities, prepayments, and average rates earned and paid. Based on this information, management uses the model to project net interest income under multiple interest rate scenarios.

A balance sheet is considered asset sensitive when its assets (investment securities and loans) reprice faster than its interest-bearing liabilities (deposits and borrowings). An asset sensitive balance sheet will produce relatively higher net interest income when interest rates rise and less net interest income when they decline. A balance sheet is considered liability sensitive when its liabilities (deposits and borrowings) reprice faster than its earning assets (investments securities and loans). A liability sensitive balance sheet will produce relatively less net interest income when interest rates rise and more net interest income when they decline. Based on our simulation analysis, management believes QNB’s interest sensitivity position at September 30, 2023 is asset sensitive. Management expects that market interest rates may increase over the next 12 months, based on the economic environment and policy of the Board of Governors of the Federal Reserve System.

The following table shows the estimated impact of changes in interest rates on net interest income as of September 30, 2023 and 2022 assuming instantaneous rate shocks, and consistent levels of assets and liabilities. Net interest income for the subsequent twelve months is projected to decrease when interest rates are higher than current rates.

Estimated Change in Net Interest Income
Changes in Interest rates	September 30,
(in basis points)	2023			2022
+300		9.36	%		-12.89	%
+200		6.27	%		-8.46	%
+100		3.14	%		-4.16	%
-100		-3.57	%		2.88	%
-200		-8.09	%		3.73	%
-300		-13.63	%		-2.28	%

Computations of future effects of hypothetical interest rate changes are based on numerous assumptions and should not be relied upon as indicative of actual results. Assets and liabilities may react differently than projected to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag changes in market interest rates. Interest rate shifts may not be parallel.

Changes in interest rates can cause substantial changes in the amount of prepayments of loans and mortgage-backed securities, which may in turn affect QNB’s interest rate sensitivity position. Additionally, credit risk may rise if an interest rate increase adversely affects the ability of borrowers to service their debt. At September 30, 2023, QNB had two derivatives designated as fair value hedging instruments, these interest rate swaps had a notional value of $300,000,000.

QNB is not subject to foreign currency exchange or commodity price risk.

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ITEM 4. CONTROLS AND PROCEDURES

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the consolidated financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. We evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report. No changes were made to our internal control over financial reporting during the nine month period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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QNB CORP. AND SUBSIDIARY

PART II. OTHER INFORMATION

September 30, 2023

Item 1. Legal Proceedings

No material proceedings.

Item 1A. Risk Factors

There were no material changes to the Risk Factors described in Item 1A in QNB’s Annual Report on Form 10-K for the period ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

QNB did not repurchase shares of its common stock during the quarter ended September 30, 2023. The following provides certain information relating to QNB's stock repurchase plan.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan		Maximum Number of Shares that may yet be Purchased Under the Plan
July 1, 2023 through July 31, 2023		—	$	—		—		98,000
August 1, 2023 through August 31, 2023		—		—		—		98,000
September 1, 2023 through September 30, 2023		—		—		—		98,000
Total		—	$	—		—		98,000

(1)Transactions are reported as of trade dates.

(2)QNB’s current stock repurchase plan was approved by its Board of Directors and announced on January 24, 2008, increased on February 9, 2009 and subsequently increased on April 27, 2021.

(3)The total number of shares approved for repurchase under QNB’s current stock repurchase plan is 200,000.

(4)QNB’s current stock repurchase plan has no expiration date.

(5)QNB has no stock repurchase plan that it has determined to terminate or under which it does not intend to make further purchases.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit 3.1	Articles of Incorporation of Registrant, as amended. (Incorporated by reference to Exhibit 3(i) of Registrant’s Annual Report on Form 10-K, SEC File No. 0-17706, filed with the Commission on September 13, 2015.)
Exhibit 3.2	By-laws of Registrant, as amended January 26, 2021. (Incorporated by reference to Exhibit 3.1 of the Registrant's Report on Form 8-K, SEC File No. 0-17706, filed with the Commission on January 27, 2021.)
Exhibit 10.10	QNB Corp. 2023 Non-Employee Director Compensation Plan. (Incorporated by reference to Appendix A to QNB Corp.'s proxy statement, filed April 11, 2023)
Exhibit 10.11	QNB Bank Nonqualified deferred Compensation Plan effective August 1, 2023
Exhibit 31.1	Section 302 Certification of Chief Executive Officer
Exhibit 31.2	Section 302 Certification of Chief Financial Officer
Exhibit 32.1	Section 1350 Certification of Chief Executive Officer
Exhibit 32.2	Section 1350 Certification of Chief Financial Officer

The following Exhibits are being furnished* as part of this report:

No.	Description
101.SCH	iXBRL Taxonomy Extension Schema Document.*
101.CAL	iXBRL Taxonomy Extension Calculation Linkbase Document.*
101.LAB	iXBRL Taxonomy Extension Label Linkbase Document.*
101.PRE	iXBRL Taxonomy Extension Presentation Linkbase Document.*
101.DEF	iXBRL Taxonomy Extension Definitions Linkbase Document.*
104	Cover Page Interactive Data File (formatted as inline iXBRL and contained in Exhibit 101)

* These interactive data files are being furnished as part of this Quarterly Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

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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.

	QNB Corp.
Date:       November 8, 2023	By:	/s/ David W. Freeman
		David W. Freeman
		Chief Executive Officer
Date:       November 8, 2023	By:	/s/ Jeffrey Lehocky
		Jeffrey Lehocky
		Chief Financial Officer
Date:         November 8, 2023	By:	/s/ Mary E. Liddle
		Mary E. Liddle
		Chief Accounting Officer, QNB Bank

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EX-10.11

QNB BANK

NONQUALIFIED DEFERRED COMPENSATION PLAN

RECITALS

This Nonqualified Deferred Compensation Plan (the “Plan”) is adopted by QNB Bank (the “Bank”), a Pennsylvania banking corporation and wholly owned subsidiary of QNB Corp., for the benefit of a select group of the Bank's management or highly compensated employees. The purpose of the Plan is to provide a deferred compensation vehicle to which the Bank may credit discretionary amounts on behalf of Participants for recruitment and reward.

The Plan is intended to be a "top-hat" plan (i.e., an unfunded deferred compensation plan maintained for a select group of management or highly-compensated employees) under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as may be amended from time to time ("ERISA"). The Bank intends that this Plan shall be construed and interpreted for all purposes as intended to be in compliance with the requirements set forth in Internal Revenue Code Section 409A (“Section 409A”) and the Treasury Regulations issued thereunder.

Accordingly, the Plan is effective as of August 1, 2023.

ARTICLE 1

DEFINITIONS

This Article provides definitions of terms used throughout this Plan, and whenever used herein in a capitalized form, except as otherwise expressly provided, the terms shall be deemed to have the following meaning:

1.1 “Account” shall mean a bookkeeping account established and maintained by the Bank on behalf of a Participant and shall be used solely as a device to measure and determine the amounts to be paid to a Participant or a Beneficiary under the terms of the Plan. A Participant’s Account balance shall equal: (a) the sum of the Bank Contributions, plus or minus (b) Deemed Investment gains and/or losses credited or debited thereon, less (c) distributions made to the Participant or his or her Beneficiary pursuant to this Plan. The Plan Administrator or Plan recordkeeper shall establish additional subaccounts that the Plan Administrator considers necessary to reflect the entire interest of the Participant under the Plan.

1.2 “Affiliate” shall mean any corporation, partnership, joint venture, association, or similar organization or entity, other than the Bank, that is a member of a controlled group of corporations in which the Bank is a member, as defined in Code Section 414(b) and all other trade or business (whether or not incorporated) under common control of or with the Bank, as defined in Code Section 414(c).

1.3 “Bank” shall mean QNB Bank, and its successors and assigns, unless otherwise provided in this Plan, or any other corporation or business organization which, with the consent of QNB Bank, or its successors or assigns, assumes the Bank's obligations under this Plan, or any Affiliate which agrees, with the consent of QNB Bank, or its successors or assigns, to become a party to the Plan.

1.4 “Bank Contributions” shall mean the deferred compensation amounts credited on behalf of a Participant by the Bank to the Participant’s Account, as described in Article 3.

1.5 “Beneficiary” or “Beneficiaries” shall mean the person or persons, natural or otherwise, designated

by a Participant in accordance with the Plan to receive applicable payments in the event of the death of the Participant prior to the Participant’s receipt of the entire amount credited to his or her Account.

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1.6 “Beneficiary Designation Form” shall mean the form established from time to time by the Plan Administrator that a Participant completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

1.7 “Board” shall mean the board of directors of the Bank, as from time to time constituted.

1.8 “Cause” shall mean conduct by a Participant determined by the Bank to be: (a) gross negligence or willful malfeasance in the performance of his or her duties; (b) actions or omissions that harm the Bank and are undertaken or omitted knowingly or are criminal or fraudulent or involve material dishonesty or moral turpitude; (c) being indicted in a court of law for any felony or for a crime involving misuse or misappropriation of Bank funds; or (d) breach of fiduciary duty to the Bank.

1.9 “Claimant” shall mean a Participant or a Beneficiary who believes that he or she is entitled to a benefit under this Plan or is being denied a benefit to which he or she is entitled hereunder.

1.10 “Code” shall mean the U.S. Internal Revenue Code of 1986 and the Treasury Regulations or otherauthoritative guidance issued thereunder, as amended from time to time.

1.11 “Deemed Investment” shall mean the notional conversion of the balance held in a Participant’s Account(s) into shares or units of the Deemed Investment Options that are used as measuring devices for determining the value of a Participant’s Account(s).

1.12 “Deemed Investment Options” shall mean the hypothetical securities or other investments described under Section 4.1 from which the Plan Administrator may select to be used as measuring devices to determine the Deemed Investment gains or losses of the Participant’s Account(s). A Participant shall have no real or beneficial ownership in the Deemed Investment Options or any other asset of the Bank resulting from participation in the Plan.

1.13 “Disability” or “Disabled” shall mean a condition of a Participant whereby he or she has been deemed totally disabled by the Social Security Administration or has been determined to be disabled in accordance with a long-term disability insurance program of the Bank, provided that the program covers the Participant and the definition of disability applied under such program complies with Code Section 409A. Upon the request of the Plan Administrator, the Participant must submit proof to the Plan Administrator of the Social Security Administration’s or disability insurance provider’s determination

1.14 “Effective Date” shall mean August 1, 2023.

1.15 “Eligibility Date” shall mean the date designated by the Plan Administrator on which an Eligible Employee shall become eligible to participate in the Plan.

1.16 “Eligible Employee” shall mean for any calendar year (or applicable portion of a calendar year), an Employee who is determined by the Bank, or its designee, to be eligible to participate in the Plan.

1.17 “Employee” shall mean an individual who provides services to the Bank in the capacity of a common law employee of the Bank

1.18 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time, and the regulations and guidance promulgated thereunder.

1.19 “Participant” shall mean an Eligible Employee of the Bank who has met the requirements of participation under Article 2 and who participates in the Plan in accordance with the terms and conditions of the Plan.

1.20 “Participation Agreement” shall mean the agreement executed by the Eligible Employee whereby the Eligible Employee agrees to participate in the Plan.

1.21 “Plan” shall mean the QNB Bank Nonqualified Deferred Compensation Plan, as evidenced by this written instrument and Participation Agreements, as amended from time to time. For purposes of applying Code Section 409A requirements, the benefit of each Participant under this Plan is a nonelective account balance plan under Treasury Regulation §1.409A-1(c)(2)(i)(B).

1.22 “Plan Administrator” shall mean the Bank or such committee or person as the Bank shall appoint. A Participant may not vote in any Bank decision relating solely to his or her individual benefits under this Plan.

2

1.23 “Plan Year” shall mean, for the first Plan Year, the period beginning on the Effective Date and ending December 31 of the same calendar year, and thereafter shall mean a twelve (12) month period beginning January 1 of each calendar year and continuing through December 31 of such calendar year.

1.24 “Retirement Age” shall mean age sixty-five (65), unless otherwise described in a Participant’s Participation Agreement.

1.25 “Section 409A” shall mean Code Section 409A and the Treasury Regulations or other authoritative guidance issued thereunder.

1.26 “Separation from Service” or “Separates from Service” shall mean an anticipated permanent reduction in the level of bona fide services to be performed by a Participant to twenty percent (20%) or less of the average level of bona fide services performed by the Participant over the immediately preceding 36-month period (or the full period during which the Participant performed services for the Bank, if that is less than 36 months). Whether a Participant has had a Separation from Service shall be determined pursuant to Treasury Regulation Section 1.409A-1(h).

1.27 “Specified Employee” shall mean a Participant meets the definition of a “key employee” as such term is defined in Code Section 416(i)(1)(A)(i), (ii) or (iii) (without regard to the Treasury Regulations thereunder and Section 416(i)(5)). However, a Participant is not a Specified Employee unless any stock of the Bank or QNB Corp. is publicly traded on an established securities market or otherwise, as defined in Treasury Regulation §1.897-1(m). If a Participant is a key employee at any time during the twelve (12) months ending on December 31, the identification date, the Participant is a Specified Employee for the twelve (12) month period ending on the first day of the fourth month following the identification date. The determination of a Participant as a Specified Employee shall be made by the Plan Administrator in accordance with Code Section 416(i) and the “specified employee” requirements of Section 409A.

1.28 “Treasury Regulation” or “Treasury Regulations” shall mean the regulations promulgated by the Internal Revenue Service for the U.S. Department of the Treasury, as they may be amended from time to time.

1.29 “Valuation Date” shall mean the date through which Deemed Investment gains and/or losses are credited or debited to a Participant’s Account. The Valuation Date shall be as close to the payout or other event triggering valuation as is administratively feasible. The Valuation Date shall be interpreted as each day at the close of business of the New York Stock Exchange (currently 4:00 p.m. Eastern Time), on days that the New York Stock Exchange is open for trading or any other day on which there is sufficient trading in securities of the applicable fund to materially affect the unit value of the fund and the corresponding unit value of the Participant's Deemed Investment Option(s).

3

ARTICLE 2

ELIGIBILITY AND PARTICIPATION

2.1 Selection. Participation in this Plan shall be limited to those Eligible Employees of the Bank or Affiliates, as determined by the Plan Administrator in its sole and absolute discretion.

2.2 Enrollment Requirements. As a condition of participation in this Plan, each Eligible Employee shall

complete, execute, and submit to the Plan Administrator a Participation Agreement, and any other election forms required by the Plan Administrator within the time specified by the Plan Administrator in accordance with the terms and conditions of the Plan. In addition, the Plan Administrator shall establish such other enrollment requirements as it determines necessary or advisable.

2.3 Re-employment. The re-employment of a former Participant by the Bank shall not entitle such individual to become a Participant hereunder. Such individual shall not become a Participant until the individual is again designated as an Eligible Employee in accordance with Section 2.1. If a Participant who has experienced a Separation from Service is receiving installment distributions pursuant to the terms of the Plan and is re-employed by the Bank, distributions due to the Participant shall not be suspended.

2.4 Termination of Active Participation. The Plan Administrator may remove an Eligible Employee from further active participation in the Plan at its discretion. If this occurs, a Participant shall not have additional amounts credited to the Account. Such individual shall continue to be subject to all the terms and conditions of the Plan, including the crediting or debiting of Deemed Investment gains or losses, as described in Article 4, until the amounts credited or debited to a Participant’s Account(s) are distributed or forfeited. A Participant will cease to be a Participant as of the date on which his or her entire Account balance has been distributed or forfeited.

ARTICLE 3

BANK CONTRIBUTIONS

3.1 Bank Contributions. Bank Contributions credited to a Participant’s Account for a particular Plan Year shall be an amount (if any) determined by the Bank in its discretion. The amount so credited on behalf of a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a given Plan Year may be zero. No Participant shall have a right to compel the Bank to credit a Bank Contribution and no Participant shall have the right to share in any such contribution for any year unless selected by the Plan Administrator in its sole and absolute discretion. Bank Contributions for any given Plan Year under this Section shall be credited to the applicable Participant’s Account, as provided herein, at such time or times established by the Plan Administrator in its sole discretion.

ARTICLE 4

DEEMED INVESTMENT GAINS OR LOSSES

4.1 Deemed Investment Options. The Plan Administrator will determine the available Deemed Investment Options for purposes of crediting or debiting the Deemed Investment gains or losses to a Participant’s Account. The Plan Administrator may discontinue, substitute, or add Deemed Investment Options in its sole discretion on a prospective basis. Any discontinuance, substitution, or addition of a Deemed Investment Option will take effect as soon as administratively practicable. The Deemed Investment Options are to be used for measurement purposes only, and the Plan Administrator’s selection of any such Deemed Investment Option, the allocation of such Deemed Investment Options to the Account, the calculation of additional amounts, and the crediting or debiting of such amounts to the Account shall not be considered or construed in any manner as an actual investment of the Account. The Plan Administrator will not be responsible in any manner to any Participant, Beneficiary or other person for any damages, losses, liabilities, costs or expenses of any kind arising in connection with any designation or elimination of a Deemed Investment Option. Without limiting the foregoing, the Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Plan Administrator.

The Participant (or Beneficiary, if applicable) shall at all times remain an unsecured creditor of the Bank. Any liability or obligation of the Bank to any Participant, former Participant, or Beneficiary with respect to a right to payment shall be based solely upon contractual obligations created by this Plan.

4.2 Allocation of Deemed Investment Options. The Plan Administrator shall decide how Bank Contributions shall be deemed to be invested among the Deemed Investment Options in its sole discretion. The Plan Administrator may elect to index the value of the Account to one Deemed Investment Option or by allocating percentages of the Deemed Investment Options to the Account, equal to one hundred percent (100%). As of each Valuation Date, the Account will be credited or debited to reflect the performance of the Deemed Investment Options elected by the Plan Administrator. If a Deemed Investment Option sustains a loss, the Account shall be reduced to reflect such loss.

4

4.3 Participant Responsibilities. A Participant, as a condition of participation in the Plan, agrees to indemnify and hold harmless the Plan Administrator and the Bank from any losses or damages of any kind relating to the Deemed Investment election of the Account.

4.4 Valuation of Account(s). A Participant’s Account(s) as of each Valuation Date shall consist of the balance of the Participant’s Account(s) as of the immediately preceding Valuation Date, plus (or minus) Deemed Investment gains or losses, minus the amount of any distributions made and any applicable tax withheld since the immediately preceding Valuation Date.

4.5 No Required Investment of Bank Assets. Notwithstanding anything contained herein to the contrary, the Bank reserves the right to invest its assets, including any assets that may have been set aside for the purpose of funding the benefits to be provided under the Plan, at its own discretion, and such assets shall remain the property of the Bank, subject to the claims of the general creditors of the Bank, and no Participant shall have any right to any portion of such assets other than as an unsecured general creditor of the Bank.

ARTICLE 5

VESTING / FORFEITURES / TAXES / FEES

5.1 Vesting. Unless otherwise described in a Participant’s Participation Agreement, a Participant is one hundred percent (100%) vested in his or her Account upon the Participant’s Eligibility Date.

5.2 Forfeitures. In the event a Participant’s employment is terminated for Cause, no benefits of any kind will be due or payable by the Bank under the terms of this Plan and all rights of the Participant, his or her designated Beneficiary, executors, or administrators, or any other person, to receive payments thereof shall be forfeited. Additionally, a Participant will forfeit any portion of his or her Account that is unvested upon Separation from Service.

5.3 Removal. Notwithstanding any provision of this Plan to the contrary, the Bank shall not distribute any benefit under this Plan if a Participant is subject to a final removal or prohibition order issued by an appropriate banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

5.4 Taxes and Withholding. Bank Contributions (including earnings thereon) are subject to the Federal

Insurance Contribution Act (FICA) and the Federal Unemployment Tax Act (FUTA) to the extent provided under applicable Code provisions, and benefits payable under the Plan are subject to all applicable federal, state, city, income, employment or other taxes as may be required to be withheld or paid. A Participant is solely responsible for the payment of all individual tax liabilities relating to any such benefits.

5

ARTICLE 6

PAYMENT OF BENEFITS

6.1 Payments in General.

(a) Amount of Benefit. A Participant (or, in the event of the death of a Participant, the Participant’s Beneficiary) shall be entitled to a benefit equal to the Participant’s vested Account balance as of the earliest payment event to occur under the terms of this Article 6.

(b) Source of Payments. All payments made under the Plan shall be made in cash from the Bank’s general assets.

(c) Changes in Time or Form of Payment. If approved by the Bank, a Participant may delay the time of a payment or change the form of a payment as expressly provided under this Section 6.1(c) and Section 409A (hereinafter, a “Subsequent Deferral Election”). A Subsequent Deferral Election cannot accelerate any payment. A Subsequent Deferral Election which delays or changes payment is permitted only if all of the following requirements are met:

(i) The Subsequent Deferral Election does not take effect until at least twelve (12) months after the date on which the Subsequent Deferral Election is made and approved by the Plan Administrator;

(ii) If the Subsequent Deferral Election relates to a payment based on Separation from Service or at a specified time, the Subsequent Deferral Election must result in payment being deferred for a period of not less than five (5) years from the date the first amount was scheduled to be paid;

(iii) If the Subsequent Deferral Election relates to a payment at a specified time, the Participant must make the Subsequent Deferral Election not less than twelve (12) months before the date the first amount was scheduled to be paid.

For purposes of applying a Subsequent Deferral Election, installment payments shall be treated as a “single payment.” Any election made pursuant to this Section shall be made on such election forms or electronic media as is required by the Plan Administrator, in accordance with the rules established by the Plan Administrator and shall comply with all requirements of Section 409A.

(d) Calculation of Installments. To calculate installments, a Participant’s vested Account balance as of the date immediately prior to the first installment shall be divided by the number of installments to be paid to the Participant. Each January 1st thereafter, the installments shall be recalculated using the preceding December 31st Account balance divided by the remaining installments to be made. Any unpaid Account balance shall continue to be deemed to be invested, in which case any deemed income, gains, losses, or expenses shall be reflected in the actual payments. Notwithstanding the foregoing, if a Participant’s vested Account balance is equal to or less than thirty thousand dollars ($30,000) at the due date of the first installment, payment shall instead be made in a lump sum and no installments shall be available hereunder.

(e) Participant Elections. Within thirty (30) days following a Participant’s Eligibility Date, the Participant must elect to be paid in a lump sum or up to ten (10) years in monthly installments for every payment event; and for a Separation from Service prior to Retirement Age, a Participant must elect to be paid on the first day of the second month following Separation from Service or the first day of the second month following attainment of age sixty-five (65).

6.2 Separation from Service.

(a) Prior to Retirement Age. In the event of a Participant’s Separation from Service (other than for Cause or death) prior to Retirement Age, the Bank shall pay to the Participant his or her vested Account balance in the form of payment elected by the Participant in accordance with Section 6.1(e). Payment shall be made or commence, as applicable, on the date elected by the Participant in accordance with Section 6.1(e). Vesting shall be calculated as of the date of Separation from Service, and installments, if applicable, shall be calculated in accordance with Section 6.1(d).

(b) On or After Retirement Age. In the event of a Participant’s Separation from Service (other than for Cause or death) on or after Retirement Age, the Bank shall pay to the Participant his or her vested Account balance in the form of payment elected by the Participant in accordance with Section 6.1(e). Payment shall be made or commence on the first day of the second month following the date of the Participant’s Separation from Service, with subsequent

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installments, if any, paid each month thereafter. Vesting shall be calculated as of the date of the Participant’s Separation from Service, and installments, if applicable, shall be calculated in accordance with Section 6.1(d).

6.3 Disability. In the event a Participant becomes Disabled while employed by the Bank, the Bank shall pay to the Participant his or her vested Account balance in the form of payment elected by the Participant in accordance with Section 6.1(e). Payment shall be made or commence, as applicable, on the first day of the second month following the later of the Participant’s Disability or attainment of the Participant’s full Social Security Retirement Age. Subsequent installments, if any, shall be paid each month thereafter. Vesting shall be calculated as of the date of Disability, and installments, if applicable, shall be calculated in accordance with Section 6.1(d).

6.4 Death.

(a) While Employed. In the event a Participant dies while employed by the Bank, the Bank shall pay to the Participant’s Beneficiary the Participant’s vested Account balance in the form of payment elected by the Participant in accordance with Section 6.1(e). Payment shall be made or commence on the first day of the second month following the date of the Participant’s death, with subsequent installments, if any, paid each month thereafter. Vesting shall be calculated as of the date of the Participant’s death, and installments, if applicable, shall be calculated in accordance with Section 6.1(d).

(b) During Installments. In the event a Participant dies after installments have commenced but prior to receiving all installments owed under the Plan, the Bank shall continue to pay any remaining installments to the Participant’s Beneficiary in accordance with the schedule the installments would have otherwise been paid to the Participant.

(c) During a Delay. In the event a Participant dies after becoming entitled to a benefit but prior to the commencement of payment, a Participant’s Beneficiary shall be paid the same benefit to which the Participant was entitled except that the distribution shall be made in accordance with the Participant’s distribution election for death under Section 6.4(a). Payment shall be made or commence, as applicable, on the first day of the second month following the date of the Participant’s death, with subsequent installments, if any, paid each month thereafter.

6.5 6-Month Delay for Specified Employees. Solely to the extent necessary to avoid penalties under Section 409A, payments to be made as a result of a Separation from Service under this Article may not commence earlier than six (6) months after the Participant’s Separation from Service if, pursuant to Section 409A, the Participant is considered a Specified Employee. In the event a distribution is delayed pursuant to this paragraph, any amounts otherwise payable during the six months shall be accumulated and paid in a lump sum on the first day of the seventh month following Separation from Service.

6.6 Permissible Payment Accelerations. Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated hereunder by the Bank (without any direct or indirect election on the part

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of any Participant), in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department. Accordingly, payments may be accelerated, in accordance with the provisions of Treasury Regulation §1.409A-3(j)(4) in the following circumstances: (a) in limited cashouts (but not in excess of the limit under Code Section 402(g)(1)(B)); (b) to pay employment-related taxes; or (c) to pay any taxes that may become due at any time that the Plan fails to meet the requirements of Section 409A (but in no case shall such payments exceed the amount to be included in income as a result of the failure to comply with the requirements of Section 409A).

6.7 Unsecured General Creditor Status of Participant.

(a) The establishment of this Plan does not represent an employment contract between the Bank and a Participant and shall not be construed as giving any Participant the right to be retained in the Bank’s service or employ, or the right to receive any benefit not specifically provided by the Plan. Neither Participants nor Beneficiaries shall have any interest in a benefit provided under this Plan, until such benefit is distributed in accordance with the Plan. Until paid to the Participant or Beneficiary, all assets required to fund this Plan shall remain the sole property of the Bank, subject to the claim of its general creditors. With respect to amounts to be paid to a Participant or his or her Beneficiaries hereunder, the Participant and his or her Beneficiaries are each a general unsecured creditor of the Bank.

(b) In the event that the Bank purchases an insurance policy or policies insuring the life of a Participant, to allow the Bank to recover or meet the cost of providing benefits, in whole or in part, hereunder, the Participant or Beneficiary shall not have any rights whatsoever in said policy or the proceeds. The Bank, or trust (if any), shall be the primary owner and beneficiary of any such insurance policy or property and shall possess and may exercise all incidents of ownership therein. The Participant further agrees to sign any forms and consent necessary for such life insurance, including the consent under Code Section 101(j), for the Bank or trust (as applicable), to be owner and beneficiary of the insurance on the Participant’s life.

(c) In the event that the Bank purchases an insurance policy or policies on the life of a Participant as provided for above, then all of such policies shall be subject to the claims of the creditors of the Bank.

(d) If the Bank chooses to obtain insurance on the life of a Participant in connection with its obligations under this Plan, the Participant hereby agrees to take such physical examinations and to truthfully and completely supply such information as may be required by the Bank or the insurance company designated by the Bank.

6.8 Discharge of Obligations. The payment to a Participant or his or her Beneficiary of the Account in full shall discharge all obligations of the Bank to such Participant or Beneficiary under the Plan with respect to the Participant’s Account.

ARTICLE 7

BENEFICIARY DESIGNATION

7.1 Designation of Beneficiaries.

(a) Each Participant may designate on a Beneficiary Designation Form any person or persons (who may be named contingently or successively) to receive any benefits payable under the Plan upon the Participant’s death, and the designation may be changed from time to time by the Participant by filing a new designation. Each designation will revoke all prior designations by the same Participant, shall be in the form prescribed by the Plan Administrator, and shall be effective only when filed with the Plan Administrator during the Participant’s lifetime.

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(b) In the absence of a valid Beneficiary designation, or if, at the time any benefit payment is due to a Beneficiary, there is no living Beneficiary validly named by the Participant, the Bank shall pay the benefit payment to the Participant’s spouse, if then living, and if the spouse is not then living to the Participant’s then living descendants, if any, per stirpes, and if there are no living descendants, to the Participant’s estate. In determining the existence or identity of anyone entitled to a benefit payment, the Bank may rely conclusively upon information supplied by the Participant’s personal representative, executor, or administrator.

(c) A Participant’s designation of a Beneficiary will not be revoked or changed automatically by any future marriage or divorce. Should the Participant wish to change the designated Beneficiary in the event of a future marriage or divorce, the Participant must do so by filing a new Beneficiary Designation Form with the Plan Administrator.

(d) If a question arises as to the existence or identity of anyone entitled to receive a death benefit payment under the Plan, or if a dispute arises with respect to any death benefit payment under the Plan, as determined by the Plan Administrator in its discretion, the Bank may distribute the payment to the Participant’s estate without liability for any tax or other consequences, or may take any other action which the Bank deems to be appropriate.

7.2 Information to be furnished by Participants and Beneficiaries; Inability to Locate Participants or Beneficiaries. Any communication, statement or notice addressed to a Participant or to a Beneficiary at his or her last post office address as shown on the Bank’s records shall be binding on the Participant or Beneficiary for all purposes of the Plan. The Bank shall not be obliged to search for any Participant or Beneficiary beyond the sending of a registered letter to such last known address.

7.3 Facility of Payment. If the Plan Administrator determines in its discretion that a benefit is to be paid to a minor, to a person legally declared incompetent, or to a person legally deemed incapable of handling the disposition of that person’s property, the Plan Administrator may direct payment of such benefit to the guardian, legal representative or person having care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to payment of the benefit. Any distribution of a benefit shall be a distribution for the account of the Participant and the Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such distribution amount.

ARTICLE 8

PLAN AMENDMENT

8.1 Right to Amend. Subject to Section 409A, the Bank shall have the right to unilaterally amend the Plan, at any time and with respect to any provisions hereof, and all parties hereto or claiming any interest hereunder shall be bound by such amendment; provided, however, that no such amendment shall deprive a Participant or a Beneficiary of a benefit amount described hereunder prior to the date of the amendment without written consent of the Participant or Beneficiary.

8.2 Amendments Required By Law. Notwithstanding the provisions of Section 8.1, the Plan may be unilaterally amended by the Bank without consent from Participants or Beneficiaries at any time, retroactively if required, if found necessary, in the opinion of the Bank, in order to ensure that the Plan is characterized as a “tophat” plan of deferred compensation maintained for a select group of management or highly compensated employees as described under ERISA Sections 201(2), 301(a)(3), and 401(a)(1), to conform the Plan to the provisions of Section 409A and to conform the Plan to the requirements of any other applicable law (including ERISA and the Code).

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ARTICLE 9

PLAN TERMINATION

9.1 Bank’s Right to Suspend Plan. Although the Bank anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee it will do so. The Bank reserves the right to suspend the operation of the Plan for a fixed or indeterminate period of time, in its sole discretion. In the event of a suspension of the Plan, during the period of the suspension, the Bank shall continue all aspects of the Plan other than crediting of Contribution amounts. Payments of distributions will continue to be made during the period of the suspension in accordance with Article 6.

9.2 Plan Termination and Liquidation under Section 409A. Notwithstanding anything to the contrary in Section 9.1, any acceleration of the payment of benefits due to Plan termination and liquidation shall comply with the following subparagraphs, but only as permitted in accordance with Section 409A and Treasury Regulation §1.409A-3(j)(4)(ix). The Bank may distribute the vested balance of all Accounts, determined as of the date of the termination of the Plan, to Participants subject to the terms below.

(a) Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Plan pursuant to Treasury Regulation §1.409A-1(c) if a Participant participated in such arrangements (“Similar Arrangements”), provided that: (i) the termination does not occur proximate to a downturn in the financial health of the Bank; (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination; and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Plan.

(b) Upon the Bank’s dissolution taxed under Code Section 331, or with approval of a bankruptcy court, provided that the amounts deferred under the Plan are included in the Participant’s gross income in the latest of: (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable; or

(c) Within thirty (30) days before or twelve (12) months following a “change in control,” as defined in Treasury Regulation §1.409A-3(i)(5), provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all the Bank’s Similar Arrangements are terminated so the Participant and all participants in the Similar Arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the Plan.

ARTICLE 10

PLAN ADMINISTRATION

10.1 Plan Administrator Duties. The Plan Administrator shall be responsible for the management, operation, and administration of the Plan. When making a determination or calculation, the Plan Administrator shall be entitled to rely on information furnished by the Bank, the Participants, or Beneficiaries. No provision of this Plan shall be construed as imposing on the Plan Administrator any fiduciary duty under ERISA or other law, or any duty similar to any fiduciary duty under ERISA or other law.

10.2 Plan Administrator Authority. The Plan Administrator shall enforce this Plan in accordance with

its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

(a) To construe and interpret the terms and provisions of this Plan and to reconcile any

inconsistency, in its sole and absolute discretion;

(b) To compute and certify the amount payable to a Participant and his or her Beneficiaries; to determine the time and manner in which such benefits are paid; and to determine the amount of any withholding taxes to be deducted;

(c) To maintain all records that may be necessary for the administration of this Plan;

(d) To provide for the disclosure of all information and the filing or provision of all reports and statements to a Participant, Beneficiaries, and governmental agencies as shall be required by law;

(e) To make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan so long as such rules or procedures are not inconsistent with the terms hereof;

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(f) To administer this Plan’s claims procedures;

(g) To approve the forms and procedures for use under this Plan; and

(h) To employ such persons or organizations, including without limitation, actuaries, attorneys, accountants, independent fiduciaries, recordkeepers and administrative consultants, to render advice or perform services with respect to the responsibilities of the Plan Administrator under the Plan.

10.3 Binding Effect of Decision. The decision or action of the Plan Administrator with respect to any

question arising out of or in connection with the administration, interpretation, and application of this Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Plan.

10.4 Compensation and Expenses. The Plan Administrator shall serve without compensation for services

rendered hereunder. The Plan Administrator is authorized at the expense of the Bank to employ such legal counsel and/or Plan recordkeeper as it may deem advisable to assist in the performance of its duties hereunder. Expenses and fees in connection with the administration of this Plan shall be paid by the Bank.

10.5 Compliance with Section 409A.

(a) Notwithstanding anything contained herein to the contrary, the interpretation and distribution of Participants’ benefits under the Plan are intended to comply with all applicable provisions of Section 409A and the regulations and guidance promulgated thereunder, or an exception or exclusion therefrom to avoid the imposition of any accelerated or additional taxes. Any defined terms shall be construed consistent with Section 409A and any terms not specifically defined shall have the meaning set forth in Section 409A.

(b) The intent of this Section is to ensure that a Participant is not subject to any tax liability or interest penalty, by reason of the application of Code Section 409A(a)(1) as a result of any failure to comply with all the requirements of Section 409A, and this Section shall be interpreted in light of, and consistent with, such requirements. This Section shall apply to distributions under the Plan, but only to the extent required in order to avoid taxation of, or interest penalties on, the Participant under Section 409A. These rules shall also be deemed modified or supplemented by such other rules as may be necessary, from time to time, to comply with Section 409A. Notwithstanding the foregoing, neither the Bank nor the Plan Administrator shall provide any guarantee that this Plan is compliant with Section 409A in form or operation and neither the Bank nor the Plan Administrator shall have any liability to any Participant on account of such Participant incurring additional taxes or penalties as a result of a failure to comply with Section 409A.

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ARTICLE 11

CLAIMS PROCEDURES

11.1 Claims Procedure. This Article is based on Department of Labor Regulation §2560.503-1. If any provision of this Article conflicts with the requirements of those regulations, the requirements of those regulations will prevail. A Claimant who has not received benefits under the Plan that he or she believes should be paid shall make a claim for such benefits as follows:

(a) Initiation - Written Claim. The Claimant initiates a claim by submitting a written request for the benefits to the Plan Administrator. The Plan Administrator will, upon written request of a Claimant, make available copies of all forms and instructions necessary to file a claim for benefits or advise the Claimant where such forms and instructions may be obtained. If the claim relates to Disability benefits, then the Plan Administrator shall designate a sub-committee to conduct the initial review of the claim (and applicable references below to the Plan Administrator shall mean such sub-committee).

(b) Timing of Bank Response. The Plan Administrator shall respond to such Claimant within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the Claimant in writing prior to the end of the initial 90-day period that an additional period is required. In the event that the claim for benefits pertains to Disability, the Plan Administrator shall provide written response within forty-five (45) days, but can extend this response period by an additional thirty (30) days, if necessary, due to circumstances beyond the Plan Administrator’s control. Any notice of extension must set forth the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render its decision.

(c) Notice of Decision. If the Plan Administrator denies the claim, in whole or in part, the Plan Administrator shall notify the Claimant in writing of such denial. The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:

(i) The specific reasons for the denial;

(ii) A reference to the specific provisions of the Plan on which the denial is based;

(iii) A description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed;

(iv) An explanation of the Plan's review procedures and the time limits applicable to such procedures; and

(v) A statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

11.2 Review Procedure. If the Plan Administrator denies the claim, in whole or in part, the Claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial, as follows:

(a) Initiation - Written Request. To initiate the review, the Claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

(b) Review of a Disability Benefit Claim. If the Claimant’s initial claim is for Disability benefits, any review of a denied claim shall be made by members of the Plan Administrator other than the original decision maker(s) and such person(s) shall not be a subordinate of the original decision maker(s).

(c) Additional Submissions-Information Access. The Claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan

12

Administrator shall also provide the Claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits.

(d) Considerations on Review. In considering the review, the Plan Administrator shall take into

account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. Additional considerations shall be required in the case of a claim for Disability benefits. For example, the claim will be reviewed without deference to the initial adverse benefits determination and, if the initial adverse benefit determination was based in whole or in part on a medical judgment, the Plan Administrator will consult with a health care professional with appropriate training and experience in the field of medicine involving the medical judgment. The health care professional who is consulted on appeal will not be the same individual who was consulted during the initial determination or the subordinate of such individual. If the Plan Administrator obtained the advice of medical or vocational experts in making the initial adverse benefits determination (regardless of whether the advice was relied upon), the Plan Administrator will identify such experts.

(e) Timing of Bank Response. The Plan Administrator shall respond in writing to such Claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the Claimant in writing, prior to the end of the initial 60-day period that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

(f) Notice of Decision. The Plan Administrator shall notify the Claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth:

(i)The specific reasons for the denial;

(ii)A reference to the specific provisions of the Plan on which the denial is based;

(iii)A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant's claim for benefits; and

(iv)A statement of the Claimant's right to bring a civil action under ERISA Section 502(a).

11.3 Calculation of Time Periods. For purposes of the time periods specified in this Article, the period of time during which a benefit determination is required to be made begins at the time a claim is filed in accordance with the Plan procedures without regard to whether all the information necessary to make a decision accompanies the claim. If a period of time is extended due to a Claimant's failure to submit all information necessary, the period for making the determination shall be tolled from the date the notification is sent to the Claimant until the date the Claimant responds.

11.4 Exhaustion of Remedies. A Claimant must follow the claims review procedures under this Plan and exhaust his or her administrative remedies before taking any further action with respect to a claim for benefits.

11.5 Failure of Plan to Follow Procedures. If the Plan fails to establish or follow the claims procedures required by this Article, a Claimant shall be deemed to have exhausted the administrative remedies available under the Plan and shall be entitled to immediately pursue any available remedy under ERISA Section 502(a) on the basis that the Plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. The Claimant may request a written explanation of the violation from the Plan, and the Plan must provide

13

such explanation within ten (10) days, including a specific description of its bases, if any, for asserting that the violation should not cause the administrative remedies to be deemed exhausted. If a court rejects the Claimant’s request for immediate review on the basis that the Plan met the standards for the exception, the claim shall be considered as re-filed on appeal upon the Plan’s receipt of the decision of the court. Within a reasonable time after the receipt of the decision, the Plan shall provide the claimant with notice of the resubmission.

11.6 Arbitration. If a Claimant continues to dispute the benefit denial based upon completed performance of the Plan or the meaning and effect of the terms and conditions thereof, then the Claimant must submit the dispute to an arbitrator for final arbitration. The arbitrator shall be selected by mutual agreement of the Bank and the Claimant. The arbitrator shall operate under any generally recognized set of arbitration rules. The parties hereto agree that they and their heirs, personal representatives, successors and assigns shall be bound by the decision of such arbitrator with respect to any controversy properly submitted to it for determination. Where a dispute arises as to the Bank’s discharge of a Participant for Cause, such dispute shall likewise be submitted to arbitration as above described and the parties hereto agree to be bound by the decision thereunder.

ARTICLE 12

MISCELLANEOUS

12.1 Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

12.2 Nonassignability. Neither any Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, alienate, or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part hereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony, or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency, or be transferable to a spouse as a result of a property settlement or otherwise. If any Participant, Beneficiary, or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber transfer, hypothecate, alienate, or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Plan Administrator, in its discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary, or successor in interest in such manner as the Plan Administrator shall direct.

12.3 Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between the Bank and a Participant. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Bank as an Employee or otherwise or to interfere with the right of the Bank to discipline or discharge a Participant at any time.

12.4 Governing Law. The Plan shall be administered, construed and governed in all respects under and

by the laws of the Commonwealth of Pennsylvania, without reference to the principles of conflicts of law (except and to the extent preempted by applicable federal law).

12.5 Notice. Any notice or filing required or permitted under this Plan shall be sufficient if in writing and

hand delivered, or sent by registered or certified mail or overnight delivery service to the Bank’s address. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, or overnight delivery service as of the date shown on the postmark on the receipt for registration or certification. Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail or overnight delivery service, to the last known address of the Participant.

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12.6 Other Benefits. The benefits provided for a Participant or a Participant’s Beneficiary under this Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Bank. This Plan shall supplement and shall not supersede, modify, or amend any other such plan or program except as may otherwise be expressly provided herein.

12.7 Unclaimed Benefits. In the case of a benefit payable on behalf of such Participant, if the Plan Administrator is unable to locate the Participant or Beneficiary to whom such benefit is payable, such Plan benefit may be forfeited to the Bank upon the Plan Administrator’s determination. Notwithstanding the foregoing, if, subsequent to any such forfeiture, the Participant or Beneficiary to whom such Plan benefit is payable makes a valid claim for such Plan benefit, such forfeited Plan benefit shall be paid by the Plan Administrator to the Participant or Beneficiary, without interest, from the date it would have otherwise been paid.

IN WITNESS WHEREOF, the Bank executes this Plan as of the date first written above.

QNB BANK:

By: /s/ David Freeman

Title: President/CEO

Printed Name: David Freeman

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, David W. Freeman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of QNB Corp.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report.

4.The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;

(c)Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date:        November 8, 2023	By:	/s/ David W Freeman
		David W. Freeman
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey Lehocky, certify that:

1.I have reviewed this quarterly report on Form 10-Q of QNB Corp.

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report.

4.The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles;

(c)Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent function):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date:           November 8, 2023	By:	/s/ Jeffrey Lehocky
		Jeffrey Lehocky
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of QNB Corp. (the Company) for the period ended September 30, 2023, as filed with the Securities and Exchange Commission (the Report), I, David W. Freeman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date:     November 8, 2023	By:	/s/ David W. Freeman
		David W. Freeman
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of QNB Corp. (the Company) for the period ended September 30, 2023, as filed with the Securities and Exchange Commission (the Report), I, Jeffrey Lehocky, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the issuer.

Date:      November 8, 2023	By:	/s/ Jeffrey Lehocky
		Jeffrey Lehocky
		Chief Financial Officer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Oct. 27, 2023
Cover [Abstract]
Entity Registrant Name	QNB Corp.
Trading Symbol	QNBC
Title of 12(g) Security	Common Stock
Security Exchange Name	NONE
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		3,640,598
Amendment Flag	false
Entity Central Index Key	0000750558
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Sep. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity File Number	0-17706
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2318082
Entity Address, Address Line One	15 North Third Street
Entity Address, Address Line Two	P.O. Box 9005
Entity Address, City or Town	Quakertown
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	18951-9005
City Area Code	215
Local Phone Number	538-5600

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Assets
Cash and due from banks	$ 12,148,000	$ 14,657,000
Interest-bearing deposits in banks	42,993,000	1,242,000
Total cash and cash equivalents	55,141,000	15,899,000
Investments:
Available-for-sale (amortized cost $612,408 and $649,217)	505,390,000	546,525,000
Equity securities (cost of $5,454 and $12,091)	4,765,000	12,056,000
Restricted investment in stocks	2,730,000	5,193,000
Loans held-for-sale	446,000
Loans receivable	1,060,450,000	1,039,385,000
Allowance for credit losses on loans	(8,542,000)	(10,531,000)
Loans receivable, net	1,051,908,000	1,028,854,000
Bank-owned life insurance	11,871,000	11,625,000
Premises and equipment, net	15,256,000	15,463,000
Accrued interest receivable	5,590,000	5,038,000
Net deferred tax assets	23,859,000	23,077,000
Other assets	7,436,000	4,767,000
Total assets	1,684,392,000	1,668,497,000
Deposits
Demand, non-interest bearing	192,226,000	231,849,000
Interest-bearing demand	469,919,000	452,927,000
Money market	218,149,000	127,043,000
Savings	312,853,000	431,101,000
Time less than $100	137,043,000	91,329,000
Time $100 through $250	110,670,000	59,650,000
Time greater than $250	42,473,000	24,470,000
Total deposits	1,483,333,000	1,418,369,000
Short-term borrowings	96,703,000	161,327,000
Long-term debt	20,000,000	10,000,000
Accrued interest payable	3,278,000	467,000
Other liabilities	6,997,000	7,376,000
Total liabilities	1,610,311,000	1,597,539,000
Shareholders' Equity
Common stock, par value $0.625 per share; authorized 10,000,000 shares; 3,849,284 shares and 3,796,948 shares issued; 3,640,598 and 3,588,262 shares outstanding	2,406,000	2,373,000
Surplus	26,096,000	24,798,000
Retained earnings	134,160,000	128,951,000
Accumulated other comprehensive loss, net of tax	(84,544,000)	(81,127,000)
Treasury stock, at cost; 208,686 and 208,686 shares	(4,037,000)	(4,037,000)
Total shareholders' equity	74,081,000	70,958,000
Total liabilities and shareholders' equity	$ 1,684,392,000	$ 1,668,497,000

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Available-for-sale, amortized cost	$ 612,408	$ 649,217
Equity securities, cost	$ 5,454	$ 12,091
Common stock, par value (in dollars per share)	$ 0.625	$ 0.625
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	3,849,284	3,796,948
Common stock, shares outstanding (in shares)	3,640,598	3,588,262
Treasury stock, shares (in shares)	208,686	208,686

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Interest income
Interest and fees on loans	$ 13,833	$ 10,624	$ 39,399	$ 29,018
Interest and dividends on available-for-sale & equity securities:
Taxable	3,443	2,376	8,179	7,065
Tax-exempt	362	485	1,101	1,504
Interest on interest-bearing balances and other interest income	859	61	1,146	95
Total interest income	18,497	13,546	49,825	37,682
Interest on deposits
Interest-bearing demand	2,437	818	5,390	1,346
Money market	1,527	170	2,913	401
Savings	1,038	608	3,208	1,312
Time less than $100	947	168	1,960	522
Time of $100 through $250	996	118	2,676	280
Time greater than $250	377	56	767	143
Interest on short-term borrowings	740	189	2,518	341
Interest on long-term debt	222	40	430	119
Total interest expense	8,284	2,167	19,862	4,464
Net interest income	10,213	11,379	29,963	33,218
Provision (reversal) for credit losses on loans	459		(1,137)
Net interest income after provision for loan losses	9,754	11,379	31,100	33,218
Non-interest income
Net gain on sales and calls of available-for-sale and equity securities	131		185	493
Unrealized loss on investment equity securities	(138)	(1,174)	(654)	(2,628)
Fees for services to customers	421	423	1,237	1,210
ATM and debit card	685	669	2,048	2,015
Retail brokerage and advisory	219	194	655	604
Bank-owned life insurance	81	121	245	277
Merchant	99	98	298	302
Net (loss) gain on sale of loans	4	6	5	6
Other	253	147	535	455
Total non-interest income	1,755	484	4,554	2,734
Non-interest expense
Salaries and employee benefits	4,971	4,371	14,309	12,842
Net occupancy	594	535	1,683	1,663
Furniture and equipment	910	779	2,665	2,190
Marketing	216	141	678	632
Third party services	592	582	1,837	1,839
Telephone, postage and supplies	134	187	434	555
State taxes	60	272	244	732
FDIC insurance premiums	274	177	745	574
Other	920	770	2,768	2,346
Total non-interest expense	8,671	7,814	25,363	23,373
Income before income taxes	2,838	4,049	10,291	12,579
Provision for income taxes	494	634	1,942	2,105
Net income	$ 2,344	$ 3,415	$ 8,349	$ 10,474
Earnings per share - basic	$ 0.65	$ 0.96	$ 2.32	$ 2.94
Earnings per share - diluted	0.65	0.96	2.32	2.94
Cash dividends per share	$ 0.37	$ 0.36	$ 1.11	$ 1.08

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income, Before tax amount		$ 2,838	$ 4,049	$ 10,291	$ 12,579
Unrealized holding losses arising during the period, Before tax amount		(19,229)	(35,419)	(15,206)	(108,518)
Reclassification adjustment for losses (gains) included in net income, Before tax amount	[1]			257	(4)
Unrealized holding gains arising during the period, Before tax amount		8,350		10,559
Reclassification adjustment for fair value remeasurements included in net income, Before tax amount	[2]	26		64
Other comprehensive loss, Before tax amount		(10,853)	(35,419)	(4,326)	(108,522)
Total comprehensive income (loss), Before tax amount		(8,015)	(31,370)	5,965	(95,943)
Tax expense (benefit)		494	634	1,942	2,105
Unrealized holding losses arising during the period, Tax expense (benefit)		(4,038)	(7,438)	(3,193)	(22,789)
Reclassification adjustment for losses (gains) included in net income, Tax expense (benefit)	[1]			54	(1)
Unrealized holding gains arising during the period, Tax expense (benefit)		1,753		2,217
Reclassification adjustment for losses (gains) included in net income, Tax expense (benefit)	[2]	5		13
Other comprehensive loss, Tax expense (benefit)		(2,280)	(7,438)	(909)	(22,790)
Total comprehensive income (loss), Tax expense (benefit)		(1,786)	(6,804)	1,033	(20,685)
Net income		2,344	3,415	8,349	10,474
Unrealized holding losses arising during the period, Net of tax amount		(15,191)	(27,981)	(12,013)	(85,729)
Reclassification adjustment for losses (gains) included in net income, Net of tax amount	[1]			203	(3)
Unrealized holding gains arising during the period, Net of tax amount		6,597		8,342
Reclassification adjustment for losses (gains) included in net income, Net of tax amount	[2]	21		51
Other comprehensive loss, Net of tax amount		(8,573)	(27,981)	(3,417)	(85,732)
Total comprehensive income (loss), Net of tax amount		$ (6,229)	$ (24,566)	$ 4,932	$ (75,258)

[1] Included in Net gain on sales and calls of available-for-sale and equity securities on the Consolidated Statements of Income

[2] Included in Interest and dividends on available-for-sale & equity securities on the Consolidated Statements of IncomeThe accompanying notes are an integral part of the consolidated financial statements

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Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Common Stock [Member]	Common Stock [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Retained Earnings [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Accumulated Other Comprehensive Income (Loss) [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Treasury Stock [Member]	Treasury Stock [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance at Dec. 31, 2021	$ 136,494			$ 2,350		$ 23,683		$ 118,163			$ (3,740)		$ (3,962)
Balance (in shares) at Dec. 31, 2021				3,553,629
Net income	10,474							10,474
Other comprehensive income (loss), net of tax	(85,732)										(85,732)
Cash dividends declared	(3,845)							(3,845)
Stock issued in connection with dividend reinvestment and stock purchase plan	684			$ 15		669
Stock issued in connection with dividend reinvestment and stock purchase plan (in shares)				22,496
Stock issued for employee stock purchase plan	67			$ 1		66
Stock issued for employee stock purchase plan (in shares)				2,286
Stock-based compensation expense	57					57
Treasury stock purchase	(75)												(75)
Treasury stock purchase (in shares)				(2,000)
Balance at Sep. 30, 2022	58,124			$ 2,366		24,475		124,792			(89,472)		(4,037)
Balance (in shares) at Sep. 30, 2022				3,576,411
Balance at Jun. 30, 2022	83,738			$ 2,360		24,244		122,662			(61,491)		(4,037)
Balance (in shares) at Jun. 30, 2022				3,567,894
Net income	3,415							3,415
Other comprehensive income (loss), net of tax	(27,981)										(27,981)
Cash dividends declared	(1,285)							(1,285)
Stock issued in connection with dividend reinvestment and stock purchase plan	233			$ 6		227
Stock issued in connection with dividend reinvestment and stock purchase plan (in shares)				8,517
Stock-based compensation expense	4					4
Balance at Sep. 30, 2022	58,124			$ 2,366		24,475		124,792			(89,472)		(4,037)
Balance (in shares) at Sep. 30, 2022				3,576,411
Balance at Dec. 31, 2022	$ 70,958	$ 857	$ 71,815	$ 2,373	$ 2,373	24,798	$ 24,798	128,951	$ 857	$ 129,808	(81,127)	$ (81,127)	(4,037)	$ (4,037)
Balance (in shares) at Dec. 31, 2022	3,588,262			3,588,262
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13 [Member]
Net income	$ 8,349							8,349
Other comprehensive income (loss), net of tax	(3,417)										(3,417)
Cash dividends declared	(3,997)							(3,997)
Stock issued in connection with dividend reinvestment and stock purchase plan	1,131			$ 30		1,101
Stock issued in connection with dividend reinvestment and stock purchase plan (in shares)				47,409
Stock issued for employee stock purchase plan	66			$ 2		64
Stock issued for employee stock purchase plan (in shares)				3,187
Stock issued for Non-Employee Director Compensation				$ 1				(1)
Stock issued for Non-Employee Director Compensation (in shares)				1,740
Stock-based compensation expense	134					134
Balance at Sep. 30, 2023	$ 74,081			$ 2,406		26,096		134,160			(84,544)		(4,037)
Balance (in shares) at Sep. 30, 2023	3,640,598			3,640,598
Balance at Jun. 30, 2023	$ 80,945			$ 2,387		25,414		133,152			(75,971)		(4,037)
Balance (in shares) at Jun. 30, 2023				3,610,920
Net income	2,344							2,344
Other comprehensive income (loss), net of tax	(8,573)										(8,573)
Cash dividends declared	(1,336)							(1,336)
Stock issued in connection with dividend reinvestment and stock purchase plan	658			$ 18		640
Stock issued in connection with dividend reinvestment and stock purchase plan (in shares)				27,938
Stock issued for Non-Employee Director Compensation				$ 1		(1)
Stock issued for Non-Employee Director Compensation (in shares)				1,740
Stock-based compensation expense	43					43
Balance at Sep. 30, 2023	$ 74,081			$ 2,406		$ 26,096		$ 134,160			$ (84,544)		$ (4,037)
Balance (in shares) at Sep. 30, 2023	3,640,598			3,640,598

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Consolidated Statement of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Retained Earnings [Member]
Cash dividends declared, per share (in dollars per share)	$ 0.37	$ 0.36	$ 1.11	$ 1.08

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating Activities
Net income	$ 8,349,000	$ 10,474,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,246,000	1,268,000
Reversal of provision for credit losses	(1,137,000)
Net gain on calls and sales of debt and equity securities	(185,000)	(493,000)
Net unrealized loss on equity securities	654,000	2,628,000
Net gain on sale of loans	(5,000)	(6,000)
Proceeds from sales of residential mortgages held-for-sale	640,000	304,000
Origination of residential mortgages held-for-sale	(1,081,000)	(298,000)
Increase in cash surrender value of bank-owned life insurance	(245,000)	(277,000)
Stock-based compensation expense	134,000	57,000
Deferred income tax benefit	(102,000)	(646,000)
Net decrease in income taxes payable	(1,189,000)	(422,000)
Net increase in accrued interest receivable	(552,000)	478,000
Fair value remeasurements on interest rate swap	64,000
Amortization of mortgage servicing rights and change in valuation allowance	44,000	58,000
Net amortization of premiums and discounts on investment securities	1,289,000	1,721,000
Net increase (decrease) in accrued interest payable	2,812,000	(7,000)
Operating lease payments	(469,000)	(464,000)
Increase in other assets	(1,595,000)	(669,000)
Decrease in other liabilities	(247,000)	(843,000)
Net cash provided by operating activities	8,425,000	12,863,000
Investing Activities
Proceeds from payments, maturities and calls of investments available-for-sale	38,040,000	61,413,000
Proceeds from the sale of investments available-for-sale	9,081,000	0
Proceeds from the sale of equity securities	8,180,000	1,541,000
Purchases of investments available-for-sale	(11,922,000)	(35,001,000)
Purchases of equity securities	(1,101,000)	(1,715,000)
Proceeds from redemption of investment in restricted stock	7,629,000	7,476,000
Purchases of restricted stock	(5,166,000)	(9,019,000)
Net increase in loans	(20,847,000)	(81,682,000)
Net purchases of premises and equipment	(617,000)	(456,000)
Redemption of Bank Owned Life Insurance investment		234,000
Net cash provided by (used in) investing activities	23,277,000	(57,209,000)
Financing Activities
Net decrease in non-interest bearing deposits	(39,623,000)	(6,839,000)
Net increase in interest-bearing deposits	104,587,000	33,762,000
Net (decrease) increase in short-term borrowings	(64,624,000)	24,420,000
Proceeds from long-term debt	20,000,000
Repayment of long-term debt	(10,000,000)
Cash dividends paid, net of reinvestment	(3,485,000)	(3,379,000)
Purchase of treasury shares		(75,000)
Proceeds from issuance of common stock	685,000	285,000
Net cash provided by financing activities	7,540,000	48,174,000
Increase in cash and cash equivalents	39,242,000	3,828,000
Cash and cash equivalents at beginning of year	15,899,000	13,390,000
Cash and cash equivalents at end of period	55,141,000	17,218,000
Supplemental Cash Flow Disclosures
Interest paid	17,051,000	4,471,000
Net income taxes paid	3,232,000	3,174,000
Non-cash transactions:
Cumulative change in accounting principal	857,000
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 369,000	$ 43,000

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Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of QNB Corp. and its wholly-owned subsidiary, QNB Bank (the “Bank”). The consolidated entity is referred to herein as “QNB” or the “Company”. All significant intercompany accounts and transactions are eliminated in the consolidated financial statements.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in QNB's 2022 Annual Report incorporated in the Form 10-K. Operating results for the three- and nine-month periods ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The unaudited consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of operations for the period and are of a normal and recurring nature.

Tabular information, other than share and per share data, is presented in thousands of dollars.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from such estimates.

QNB has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2023 for items that should potentially be recognized or disclosed in these consolidated financial statements.

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Note 2 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2023

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recent Accounting Pronouncements

2. RECENT ACCOUNTING PRONOUNCEMENTS

On January 1, 2023, the Company adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), as amended ("ASU 326"), which replaces the incurred loss methodology with an expected credit losses (“CECL”) for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The measurement under CECL is applicable to loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. Additionally, ASU 326 made changes to the accounting for available-for-sale debt securities, requiring credit losses to be presented as an allowance rather as a write-down on available-for-sale debt securities management does not intend to sell or believes it is more-likely-than-not they will be required to sell. The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans, available for sale securities, and held to maturity securities. Accrued interest receivable is reported as a component of accrued interest receivable on the Consolidated Statement of Financial Condition.

The Company adopted CECL using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for reporting periods beginning after December 31, 2022 are presented under ASU 326 while prior period amounts continue to be reported in accordance with previously applicable US GAAP. The Company recorded a net increase of $857,000 to retained earnings as of January 1, 2023 for the cumulative effect of adopting ASU 326.

The following table illustrates the impact of ASC 326:

January 1, 2023
	As Reported under ASC 326			Pre-ASC 326 Adoption			Impact of ASC 326 Adoption
Assets:
Commercial loans:
Revolving real estate secured by 1-4 family properties	$	5,255		$	—		$	5,255
Retail loans:
1-4 family residential mortgages		105,524			105,654			(130	)
Construction-individual		130			—			130
Revolving home equity secured by 1-4 family properties		36,732			41,987			(5,255	)
Allowance for credit losses on loans (ACL):
Commercial:
Commercial and industrial		(1,246	)		(1,316	)		70
Construction and land development		(745	)		(755	)		10
Real estate secured by multi-family properties		(1,679	)		(995	)		(684	)
Real estate secured by owner-occupied properties		(1,175	)		(1,549	)		374
Real estate secured by other commercial properties		(1,330	)		(2,458	)		1,128
Revolving real estate secured by 1-4 family properties-business		(32	)		(25	)		(7	)
Real estate secured by 1st lien on 1-4 family properties-business		(1,700	)		(1,210	)		(490	)
Real estate secured by junior lien on 1-4 family properties-business		(16	)		(30	)		14
State and political subdivisions		(74	)		(94	)		20
Retail:
1-4 family residential mortgages		(486	)		(682	)		196
Construction-individual		(1	)		(1	)		—
Revolving home equity secured by 1-4 family properties-personal		(292	)		(299	)		7
Real estate secured by 1st lien on 1-4 family properties-personal		(72	)		(57	)		(15	)
Real estate secured by junior lien on 1-4 family properties-personal		(84	)		(55	)		(29	)
Student loans		(466	)		(454	)		(12	)
Overdrafts		(11	)		(8	)		(3	)
Other consumer		(33	)		(41	)		8
Unallocated		—			(502	)		502
Total ACL		(9,442	)		(10,531	)		1,089
Deferred tax assets		4,540			4,767			(227	)
Liabilities:
Allowance for credit losses on unused commitments	$	122		$	117		$	5
Equity:
Retained earnings	$	129,808		$	128,951		$	857

The Company adopted ASU 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging--Portfolio Layer Method ("ASC 2022-01") as of the first fiscal year beginning after 12/15/2022. ASC 2022-01 allows for the use of an amortizing notional swap when entering a portfolio layer method hedge. This guidance now allows the interest rate swap to be considered a hedge of a single layer of portfolio.

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Note 3 - Stock-based Compensation and Shareholders' Equity

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation and Shareholders Equity

3. STOCK-BASED COMPENSATION AND SHAREHOLDERS’ EQUITY

QNB maintains a 2015 Stock Incentive Plan (the "2015 Plan"), administered by a Board committee (the “Committee”), under which both qualified and non-qualified stock options may be granted periodically to certain employees. Compensation cost has been measured using the fair value of an award on the grant date and is recognized over the service period, which is usually the vesting period.

Stock-based compensation expense related to the 2015 Plan was $23,000 and $4,000 for the three months ended September 30, 2023 and 2022, respectively. Stock-based compensation expense related to the 2015 Plan was $67,000 and $50,000 for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023, there was approximately $190,000 of unrecognized compensation cost related to unvested share-based compensation award grants that is expected to be recognized over the next 53 months.

Options are granted to certain employees at prices equal to the market value of the stock on the date the options are granted. The 2015 Plan authorized the issuance of 300,000 shares. The time period during which any option is exercisable under the 2015 Plan is determined by the Committee but shall not commence before the expiration of six months after the date of grant or continue beyond the expiration of five years after the date the option is awarded. The granted options vest after a three-year period. The 2015 Plan was amended, effective January 1, 2023, to increase the maximum term of any options granted under the plan from five years to ten years, and to also require that awards granted under the Plan will vest 20% each consecutive year commencing on the first anniversary date of the award unless otherwise specified in an award agreement. As of September 30, there were 212,550 options granted, 120,875 options forfeited, 20,825 options exercised, and 121,550 options outstanding under this Plan. The 2015 Plan expires on February 24, 2025.

The following assumptions were used in the option pricing model in determining the fair value of options granted during the period:

For the Nine Months Ended September 30,	2023			2022
Risk free interest rate		3.64	%		1.25	%
Dividend yield		4.80	%		3.64	%
Volatility		20.36	%		22.68	%
Expected life (years)		8.35			4.05

The risk-free interest rate was selected based upon yields of U.S. Treasury securities with a term approximating the expected life of the option being valued. Historical information was the basis for the selection of the expected dividend yield, expected volatility and expected lives of the options.

The fair market value of options granted in the nine months ended September 30, 2023 and 2022 was $4.11 and $5.20, respectively.

Stock option activity during the nine months ended September 30, 2023 and 2022 is as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2022		109,150		$	37.65
Granted		35,000			29.51
Exercised		—			—
Forfeited		(22,600	)		43.15
Outstanding at September 30, 2023		121,550		$	34.29		4.09	$	—
Exercisable at September 30, 2023		41,375		$	37.37		0.85	$	—

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2021		113,950		$	37.58
Granted		29,350			37.26
Exercised		—			—
Forfeited		(33,450	)		36.99
Outstanding at September 30, 2022		109,850		$	37.68		2.19	$	—
Exercisable at September 30, 2022		43,925		$	40.82		0.64	$	—

QNB maintains a 2021 Employee Stock Purchase Plan (the "2021 ESPP") offering eligible employees an opportunity to purchase shares of QNB Corp. common stock at a 10% discount from the lesser of fair market value on the first or last day of each offering period (as defined by the Plan). Stock-based compensation expense related to the 2021 ESPP was $7,000 and $7,000 for the nine months ended September 30, 2023 and 2022, respectively. The 2021 ESPP authorized the issuance of 30,000 shares. As of September 30, 2023, 10,451 shares were issued under the 2021 ESPP Plan. The 2021 ESPP Plan expires May 31, 2026.

The QNB Corp. 2023 Non-Employee Director Compensation Plan was approved by shareholders on May 23, 2023 (The "Director Compensation Plan"). The Director Compensation Plan authorized the issuance of 50,000 shares, is effective January 1, 2023 and expires on January 1, 2033. The Plan requires each non-employee director of the QNB, or any subsidiary of QNB designated by the Board (including QNB Bank), to receive $8,000 of their total annual compensation for service as a director in the form of the QNB’s common stock. Under the Director Compensation Plan, commencing with the six-month period ended June 30, 2023, each non-employee director will receive, in addition to any cash compensation otherwise payable, a semi-annual grant of such number of shares of the QNB’s common stock determined by dividing (i) the Semi-Annual Stock Payment Amount of $4,000 by (ii) the market value of a share of common stock determined as of June 30 or December 31 of any year, as applicable. Payments will be made under the Director Compensation Plan only to non-employee directors in office on the applicable payment date. As of September 30, 2023, 1,740 shares were issued to non-employee directors and there were 48,260 shares remaining under the Plan. Stock-based compensation expense related to the Director Compensation Plan was $20,000 for the three months ended September 30, 2023 and $60,000 for the nine months ended September 30, 2023.

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Note 4 - Earnings Per Share & Share Repurchase Plan

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Earnings Per Share & Share Repurchase Plan

4. EARNINGS PER SHARE & SHARE REPURCHASE PLAN

The following sets forth the computation of basic and diluted earnings per share:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator for basic and diluted earnings per share - net income	$	2,344	$	3,415	$	8,349	$	10,474
Denominator for basic earnings per share - weighted    average shares outstanding		3,613,230		3,567,987		3,600,137		3,560,064
Effect of dilutive securities - employee stock options		—		—		—		—
Denominator for diluted earnings per share - adjusted    weighted average shares outstanding		3,613,230		3,567,987		3,600,137		3,560,064
Earnings per share - basic	$	0.65	$	0.96	$	2.32	$	2.94
Earnings per share - diluted		0.65		0.96		2.32		2.94

There were 121,550 and 109,850 stock options that were anti-dilutive for the three-month periods ended September 30, 2023 and 2022, respectively. There were 121,550 and 109,850 stock options that were anti-dilutive for the nine-month periods ended September 30, 2023 and 2022, respectively. These stock options were not included in the above calculation.

QNB’s current stock repurchase plan was originally approved by the Board of Directors on January 21, 2008, increased in amount on February 9, 2009 to 100,000 shares, and subsequently increased on April 29, 2021 to up to 200,000 shares of common stock in the open market or privately negotiated transactions. The repurchase authorization has no termination date. There were 0 and 2,000 shares repurchased during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, 102,000 shares were repurchased under this authorization at an average price of $24.93 and a total cost of approximately $2,543,000.

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Note 5 - Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2023

Other Comprehensive Loss, Tax [Abstract]

Comprehensive Income (Loss)

5. COMPREHENSIVE INCOME (LOSS)

The following shows the components of accumulated other comprehensive loss at September 30, 2023 and December 31, 2022:

	September 30,			December 31,
	2023			2022
Unrealized net holding losses on available-for-sale    securities	$	(117,641	)	$	(102,692	)
Unrealized gains (losses) on available-for-sale securities    for which a portion of an other-than-temporary    impairment loss has been recognized in earnings		—			—
Unrealized net holding gains (losses) on interest rate swaps		10,623			—
Accumulated other loss		(107,018	)		(102,692	)
Tax effect		22,474			21,565
Accumulated other comprehensive loss, net of tax	$	(84,544	)	$	(81,127	)

The following table presents amounts reclassified out of accumulated other comprehensive loss for the three and nine months ended September 30, 2023 and 2022:

For the Three Months Ended September 30,	Amount reclassified from accumulated other comprehensive loss
Details about accumulated other comprehensive loss	2023			2022		Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	—		$	—	Net gain (loss) on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—	Net other-than-temporary impairment losses on investment securities
Fair value remeasurements on fair value hedges		(26	)		—	Interest and dividends on available-for-sale & equity securities
		(26	)		—
Tax effect		5			—	Provision for income taxes
Total reclassification out of accumulated other comprehensive loss, net of tax	$	(21	)	$	—	Net of tax

For the Nine Months Ended September 30,	Amount reclassified from accumulated other comprehensive loss
Details about accumulated other comprehensive loss	2023			2022			Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	(257	)	$	4		Net gain (loss) on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—		Net other-than-temporary impairment losses on investment securities
Fair value remeasurements on fair value hedges		(64	)		—		Interest and dividends on available-for-sale & equity securities
		(321	)		4
Tax effect		67			(1	)	Provision for income taxes
Total reclassification out of accumulated other comprehensive loss, net of tax	$	(254	)	$	3		Net of tax

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Note 6 - Investment Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Investment Securities

6. INVESTMENT SECURITIES

Available-For-Sale Securities

The amortized cost and estimated fair values of investment securities available-for-sale at September 30, 2023 and December 31, 2022 were as follows:

	Fair		Gross unrealized holding		Gross unrealized holding			Gross unrealized fair value hedge		Amortized
September 30, 2023	value		gains		losses			gains (1)		cost
U.S. Treasury	$	6,922	$	—	$	(2	)	$	—	$	6,924
U.S. Government agency		86,226		—		(15,722	)		—		101,948
State and municipal		83,630		—		(28,471	)		3,041		109,060
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		233,361		—		(52,645	)		7,582		278,424
Collateralized mortgage obligations (CMOs)		89,185		—		(20,154	)		—		109,339
Corporate debt and money market funds		6,066		—		(647	)		—		6,713
Total investment debt securities available-for-sale	$	505,390	$	—	$	(117,641	)	$	10,623	$	612,408
(1) See Footnote 13

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
December 31, 2022	value		gains		losses			cost
U.S. Treasuries	$	301	$	2	$	—		$	299
U.S. Government agency		86,709		—		(15,233	)		101,942
State and municipal		95,367		—		(23,494	)		118,861
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		256,161		—		(45,303	)		301,464
Collateralized mortgage obligations (CMOs)		101,672		—		(18,338	)		120,010
Corporate debt		6,315		—		(326	)		6,641
Total investment debt securities available-for-sale	$	546,525	$	2	$	(102,694	)	$	649,217

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at September 30, 2023 is shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities are assigned to categories based on contractual maturity except for mortgage-backed securities and CMOs which are based on the estimated average life of these securities and municipal securities that have been pre-refunded.

September 30, 2023	Fair value		Amortized cost
Due in one year or less	$	10,261	$	10,417
Due after one year through five years		118,489		135,377
Due after five years through ten years		301,129		372,883
Due after ten years		75,511		93,731
Total investment debt securities available-for-sale	$	505,390	$	612,408

There were no proceeds from the sale of investment securities available-for-sale for the three months ended September 30, 2023 and 2022. Proceeds from sales of investment securities available-for-sale were approximately $9,081,000 and $0 for the nine months ended September 30, 2023 and 2022, respectively.

At September 30, 2023 and December 31, 2022, investment securities available-for-sale totaling approximately $294,104,000 and $237,645,000, respectively, were pledged as collateral for repurchase agreements and deposits of public funds.

The following table presents information related to the Company’s gains and losses on the sales and calls of securities available-for-sale, and losses recognized for the impairment of these investments. Gains and losses on available-for-sale securities are computed on the specific identification method and included in non-interest income. Gross realized losses on debt securities are net of impairment charges:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023			2022
Gross realized gains	$	—	$	—	$	—		$	4
Gross realized losses		—		—		(257	)		—
Impairment		—		—		—			—
Total net gains (losses) on AFS securities	$	—	$	—	$	(257	)	$	4

The tax applicable to the net realized gains for both of the three-month periods ended September 30, 2023 and 2022 was $0 and $0, respectively. The tax applicable to the net realized gains for both of the nine-month periods ended September 30, 2023 and 2022 was $54,000 and $1,000, respectively.

QNB recognizes impairment for debt securities classified as available-for-sale in accordance with FASB ASC 320, Investments – Debt and Equity Securities, which requires an assessment of whether QNB intends to sell or it is more likely than not that QNB will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that QNB does not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, the amount of the impairment is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and, therefore, is not required to be recognized as a loss in the statement of income but is recognized in other comprehensive income. QNB believes that it will fully collect the carrying value of securities on which it has recorded a non-credit related impairment in other comprehensive income. No credit impairments were recognized on debt securities during the three or nine months ended September 30, 2023 and 2022, respectively.

The following table indicates the length of time individual debt securities have been in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022:

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2023	securities		value		losses			value		losses			value		losses
U.S. Treasury		13	$	6,922	$	(2	)	$	—	$	—		$	6,922	$	(2	)
U.S. Government agency		46		—		—			86,226		(15,722	)		86,226		(15,722	)
State and municipal		192		369		(11	)		80,254		(28,460	)		80,623		(28,471	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		191		2		—			225,807		(52,645	)		225,809		(52,645	)
Collateralized mortgage obligations (CMOs)		127		—		—			89,185		(20,154	)		89,185		(20,154	)
Corporate debt and money market funds		4		98		(7	)		5,969		(640	)		6,067		(647	)
Total		573	$	7,391	$	(20	)	$	487,441	$	(117,621	)	$	494,832	$	(117,641	)

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2022	securities		value		losses			value		losses			value		losses
U.S. Government agency		46	$	3,647	$	(353	)	$	83,062	$	(14,880	)	$	86,709	$	(15,233	)
State and municipal		216		50,156		(7,816	)		45,210		(15,678	)		95,366		(23,494	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		197		58,811		(6,775	)		197,351		(38,528	)		256,162		(45,303	)
Collateralized mortgage obligations (CMOs)		129		35,797		(3,983	)		65,875		(14,355	)		101,672		(18,338	)
Corporate debt		4		6,262		(318	)		53		(8	)		6,315		(326	)
Total		592	$	154,673	$	(19,245	)	$	391,551	$	(83,449	)	$	546,224	$	(102,694	)

Management evaluates debt securities, which are comprised of U.S. Treasury, U.S. Government agencies, state and municipalities, mortgage-backed securities, CMOs and corporate debt securities, for other-than-temporary impairment and considers the current economic conditions, the length of time and the extent to which the fair value has been less than cost, interest rates and the bond rating of each security. The unrealized losses at September 30, 2023 in U.S. Treasury, U.S. Government agency securities, state and municipal securities, mortgage-backed securities, and CMOs are primarily the result of interest rate fluctuations. If held to maturity, these bonds will mature at par, and QNB will not realize a loss. QNB has the intent to hold the securities and does not believe it will be required to sell the securities before recovery occurs.

QNB holds one pooled trust preferred security as of September 30, 2023. This security has a total amortized cost of approximately $60,000 and a fair value of $52,000. The pooled trust preferred security is available-for-sale and is carried at fair value.

Marketable Equity Securities

The Company’s investment in marketable equity securities primarily consists of investments with readily determinable fair values in large cap stock companies. Changes in fair value is recorded in unrealized gain/(losses) in non-interest income.

At September 30, 2023 and December 31, 2022, the Company had $4,765,000 and $12,056,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2023 and 2022:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net (loss) gains recognized during the period on equity securities	$	(7	)	$	(1,174	)	$	(212	)	$	(2,139	)
Less: Net (losses) gains recognized during the period on equity securities sold during the period		131			—			442			489
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	(138	)	$	(1,174	)	$	(654	)	$	(2,628	)

Taxes applicable to the net gains (losses) recognized for the three months ended September 30, 2023 resulted in an benefit of $2,000 compared to a benefit of $339,000 for the three months ended September 30, 2022. Taxes applicable to the net gains (losses) recognized for the nine months ended September 30, 2023 and 2022 was a benefit of $61,000 and a benefit of $618,000, respectively. Proceeds from sales of investment equity securities were $8,180,000 and $1,541,000 for the nine months ended September 30, 2023 and 2022, respectively.

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Note 7 - Restricted Investment in Stocks

9 Months Ended

Sep. 30, 2023

Schedule of Investments [Abstract]

Restricted Investment in Stocks

7. RESTRICTED INVESTMENT IN STOCKS

Restricted investment in stocks includes Federal Home Loan Bank of Pittsburgh (“FHLB”) with a carrying cost of $1,718,000, Atlantic Community Bankers Bank (“ACBB”) stock with a carrying cost of $12,000, VISA Class B stock with a carrying cost of $0 and Senior Housing Crime Prevention Investment Corporation ("SHCPFIC") preferred stock of $1,000,000 at September 30, 2023. FHLB and ACBB stock was issued to the Bank as a requirement to facilitate the Bank’s participation in borrowing and other banking services. The SHCPFIC stock was issued to the Bank to enable its participation in a Community Reinvestment Act qualified investment. The Bank’s investment in FHLB stock may fluctuate, as it is based on the member banks’ use of FHLB’s services.

The Bank owns 6,502 shares of Visa Class B stock, which was necessary to participate in Visa services in support of the Bank’s credit card, debit card, and related payment programs (permissible activities under banking regulations) as a member institution. Following the resolution of Visa’s covered litigation, shares of Visa’s Class B stock will be converted to Visa Class A shares using a conversion factor (1.5875 as of September 28, 2023), which is periodically adjusted to reflect VISA’s ongoing litigation costs. There is a very limited market for this stock, as only current owners of Class B shares are permitted to transact in Class B. Due to the lack of orderly trades and public information of such trades, Visa Class B stock does not have a readily determinable fair value.

The Bank owns 100 shares of preferred stock of SHCPFIC. These shares are not transferable without the consent of SHCPFIC and does not have a readily determinable fair value.

These restricted investments are carried at cost and evaluated for impairment periodically. As of September 30, 2023, there was no impairment associated with these shares.

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Note 8 - Loans & Allowance for Credit Losses on Loans

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

Loans & Allowance for Credit Losses on Loans

8. LOANS & ALLOWANCE FOR CREDIT LOSSES ON LOANS

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are stated at the principal amount outstanding, net of deferred loan fees and costs. Interest income is accrued on the principal amount outstanding. Loan origination and commitment fees and related direct costs are deferred and amortized to income over the term of the respective loan and loan commitment period as a yield adjustment.

Loans held-for-sale consists of residential mortgage loans that are carried at the lower of aggregate cost or fair value. Net unrealized losses, if any, are recognized through a valuation allowance charged to income. Gains and losses on residential mortgages held-for-sale are included in non-interest income.

The Company maintains an allowance for credit losses on loans, which is intended to absorb probable known and inherent losses in the outstanding loan portfolio. The allowance is reduced by actual credit losses and is increased or decreased by the provision (reversal) for loan losses and increased by recoveries of previous losses. The provisions or reversals for credit losses are charged to earnings to bring the total allowance for loan losses to a level considered necessary by management.

The allowance for credit losses is measured on a pool basis when similar risk characteristics exist; these pools are identified in the first table below. The Company establishes a general valuation allowance for performing loans, including non-accrual student loans. QNB calculates each segment's historical loss rate using a full economic cycle of loan balance and historical loss experienced. The level of the allowance is determined by assigning specific reserves to all non-accrual loans, except the homogeneous pool of student loans which are measured in the general reserve. An allowance on these non-accrual loans is established when the discounted cash flows (or collateral value) of the loan is lower than the carrying value of that loan. The portion of the allowance that is allocated to non-accrual loans is determined by estimating the inherent loss on each credit after giving consideration to the value of underlying collateral. The general component is adjusted for qualitative factors. These qualitative risk factors include:

1.Concentrations: The Company adjusts historic loss for concentrations in the current portfolio that were not present during the down-turn of economic cycle.

2.Economic Forecast: The Company utilizes an entire economic cycle of data to determine loss rates by segment. This approach reflects an inherent reversion to the historical losses during life of the loans within the pool considering prepayments and loss experience throughout an entire economic cycle. However, the Company feels it is prudent to maintain a floor in its model to assure that there is enough reserve on hand to sustain any losses upon an upcoming recession.

Management emphasizes loan quality and close monitoring of potential problem credits. Credit risk identification and review processes are utilized in order to assess and monitor the degree of risk in the loan portfolio. The Company’s lending and credit administration staff are charged with reviewing the loan portfolio and identifying changes in the economy or in a borrower’s circumstances which may affect the ability to repay debt or the value of pledged collateral. A loan classification and review system exists that identifies those loans with a higher than normal risk of collectability. Each commercial loan is assigned a grade based upon an assessment of the borrower’s financial capacity to service the debt and the presence and value of collateral for the loan. An independent firm reviews risk assessment and evaluates the adequacy of the allowance for loan losses. Management meets monthly to review the credit quality of the loan portfolio and quarterly to review the allowance for loan losses.

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for credit losses on loans. Such agencies may require the Company to recognize additions to the allowance based on their judgments using information available to them at the time of their examination.

Management believes that it uses the best information available to make determinations about the adequacy of the allowance and that it has established its existing allowance for credit losses on loans in accordance with U.S. GAAP. If circumstances differ substantially

from the current calculation, future adjustments to the allowance for credit losses on loans may be necessary and results of operations could be affected. Because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that increases to the allowance will not be necessary should the quality of any loans deteriorate.

Major classes of loans are as follows:

	September 30,
	2023
Commercial:
Commercial and industrial	$	129,425
Construction and land development		99,958
Real estate secured by multi-family properties		106,644
Real estate secured by owner-occupied properties		163,163
Real estate secured by other commercial properties		261,539
Revolving real estate secured by 1-4 family properties-business		6,960
Real estate secured by 1st lien on 1-4 family properties-business		99,047
Real estate secured by junior lien on 1-4 family properties-business		3,457
State and political subdivisions		19,854
Retail:
1-4 family residential mortgages		108,304
Construction-individual		328
Revolving home equity secured by 1-4 family properties-personal		33,151
Real estate secured by 1st lien on 1-4 family properties-personal		11,651
Real estate secured by junior lien on 1-4 family properties-personal		13,522
Student loans		1,746
Overdrafts		171
Other consumer		1,773
Total loans		1,060,693
Net unearned (fees) costs		(243	)
Allowance for credit losses on loans		(8,542	)
Loans receivable, net	$	1,051,908

	December 31,
	2022
Commercial:
Commercial and industrial	$	160,875
Construction		62,955
Secured by commercial real estate		518,070
Secured by residential real estate		103,419
State and political subdivisions		20,971
Retail:
1-4 family residential mortgages		105,654
Home equity loans and lines		63,580
Consumer		4,113
Total loans		1,039,637
Net unearned (fees) costs		(252	)
Allowance for loan losses		(10,531	)
Loans receivable, net	$	1,028,854

Overdrafts are reclassified as loans and at December 31, 2022 are included in consumer loans above and total loans receivable on the Consolidated Balance Sheets. At December 31, 2022, overdrafts were approximately $132,000. Loans secured by commercial real estate include all loans collateralized at least in part by commercial real estate. These loans may not be for the express purpose of conducting commercial real estate transactions.

QNB generally lends in Bucks, Lehigh, and Montgomery counties in southeastern Pennsylvania. To a large extent, QNB makes loans collateralized at least in part by real estate. Its lending activities could be affected by changes in the general economy, the regional economy, or real estate values.

The Company engages in a variety of lending activities, including commercial, residential real estate and consumer transactions. The Company focuses its lending activities on individuals, professionals and small to medium sized businesses. Risks associated with lending activities include economic conditions and changes in interest rates, which can adversely impact both the ability of borrowers to repay their loans and the value of the associated collateral.

Commercial and industrial loans, commercial real estate loans, construction loans and residential real estate loans with a business purpose are generally perceived as having more risk of default than residential real estate loans with a personal purpose and consumer loans. These types of loans involve larger loan balances to a single borrower or groups of related borrowers and are more susceptible to a risk of loss during a downturn in the business cycle. These loans may involve greater risk because the availability of funds to repay these loans depends on the successful operation of the borrower’s business. The assets financed are used within the business for its ongoing operation. Repayment of these kinds of loans generally comes from the cash flow of the business or the ongoing conversions of assets, such as accounts receivable and inventory, to cash. Typical collateral for commercial and industrial loans includes the borrower’s accounts receivable, inventory and machinery and equipment. Commercial real estate and residential real estate loans secured for a business purpose are originated primarily within the eastern Pennsylvania market area at conservative loan-to-value ratios and often backed by the individual guarantees of the borrowers or owners. Repayment of this kind of loan is dependent upon either the ongoing cash flow of the borrowing entity or the resale or lease of the subject property. Commercial real estate loans may be affected to a greater extent than residential loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers’ ability to repay their loans depends on successful development of their properties, as well as the factors affecting residential real estate borrowers.

Loans to state and political subdivisions are tax-exempt or taxable loans to municipalities, school districts and housing and industrial development authorities. These loans can be general obligations of the municipality or school district repaid through their taxing authority, revenue obligations repaid through the income generated by the operations of the authority, such as a water or sewer authority, or loans issued to a housing and industrial development agency, for which a private corporation is responsible for payments on the loans.

The Company originates fixed-rate and adjustable-rate real estate-residential mortgage loans for personal purposes that are secured by first liens on the underlying 1-4 family residential properties. Credit risk exposure in this area of lending is minimized by the evaluation of the credit worthiness of the borrower, including debt-to-income ratios, credit scores and adherence to underwriting policies that emphasize conservative loan-to-value ratios of generally no more than 80%. Residential mortgage loans granted in excess of the 80% loan-to-value ratio criterion are generally insured by private mortgage insurance.

The real estate-home equity portfolio consists of fixed-rate home equity loans and variable-rate home equity lines of credit. Risks associated with loans secured by residential properties are generally lower than commercial loans and include general economic risks, such as the strength of the job market, employment stability and the strength of the housing market. Since most loans are secured by a primary or secondary residence, the borrower’s continued employment is the greatest risk to repayment.

The Company offers a variety of loans to individuals for personal and household purposes. Consumer loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or, if they are secured, the value of the collateral may be difficult to assess and is more likely to decrease in value than real estate. Credit risk in this portfolio is controlled by conservative underwriting standards that consider debt-to-income levels and the creditworthiness of the borrower and, if secured, collateral values.

The Company employs a ten-grade risk rating system related to the credit quality of commercial loans and loans to state and political subdivisions of which the first six categories are pass categories (credits not adversely rated). The following is a description of the internal risk ratings and the likelihood of loss related to each risk rating.

1.Excellent - no apparent risk

2.Good - minimal risk

3.Acceptable - lower risk

4.Acceptable - average risk

5.Acceptable – higher risk

6.Pass watch

7.Special Mention - potential weaknesses

8.Substandard - well defined weaknesses

9.Doubtful - full collection unlikely

10.Loss - considered uncollectible

The Company maintains a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential problem loans. Each loan officer assigns a rating to all loans in the portfolio at the time the loan is originated. Loans with risk ratings of one through five are reviewed annually based on the borrower’s fiscal year. Loans with risk ratings of six are reviewed every six to twelve months based on the dollar amount of the relationship with the borrower. Loans with risk ratings of seven through ten are reviewed at least quarterly, and as often as monthly, at management’s discretion. The Company also utilizes an outside loan review firm to review the portfolio on a semi-annual basis to provide the Board of Directors and senior management an independent review of the Company’s loan portfolio on an ongoing basis. These reviews are designed to recognize deteriorating credits in their earliest stages in an effort to reduce and control risk in the lending function as well as identifying potential shifts in the quality of the loan portfolio. The examinations by the outside loan review firm include the review of lending activities with respect to underwriting and processing new loans, monitoring the risk of existing loans and to provide timely follow-up and corrective action for loans showing signs of deterioration in quality. In addition, the outside firm reviews the methodology for the allowance for loan losses to determine compliance to policy and regulatory guidance.

The following tables present the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company’s internal risk rating system as of September 30, 2023 and December 31, 2022:

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	11,675	$	15,261	$	9,197	$	6,624	$	6,179	$	7,696	$	71,556	$	128,188
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		1,237		1,237
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	11,675	$	15,261	$	9,197	$	6,624	$	6,179	$	7,696	$	72,793	$	129,425
Construction and land development:
Risk rating
Pass	$	32,038	$	42,023	$	14,091	$	3,275	$	4,078	$	4,408	$	—	$	99,913
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		45		—		45
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	32,038	$	42,023	$	14,091	$	3,275	$	4,078	$	4,453	$	—	$	99,958
Real estate secured by multi-family properties:
Risk rating
Pass	$	7,358	$	29,036	$	23,565	$	9,909	$	5,848	$	28,049	$	—	$	103,765
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		709		2,170		—		2,879
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	7,358	$	29,036	$	23,565	$	9,909	$	6,557	$	30,219	$	—	$	106,644
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	12,648	$	29,879	$	28,325	$	19,262	$	12,158	$	55,004	$	—	$	157,276
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—				—		—		5,887		—		5,887
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	12,648	$	29,879	$	28,325	$	19,262	$	12,158	$	60,891	$	—	$	163,163
Real estate secured by other commercial properties:

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Risk rating
Pass	$	21,258	$	44,999	$	43,063	$	19,829	$	29,232	$	102,282	$	—	$	260,663
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		876		—		876
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	21,258	$	44,999	$	43,063	$	19,829	$	29,232	$	103,158	$	—	$	261,539
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	6,960	$	6,960
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	6,960	$	6,960
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	7,685	$	29,096	$	21,313	$	10,510	$	8,771	$	20,763	$	—	$	98,138
Special mention		—		—		138		—		—		—		—		138
Substandard		—		157		—		—		277		337		—		771
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by 1st lien on 1-4 family properties-business	$	7,685	$	29,253	$	21,451	$	10,510	$	9,048	$	21,100	$	—	$	99,047
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	479	$	611	$	551	$	592	$	41	$	964	$	—	$	3,238
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		219		—		219
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	479	$	611	$	551	$	592	$	41	$	1,183	$	—	$	3,457
State and political subdivisions:
Risk rating
Pass	$	678	$	—	$	4,565	$	21	$	5,931	$	8,659	$	—	$	19,854
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	678	$	—	$	4,565	$	21	$	5,931	$	8,659	$	—	$	19,854
Total Commercial Loans:
Risk rating
Pass	$	93,819	$	190,905	$	144,670	$	70,022	$	72,238	$	227,825	$	78,516	$	877,995
Special mention		—		—		138		—		—		—		—		138
Substandard		—		157		—		—		986		9,534		1,237		11,914
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	93,819	$	191,062	$	144,808	$	70,022	$	73,224	$	237,359	$	79,753	$	890,047

December 31, 2022	Pass		Special mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	157,914	$	23	$	2,938	$	—	$	160,875
Construction		62,955		—		—		—		62,955
Secured by commercial real estate		505,657		2,597		9,816		—		518,070
Secured by residential real estate		102,295		194		930		—		103,419
State and political subdivisions		20,971		—		—		—		20,971
Total	$	849,792	$	2,814	$	13,684	$	—	$	866,290

For retail loans, the Company evaluates credit quality based on the performance of the individual credits. The following tables present the recorded investment in the retail classes of the loan portfolio based on payment activity as of September 30, 2023 and December 2022:

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Retail Loans
1-4 family residential mortgages:
Payment performance
Performing	$	10,775	$	14,739	$	30,773	$	20,757	$	4,567	$	25,891	$	—	$	107,502
Nonperforming		—		—		—		—		—		802		—		802
Total 1-4 family residential mortgages	$	10,775	$	14,739	$	30,773	$	20,757	$	4,567	$	26,693	$	—	$	108,304
Construction-individual:
Payment performance
Performing	$	—	$	—	$	328	$	—	$	—	$	—	$	—	$	328
Nonperforming		—		—		—		—		—		—		—		—
Total construction-individual	$	—	$	—	$	328	$	—	$	—	$	—	$	—	$	328
Revolving home equity secured by 1-4 family properties-personal:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	32,979	$	32,979
Nonperforming		—		—		—		—		—		—		172		172
Total revolving home equity secured by 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	—	$	33,151	$	33,151
Real estate secured by 1st lien on 1-4 family properties-personal:
Payment performance
Performing	$	2,277	$	1,657	$	3,053	$	1,095	$	960	$	2,488	$	—	$	11,530
Nonperforming		—		—		—		—		—		121		—		121
Total real estate secured by 1st lien Real estate secured by 1st lien on 1-4 family properties-personal	$	2,277	$	1,657	$	3,053	$	1,095	$	960	$	2,609	$	—	$	11,651
Real estate secured by junior lien on 1-4 family properties-personal:
Payment performance
Performing	$	4,029	$	1,690	$	2,357	$	1,232	$	721	$	3,474	$	—	$	13,503
Nonperforming		—		19		—		—		—		—		—		19
Total real estate secured by junior lien on 1-4 family properties-personal	$	4,029	$	1,709	$	2,357	$	1,232	$	721	$	3,474	$	—	$	13,522
Student loans:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	1,729	$	—	$	1,729
Nonperforming		—		—		—		—		—		17		—		17
Total student loans	$	—	$	—	$	—	$	—	$	—	$	1,746	$	—	$	1,746
Overdrafts:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	171	$	171
Nonperforming		—		—		—		—		—		—		—		—
Total overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	171	$	171
Other consumer:
Payment performance
Performing	$	636	$	329	$	300	$	107	$	96	$	52	$	215	$	1,735
Nonperforming		—		—		—		—		—		38		—		38
Total other consumer	$	636	$	329	$	300	$	107	$	96	$	90	$	215	$	1,773
Total Retail Loans:
Payment performance
Performing	$	17,717	$	18,415	$	36,811	$	23,191	$	6,344	$	33,634	$	33,365	$	169,477
Nonperforming		—		19		—		—		—		978		172		1,169
Total Retail Loans	$	17,717	$	18,434	$	36,811	$	23,191	$	6,344	$	34,612	$	33,537	$	170,646

December 31, 2022	Performing		Non-performing		Total
Retail:
1-4 family residential mortgages	$	105,193	$	461	$	105,654
Home equity loans and lines		63,178		402		63,580
Consumer		4,051		62		4,113
Total	$	172,422	$	925	$	173,347

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of September 30, 2023 and December 31, 2022:

September 30, 2023	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	83	$	—	$	—	$	83	$	129,342	$	129,425
Construction and land development		—		—		—		—		99,958		99,958
Real estate secured by multi-family properties		—		—		—		—		106,644		106,644
Real estate secured by owner-occupied properties		226		—		—		226		162,937		163,163
Real estate secured by other commercial properties		3,725		5,035		—		8,760		252,779		261,539
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		6,960		6,960
Real estate secured by 1st lien on 1-4 family properties-business		231		—		1		232		98,815		99,047
Real estate secured by junior lien on 1-4 family properties-business		7		—		—		7		3,450		3,457
State and political subdivisions		—		—		—		—		19,854		19,854
Retail:
1-4 family residential mortgages		—		362		385		747		107,557		108,304
Construction-individual		—		—		—		—		328		328
Revolving home equity secured by 1-4 family properties-personal		—		129		—		129		33,022		33,151
Real estate secured by 1st lien on 1-4 family properties-personal		—		—		—		—		11,651		11,651
Real estate secured by junior lien on 1-4 family properties-personal		18		—		19		37		13,485		13,522
Student loans		—		14		—		14		1,732		1,746
Overdrafts		16		3		—		19		152		171
Other consumer		5		—		—		5		1,768		1,773
Total	$	4,311	$	5,543	$	405	$	10,259	$	1,050,434	$	1,060,693

December 31, 2022	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	—	$	1,157	$	—	$	1,157	$	159,718	$	160,875
Construction		—		—		—		—		62,955		62,955
Secured by commercial real estate		—		—		—		—		518,070		518,070
Secured by residential real estate		—		—		13		13		103,406		103,419
State and political subdivisions		—		—		—		—		20,971		20,971
Retail:
1-4 family residential mortgages		703		168		216		1,087		104,567		105,654
Home equity loans and lines		95		—		—		95		63,485		63,580
Consumer		37		50		—		87		4,026		4,113
Total	$	835	$	1,375	$	229	$	2,439	$	1,037,198	$	1,039,637

As previously discussed, the Company maintains a loan review system, which includes a continuous review of the loan portfolio by internal and external parties to aid in the early identification of potential impaired loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. When placing a loan on non-accrual status, management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. All non-accrual loans, except student loans, are individually evaluated for an allowance for credit losses ("ACL"). This ACL is measured using either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

An allowance for credit loss is established for a non-accrual loan if its carrying value exceeds its estimated fair value. The estimated fair values of the majority of the Company’s non-accrual loans are measured based on the estimated fair value of the loan’s collateral.

For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets. The following table disclose the recorded investment in loans receivable that are either on non-accrual status or past due 90 days or more and still accruing interest as of September 30, 2023:

September 30, 2023	90 Days or More Past Due-Still Accruing		Nonaccrual With No Specifically-Related ACL		Nonaccrual With Related ACL		Total Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	—	$	339	$	339
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		188		—		188
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		1		—		1
Real estate secured by junior lien on 1-4 family properties-business		—		—		196		196
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		802		—		802
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		23		149		172
Real estate secured by 1st lien on 1-4 family properties-personal		—		121		—		121
Real estate secured by junior lien on 1-4 family properties-personal		—		19		—		19
Student loans		—		17		—		17
Other consumer		—		38		—		38
Total	$	—	$	1,209	$	684	$	1,893

QNB recognized interest income of $557,000 on non-accrual loans during the nine months ended September 30, 2023.

The following table presents the collateral-dependent loans by loan category at September 30, 2023:

September 30, 2023	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	294	$	45	$	339
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		188		—		—		188
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		1						1
Real estate secured by junior lien on 1-4 family properties-business		—		—		196		196
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		802		—		—		802
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		66		—		106		172
Real estate secured by 1st lien on 1-4 family properties-personal		121		—		—		121
Real estate secured by junior lien on 1-4 family properties-personal		19		—		—		19
Other consumer		—		38		—		38
Total	$	1,197	$	332	$	347	$	1,876
(1) Secured by business assets, personal property and equipment or guarantees

The following tables disclose the recorded investment in loans receivable that are either on non-accrual status or past due 90 days or more and still accruing interest as of December 31, 2022:

December 31, 2022	90 days or more past due (still accruing)		Non-accrual
Commercial:
Commercial and industrial	$	—	$	1,575
Construction		—		—
Secured by commercial real estate		—		2,031
Secured by residential real estate		—		289
State and political subdivisions		—		—
Retail:
1-4 family residential mortgages		—		461
Home equity loans and lines		—		402
Consumer		—		62
Total	$	—	$	4,820

The following table present the balance in the allowance for loan losses at December 31, 2022 disaggregated on the basis of the Company’s impairment method by class of loans receivable along with the balance of loans receivable by class, excluding unearned fees and costs, disaggregated on the basis of the Company’s impairment methodology:

	Allowance for Loan Losses						Loans Receivable
December 31, 2022	Balance		Balance related to loans individually evaluated for impairment		Balance related to loans collectively evaluated for impairment		Balance		Balance individually evaluated for impairment		Balance collectively evaluated for impairment
Commercial:
Commercial and industrial	$	1,316	$	125	$	1,191	$	160,875	$	1,821	$	159,054
Construction		755		—		755		62,955		—		62,955
Secured by commercial real estate		5,002		131		4,871		518,070		5,309		512,761
Secured by residential real estate		1,240		321		919		103,419		1,362		102,057
State and political subdivisions		94		—		94		20,971		—		20,971
Retail:
1-4 family residential mortgages		683		—		683		105,654		628		105,026
Home equity loans and lines		437		119		318		63,580		402		63,178
Consumer		502		—		502		4,113		45		4,068
Unallocated		502	N/A		N/A		N/A		N/A		N/A
Total	$	10,531	$	696	$	9,333	$	1,039,637	$	9,567	$	1,030,070

The following table summarizes additional information, in regards to impaired loans by loan portfolio class, as of December 31, 2022:

	December 31, 2022
	Recorded investment (after charge-offs)		Unpaid principal balance		Related allowance
With no specific allowance recorded:
Commercial:
Commercial and industrial	$	1,402	$	1,694
Construction		—		—
Secured by commercial real estate		2,198		2,608
Secured by residential real estate		430		482
Retail:
1-4 family residential mortgages		628		678
Home equity loans and lines		240		296
Consumer		45		62
Total	$	4,943	$	5,820
With an allowance recorded:
Commercial:
Commercial and industrial	$	419	$	601	$	125
Construction		—		—		—
Secured by commercial real estate		3,111		3,312		131
Secured by residential real estate		932		1,065		321
Retail:
1-4 family residential mortgages		—		—		—
Home equity loans and lines		162		191		119
Consumer		—		—		—
Total	$	4,624	$	5,169	$	696
Total:
Commercial:
Commercial and industrial	$	1,821	$	2,295	$	125
Construction		—		—		—
Secured by commercial real estate		5,309		5,920		131
Secured by residential real estate		1,362		1,547		321
Retail:
1-4 family residential mortgages		628		678		—
Home equity loans and lines		402		487		119
Consumer		45		62		—
Total	$	9,567	$	10,989	$	696

Activity in the allowance for credit losses on loans for the three and nine months ended September 30, 2023 and 2022 are as follows:

For the Three Months Ended September 30, 2023	Beginning balance prior to adoption of ASC 326		Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	795	$	256		$	(273	)	$	11	$	789
Construction and land development		854		234			—			—		1,088
Real estate secured by multi-family properties		1,624		85			—			—		1,709
Real estate secured by owner-occupied properties		985		20			—			—		1,005
Real estate secured by other commercial properties		1,228		(102	)		—			—		1,126
Revolving real estate secured by 1-4 family properties-business		37		(1	)		—			—		36
Real estate secured by 1st lien on 1-4 family properties-business		1,277		(2	)		—			3		1,278
Real estate secured by junior lien on 1-4 family properties-business		234		(24	)		—			—		210
State and political subdivisions		51		5			—			—		56
Retail:
1-4 family residential mortgages		433		(17	)		—			—		416
Construction-individual		—		—			—			—		—
Revolving home equity secured by 1-4 family properties-personal		234		(103	)		—			—		131
Real estate secured by 1st lien on 1-4 family properties-personal		67		3			—			—		70
Real estate secured by junior lien on 1-4 family properties-personal		86		109			—			2		197
Student loans		418		(36	)		—			2		384
Overdrafts		13		15			(21	)		7		14
Other consumer		29		10			(6	)		—		33
Total	$	8,365	$	452		$	(300	)	$	25	$	8,542

For the Three Months Ended September 30, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	2,710	$	(503	)	$	(30	)	$	83	$	2,260
Construction		687		(297	)		—			—		390
Secured by commercial real estate		4,336		834			—			—		5,170
Secured by residential real estate		1,181		50			—			36		1,267
State and political subdivisions		77		12			—			—		89
Retail:
1-4 family residential mortgages		680		7			—			—		687
Home equity loans and lines		412		51			—			2		465
Consumer		482		69			(62	)		12		501
Unallocated		732		(223	)	N/A			N/A			509
Total	$	11,297	$	—		$	(92	)	$	133	$	11,338

For the Nine Months Ended September 30, 2023	Beginning balance prior to adoption of ASC 326		Impact of adopting ASC 326			Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	1,316	$	(70	)	$	(759	)	$	(313	)	$	615	$	789
Construction and land development		755		(10	)		343			—			—		1,088
Real estate secured by multi-family properties		995		684			30			—			—		1,709
Real estate secured by owner-occupied properties		1,549		(374	)		(170	)		—			—		1,005
Real estate secured by other commercial properties		2,458		(1,128	)		(204	)		—			—		1,126
Revolving real estate secured by 1-4 family properties-business		25		7			4			—			—		36
Real estate secured by 1st lien on 1-4 family properties-business		1,210		490			(430	)		—			8		1,278
Real estate secured by junior lien on 1-4 family properties-business		30		(14	)		194			—			—		210
State and political subdivisions		94		(20	)		(18	)		—			—		56
Retail:
1-4 family residential mortgages		682		(196	)		(70	)		—			—		416
Construction-individual		1		-			(1	)		—			—		—
Revolving home equity secured by 1-4 family properties-personal		299		(7	)		(161	)		—			—		131
Real estate secured by 1st lien on 1-4 family properties-personal		57		15			(2	)		—			—		70
Real estate secured by junior lien on 1-4 family properties-personal		55		29			107			—			6		197
Student loans		454		12			(45	)		(43	)		6		384
Overdrafts		8		3			54			(73	)		22		14
Other consumer		41		(8	)		9			(9	)		—		33
Unallocated		502		(502	)		—		N/A			N/A			—
Total	$	10,531	$	(1,089	)	$	(1,119	)	$	(438	)	$	657	$	8,542

For the Nine Months Ended September 30, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	3,368	$	(1,295	)	$	(38	)	$	225	$	2,260
Construction		363		27			—			—		390
Secured by commercial real estate		4,280		890			—			—		5,170
Secured by residential real estate		1,035		190			—			42		1,267
State and political subdivisions		69		20			—			—		89
Retail:
1-4 family residential mortgages		646		41			—			—		687
Home equity loans and lines		376		85			—			4		465
Consumer		542		38			(109	)		30		501
Unallocated		505		4		N/A			N/A			509
Total	$	11,184	$	—		$	(147	)	$	301	$	11,338

Since the implementation of ASU 326 on January 1, 2023, the Company measures loan modifications to borrowers in financial distress as a troubled debt modification ("TDM"). A TDM could involve principal forgiveness, term extension, an other-than-insignificant payment delay, interest rate reduction or exchanging or paying off existing debt for new debt with the Company. Any amount forgiven would be charged to the allowance for credit losses. There were no TDMs in 2023.

The Company had extended, restructured, or otherwise modified the terms of loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers that had been experiencing financial difficulties. A loan was considered to be a troubled debt restructuring (“TDR”) loan when the Company granted a concession to the borrower because of the borrower’s financial condition that it would not have otherwise considered. Such concessions included a reduction of interest rates, forgiveness of principal or interest, or other modifications of interest rates to less than the current market rate for new obligations with similar risk. Loans that

had been classified as TDRs are considered non-performing. Under ASU 326, the accounting for these Legacy TDRs will continue until the loan paid off.

The concessions made for the Legacy TDRs reported in the following disclosures involve lowering the monthly payments on loans through periods of interest only payments, a reduction in interest rate below a market rate or an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these three methods. The restructurings rarely result in the forgiveness of principal or accrued interest. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible. TDR loans that are in compliance with their modified terms and that yield a market rate may be removed from the TDR status after a period of performance.The Company closely monitors the performance of loans that are modified to understand the effectiveness of its modification efforts. There were no payment default (60 days or more past due) during the nine months ended September 30, 2023 and 2022, respectively, on loans modified within 12 months prior to September 30, 2023 and 2022, respectively.

Performing Legacy TDRs (not reported as non-accrual or past due 90 days or more and still accruing) totaled $3,979,000 and $4,301,000 as of September 30, 2023 and December 31, 2022, respectively. Non-performing Legacy TDRs totaled $269,000 and $371,000 as of September 30, 2023 and December 31, 2022, respectively. Non-accrual Legacy TDRs are included in the specific reserve calculation in 2023. All legacy TDRs were included in the specific reserve calculation for 2022.

The following table illustrates the specific reserve for loan losses allocated to Legacy TDRs. These specific reserves are included in the allowance for loan losses for loans individually evaluated. There were no loans modified as TDMs during the period.

	September 30, 2023				December 31, 2022
	Unpaid principal balance		Related allowance		Unpaid principal balance		Related allowance
Legacy TDRs with no specific allowance recorded	$	4,052	$	—	$	1,272	$	—
Legacy TDRs with an allowance recorded		196		245		3,400		392
Total	$	4,248	$	245	$	4,672	$	392

As of September 30, 2023 and December 31, 2022, QNB had $14,000 and $5,000, respectively, in commitments to lend additional funds to customers with loans whose terms have been modified as TDRs. There were no charge-offs during the three or nine months ended September 30, 2023 and 2022, resulting from loans previously modified as TDRs.

The Company has no loans secured by residential real estate for which foreclosure proceedings are in process at September 30, 2023.

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Note 9 - Fair Value Measurements and Disclosures

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements and Disclosures

9. FAIR VALUE MEASUREMENTS AND DISCLOSURES

FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (fair values are not adjusted for transaction costs). ASC 820 also establishes a framework (fair value hierarchy) for measuring fair value under U.S. GAAP and expands disclosures about fair value measurements.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The measurement of fair value should be consistent with one of the following valuation techniques: market approach, income approach, and/or cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). For example, valuation techniques consistent with the market approach often use market multiples derived from a set of comparables. Multiples might lie in ranges with a different multiple for each comparable. The selection of where within the range the appropriate multiple falls requires judgment, considering factors specific to the measurement (qualitative and quantitative). Valuation techniques consistent with the market approach include matrix pricing. Matrix pricing is a mathematical technique used principally to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the security’s relationship to other benchmark quoted securities.

The following table sets forth QNB’s financial assets measured at fair value on a recurring and nonrecurring basis and the fair value measurements by level within the fair value hierarchy as of September 30, 2023:

September 30, 2023	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Available-for-sale securities:
U.S. Treasury securities	$	—	$	6,922	$	—	$	6,922
U.S. Government agency securities		—		86,226		—		86,226
State and municipal securities (1)		—		83,630		—		83,630
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities (1)		—		233,361		—		233,361
Collateralized mortgage obligations (CMOs)		—		89,185		—		89,185
Corporate debt securities and money market funds		—		6,014		52		6,066
Total debt securities available-for-sale		—		505,338		52		505,390
Equity securities		4,765		—		—		4,765
Total recurring fair value measurements	$	4,765	$	505,338	$	52	$	510,155
Nonrecurring fair value measurements*
Loans individually evaluated for impairment	$	—	$	—	$	337	$	337
Mortgage loans held-for-sale		—		—		446		446
Mortgage servicing rights		—		—		7		7
Total nonrecurring fair value measurements	$	—	$	—	$	790	$	790
*Impairment
(1) Includes derivatives designated as fair value hedging instruments as discussed in Footnote 13

December 31, 2022	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Debt securities available-for-sale
U.S. Treasuries	$	—	$	301	$	—	$	301
U.S. Government agency securities		—		86,709		—		86,709
State and municipal securities		—		95,367		—		95,367
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities		—		256,161		—		256,161
Collateralized mortgage obligations (CMOs)		—		101,672		—		101,672
Corporate debt securities		—		6,262		53		6,315
Total debt securities available-for-sale		—		546,472		53		546,525
Equity securities		12,056		—		—		12,056
Total recurring fair value measurements	$	12,056	$	546,472	$	53	$	558,581
Nonrecurring fair value measurements*
Impaired loans	$	—	$	—	$	3,928	$	3,928
Mortgage servicing rights		—		—		1		1
Total nonrecurring fair value measurements	$	—	$	—	$	3,929	$	3,929
*Impairment

There were no transfers in and out of Level 1, Level 2, or Level 3 fair value measurements during the three or nine months ended September 30, 2023. There were no losses included in earnings attributable to the change in unrealized gains or losses relating to the available-for-sale securities above with fair value measurements utilizing significant unobservable inputs for the three- or nine-month periods ended September 30, 2023.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which QNB has utilized Level 3 inputs to determine fair value:

	Quantitative information about Level 3 fair value measurements
September 30, 2023	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Loans individually evaluated for impairment	$	43	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-20% to -100%
					Liquidation expenses	(3)		-10	%
Loans individually evaluated for impairment		294	Financial statement values for UCC collateral		Financial statement value discounts	(4)	-30% to -100%
Mortgage servicing rights		7	Discounted cash flow		Remaining term		2 to 27 years
					Prepayment speeds		96% to 206%
					Discount rate		12.0% to 12.5%

	Quantitative information about Level 3 fair value measurements
December 31, 2022	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Impaired loans	$	3,634	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-15% to -100%
					Liquidation expenses	(3)		-10	%
Impaired loans		294	Financial statement values for UCC collateral		Financial statement value discounts	(4)	-30% to -100%
Mortgage servicing rights		1	Discounted cash flow		Remaining term		2 to 28 years
					Prepayment speeds		113% to 235%
					Discount rate		12.0% to 12.5%

(1)Fair value is primarily determined through appraisals of the underlying collateral by independent parties, which generally includes various Level 3 inputs which are not always identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and the age of the appraisal. The range is presented as a percent of the initial appraised value.

(3)Appraisals and pending agreements of sale are adjusted by management for estimated liquidation expenses. The range is presented as a percent of the initial appraised value.

(4)Values obtained from financial statements for UCC collateral (fixed assets and inventory) are discounted to estimated realizable liquidation value.

The following table presents additional information about the available-for-sale securities measured at fair value on a recurring basis and for which QNB utilized significant unobservable inputs (Level 3 inputs) to determine fair value for the nine months ended September 30, 2023 and 2022:

	Fair value measurements using significant unobservable inputs (Level 3)
	2023			2022
Balance, January 1,	$	53		$	75
Payments received		(1	)		(21	)
Total gains or losses (realized/unrealized)
Included in earnings		—			—
Included in other comprehensive (loss) income		—			1
Transfers in and/or out of Level 3		—			—
Balance, September 30,	$	52		$	55

The Level 3 securities consist of one collateralized debt obligation security, the PreTSL security, which is backed by trust preferred securities issued by banks. The market for this security at September 30, 2023 was not active and markets for similar securities also are not active. The new issue market is also inactive and there are currently very few market participants who are willing and able to transact for these securities.

Given conditions in the debt markets today and the absence of observable transactions in the secondary and new issue markets, we determined:

•The few observable transactions and market quotations that are available are not reliable for purposes of determining fair value at September 30, 2023;

•An income valuation approach technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs will be equally or more representative of fair value than the market approach valuation technique used at prior measurement dates; and

•The PreTSL will be classified within Level 3 of the fair value hierarchy because significant adjustments are required to determine fair value at the measurement date.

QNB used an independent third party to value this security using a discounted cash flow analysis. Based on management’s review of the bond’s three underlying issuers, there are no expected credit losses or prepayments; cashflows used were contractual based on the Bloomberg YA screen. The assumed cashflows have been discounted using an estimated market discount rate based on the 30-year swap rate. The 30-year is used as the reference rate since it is indicative of market expectation for short-term rates in the future. This is consistent with the 30-year nature of the PreTSL security, which is priced using the 3-month LIBOR as a reference rate. The discount rate of 8.34% includes the risk-free rate, a credit component and a spread for illiquidity.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of QNB’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between QNB’s disclosures and those of other companies may not be meaningful.

The following methods and assumptions were used to estimate the fair values of each major classification of financial instrument and non-financial asset at September 30, 2023 and December 31, 2022:

Cash and cash equivalents, accrued interest receivable and accrued interest payable (carried at cost): The carrying amounts reported in the balance sheet approximate those assets’ fair value.

Investment securities (including derivative instruments) (carried at fair value): The fair value of securities is primarily determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. Level 2 debt securities are valued by a third-party pricing service commonly used in the banking industry. Level 2 fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution date, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.

The fair value of derivatives instruments designated as fair value hedges are based on estimates QNB would receive or pay to terminate the contracts or agreement, taking into account current interest rates and when appropriate, the credit-worthiness of the counterparties; these values are included in Level 2.

Restricted investment in stocks (carried at cost): The fair value of stock in Atlantic Community Bankers Bank, the Federal Home Loan Bank, VISA Class B and SHCPFIC is the carrying amount, based on redemption provisions, and considers the limited marketability of and restrictions on such securities.

Loans Held for Sale (carried at lower of cost or fair value): The fair value of loans held for sale is determined, when possible, using quoted secondary market prices. If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for the specific attributes of that loan.

Loans Receivable (carried at cost): The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the liquidity, credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (generally carried at fair value): Impaired loans are loans for which the Company has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Mortgage Servicing Rights (carried at lower of cost or fair value): The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated net servicing income. The mortgage servicing rights are stratified into tranches based on predominant characteristics, such as interest rate, loan type and investor type. The valuation incorporates assumptions that market participants would use in estimating future net servicing income.

Deposit liabilities (carried at cost): The fair value of deposits with no stated maturity (e.g. demand deposits, interest-bearing demand accounts, money market accounts and savings accounts) are by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amounts). This approach to estimating fair value excludes the significant benefit that results from the low-cost funding provided by such deposit liabilities, as compared to alternative sources of funding. Deposits with a stated maturity (time deposits) have been valued using the present value of cash flows discounted at rates approximating the current market for similar deposits.

Short-term borrowings (carried at cost): The carrying amount of short-term borrowings approximates their fair values.

Long-term debt (carried at cost): Long-term debt has stated maturities and have been valued using the present value of cash flows discounted at rates approximating the current market for similar debt instruments.

Off-balance-sheet instruments (disclosed at cost): The fair values for QNB’s off-balance sheet instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in sales transaction on the dates indicated. The estimated fair

value amounts have been measured as of the respective period ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period end.

The estimated fair values and carrying amounts of the Company’s financial and off-balance sheet instruments are summarized as follows:

					Fair value measurements
September 30, 2023	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	55,141	$	55,141	$	55,141	$	—	$	—
Investment securities:
Available-for-sale (1)		505,390		505,390		—		505,338		52
Equities		4,765		4,765		4,765		—		—
Restricted investment in stocks		2,730		2,730		—		2,730		—
Loans held for sale		446		446		—		446		—
Net loans		1,051,908		1,023,811		—		—		1,023,811
Mortgage servicing rights		430		608		—		—		608
Accrued interest receivable		5,590		5,590		—		5,590		—
Financial liabilities
Deposits with no stated maturities	$	1,193,147	$	1,193,147	$	1,193,147	$	—	$	—
Deposits with stated maturities		290,186		284,757		—		284,757		—
Short-term borrowings		96,703		96,703		96,703		—		—
Long-term debt		20,000		19,718		19,718		—		—
Accrued interest payable		3,278		3,278		—		3,278		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		60		—		60		—
(1) Includes derivatives designated as fair value hedging instruments as discussed in Footnote 13

					Fair value measurements
December 31, 2022	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	15,899	$	15,899	$	15,899	$	—	$	—
Investment securities:
Available-for-sale		546,525		546,525		—		546,472		53
Equities		12,056		12,056		12,056		—		—
Restricted investment in stocks		5,193		5,193		—		5,193		—
Net loans		1,028,854		1,001,103		—		—		1,001,103
Mortgage servicing rights		469		638		—		—		638
Accrued interest receivable		5,038		5,038		—		5,038		—
Financial liabilities
Deposits with no stated maturities	$	1,242,920	$	1,242,920	$	1,242,920	$	—	$	—
Deposits with stated maturities		175,449		168,554		—		168,554		—
Short-term borrowings		161,327		161,327		161,327		—		—
Long-term debt		10,000		10,000		10,000		—		—
Accrued interest payable		467		467		—		467		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		69		—		69		—

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Note 10 - Commitments And Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

10. COMMITMENTS AND CONTINGENCIES

Financial Instruments with off-balance sheet risk:

In the normal course of business there are various legal proceedings, commitments, and contingent liabilities which are not reflected in the consolidated financial statements. Management does not anticipate any material losses as a result of these transactions and activities. They include, among other things, commitments to extend credit and standby letters of credit. The maximum exposure to credit loss, which represents the possibility of sustaining a loss due to the failure of the other parties to a financial instrument to perform according to the terms of the contract, is represented by the contractual amount of these instruments. QNB uses the same lending standards and policies in making credit commitments as it does for on-balance sheet instruments. The activity is controlled through credit approvals, control limits, and monitoring procedures.

A summary of the Company's financial instrument commitments is as follows:

	September 30,		December 31,
	2023		2022
Commitments to extend credit and unused lines of credit	$	375,448	$	339,312
Standby letters of credit		19,894		19,512
Total financial instrument commitments	$	395,342	$	358,824

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. QNB evaluates each customer’s creditworthiness on a case-by-case basis.

Standby letters of credit are conditional commitments issued by the Company to guarantee the financial or performance obligation of a customer to a third party. QNB’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making conditional obligations as it does for on-balance sheet instruments. Standby letters of credit of $14,817,000 will expire within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Company requires collateral and personal guarantees supporting these letters of credit as deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral and the enforcement of personal guarantees would be sufficient to

cover the maximum potential amount of future payments required under the corresponding guarantees. The amount of the liability as of September 30, 2023 and December 31, 2022 for guarantees under standby letters of credit issued is not material.

The amount of collateral obtained for letters of credit and commitments to extend credit is based on management’s credit evaluation of the customer. Collateral varies, but may include real estate, accounts receivable, marketable securities, pledged deposits, inventory or equipment.

Other commitments:

QNB has committed to various operating leases for several of their branch and office facilities. Some of these leases include specific provisions relating to rent increases. Some of the leases contain renewal options to extend the initial terms of the lease for periods ranging from five to ten years and certain leases allow for multiple extensions. During the nine months ended September 30, 2023, QNB renewed one lease and recorded an additional right-of-use asset in exchange for an operating lease liability of $369,000.

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Note 11 - Regulatory Restrictions

9 Months Ended

Sep. 30, 2023

Regulated Operations [Abstract]

Regulatory Restrictions

11. REGULATORY RESTRICTIONS

Dividends payable by QNB and the Bank are subject to various limitations imposed by statutes, regulations and policies adopted by bank regulatory agencies. Under Federal and Pennsylvania banking law, the Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. Under Federal Reserve regulations, the Bank is limited as to the amount it may lend affiliates, including QNB, unless such loans are collateralized by specific obligations.

Both QNB and the Bank are subject to regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate actions by regulators that could have an effect on the financial statements. Under the framework for prompt corrective action, the Bank must meet capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items. The capital amounts and classification are also subject to qualitative judgments by the regulators. Management believes, as of September 30, 2023, that QNB and the Bank met capital adequacy requirements to which they were subject.

As of the most recent notification, the primary regulator of the Bank considered it to be “well capitalized” under the regulatory framework. There are no conditions or events since that notification that management believes have changed the classification. To be categorized as well capitalized, bank holding companies and insured depository institutions must maintain minimum ratios as set forth in the following table below.

The Company and the Bank’s actual capital amounts and ratios are presented as follows:

	Capital levels
	Actual					Adequately capitalized					Well capitalized
September 30, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	167,262		13.31	%	$	100,569		8.00	%	$	125,711		10.00	%
Bank		154,116		12.41			99,353	8.00				124,191	10.00
Tier 1 capital (to risk-weighted assets):
The Company	$	158,617		12.62			75,427	6.00				75,427	6.00
Bank		145,471		11.71			74,515	6.00				99,353	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		158,617		12.62			56,570	4.50			N/A		N/A
Bank		145,471		11.71			55,886	4.50				80,724	6.50
Tier 1 capital (to average assets):
The Company		158,617		8.95			70,925	4.00			N/A		N/A
Bank		145,471		8.25			70,515	4.00				88,144	5.00

	Capital levels
	Actual					Adequately capitalized					Well capitalized
As of December 31, 2022	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	162,725		13.19	%	$	98,701		8.00	%	$	123,376		10.00	%
Bank		149,908		12.52			95,796	8.00				119,746	10.00
Tier 1 capital (to risk-weighted assets):
The Company		152,077		12.33			74,025	6.00				74,025	6.00
Bank		139,260		11.63			71,847	6.00				95,896	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		152,077		12.33			55,519	4.50			N/A		N/A
Bank		139,260		11.63			53,886	4.50				77,835	6.50
Tier 1 capital (to average assets):
The Company		152,077		8.75			69,507	4.00			N/A		N/A
Bank		139,260		8.07			69,009	4.00				86,261	5.00

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Note 12 - Revenue Recognition from Contracts with Customers

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition from Contracts with Customers

12. REVENUE RECOGNITION FROM CONTRACTS WITH CUSTOMERS

The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers. The main types of revenue contracts included in non-interest income within the consolidated statements of operations are as follows:

•Fees for services to customers—fees include service charges on deposits which are included as liabilities in the consolidated statement of financial position and consist of transaction-based fees, stop payment fees, Automated Clearing House (ACH) fees, account maintenance fees, and overdraft services fees for various retail and business checking customers. These fees are charged as earned on the day of the transaction or within the month of the service, with the exception of Enhanced Account Analysis Fees, which are calculated on the previous month’s activity and assessed on the following month. The Enhanced Account Analysis Fees are currently being accrued; the revenue is currently being recorded in the month it is earned. Service charges on deposits are withdrawn directly from the customer’s account balance.

•ATM and debit card – fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request.

•Retail brokerage and advisory—fee income and related expenses are accrued monthly to properly record the revenues in the month they are earned. Advisory fees are collected in advance on a quarterly basis. These advisory fees are recorded in the first month of the quarter for which the service is being performed. Fees that are transaction based are recognized at the point in time that the transaction is executed (i.e. trade date).

•Merchant – QNB earns interchange fees from credit/debit cardholder transactions conducted through VISA/MasterCard payment networks. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized monthly, concurrently with the transaction processing services provided to the cardholder within the month.

•Other—includes credit card fees, sales of checks to depositors, miscellaneous fees and gain/losses on sale of OREO.

•Credit card fees are recognized monthly, concurrently with the transaction processing services provided to the cardholder within the month.

•Sales of checks to depositors are commissions earned from a third-party who provides checks to QNB’s customers. There is a pre-paid incentive with the third party which is recognized over the term of the contract. Other commissions on the sales of checks are recorded weekly.

•Miscellaneous fees, such as wire, cashier check and garnishment fees, are charged as earned on the day of the transaction.

•Gain (loss) on sales of OREO – QNB records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When QNB finances the sale of OREO to the buyer, QNB assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, QNB adjusts the transaction prices and related gain (loss) on sale if a significant financing component is present.

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Note 13 - Derivatives and Hedging Activities

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

13. DERIVATIVES AND HEDGING ACTIVITIES

QNB's risk management objective with respect to derivative financial instruments is to hedge the risk of changes in the fair value of certain fixed-rate investment securities, included in a closed portfolio, for changes in the Secured Overnight Financing Rate ("SOFR"). The effective and ineffective portions of changes in the fair value of each derivative financial instrument is reported in accumulated other comprehensive (loss) income, net of tax, and are reclassified to interest income as interest payments are made or received on the hedged portfolios. QNB assesses the effectiveness of each hedging relationship using a regression analysis of prior periodic changes in fair value of both the hedge and the hedged item. In the assessment of hedge effectiveness, QNB will consider the likelihood of the counterparty's compliance with the contractual terms of the hedging derivative that could require the counterparty to make payments (counterparty default risk). If the likelihood that the counterparty will not default ceases to be probable, the hedge may no longer be highly effective and hedge ineffectiveness due to counterparty payment risk will be assessed.

The following table presents the notional amounts of derivatives designated as fair value hedging instruments at September 30, 2023. QNB pledges cash or securities to cover the negative fair value of derivatives instruments. Cash collateral associated with the derivative instruments are not added to or netted against the fair value amounts. QNB did not have any derivatives designated as fair value hedging instruments at December 31, 2022.

	At September 30, 2023
	Interest Rate Swaps-Fair Value Hedges
Balance Sheet Classification	Notional Amount		Fair Value
Investment Securities Available-for-sale:
State and municipal securities	$	75,000	$	3,041
U.S. Government agencies and GSE mortgage backed securities		225,000		7,582
Total	$	300,000	$	10,623

The following table presents amounts included in the Consolidated Statements on Income for derivatives designated as fair value hedging instruments for the three and nine months ended September 30, 2023.

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
Income Sheet Classification	2023		2023
Interest and dividends on available-for-sale and equity securities:
Taxable	$	1,190	$	1,370
Total	$	1,190	$	1,370

The following table presents amounts included in accumulated other comprehensive (loss) income for derivatives designated as fair value hedging instruments at September 30, 2023.

Balance Sheet Classification	At September 30, 2023
Accumulated other comprehensive loss, net of tax	$	8,392
Total	$	8,392

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Note 2 - Recent Accounting Pronouncements (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Impact of Adoption

The following table illustrates the impact of ASC 326:

January 1, 2023
	As Reported under ASC 326			Pre-ASC 326 Adoption			Impact of ASC 326 Adoption
Assets:
Commercial loans:
Revolving real estate secured by 1-4 family properties	$	5,255		$	—		$	5,255
Retail loans:
1-4 family residential mortgages		105,524			105,654			(130	)
Construction-individual		130			—			130
Revolving home equity secured by 1-4 family properties		36,732			41,987			(5,255	)
Allowance for credit losses on loans (ACL):
Commercial:
Commercial and industrial		(1,246	)		(1,316	)		70
Construction and land development		(745	)		(755	)		10
Real estate secured by multi-family properties		(1,679	)		(995	)		(684	)
Real estate secured by owner-occupied properties		(1,175	)		(1,549	)		374
Real estate secured by other commercial properties		(1,330	)		(2,458	)		1,128
Revolving real estate secured by 1-4 family properties-business		(32	)		(25	)		(7	)
Real estate secured by 1st lien on 1-4 family properties-business		(1,700	)		(1,210	)		(490	)
Real estate secured by junior lien on 1-4 family properties-business		(16	)		(30	)		14
State and political subdivisions		(74	)		(94	)		20
Retail:
1-4 family residential mortgages		(486	)		(682	)		196
Construction-individual		(1	)		(1	)		—
Revolving home equity secured by 1-4 family properties-personal		(292	)		(299	)		7
Real estate secured by 1st lien on 1-4 family properties-personal		(72	)		(57	)		(15	)
Real estate secured by junior lien on 1-4 family properties-personal		(84	)		(55	)		(29	)
Student loans		(466	)		(454	)		(12	)
Overdrafts		(11	)		(8	)		(3	)
Other consumer		(33	)		(41	)		8
Unallocated		—			(502	)		502
Total ACL		(9,442	)		(10,531	)		1,089
Deferred tax assets		4,540			4,767			(227	)
Liabilities:
Allowance for credit losses on unused commitments	$	122		$	117		$	5
Equity:
Retained earnings	$	129,808		$	128,951		$	857

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Note 3 - Stock-based Compensation and Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Assumptions Used in Option Pricing Model

The following assumptions were used in the option pricing model in determining the fair value of options granted during the period:

For the Nine Months Ended September 30,	2023			2022
Risk free interest rate		3.64	%		1.25	%
Dividend yield		4.80	%		3.64	%
Volatility		20.36	%		22.68	%
Expected life (years)		8.35			4.05

Stock Option Activity

Stock option activity during the nine months ended September 30, 2023 and 2022 is as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2022		109,150		$	37.65
Granted		35,000			29.51
Exercised		—			—
Forfeited		(22,600	)		43.15
Outstanding at September 30, 2023		121,550		$	34.29		4.09	$	—
Exercisable at September 30, 2023		41,375		$	37.37		0.85	$	—

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (in years)		Aggregate intrinsic value
Outstanding at December 31, 2021		113,950		$	37.58
Granted		29,350			37.26
Exercised		—			—
Forfeited		(33,450	)		36.99
Outstanding at September 30, 2022		109,850		$	37.68		2.19	$	—
Exercisable at September 30, 2022		43,925		$	40.82		0.64	$	—

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Note 4 - Earnings Per Share & Share Repurchase Plan (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The following sets forth the computation of basic and diluted earnings per share:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator for basic and diluted earnings per share - net income	$	2,344	$	3,415	$	8,349	$	10,474
Denominator for basic earnings per share - weighted    average shares outstanding		3,613,230		3,567,987		3,600,137		3,560,064
Effect of dilutive securities - employee stock options		—		—		—		—
Denominator for diluted earnings per share - adjusted    weighted average shares outstanding		3,613,230		3,567,987		3,600,137		3,560,064
Earnings per share - basic	$	0.65	$	0.96	$	2.32	$	2.94
Earnings per share - diluted		0.65		0.96		2.32		2.94

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Note 5 - Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2023

Other Comprehensive Loss, Tax [Abstract]

Components of Accumulated Other Comprehensive Loss

The following shows the components of accumulated other comprehensive loss at September 30, 2023 and December 31, 2022:

	September 30,			December 31,
	2023			2022
Unrealized net holding losses on available-for-sale    securities	$	(117,641	)	$	(102,692	)
Unrealized gains (losses) on available-for-sale securities    for which a portion of an other-than-temporary    impairment loss has been recognized in earnings		—			—
Unrealized net holding gains (losses) on interest rate swaps		10,623			—
Accumulated other loss		(107,018	)		(102,692	)
Tax effect		22,474			21,565
Accumulated other comprehensive loss, net of tax	$	(84,544	)	$	(81,127	)

Amounts Reclassified Out of Accumulated Other Comprehensive Loss

The following table presents amounts reclassified out of accumulated other comprehensive loss for the three and nine months ended September 30, 2023 and 2022:

For the Three Months Ended September 30,	Amount reclassified from accumulated other comprehensive loss
Details about accumulated other comprehensive loss	2023			2022		Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	—		$	—	Net gain (loss) on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—	Net other-than-temporary impairment losses on investment securities
Fair value remeasurements on fair value hedges		(26	)		—	Interest and dividends on available-for-sale & equity securities
		(26	)		—
Tax effect		5			—	Provision for income taxes
Total reclassification out of accumulated other comprehensive loss, net of tax	$	(21	)	$	—	Net of tax

For the Nine Months Ended September 30,	Amount reclassified from accumulated other comprehensive loss
Details about accumulated other comprehensive loss	2023			2022			Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	(257	)	$	4		Net gain (loss) on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—		Net other-than-temporary impairment losses on investment securities
Fair value remeasurements on fair value hedges		(64	)		—		Interest and dividends on available-for-sale & equity securities
		(321	)		4
Tax effect		67			(1	)	Provision for income taxes
Total reclassification out of accumulated other comprehensive loss, net of tax	$	(254	)	$	3		Net of tax

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Note 6 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Debt Securities Available-for-sale

The amortized cost and estimated fair values of investment securities available-for-sale at September 30, 2023 and December 31, 2022 were as follows:

	Fair		Gross unrealized holding		Gross unrealized holding			Gross unrealized fair value hedge		Amortized
September 30, 2023	value		gains		losses			gains (1)		cost
U.S. Treasury	$	6,922	$	—	$	(2	)	$	—	$	6,924
U.S. Government agency		86,226		—		(15,722	)		—		101,948
State and municipal		83,630		—		(28,471	)		3,041		109,060
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		233,361		—		(52,645	)		7,582		278,424
Collateralized mortgage obligations (CMOs)		89,185		—		(20,154	)		—		109,339
Corporate debt and money market funds		6,066		—		(647	)		—		6,713
Total investment debt securities available-for-sale	$	505,390	$	—	$	(117,641	)	$	10,623	$	612,408
(1) See Footnote 13

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
December 31, 2022	value		gains		losses			cost
U.S. Treasuries	$	301	$	2	$	—		$	299
U.S. Government agency		86,709		—		(15,233	)		101,942
State and municipal		95,367		—		(23,494	)		118,861
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		256,161		—		(45,303	)		301,464
Collateralized mortgage obligations (CMOs)		101,672		—		(18,338	)		120,010
Corporate debt		6,315		—		(326	)		6,641
Total investment debt securities available-for-sale	$	546,525	$	2	$	(102,694	)	$	649,217

Investment Securities by Contractual Maturity

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at September 30, 2023 is shown in the following table.

September 30, 2023	Fair value		Amortized cost
Due in one year or less	$	10,261	$	10,417
Due after one year through five years		118,489		135,377
Due after five years through ten years		301,129		372,883
Due after ten years		75,511		93,731
Total investment debt securities available-for-sale	$	505,390	$	612,408

Realized Gain (Loss) on Investments

The following table presents information related to the Company’s gains and losses on the sales and calls of securities available-for-sale, and losses recognized for the impairment of these investments.

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023			2022
Gross realized gains	$	—	$	—	$	—		$	4
Gross realized losses		—		—		(257	)		—
Impairment		—		—		—			—
Total net gains (losses) on AFS securities	$	—	$	—	$	(257	)	$	4

Debt Securities in a Continuous Unrealized Loss Position

The following table indicates the length of time individual debt securities have been in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022:

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2023	securities		value		losses			value		losses			value		losses
U.S. Treasury		13	$	6,922	$	(2	)	$	—	$	—		$	6,922	$	(2	)
U.S. Government agency		46		—		—			86,226		(15,722	)		86,226		(15,722	)
State and municipal		192		369		(11	)		80,254		(28,460	)		80,623		(28,471	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		191		2		—			225,807		(52,645	)		225,809		(52,645	)
Collateralized mortgage obligations (CMOs)		127		—		—			89,185		(20,154	)		89,185		(20,154	)
Corporate debt and money market funds		4		98		(7	)		5,969		(640	)		6,067		(647	)
Total		573	$	7,391	$	(20	)	$	487,441	$	(117,621	)	$	494,832	$	(117,641	)

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2022	securities		value		losses			value		losses			value		losses
U.S. Government agency		46	$	3,647	$	(353	)	$	83,062	$	(14,880	)	$	86,709	$	(15,233	)
State and municipal		216		50,156		(7,816	)		45,210		(15,678	)		95,366		(23,494	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		197		58,811		(6,775	)		197,351		(38,528	)		256,162		(45,303	)
Collateralized mortgage obligations (CMOs)		129		35,797		(3,983	)		65,875		(14,355	)		101,672		(18,338	)
Corporate debt		4		6,262		(318	)		53		(8	)		6,315		(326	)
Total		592	$	154,673	$	(19,245	)	$	391,551	$	(83,449	)	$	546,224	$	(102,694	)

Summary of Unrealized and Realized Gains and Losses Recognized in Net Income on Equity Securities

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2023 and 2022:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Net (loss) gains recognized during the period on equity securities	$	(7	)	$	(1,174	)	$	(212	)	$	(2,139	)
Less: Net (losses) gains recognized during the period on equity securities sold during the period		131			—			442			489
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	(138	)	$	(1,174	)	$	(654	)	$	(2,628	)

XML

Note 8 - Loans & Allowance for Credit Losses on Loans (Tables)

9 Months Ended

Sep. 30, 2023

Troubled Debt Restructuring [Member]

Allowance for Loan Losses

	September 30, 2023				December 31, 2022
	Unpaid principal balance		Related allowance		Unpaid principal balance		Related allowance
Legacy TDRs with no specific allowance recorded	$	4,052	$	—	$	1,272	$	—
Legacy TDRs with an allowance recorded		196		245		3,400		392
Total	$	4,248	$	245	$	4,672	$	392

Retail and Commercial Loans [Member]

Major Classes of Loans

Major classes of loans are as follows:

	September 30,
	2023
Commercial:
Commercial and industrial	$	129,425
Construction and land development		99,958
Real estate secured by multi-family properties		106,644
Real estate secured by owner-occupied properties		163,163
Real estate secured by other commercial properties		261,539
Revolving real estate secured by 1-4 family properties-business		6,960
Real estate secured by 1st lien on 1-4 family properties-business		99,047
Real estate secured by junior lien on 1-4 family properties-business		3,457
State and political subdivisions		19,854
Retail:
1-4 family residential mortgages		108,304
Construction-individual		328
Revolving home equity secured by 1-4 family properties-personal		33,151
Real estate secured by 1st lien on 1-4 family properties-personal		11,651
Real estate secured by junior lien on 1-4 family properties-personal		13,522
Student loans		1,746
Overdrafts		171
Other consumer		1,773
Total loans		1,060,693
Net unearned (fees) costs		(243	)
Allowance for credit losses on loans		(8,542	)
Loans receivable, net	$	1,051,908

	December 31,
	2022
Commercial:
Commercial and industrial	$	160,875
Construction		62,955
Secured by commercial real estate		518,070
Secured by residential real estate		103,419
State and political subdivisions		20,971
Retail:
1-4 family residential mortgages		105,654
Home equity loans and lines		63,580
Consumer		4,113
Total loans		1,039,637
Net unearned (fees) costs		(252	)
Allowance for loan losses		(10,531	)
Loans receivable, net	$	1,028,854

Internal Risk Ratings and Payment Activity

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	11,675	$	15,261	$	9,197	$	6,624	$	6,179	$	7,696	$	71,556	$	128,188
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		1,237		1,237
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	11,675	$	15,261	$	9,197	$	6,624	$	6,179	$	7,696	$	72,793	$	129,425
Construction and land development:
Risk rating
Pass	$	32,038	$	42,023	$	14,091	$	3,275	$	4,078	$	4,408	$	—	$	99,913
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		45		—		45
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	32,038	$	42,023	$	14,091	$	3,275	$	4,078	$	4,453	$	—	$	99,958
Real estate secured by multi-family properties:
Risk rating
Pass	$	7,358	$	29,036	$	23,565	$	9,909	$	5,848	$	28,049	$	—	$	103,765
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		709		2,170		—		2,879
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	7,358	$	29,036	$	23,565	$	9,909	$	6,557	$	30,219	$	—	$	106,644
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	12,648	$	29,879	$	28,325	$	19,262	$	12,158	$	55,004	$	—	$	157,276
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—				—		—		5,887		—		5,887
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	12,648	$	29,879	$	28,325	$	19,262	$	12,158	$	60,891	$	—	$	163,163
Real estate secured by other commercial properties:

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Risk rating
Pass	$	21,258	$	44,999	$	43,063	$	19,829	$	29,232	$	102,282	$	—	$	260,663
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		876		—		876
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	21,258	$	44,999	$	43,063	$	19,829	$	29,232	$	103,158	$	—	$	261,539
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	6,960	$	6,960
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	6,960	$	6,960
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	7,685	$	29,096	$	21,313	$	10,510	$	8,771	$	20,763	$	—	$	98,138
Special mention		—		—		138		—		—		—		—		138
Substandard		—		157		—		—		277		337		—		771
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by 1st lien on 1-4 family properties-business	$	7,685	$	29,253	$	21,451	$	10,510	$	9,048	$	21,100	$	—	$	99,047
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	479	$	611	$	551	$	592	$	41	$	964	$	—	$	3,238
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		219		—		219
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	479	$	611	$	551	$	592	$	41	$	1,183	$	—	$	3,457
State and political subdivisions:
Risk rating
Pass	$	678	$	—	$	4,565	$	21	$	5,931	$	8,659	$	—	$	19,854
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	678	$	—	$	4,565	$	21	$	5,931	$	8,659	$	—	$	19,854
Total Commercial Loans:
Risk rating
Pass	$	93,819	$	190,905	$	144,670	$	70,022	$	72,238	$	227,825	$	78,516	$	877,995
Special mention		—		—		138		—		—		—		—		138
Substandard		—		157		—		—		986		9,534		1,237		11,914
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	93,819	$	191,062	$	144,808	$	70,022	$	73,224	$	237,359	$	79,753	$	890,047

December 31, 2022	Pass		Special mention		Substandard		Doubtful		Total
Commercial:
Commercial and industrial	$	157,914	$	23	$	2,938	$	—	$	160,875
Construction		62,955		—		—		—		62,955
Secured by commercial real estate		505,657		2,597		9,816		—		518,070
Secured by residential real estate		102,295		194		930		—		103,419
State and political subdivisions		20,971		—		—		—		20,971
Total	$	849,792	$	2,814	$	13,684	$	—	$	866,290

	Term Loans by Origination Year
September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Retail Loans
1-4 family residential mortgages:
Payment performance
Performing	$	10,775	$	14,739	$	30,773	$	20,757	$	4,567	$	25,891	$	—	$	107,502
Nonperforming		—		—		—		—		—		802		—		802
Total 1-4 family residential mortgages	$	10,775	$	14,739	$	30,773	$	20,757	$	4,567	$	26,693	$	—	$	108,304
Construction-individual:
Payment performance
Performing	$	—	$	—	$	328	$	—	$	—	$	—	$	—	$	328
Nonperforming		—		—		—		—		—		—		—		—
Total construction-individual	$	—	$	—	$	328	$	—	$	—	$	—	$	—	$	328
Revolving home equity secured by 1-4 family properties-personal:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	32,979	$	32,979
Nonperforming		—		—		—		—		—		—		172		172
Total revolving home equity secured by 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	—	$	33,151	$	33,151
Real estate secured by 1st lien on 1-4 family properties-personal:
Payment performance
Performing	$	2,277	$	1,657	$	3,053	$	1,095	$	960	$	2,488	$	—	$	11,530
Nonperforming		—		—		—		—		—		121		—		121
Total real estate secured by 1st lien Real estate secured by 1st lien on 1-4 family properties-personal	$	2,277	$	1,657	$	3,053	$	1,095	$	960	$	2,609	$	—	$	11,651
Real estate secured by junior lien on 1-4 family properties-personal:
Payment performance
Performing	$	4,029	$	1,690	$	2,357	$	1,232	$	721	$	3,474	$	—	$	13,503
Nonperforming		—		19		—		—		—		—		—		19
Total real estate secured by junior lien on 1-4 family properties-personal	$	4,029	$	1,709	$	2,357	$	1,232	$	721	$	3,474	$	—	$	13,522
Student loans:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	1,729	$	—	$	1,729
Nonperforming		—		—		—		—		—		17		—		17
Total student loans	$	—	$	—	$	—	$	—	$	—	$	1,746	$	—	$	1,746
Overdrafts:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	171	$	171
Nonperforming		—		—		—		—		—		—		—		—
Total overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	171	$	171
Other consumer:
Payment performance
Performing	$	636	$	329	$	300	$	107	$	96	$	52	$	215	$	1,735
Nonperforming		—		—		—		—		—		38		—		38
Total other consumer	$	636	$	329	$	300	$	107	$	96	$	90	$	215	$	1,773
Total Retail Loans:
Payment performance
Performing	$	17,717	$	18,415	$	36,811	$	23,191	$	6,344	$	33,634	$	33,365	$	169,477
Nonperforming		—		19		—		—		—		978		172		1,169
Total Retail Loans	$	17,717	$	18,434	$	36,811	$	23,191	$	6,344	$	34,612	$	33,537	$	170,646

December 31, 2022	Performing		Non-performing		Total
Retail:
1-4 family residential mortgages	$	105,193	$	461	$	105,654
Home equity loans and lines		63,178		402		63,580
Consumer		4,051		62		4,113
Total	$	172,422	$	925	$	173,347

Past Due Loans

September 30, 2023	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	83	$	—	$	—	$	83	$	129,342	$	129,425
Construction and land development		—		—		—		—		99,958		99,958
Real estate secured by multi-family properties		—		—		—		—		106,644		106,644
Real estate secured by owner-occupied properties		226		—		—		226		162,937		163,163
Real estate secured by other commercial properties		3,725		5,035		—		8,760		252,779		261,539
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		6,960		6,960
Real estate secured by 1st lien on 1-4 family properties-business		231		—		1		232		98,815		99,047
Real estate secured by junior lien on 1-4 family properties-business		7		—		—		7		3,450		3,457
State and political subdivisions		—		—		—		—		19,854		19,854
Retail:
1-4 family residential mortgages		—		362		385		747		107,557		108,304
Construction-individual		—		—		—		—		328		328
Revolving home equity secured by 1-4 family properties-personal		—		129		—		129		33,022		33,151
Real estate secured by 1st lien on 1-4 family properties-personal		—		—		—		—		11,651		11,651
Real estate secured by junior lien on 1-4 family properties-personal		18		—		19		37		13,485		13,522
Student loans		—		14		—		14		1,732		1,746
Overdrafts		16		3		—		19		152		171
Other consumer		5		—		—		5		1,768		1,773
Total	$	4,311	$	5,543	$	405	$	10,259	$	1,050,434	$	1,060,693

December 31, 2022	30-59 days past due		60-89 days past due		90 days or more past due		Total past due loans		Current		Total loans receivable
Commercial:
Commercial and industrial	$	—	$	1,157	$	—	$	1,157	$	159,718	$	160,875
Construction		—		—		—		—		62,955		62,955
Secured by commercial real estate		—		—		—		—		518,070		518,070
Secured by residential real estate		—		—		13		13		103,406		103,419
State and political subdivisions		—		—		—		—		20,971		20,971
Retail:
1-4 family residential mortgages		703		168		216		1,087		104,567		105,654
Home equity loans and lines		95		—		—		95		63,485		63,580
Consumer		37		50		—		87		4,026		4,113
Total	$	835	$	1,375	$	229	$	2,439	$	1,037,198	$	1,039,637

Non-accrual Loans

September 30, 2023	90 Days or More Past Due-Still Accruing		Nonaccrual With No Specifically-Related ACL		Nonaccrual With Related ACL		Total Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	—	$	339	$	339
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		188		—		188
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		1		—		1
Real estate secured by junior lien on 1-4 family properties-business		—		—		196		196
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		802		—		802
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		23		149		172
Real estate secured by 1st lien on 1-4 family properties-personal		—		121		—		121
Real estate secured by junior lien on 1-4 family properties-personal		—		19		—		19
Student loans		—		17		—		17
Other consumer		—		38		—		38
Total	$	—	$	1,209	$	684	$	1,893

The following tables disclose the recorded investment in loans receivable that are either on non-accrual status or past due 90 days or more and still accruing interest as of December 31, 2022:

December 31, 2022	90 days or more past due (still accruing)		Non-accrual
Commercial:
Commercial and industrial	$	—	$	1,575
Construction		—		—
Secured by commercial real estate		—		2,031
Secured by residential real estate		—		289
State and political subdivisions		—		—
Retail:
1-4 family residential mortgages		—		461
Home equity loans and lines		—		402
Consumer		—		62
Total	$	—	$	4,820

Allowance for Loan Losses

Activity in the allowance for credit losses on loans for the three and nine months ended September 30, 2023 and 2022 are as follows:

For the Three Months Ended September 30, 2023	Beginning balance prior to adoption of ASC 326		Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	795	$	256		$	(273	)	$	11	$	789
Construction and land development		854		234			—			—		1,088
Real estate secured by multi-family properties		1,624		85			—			—		1,709
Real estate secured by owner-occupied properties		985		20			—			—		1,005
Real estate secured by other commercial properties		1,228		(102	)		—			—		1,126
Revolving real estate secured by 1-4 family properties-business		37		(1	)		—			—		36
Real estate secured by 1st lien on 1-4 family properties-business		1,277		(2	)		—			3		1,278
Real estate secured by junior lien on 1-4 family properties-business		234		(24	)		—			—		210
State and political subdivisions		51		5			—			—		56
Retail:
1-4 family residential mortgages		433		(17	)		—			—		416
Construction-individual		—		—			—			—		—
Revolving home equity secured by 1-4 family properties-personal		234		(103	)		—			—		131
Real estate secured by 1st lien on 1-4 family properties-personal		67		3			—			—		70
Real estate secured by junior lien on 1-4 family properties-personal		86		109			—			2		197
Student loans		418		(36	)		—			2		384
Overdrafts		13		15			(21	)		7		14
Other consumer		29		10			(6	)		—		33
Total	$	8,365	$	452		$	(300	)	$	25	$	8,542

For the Three Months Ended September 30, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	2,710	$	(503	)	$	(30	)	$	83	$	2,260
Construction		687		(297	)		—			—		390
Secured by commercial real estate		4,336		834			—			—		5,170
Secured by residential real estate		1,181		50			—			36		1,267
State and political subdivisions		77		12			—			—		89
Retail:
1-4 family residential mortgages		680		7			—			—		687
Home equity loans and lines		412		51			—			2		465
Consumer		482		69			(62	)		12		501
Unallocated		732		(223	)	N/A			N/A			509
Total	$	11,297	$	—		$	(92	)	$	133	$	11,338

For the Nine Months Ended September 30, 2023	Beginning balance prior to adoption of ASC 326		Impact of adopting ASC 326			Credit loss expense (reversal)			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	1,316	$	(70	)	$	(759	)	$	(313	)	$	615	$	789
Construction and land development		755		(10	)		343			—			—		1,088
Real estate secured by multi-family properties		995		684			30			—			—		1,709
Real estate secured by owner-occupied properties		1,549		(374	)		(170	)		—			—		1,005
Real estate secured by other commercial properties		2,458		(1,128	)		(204	)		—			—		1,126
Revolving real estate secured by 1-4 family properties-business		25		7			4			—			—		36
Real estate secured by 1st lien on 1-4 family properties-business		1,210		490			(430	)		—			8		1,278
Real estate secured by junior lien on 1-4 family properties-business		30		(14	)		194			—			—		210
State and political subdivisions		94		(20	)		(18	)		—			—		56
Retail:
1-4 family residential mortgages		682		(196	)		(70	)		—			—		416
Construction-individual		1		-			(1	)		—			—		—
Revolving home equity secured by 1-4 family properties-personal		299		(7	)		(161	)		—			—		131
Real estate secured by 1st lien on 1-4 family properties-personal		57		15			(2	)		—			—		70
Real estate secured by junior lien on 1-4 family properties-personal		55		29			107			—			6		197
Student loans		454		12			(45	)		(43	)		6		384
Overdrafts		8		3			54			(73	)		22		14
Other consumer		41		(8	)		9			(9	)		—		33
Unallocated		502		(502	)		—		N/A			N/A			—
Total	$	10,531	$	(1,089	)	$	(1,119	)	$	(438	)	$	657	$	8,542

For the Nine Months Ended September 30, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	3,368	$	(1,295	)	$	(38	)	$	225	$	2,260
Construction		363		27			—			—		390
Secured by commercial real estate		4,280		890			—			—		5,170
Secured by residential real estate		1,035		190			—			42		1,267
State and political subdivisions		69		20			—			—		89
Retail:
1-4 family residential mortgages		646		41			—			—		687
Home equity loans and lines		376		85			—			4		465
Consumer		542		38			(109	)		30		501
Unallocated		505		4		N/A			N/A			509
Total	$	11,184	$	—		$	(147	)	$	301	$	11,338

Since the implementation of ASU 326 on January 1, 2023, the Company measures loan modifications to borrowers in financial distress as a troubled debt modification ("TDM"). A TDM could involve principal forgiveness, term extension, an other-than-insignificant payment delay, interest rate reduction or exchanging or paying off existing debt for new debt with the Company. Any amount forgiven would be charged to the allowance for credit losses. There were no TDMs in 2023.

Collateral-dependent Loans By Loan Category

The following table presents the collateral-dependent loans by loan category at September 30, 2023:

September 30, 2023	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	294	$	45	$	339
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		188		—		—		188
Real estate secured by other commercial properties		—		—		—		—
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		1						1
Real estate secured by junior lien on 1-4 family properties-business		—		—		196		196
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		802		—		—		802
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		66		—		106		172
Real estate secured by 1st lien on 1-4 family properties-personal		121		—		—		121
Real estate secured by junior lien on 1-4 family properties-personal		19		—		—		19
Other consumer		—		38		—		38
Total	$	1,197	$	332	$	347	$	1,876
(1) Secured by business assets, personal property and equipment or guarantees

Loans Disaggregated by Impairment Method

	Allowance for Loan Losses						Loans Receivable
December 31, 2022	Balance		Balance related to loans individually evaluated for impairment		Balance related to loans collectively evaluated for impairment		Balance		Balance individually evaluated for impairment		Balance collectively evaluated for impairment
Commercial:
Commercial and industrial	$	1,316	$	125	$	1,191	$	160,875	$	1,821	$	159,054
Construction		755		—		755		62,955		—		62,955
Secured by commercial real estate		5,002		131		4,871		518,070		5,309		512,761
Secured by residential real estate		1,240		321		919		103,419		1,362		102,057
State and political subdivisions		94		—		94		20,971		—		20,971
Retail:
1-4 family residential mortgages		683		—		683		105,654		628		105,026
Home equity loans and lines		437		119		318		63,580		402		63,178
Consumer		502		—		502		4,113		45		4,068
Unallocated		502	N/A		N/A		N/A		N/A		N/A
Total	$	10,531	$	696	$	9,333	$	1,039,637	$	9,567	$	1,030,070

Impaired Loans

	December 31, 2022
	Recorded investment (after charge-offs)		Unpaid principal balance		Related allowance
With no specific allowance recorded:
Commercial:
Commercial and industrial	$	1,402	$	1,694
Construction		—		—
Secured by commercial real estate		2,198		2,608
Secured by residential real estate		430		482
Retail:
1-4 family residential mortgages		628		678
Home equity loans and lines		240		296
Consumer		45		62
Total	$	4,943	$	5,820
With an allowance recorded:
Commercial:
Commercial and industrial	$	419	$	601	$	125
Construction		—		—		—
Secured by commercial real estate		3,111		3,312		131
Secured by residential real estate		932		1,065		321
Retail:
1-4 family residential mortgages		—		—		—
Home equity loans and lines		162		191		119
Consumer		—		—		—
Total	$	4,624	$	5,169	$	696
Total:
Commercial:
Commercial and industrial	$	1,821	$	2,295	$	125
Construction		—		—		—
Secured by commercial real estate		5,309		5,920		131
Secured by residential real estate		1,362		1,547		321
Retail:
1-4 family residential mortgages		628		678		—
Home equity loans and lines		402		487		119
Consumer		45		62		—
Total	$	9,567	$	10,989	$	696

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Note 9 - Fair Value Measurements and Disclosures (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Financial Assets Measured at Fair Value on a Recurring and Nonrecurring Basis

The following table sets forth QNB’s financial assets measured at fair value on a recurring and nonrecurring basis and the fair value measurements by level within the fair value hierarchy as of September 30, 2023:

September 30, 2023	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Available-for-sale securities:
U.S. Treasury securities	$	—	$	6,922	$	—	$	6,922
U.S. Government agency securities		—		86,226		—		86,226
State and municipal securities (1)		—		83,630		—		83,630
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities (1)		—		233,361		—		233,361
Collateralized mortgage obligations (CMOs)		—		89,185		—		89,185
Corporate debt securities and money market funds		—		6,014		52		6,066
Total debt securities available-for-sale		—		505,338		52		505,390
Equity securities		4,765		—		—		4,765
Total recurring fair value measurements	$	4,765	$	505,338	$	52	$	510,155
Nonrecurring fair value measurements*
Loans individually evaluated for impairment	$	—	$	—	$	337	$	337
Mortgage loans held-for-sale		—		—		446		446
Mortgage servicing rights		—		—		7		7
Total nonrecurring fair value measurements	$	—	$	—	$	790	$	790
*Impairment
(1) Includes derivatives designated as fair value hedging instruments as discussed in Footnote 13

December 31, 2022	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Debt securities available-for-sale
U.S. Treasuries	$	—	$	301	$	—	$	301
U.S. Government agency securities		—		86,709		—		86,709
State and municipal securities		—		95,367		—		95,367
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities		—		256,161		—		256,161
Collateralized mortgage obligations (CMOs)		—		101,672		—		101,672
Corporate debt securities		—		6,262		53		6,315
Total debt securities available-for-sale		—		546,472		53		546,525
Equity securities		12,056		—		—		12,056
Total recurring fair value measurements	$	12,056	$	546,472	$	53	$	558,581
Nonrecurring fair value measurements*
Impaired loans	$	—	$	—	$	3,928	$	3,928
Mortgage servicing rights		—		—		1		1
Total nonrecurring fair value measurements	$	—	$	—	$	3,929	$	3,929
*Impairment

Quantitative Information about Assets Measured at Fair Value

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which QNB has utilized Level 3 inputs to determine fair value:

	Quantitative information about Level 3 fair value measurements
September 30, 2023	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Loans individually evaluated for impairment	$	43	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-20% to -100%
					Liquidation expenses	(3)		-10	%
Loans individually evaluated for impairment		294	Financial statement values for UCC collateral		Financial statement value discounts	(4)	-30% to -100%
Mortgage servicing rights		7	Discounted cash flow		Remaining term		2 to 27 years
					Prepayment speeds		96% to 206%
					Discount rate		12.0% to 12.5%

	Quantitative information about Level 3 fair value measurements
December 31, 2022	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Impaired loans	$	3,634	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-15% to -100%
					Liquidation expenses	(3)		-10	%
Impaired loans		294	Financial statement values for UCC collateral		Financial statement value discounts	(4)	-30% to -100%
Mortgage servicing rights		1	Discounted cash flow		Remaining term		2 to 28 years
					Prepayment speeds		113% to 235%
					Discount rate		12.0% to 12.5%

(1)Fair value is primarily determined through appraisals of the underlying collateral by independent parties, which generally includes various Level 3 inputs which are not always identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and the age of the appraisal. The range is presented as a percent of the initial appraised value.

(3)Appraisals and pending agreements of sale are adjusted by management for estimated liquidation expenses. The range is presented as a percent of the initial appraised value.

(4)Values obtained from financial statements for UCC collateral (fixed assets and inventory) are discounted to estimated realizable liquidation value.

Available-for-sale Securities Measured at Fair Value Using Significant Unobservable Inputs

The following table presents additional information about the available-for-sale securities measured at fair value on a recurring basis and for which QNB utilized significant unobservable inputs (Level 3 inputs) to determine fair value for the nine months ended September 30, 2023 and 2022:

	Fair value measurements using significant unobservable inputs (Level 3)
	2023			2022
Balance, January 1,	$	53		$	75
Payments received		(1	)		(21	)
Total gains or losses (realized/unrealized)
Included in earnings		—			—
Included in other comprehensive (loss) income		—			1
Transfers in and/or out of Level 3		—			—
Balance, September 30,	$	52		$	55

Financial and Off-balance Sheet Instruments

The estimated fair values and carrying amounts of the Company’s financial and off-balance sheet instruments are summarized as follows:

					Fair value measurements
September 30, 2023	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	55,141	$	55,141	$	55,141	$	—	$	—
Investment securities:
Available-for-sale (1)		505,390		505,390		—		505,338		52
Equities		4,765		4,765		4,765		—		—
Restricted investment in stocks		2,730		2,730		—		2,730		—
Loans held for sale		446		446		—		446		—
Net loans		1,051,908		1,023,811		—		—		1,023,811
Mortgage servicing rights		430		608		—		—		608
Accrued interest receivable		5,590		5,590		—		5,590		—
Financial liabilities
Deposits with no stated maturities	$	1,193,147	$	1,193,147	$	1,193,147	$	—	$	—
Deposits with stated maturities		290,186		284,757		—		284,757		—
Short-term borrowings		96,703		96,703		96,703		—		—
Long-term debt		20,000		19,718		19,718		—		—
Accrued interest payable		3,278		3,278		—		3,278		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		60		—		60		—
(1) Includes derivatives designated as fair value hedging instruments as discussed in Footnote 13

					Fair value measurements
December 31, 2022	Carrying amount		Fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Financial assets
Cash and cash equivalents	$	15,899	$	15,899	$	15,899	$	—	$	—
Investment securities:
Available-for-sale		546,525		546,525		—		546,472		53
Equities		12,056		12,056		12,056		—		—
Restricted investment in stocks		5,193		5,193		—		5,193		—
Net loans		1,028,854		1,001,103		—		—		1,001,103
Mortgage servicing rights		469		638		—		—		638
Accrued interest receivable		5,038		5,038		—		5,038		—
Financial liabilities
Deposits with no stated maturities	$	1,242,920	$	1,242,920	$	1,242,920	$	—	$	—
Deposits with stated maturities		175,449		168,554		—		168,554		—
Short-term borrowings		161,327		161,327		161,327		—		—
Long-term debt		10,000		10,000		10,000		—		—
Accrued interest payable		467		467		—		467		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		69		—		69		—

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Note 10 - Commitments And Contingencies (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Financial Instrument Commitments

A summary of the Company's financial instrument commitments is as follows:

	September 30,		December 31,
	2023		2022
Commitments to extend credit and unused lines of credit	$	375,448	$	339,312
Standby letters of credit		19,894		19,512
Total financial instrument commitments	$	395,342	$	358,824

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Note 11 - Regulatory Restrictions (Tables)

9 Months Ended

Sep. 30, 2023

Regulated Operations [Abstract]

Capital Ratios and Regulatory Minimum Requirements

The Company and the Bank’s actual capital amounts and ratios are presented as follows:

	Capital levels
	Actual					Adequately capitalized					Well capitalized
September 30, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	167,262		13.31	%	$	100,569		8.00	%	$	125,711		10.00	%
Bank		154,116		12.41			99,353	8.00				124,191	10.00
Tier 1 capital (to risk-weighted assets):
The Company	$	158,617		12.62			75,427	6.00				75,427	6.00
Bank		145,471		11.71			74,515	6.00				99,353	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		158,617		12.62			56,570	4.50			N/A		N/A
Bank		145,471		11.71			55,886	4.50				80,724	6.50
Tier 1 capital (to average assets):
The Company		158,617		8.95			70,925	4.00			N/A		N/A
Bank		145,471		8.25			70,515	4.00				88,144	5.00

	Capital levels
	Actual					Adequately capitalized					Well capitalized
As of December 31, 2022	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	162,725		13.19	%	$	98,701		8.00	%	$	123,376		10.00	%
Bank		149,908		12.52			95,796	8.00				119,746	10.00
Tier 1 capital (to risk-weighted assets):
The Company		152,077		12.33			74,025	6.00				74,025	6.00
Bank		139,260		11.63			71,847	6.00				95,896	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		152,077		12.33			55,519	4.50			N/A		N/A
Bank		139,260		11.63			53,886	4.50				77,835	6.50
Tier 1 capital (to average assets):
The Company		152,077		8.75			69,507	4.00			N/A		N/A
Bank		139,260		8.07			69,009	4.00				86,261	5.00

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Note 13 - Derivatives and Hedging Activities (Tables)

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Derivative Instruments

The following table presents the notional amounts of derivatives designated as fair value hedging instruments at September 30, 2023. QNB pledges cash or securities to cover the negative fair value of derivatives instruments. Cash collateral associated with the derivative instruments are not added to or netted against the fair value amounts. QNB did not have any derivatives designated as fair value hedging instruments at December 31, 2022.

	At September 30, 2023
	Interest Rate Swaps-Fair Value Hedges
Balance Sheet Classification	Notional Amount		Fair Value
Investment Securities Available-for-sale:
State and municipal securities	$	75,000	$	3,041
U.S. Government agencies and GSE mortgage backed securities		225,000		7,582
Total	$	300,000	$	10,623

Schedule of Derivative Designated as Fair Value Hedging Instruments of Statements on Income

The following table presents amounts included in the Consolidated Statements on Income for derivatives designated as fair value hedging instruments for the three and nine months ended September 30, 2023.

	For the Three Months Ended September 30,		For the Nine Months Ended September 30,
Income Sheet Classification	2023		2023
Interest and dividends on available-for-sale and equity securities:
Taxable	$	1,190	$	1,370
Total	$	1,190	$	1,370

Schedule of Derivative Designated as Fair Value Hedging Instruments of Accumulated Other Comprehensive (Loss) Income

The following table presents amounts included in accumulated other comprehensive (loss) income for derivatives designated as fair value hedging instruments at September 30, 2023.

Balance Sheet Classification	At September 30, 2023
Accumulated other comprehensive loss, net of tax	$	8,392
Total	$	8,392

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Note 2 - Recent Accounting Pronouncements (Details Textual) - USD ($)		9 Months Ended
	Jan. 01, 2023	Sep. 30, 2023	Dec. 31, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings	$ 129,808,000	$ 134,160,000	$ 128,951,000
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13 [Member]	Accounting Standards Update 2016-13 [Member]
Cumulative Effect, Period of Adoption, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings	$ 857,000

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Note 2 - Recent Accounting Pronouncements - Impact of Adoption (Details) - USD ($) $ in Thousands		9 Months Ended
	Jan. 01, 2023	Sep. 30, 2023	Dec. 31, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13 [Member]	Accounting Standards Update 2016-13 [Member]
Loans		$ 1,060,693	$ 1,039,637
Allowance for credit losses on loans (ACL)	$ (9,442)
Deferred tax assets	4,540
Liabilities:
Allowance for credit losses on unused commitments	122
Equity:
Retained earnings	129,808	134,160	128,951
Commercial Portfolio Segment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		890,047
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		129,425	160,875
Allowance for credit losses on loans (ACL)	(1,246)
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		99,958
Allowance for credit losses on loans (ACL)	(745)
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		106,644
Allowance for credit losses on loans (ACL)	(1,679)
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		163,163
Allowance for credit losses on loans (ACL)	1,175
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		261,539
Allowance for credit losses on loans (ACL)	1,330
Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		6,960
Allowance for credit losses on loans (ACL)	(32)
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		99,047
Allowance for credit losses on loans (ACL)	(1,700)
Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		3,457
Allowance for credit losses on loans (ACL)	(16)
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		19,854	$ 20,971
Allowance for credit losses on loans (ACL)	(74)
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		108,304
Allowance for credit losses on loans (ACL)	(486)
Retail Portfolio Segment [Member] | Construction-individual [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		328
Allowance for credit losses on loans (ACL)	(1)
Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		33,151
Allowance for credit losses on loans (ACL)	(292)
Retail Portfolio Segment [Member] | Real Estate Secured By First Lien on One to Four Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		11,651
Allowance for credit losses on loans (ACL)	(72)
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		13,522
Allowance for credit losses on loans (ACL)	(84)
Retail Portfolio Segment [Member] | Student Loans [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		1,746
Allowance for credit losses on loans (ACL)	(466)
Retail Portfolio Segment [Member] | Overdrafts [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		171
Allowance for credit losses on loans (ACL)	(11)
Retail Portfolio Segment [Member] | Other Consumer [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		$ 1,773
Allowance for credit losses on loans (ACL)	(33)
Unallocated Financing Receivables [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	0
Commercial Loans [Member] | Revolving Real Estate Secured by One to Four Family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	5,255
Retail Loans [Member] | 1-4 Family Residential Mortgages [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	105,524
Retail Loans [Member] | Construction-individual [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	130
Retail Loans [Member] | Revolving Home Equity Secured by 1-4 Family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	36,732
Pre-ASC 326 Adoption [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(10,531)
Deferred tax assets	4,767
Liabilities:
Allowance for credit losses on unused commitments	117
Equity:
Retained earnings	128,951
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(1,316)
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(755)
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(995)
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	1,549
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	2,458
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(25)
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(1,210)
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(30)
Pre-ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(94)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	105,654
Allowance for credit losses on loans (ACL)	(682)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Construction-individual [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(1)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(299)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Real Estate Secured By First Lien on One to Four Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(57)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(55)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Student Loans [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(454)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Overdrafts [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(8)
Pre-ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Other Consumer [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(41)
Pre-ASC 326 Adoption [Member] | Unallocated Financing Receivables [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(502)
Pre-ASC 326 Adoption [Member] | Retail Loans [Member] | Revolving Home Equity Secured by 1-4 Family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	41,987
Impact of ASC 326 Adoption [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	1,089
Deferred tax assets	(227)
Liabilities:
Allowance for credit losses on unused commitments	5
Equity:
Retained earnings	857
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	70
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	10
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(684)
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(374)
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(1,128)
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(7)
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(490)
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	14
Impact of ASC 326 Adoption [Member] | Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	20
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	196
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Construction-individual [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	0
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	7
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Real Estate Secured By First Lien on One to Four Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(15)
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(29)
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Student Loans [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(12)
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Overdrafts [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	(3)
Impact of ASC 326 Adoption [Member] | Retail Portfolio Segment [Member] | Other Consumer [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	8
Impact of ASC 326 Adoption [Member] | Unallocated Financing Receivables [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses on loans (ACL)	502
Impact of ASC 326 Adoption [Member] | Commercial Loans [Member] | Revolving Real Estate Secured by One to Four Family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	5,255
Impact of ASC 326 Adoption [Member] | Retail Loans [Member] | 1-4 Family Residential Mortgages [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	(130)
Impact of ASC 326 Adoption [Member] | Retail Loans [Member] | Construction-individual [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	130
Impact of ASC 326 Adoption [Member] | Retail Loans [Member] | Revolving Home Equity Secured by 1-4 Family Properties [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	$ (5,255)

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Note 3 - Stock-based Compensation and Shareholders' Equity (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated share-based compensation expense	$ 23,000	$ 4,000	$ 67,000	$ 50,000
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized	$ 190,000		$ 190,000
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition			53 months
Share-based compensation arrangement by share-based payment award, options, grants in period, gross			35,000	29,350
Share-based compensation arrangement by share-based payment award, options, forfeitures in period			22,600	33,450
Share-based compensation arrangement by share-based payment award, options, outstanding, number	121,550	109,850	121,550	109,850	109,150	113,950
Share-based compensation arrangement by share-based payment award, options, grants in period, weighted average grant date fair value			$ 4.11	$ 5.2
Non-Employee [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, number of shares authorized	50,000		50,000
Share-based compensation arrangement by share-based payment award, shares issued			1,740
Stock repurchase program remaining number of shares	48,260		48,260
Annual stock based compensation service fee			$ 8,000,000
Semi annual stock based compensation payment			$ 4,000,000
The 2015 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, number of shares authorized	300,000		300,000
Share-based compensation arrangement by share-based payment award, options, grants in period, gross			212,550
Share-based compensation arrangement by share-based payment award, options, forfeitures in period			120,875
Share-based compensation arrangement by share-based payment award, options, exercises in period			20,825
Share-based compensation arrangement by share-based payment award, options, outstanding, number	121,550		121,550
Employee Stock Purchase Plan 2021 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated share-based compensation expense			$ 7,000	$ 7,000
Share-based compensation arrangement by share-based payment award, number of shares authorized	30,000		30,000
Share-based compensation arrangement by share-based payment award, shares issued			10,451
Discount rate on common stock			10.00%
Expiration date			May 31, 2026
Director Compensation Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated share-based compensation expense	$ 20,000		$ 60,000
Employee Stock Option [Member] | The 2015 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, period options can be exercised after grant date			6 months
Share-based compensation arrangement by share-based payment award, expiration period			5 years
Share-based compensation arrangement by share-based payment award, award vesting period			3 years
Employee Stock Option [Member] | The 2015 Plan [Member] | First Anniversary [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage			20.00%
Employee Stock Option [Member] | The 2015 Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, expiration period			10 years

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Note 3 - Assumptions Used in Option Pricing Model (Details)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]
Risk free interest rate	3.64%	1.25%
Dividend yield	4.80%	3.64%
Volatility	20.36%	22.68%
Expected life (years)	8 years 4 months 6 days	4 years 18 days

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Note 3 - Stock Option Activity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding [Roll Forward]
Outstanding-Number of options (in shares)	109,150	113,950
Granted-Number of options (in shares)	35,000	29,350
Forfeited-Number of options (in shares)	(22,600)	(33,450)
Outstanding ending-Number of options (in shares)	121,550	109,850
Exercisable-Number of options (in shares)	41,375	43,925
Outstanding-Weighted average exercise price (in dollars per share)	$ 37.65	$ 37.58
Granted-Weighted average exercise price (in dollars per share)	29.51	37.26
Forfeited-Weighted average exercise price (in dollars per share)	43.15	36.99
Outstanding ending-Weighted average exercise price (in dollars per share)	34.29	37.68
Exercisable-Weighted average exercise price (in dollars per share)	$ 37.37	$ 40.82
Outstanding ending-Weighted average remaining contractual term	4 years 1 month 2 days	2 years 2 months 8 days
Exercisable-Weighted average remaining contractual term	10 months 6 days	7 months 20 days

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Note 4 - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Numerator for basic and diluted earnings per share - net income	$ 2,344	$ 3,415	$ 8,349	$ 10,474
Denominator for basic earnings per share - weighted average shares outstanding	3,613,230	3,567,987	3,600,137	3,560,064
Denominator for diluted earnings per share - adjusted weighted average shares outstanding	3,613,230	3,567,987	3,600,137	3,560,064
Earnings per share - basic	$ 0.65	$ 0.96	$ 2.32	$ 2.94
Earnings per share - diluted	$ 0.65	$ 0.96	$ 2.32	$ 2.94

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Note 4 - Earnings Per Share & Share Repurchase Plan (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Apr. 29, 2021	Feb. 09, 2009
Earnings Per Share and Share Repurchase Plan [Line Items]
Treasury stock, shares	208,686		208,686		208,686
Treasury stock, value				$ 75
Board of Directors [Member]
Earnings Per Share and Share Repurchase Plan [Line Items]
Stock repurchase plan approved date			Jan. 21, 2008
Share Repurchase Program 1 [Member]
Earnings Per Share and Share Repurchase Plan [Line Items]
Treasury stock, shares, acquired			0	2,000
Treasury stock, shares	102,000		102,000
Treasury stock shares average price per share acquired			$ 24.93
Treasury stock, value			$ 2,543,000
Share Repurchase Program 1 [Member] | Maximum [Member]
Earnings Per Share and Share Repurchase Plan [Line Items]
Stock repurchase program, number of shares authorized to be repurchased						200,000	100,000
Employee Stock Option [Member]
Earnings Per Share and Share Repurchase Plan [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	121,550	109,850	121,550	109,850

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Note 5 - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accumulated Other Comprehensive Loss [Line Items]
Accumulated other loss	$ (107,018)	$ (102,692)
Tax effect	22,474	21,565
Accumulated other comprehensive loss, net of tax	(84,544)	(81,127)
Unrealized Net Holding Losses on Available-for-sale Securities [Member]
Accumulated Other Comprehensive Loss [Line Items]
Accumulated other loss	(117,641)	$ (102,692)
Unrealized Net Holding Gains (Losses) on Interest Rate Swaps [Member]
Accumulated Other Comprehensive Loss [Line Items]
Accumulated other loss	$ 10,623

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Note 5 - Amounts Reclassified Out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Reclassification Adjustment Out Of Accumulated Other Comprehensive Loss [Line Items]
Income before income taxes	$ 2,838	$ 4,049	$ 10,291	$ 12,579
Tax effect	(494)	(634)	(1,942)	(2,105)
Net income	2,344	$ 3,415	8,349	10,474
Reclassification out of Accumulated Other Comprehensive Loss
Reclassification Adjustment Out Of Accumulated Other Comprehensive Loss [Line Items]
Unrealized net holding gains on available-for-sale securities			(257)	4
Fair value remeasurements on fair value hedges	(26)		(64)
Income before income taxes	(26)		(321)	4
Tax effect	5		67	(1)
Net income	$ (21)		$ (254)	$ 3

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Note 6 - Available-for-Sale (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	$ 505,390	$ 546,525
Investment securities available-for-sale, debt securities gross unrealized holding gains		2
Investment securities available-for-sale, debt securities gross unrealized fair value hedge gains	10,623
Investment securities available-for-sale, debt securities gross unrealized holding losses	(117,641)	(102,694)
Investment securities available-for-sale, debt securities amortized cost	612,408	649,217
US Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	6,922	301
Investment securities available-for-sale, debt securities gross unrealized holding gains		2
Investment securities available-for-sale, debt securities gross unrealized holding losses	(2)
Investment securities available-for-sale, debt securities amortized cost	6,924	299
US Government Agencies Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	86,226	86,709
Investment securities available-for-sale, debt securities gross unrealized holding losses	(15,722)	(15,233)
Investment securities available-for-sale, debt securities amortized cost	101,948	101,942
US States and Political Subdivisions Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	83,630	95,367
Investment securities available-for-sale, debt securities gross unrealized fair value hedge gains	3,041
Investment securities available-for-sale, debt securities gross unrealized holding losses	(28,471)	(23,494)
Investment securities available-for-sale, debt securities amortized cost	109,060	118,861
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	233,361	256,161
Investment securities available-for-sale, debt securities gross unrealized fair value hedge gains	7,582
Investment securities available-for-sale, debt securities gross unrealized holding losses	(52,645)	(45,303)
Investment securities available-for-sale, debt securities amortized cost	278,424	301,464
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	89,185	101,672
Investment securities available-for-sale, debt securities gross unrealized holding losses	(20,154)	(18,338)
Investment securities available-for-sale, debt securities amortized cost	109,339	120,010
Corporate Debt Securities and Money Market Funds [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	6,066
Investment securities available-for-sale, debt securities gross unrealized holding losses	(647)
Investment securities available-for-sale, debt securities amortized cost	$ 6,713
Corporate Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities		6,315
Investment securities available-for-sale, debt securities gross unrealized holding losses		(326)
Investment securities available-for-sale, debt securities amortized cost		$ 6,641

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Note 6 - Investment Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Due in one year or less, Fair value	$ 10,261
Due after one year through five years, Fair value	118,489
Due after five years through ten years, Fair value	301,129
Due after ten years, Fair value	75,511
Investment debt securities available-for-sale, Fair value	505,390	$ 546,525
Due in one year or less, Amortized cost	10,417
Due after one year through five years, Amortized cost	135,377
Due after five years through ten years, Amortized cost	372,883
Due after ten years, Amortized cost	93,731
Investment securities available-for-sale, debt securities amortized cost	$ 612,408	$ 649,217

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Note 6 - Investment Securities (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($) Security	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) Security	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Investment Securities [Line Items]
Proceeds from sale of investment securities			$ 9,081,000	$ 0
Available-for-sale securities pledged as collateral	$ 294,104,000		$ 294,104,000		$ 237,645,000
Debt Securities, Available-for-Sale, Restriction Type [Extensible Enumeration]	us-gaap:AssetPledgedAsCollateralMember		us-gaap:AssetPledgedAsCollateralMember		us-gaap:AssetPledgedAsCollateralMember
Other than temporary impairment, credit losses recognized in earnings	$ 0	$ 0	$ 0	0
Available-for-sale, amortized cost	612,408,000		612,408,000		$ 649,217,000
Available-for-sale	505,390,000		505,390,000		546,525,000
Investment equity securities	$ 4,765,000		4,765,000		$ 12,056,000
Proceeds from sale of investment equity securities			$ 8,180,000	1,541,000
Pooled Trust Preferred Security [Member]
Investment Securities [Line Items]
Number of trust preferred securities | Security	1		1
Available-for-sale, amortized cost	$ 60,000		$ 60,000
Available-for-sale	52,000		52,000
Equity Securities [Member]
Investment Securities [Line Items]
Income tax expense (benefit) related to net recognized gains (losses) on sales of securities	(2,000)	(339,000)	(61,000)	(618,000)
Debt Securities [Member]
Investment Securities [Line Items]
Income tax expense (benefit) related to net realized gains (losses) on sales of securities	$ 0	$ 0	$ 54,000	$ 1,000

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Note 6 - Realized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract]
Gross realized gains	$ 0	$ 0	$ 0	$ 4
Gross realized losses	0	0	(257)	0
Other-than-temporary impairment	0	0	0	0
Total net gains (losses) on AFS securities	$ 0	$ 0	$ (257)	$ 4

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Note 6 - Debt Securities in a Continuous Unrealized Loss Position (Details) $ in Thousands	Sep. 30, 2023 USD ($) Security	Dec. 31, 2022 USD ($) Security
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	573	592
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 7,391	$ 154,673
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(20)	(19,245)
Debt Securities in an unrealized loss position 12 months or longer, fair value	487,441	391,551
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(117,621)	(83,449)
Debt Securities in an unrealized loss position, fair value	494,832	546,224
Debt Securities in an unrealized loss position, unrealized losses	$ (117,641)	$ (102,694)
US Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	13
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 6,922
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(2)
Debt Securities in an unrealized loss position 12 months or longer, fair value	0
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	0
Debt Securities in an unrealized loss position, fair value	6,922
Debt Securities in an unrealized loss position, unrealized losses	$ (2)
US Government Agencies Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	46	46
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 0	$ 3,647
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	0	(353)
Debt Securities in an unrealized loss position 12 months or longer, fair value	86,226	83,062
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(15,722)	(14,880)
Debt Securities in an unrealized loss position, fair value	86,226	86,709
Debt Securities in an unrealized loss position, unrealized losses	$ (15,722)	$ (15,233)
US States and Political Subdivisions Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	192	216
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 369	$ 50,156
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(11)	(7,816)
Debt Securities in an unrealized loss position 12 months or longer, fair value	80,254	45,210
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(28,460)	(15,678)
Debt Securities in an unrealized loss position, fair value	80,623	95,366
Debt Securities in an unrealized loss position, unrealized losses	$ (28,471)	$ (23,494)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	191	197
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 2	$ 58,811
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	0	(6,775)
Debt Securities in an unrealized loss position 12 months or longer, fair value	225,807	197,351
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(52,645)	(38,528)
Debt Securities in an unrealized loss position, fair value	225,809	256,162
Debt Securities in an unrealized loss position, unrealized losses	$ (52,645)	$ (45,303)
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	127	129
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 0	$ 35,797
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	0	(3,983)
Debt Securities in an unrealized loss position 12 months or longer, fair value	89,185	65,875
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(20,154)	(14,355)
Debt Securities in an unrealized loss position, fair value	89,185	101,672
Debt Securities in an unrealized loss position, unrealized losses	$ (20,154)	$ (18,338)
Corporate Debt Securities and Money Market Funds [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	4
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 98
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(7)
Debt Securities in an unrealized loss position 12 months or longer, fair value	5,969
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(640)
Debt Securities in an unrealized loss position, fair value	6,067
Debt Securities in an unrealized loss position, unrealized losses	$ (647)
Corporate Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security		4
Debt Securities in an unrealized loss position less than 12 months, fair value		$ 6,262
Debt Securities in an unrealized loss position less than 12 months, unrealized losses		(318)
Debt Securities in an unrealized loss position 12 months or longer, fair value		53
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses		(8)
Debt Securities in an unrealized loss position, fair value		6,315
Debt Securities in an unrealized loss position, unrealized losses		$ (326)

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Note 6 - Summary of Unrealized and Realized Gains and Losses Recognized in Net Income on Equity Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Equity Securities [Abstract]
Net (loss) gains recognized during the period on equity securities	$ (7)	$ (1,174)	$ (212)	$ (2,139)
Less: Net (losses) gains recognized during the period on equity securities sold during the period	131		442	489
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$ (138)	$ (1,174)	$ (654)	$ (2,628)

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Note 7 - Restricted Investment in Stocks (Details Textual)	9 Months Ended
	Sep. 30, 2023 USD ($) shares	Sep. 28, 2023	Dec. 31, 2022 USD ($)
Schedule of Investments [Line Items]
Restricted investment in stocks	$ 2,730,000		$ 5,193,000
Other than temporary impairment charge of restricted investment	0
Investment in Federal Home Loan Bank Stock [Member]
Schedule of Investments [Line Items]
Restricted investment in stocks	1,718,000
Investment in Atlantic Community Bankers Bank Stock [Member]
Schedule of Investments [Line Items]
Restricted investment in stocks	12,000
Investment In SHCPFIC Preferred Stock [Member]
Schedule of Investments [Line Items]
Restricted investment in stocks	$ 1,000,000
Number of shares owned | shares	100
VISA Class B Stock [Member]
Schedule of Investments [Line Items]
Restricted investment in stocks	$ 0
Number of shares owned | shares	6,502
VISA Class A Stock [Member]
Schedule of Investments [Line Items]
Conversion factor per share		1.5875

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Note 8 - Loans & Allowance for Credit Losses on Loans (Details Textual)	3 Months Ended		9 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) Loan Contract	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Accounts Notes And Loans Receivable [Line Items]
Total troubled debt restructuring	$ 4,248,000		$ 4,248,000		$ 4,672,000
Over drafts reclassified as loans receivables					132,000
Loans and leases receivable, impaired, commitment to lend	14,000		14,000		5,000
Financing receivables, impaired, troubled debt restructuring, write-down	0	$ 0	$ 0	$ 0
Financing receivable, modifications, subsequent default, number of contracts | Contract			0
Interest income on non-accrual loans			$ 557,000
Performing Financial Instruments [Member]
Accounts Notes And Loans Receivable [Line Items]
Total troubled debt restructuring	3,979,000		3,979,000		4,301,000
Nonperforming Financial Instruments [Member]
Accounts Notes And Loans Receivable [Line Items]
Total troubled debt restructuring	$ 269,000		$ 269,000		$ 371,000
Residential Portfolio Segment [Member]
Accounts Notes And Loans Receivable [Line Items]
Mortgage loan on real estate number of loan in foreclosure | Loan			0
Residential Portfolio Segment [Member] | Maximum [Member]
Accounts Notes And Loans Receivable [Line Items]
Loan to value ratio			80.00%

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Note 8 - Major Classes of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accounts Notes And Loans Receivable [Line Items]
Loans	$ 1,060,693	$ 1,039,637
Net unearned (fees) costs	(243)	(252)
Allowance for credit losses on loans	(8,542)	(10,531)
Loans receivable, net	1,051,908	1,028,854
Commercial Portfolio Segment [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	890,047
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	129,425	160,875
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	99,958
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-Family Properties [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	106,644
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	163,163
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	261,539
Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	6,960
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	99,047
Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	3,457
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	19,854	20,971
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		62,955
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		518,070
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		103,419
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		4,113
Retail Portfolio Segment [Member] | Construction-Individual [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	328
Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	33,151
Retail Portfolio Segment [Member] | Real Estate Secured By First Lein on 1-4 Family Properties-Personal [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	11,651
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Personal [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	13,522
Retail Portfolio Segment [Member] | Student Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	1,746
Retail Portfolio Segment [Member] | Overdrafts [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	171
Retail Portfolio Segment [Member] | Other Consumer [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	1,773
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	$ 108,304	105,654
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		$ 63,580

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Note 8 - Internal Risk Ratings and Payment Activity (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment [Line Items]
Total	$ 1,060,693	$ 1,039,637
Excluding Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		866,290
Pass [Member] | Excluding Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		849,792
Special Mention [Member] | Excluding Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		2,814
Substandard [Member] | Excluding Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		13,684
Doubtful [Member] | Excluding Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
Commercial Portfolio Segment [Member]
Financing Receivable Recorded Investment [Line Items]
2023	93,819
2022	191,062
2021	144,808
2020	70,022
2019	73,224
Prior	237,359
Revolving	79,753
Total	890,047
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	11,675
2022	15,261
2021	9,197
2020	6,624
2019	6,179
Prior	7,696
Revolving	72,793
Total	129,425	160,875
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment [Line Items]
2023	32,038
2022	42,023
2021	14,091
2020	3,275
2019	4,078
Prior	4,453
Revolving	0
Total	99,958
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	7,358
2022	29,036
2021	23,565
2020	9,909
2019	6,557
Prior	30,219
Revolving	0
Total	106,644
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	12,648
2022	29,879
2021	28,325
2020	19,262
2019	12,158
Prior	60,891
Revolving	0
Total	163,163
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	21,258
2022	44,999
2021	43,063
2020	19,829
2019	29,232
Prior	103,158
Revolving	0
Total	261,539
Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	6,960
Total	6,960
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	7,685
2022	29,253
2021	21,451
2020	10,510
2019	9,048
Prior	21,100
Revolving	0
Total	99,047
Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	479
2022	611
2021	551
2020	592
2019	41
Prior	1,183
Revolving	0
Total	3,457
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment [Line Items]
2023	678
2022	0
2021	4,565
2020	21
2019	5,931
Prior	8,659
Revolving	0
Total	19,854	20,971
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		62,955
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		518,070
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		103,419
Commercial Portfolio Segment [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
2023	93,819
2022	190,905
2021	144,670
2020	70,022
2019	72,238
Prior	227,825
Revolving	78,516
Total	877,995
Commercial Portfolio Segment [Member] | Pass [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	11,675
2022	15,261
2021	9,197
2020	6,624
2019	6,179
Prior	7,696
Revolving	71,556
Total	128,188	157,914
Commercial Portfolio Segment [Member] | Pass [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment [Line Items]
2023	32,038
2022	42,023
2021	14,091
2020	3,275
2019	4,078
Prior	4,408
Revolving	0
Total	99,913
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	7,358
2022	29,036
2021	23,565
2020	9,909
2019	5,848
Prior	28,049
Revolving	0
Total	103,765
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	12,648
2022	29,879
2021	28,325
2020	19,262
2019	12,158
Prior	55,004
Revolving	0
Total	157,276
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	21,258
2022	44,999
2021	43,063
2020	19,829
2019	29,232
Prior	102,282
Revolving	0
Total	260,663
Commercial Portfolio Segment [Member] | Pass [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	6,960
Total	6,960
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	7,685
2022	29,096
2021	21,313
2020	10,510
2019	8,771
Prior	20,763
Revolving	0
Total	98,138
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	479
2022	611
2021	551
2020	592
2019	41
Prior	964
Revolving	0
Total	3,238
Commercial Portfolio Segment [Member] | Pass [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment [Line Items]
2023	678
2022	0
2021	4,565
2020	21
2019	5,931
Prior	8,659
Revolving	0
Total	19,854
Commercial Portfolio Segment [Member] | Pass [Member] | Construction Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		62,955
Commercial Portfolio Segment [Member] | Pass [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		505,657
Commercial Portfolio Segment [Member] | Pass [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		102,295
Commercial Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	138
2020	0
2019	0
Prior	0
Revolving	0
Total	138
Commercial Portfolio Segment [Member] | Special Mention [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0	23
Commercial Portfolio Segment [Member] | Special Mention [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Special Mention [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Special Mention [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Special Mention [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Special Mention [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Special Mention [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	138
2020	0
2019	0
Prior	0
Revolving	0
Total	138
Commercial Portfolio Segment [Member] | Special Mention [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Special Mention [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Special Mention [Member] | Construction Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
Commercial Portfolio Segment [Member] | Special Mention [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		2,597
Commercial Portfolio Segment [Member] | Special Mention [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		194
Commercial Portfolio Segment [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	157
2021	0
2020	0
2019	986
Prior	9,534
Revolving	1,237
Total	11,914
Commercial Portfolio Segment [Member] | Substandard [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	1,237
Total	1,237	2,938
Commercial Portfolio Segment [Member] | Substandard [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	45
Revolving	0
Total	45
Commercial Portfolio Segment [Member] | Substandard [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	709
Prior	2,170
Revolving	0
Total	2,879
Commercial Portfolio Segment [Member] | Substandard [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2020	0
2019	0
Prior	5,887
Revolving	0
Total	5,887
Commercial Portfolio Segment [Member] | Substandard [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	876
Revolving	0
Total	876
Commercial Portfolio Segment [Member] | Substandard [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Substandard [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	157
2021	0
2020	0
2019	277
Prior	337
Revolving	0
Total	771
Commercial Portfolio Segment [Member] | Substandard [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	219
Revolving	0
Total	219
Commercial Portfolio Segment [Member] | Substandard [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Substandard [Member] | Construction Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
Commercial Portfolio Segment [Member] | Substandard [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		9,816
Commercial Portfolio Segment [Member] | Substandard [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		930
Commercial Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Real Estate Secured By 1st Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Doubtful [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	$ 0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Construction Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
Commercial Portfolio Segment [Member] | Doubtful [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
State and Political Subdivisions Portfolio Segment [Member]
Financing Receivable Recorded Investment [Line Items]
Total		20,971
State and Political Subdivisions Portfolio Segment [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Total		20,971
State and Political Subdivisions Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
State and Political Subdivisions Portfolio Segment [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Total		0
State and Political Subdivisions Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Total		$ 0

XML

Note 8 - Retail Loans by Credit Quality (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment [Line Items]
Total	$ 1,060,693	$ 1,039,637
Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		173,347
Performing Financial Instruments [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		172,422
Nonperforming Financial Instruments [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		925
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		4,113
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
2023	10,775
2022	14,739
2021	30,773
2020	20,757
2019	4,567
Prior	26,693
Revolving	0
Total	108,304	105,654
Retail Portfolio Segment [Member] | Construction - Individual [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	328
2020	0
2019	0
Prior	0
Revolving	0
Total	328
Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	33,151
Total	33,151
Retail Portfolio Segment [Member] | Real Estate Secured By First Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	2,277
2022	1,657
2021	3,053
2020	1,095
2019	960
Prior	2,609
Revolving	0
Total	11,651
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	4,029
2022	1,709
2021	2,357
2020	1,232
2019	721
Prior	3,474
Revolving	0
Total	13,522
Retail Portfolio Segment [Member] | Student Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	1,746
Revolving	0
Total	1,746
Retail Portfolio Segment [Member] | Overdrafts [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	171
Total	171
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
2023	636
2022	329
2021	300
2020	107
2019	96
Prior	90
Revolving	215
Total	1,773
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Total		63,580
Retail Portfolio Segment [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	17,717
2022	18,434
2021	36,811
2020	23,191
2019	6,344
Prior	34,612
Revolving	33,537
Total	170,646
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		4,051
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
2023	10,775
2022	14,739
2021	30,773
2020	20,757
2019	4,567
Prior	25,891
Revolving	0
Total	107,502	105,193
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Construction - Individual [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	328
2020	0
2019	0
Prior	0
Revolving	0
Total	328
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	32,979
Total	32,979
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Real Estate Secured By First Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	2,277
2022	1,657
2021	3,053
2020	1,095
2019	960
Prior	2,488
Revolving	0
Total	11,530
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	4,029
2022	1,690
2021	2,357
2020	1,232
2019	721
Prior	3,474
Revolving	0
Total	13,503
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Student Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	1,729
Revolving	0
Total	1,729
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Overdrafts [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	171
Total	171
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
2023	636
2022	329
2021	300
2020	107
2019	96
Prior	52
Revolving	215
Total	1,735
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Total		63,178
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	17,717
2022	18,415
2021	36,811
2020	23,191
2019	6,344
Prior	33,634
Revolving	33,365
Total	169,477
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		62
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	802
Revolving	0
Total	802	461
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Construction - Individual [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	172
Total	172
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Real Estate Secured By First Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	121
Revolving	0
Total	121
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Real Estate Secured By Junior Lien on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	19
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	19
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Student Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	17
Revolving	0
Total	17
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Overdrafts [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	0
Revolving	0
Total	0
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	38
Revolving	0
Total	38
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Total		$ 402
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	19
2021	0
2020	0
2019	0
Prior	978
Revolving	172
Total	$ 1,169

XML

Note 8 - Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	$ 1,060,693	$ 1,039,637
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	4,311	835
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	5,543	1,375
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	405	229
Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	10,259	2,439
Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,050,434	1,037,198
Commercial Portfolio Segment [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	890,047
Commercial Portfolio Segment [Member] | Commercial and industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	129,425	160,875
Commercial Portfolio Segment [Member] | Commercial and industrial | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	83	0
Commercial Portfolio Segment [Member] | Commercial and industrial | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0	1,157
Commercial Portfolio Segment [Member] | Commercial and industrial | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0	0
Commercial Portfolio Segment [Member] | Commercial and industrial | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	83	1,157
Commercial Portfolio Segment [Member] | Commercial and industrial | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	129,342	159,718
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	99,958
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	99,958
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	106,644
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	106,644
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	163,163
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	226
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	226
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	162,937
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	261,539
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	3,725
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	5,035
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	8,760
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	252,779
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	6,960
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	6,960
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	99,047
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	231
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	232
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	98,815
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	3,457
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	7
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	7
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	3,450
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	19,854	20,971
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	19,854
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		62,955
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		62,955
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		518,070
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		518,070
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		103,419
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		13
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		13
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		103,406
State and Political Subdivisions Portfolio Segment [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		20,971
State and Political Subdivisions Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
State and Political Subdivisions Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
State and Political Subdivisions Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
State and Political Subdivisions Portfolio Segment [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
State and Political Subdivisions Portfolio Segment [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		20,971
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		4,113
Retail Portfolio Segment [Member] | Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		37
Retail Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		50
Retail Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Retail Portfolio Segment [Member] | Financing Receivables, Past Due [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		87
Retail Portfolio Segment [Member] | Current Loans [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		4,026
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	108,304
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	362
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	385
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	747
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	107,557
Retail Portfolio Segment [Member] | Construction-individual [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	328
Retail Portfolio Segment [Member] | Construction-individual [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Construction-individual [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Construction-individual [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Construction-individual [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Construction-individual [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	328
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	33,151
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	129
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	129
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	33,022
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	11,651
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	11,651
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	13,522
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	18
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	19
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	37
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	13,485
Retail Portfolio Segment [Member] | Student Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,746
Retail Portfolio Segment [Member] | Student Loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Student Loans [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	14
Retail Portfolio Segment [Member] | Student Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Student Loans [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	14
Retail Portfolio Segment [Member] | Student Loans [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,732
Retail Portfolio Segment [Member] | Overdrafts [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	171
Retail Portfolio Segment [Member] | Overdrafts [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	16
Retail Portfolio Segment [Member] | Overdrafts [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	3
Retail Portfolio Segment [Member] | Overdrafts [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Overdrafts [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	19
Retail Portfolio Segment [Member] | Overdrafts [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	152
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,773
Retail Portfolio Segment [Member] | Other Consumer [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	5
Retail Portfolio Segment [Member] | Other Consumer [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Other Consumer [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	0
Retail Portfolio Segment [Member] | Other Consumer [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	5
Retail Portfolio Segment [Member] | Other Consumer [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,768
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	$ 108,304	105,654
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		703
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		168
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		216
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		1,087
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		104,567
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		63,580
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		95
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		0
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		95
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		$ 63,485

XML

Note 8 - Non-accrual Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		$ 0
Loans receivable		4,820
Commercial Portfolio Segment [Member] | Commercial and industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	$ 0	0
Loans receivable	339	1,575
Commercial Portfolio Segment [Member] | Commercial and industrial | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Commercial and industrial | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	339
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	0
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	188
Commercial Portfolio Segment [Member] | Real Estate Secured by Owner-Occupied Properties [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	188
Commercial Portfolio Segment [Member] | Real Estate Secured by Owner-Occupied Properties [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	1
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	1
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	196
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	196
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	0
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		0
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		2,031
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		289
State and Political Subdivisions Portfolio Segment [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		0
Retail Portfolio Segment [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	1,893
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		62
Retail Portfolio Segment [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	1,209
Retail Portfolio Segment [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	684
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	802
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	802
Retail Portfolio Segment [Member] | Construction-individual [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	0
Retail Portfolio Segment [Member] | Construction-individual [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Retail Portfolio Segment [Member] | Construction-individual [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	172
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	23
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	149
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	121
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	121
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	19
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	19
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Retail Portfolio Segment [Member] | Student Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	17
Retail Portfolio Segment [Member] | Student Loans [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	17
Retail Portfolio Segment [Member] | Student Loans [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	38
Retail Portfolio Segment [Member] | Other Consumer [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	38
Retail Portfolio Segment [Member] | Other Consumer [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	$ 0
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		461
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		$ 402

XML

Note 8 - Collateral-dependent Loans (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Commercial Portfolio Segment [Member] | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Real Estate Secured	$ 0
Other	294
Deficiency in Collateral	45
Total Collateral Dependent Nonaccrual Loans	339
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	0
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	0
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties
Financing Receivable, Past Due [Line Items]
Real Estate Secured	188
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	188
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	0
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	0
Commercial Portfolio Segment [Member] | Real estate secured by 1st lein on 1-4 family properties-business
Financing Receivable, Past Due [Line Items]
Real Estate Secured	1
Total Collateral Dependent Nonaccrual Loans	1
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	196
Total Collateral Dependent Nonaccrual Loans	196
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	0
Retail Portfolio Segment [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	1,197
Other	332
Deficiency in Collateral	347
Total Collateral Dependent Nonaccrual Loans	1,876
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	802
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	802
Retail Portfolio Segment [Member] | Construction-individual [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	0
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal
Financing Receivable, Past Due [Line Items]
Real Estate Secured	66
Other	0
Deficiency in Collateral	106
Total Collateral Dependent Nonaccrual Loans	172
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal
Financing Receivable, Past Due [Line Items]
Real Estate Secured	121
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	121
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal
Financing Receivable, Past Due [Line Items]
Real Estate Secured	19
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	19
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable, Past Due [Line Items]
Real Estate Secured	0
Other	38
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	$ 38

XML

Note 8 - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		$ 11,297	$ 10,531	$ 11,184
Provision for (credit to) loan losses	$ 452	0	(1,119)	0
Charge-offs	(300)	(92)	(438)	(147)
Recoveries	25	133	657	301
Allowance for loan losses, end of period	8,542	11,338	8,542	11,338
Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	8,365		10,531
Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(1,089)
Commercial Portfolio Segment [Member] | Commercial And Industrial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		2,710	1,316	3,368
Provision for (credit to) loan losses	256	(503)	(759)	(1,295)
Charge-offs	(273)	(30)	(313)	(38)
Recoveries	11	83	615	225
Allowance for loan losses, end of period	789	2,260	789	2,260
Commercial Portfolio Segment [Member] | Commercial And Industrial [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	795		1,316
Commercial Portfolio Segment [Member] | Commercial And Industrial [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(70)
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	234		343
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	1,088		1,088
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	854		755
Commercial Portfolio Segment [Member] | Construction and Land Development [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(10)
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	85		30
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	1,709		1,709
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-Family Properties [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	1,624		995
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-Family Properties [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			684
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	20		(170)
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	1,005		1,005
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	985		1,549
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(374)
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	(102)		(204)
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	1,126		1,126
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	1,228		2,458
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(1,128)
Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By Family Properties-business [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	(1)		4
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	36		36
Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By Family Properties-business [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	37		25
Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By Family Properties-business [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			7
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lein On Family Properties-Business [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	(2)		(430)
Charge-offs	0		0
Recoveries	3		8
Allowance for loan losses, end of period	1,278		1,278
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lein On Family Properties-Business [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	1,277		1,210
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lein On Family Properties-Business [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			490
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	(24)		194
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	210		210
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	234		30
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(14)
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		687	755	363
Provision for (credit to) loan losses		(297)		27
Charge-offs		0		0
Recoveries		0		0
Allowance for loan losses, end of period		390		390
Commercial Portfolio Segment [Member] | Secured By Commercial Real Estate [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		4,336	5,002	4,280
Provision for (credit to) loan losses		834		890
Charge-offs		0		0
Recoveries		0		0
Allowance for loan losses, end of period		5,170		5,170
Commercial Portfolio Segment [Member] | Secured By Residential Real Estate [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		1,181	1,240	1,035
Provision for (credit to) loan losses		50		190
Charge-offs		0		0
Recoveries		36		42
Allowance for loan losses, end of period		1,267		1,267
State and Political Subdivisions Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		77	94	69
Provision for (credit to) loan losses	5	12	(18)	(20)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Allowance for loan losses, end of period	56	89	56	89
State and Political Subdivisions Portfolio Segment [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	51		94
State and Political Subdivisions Portfolio Segment [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(20)
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		482	502	542
Provision for (credit to) loan losses		(69)		38
Charge-offs		(62)		(109)
Recoveries		12		30
Allowance for loan losses, end of period		501		501
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		680	683	646
Provision for (credit to) loan losses	(17)	7	(70)	41
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Allowance for loan losses, end of period	416	687	416	687
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	433		682
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(196)
Retail Portfolio Segment [Member] | Construction - Individual [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	0		(1)
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	0		0
Retail Portfolio Segment [Member] | Construction - Individual [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	0		1
Retail Portfolio Segment [Member] | Construction - Individual [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			0
Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	(103)		(161)
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	131		131
Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	234		299
Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(7)
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	3		(2)
Charge-offs	0		0
Recoveries	0		0
Allowance for loan losses, end of period	70		70
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	67		57
Retail Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Personal [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			15
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein On 1-4 Family Properties-Personal [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	109		107
Charge-offs	0		0
Recoveries	2		6
Allowance for loan losses, end of period	197		197
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein On 1-4 Family Properties-Personal [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	86		55
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein On 1-4 Family Properties-Personal [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			29
Retail Portfolio Segment [Member] | Student Loans [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	(36)		(45)
Charge-offs	0		(43)
Recoveries	2		6
Allowance for loan losses, end of period	384		384
Retail Portfolio Segment [Member] | Student Loans [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	418		454
Retail Portfolio Segment [Member] | Student Loans [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			12
Retail Portfolio Segment [Member] | Overdrafts [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	15		54
Charge-offs	(21)		(73)
Recoveries	7		22
Allowance for loan losses, end of period	14		14
Retail Portfolio Segment [Member] | Overdrafts [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	13		8
Retail Portfolio Segment [Member] | Overdrafts [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			3
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	10		9
Charge-offs	(6)		(9)
Recoveries	0		0
Allowance for loan losses, end of period	33		33
Retail Portfolio Segment [Member] | Other Consumer [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	29		41
Retail Portfolio Segment [Member] | Other Consumer [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			(8)
Retail Portfolio Segment [Member] | Home Equity Loans And Lines [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		412	437	376
Provision for (credit to) loan losses		51		85
Charge-offs		0		0
Recoveries		2		4
Allowance for loan losses, end of period		465		465
Unallocated Financing Receivables [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period		732	502	505
Provision for (credit to) loan losses		(223)	0	4
Charge-offs		0	0	0
Recoveries		0	0	0
Allowance for loan losses, end of period	$ 0	$ 509	0	$ 509
Unallocated Financing Receivables [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			502
Unallocated Financing Receivables [Member] | Impact of adopting ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period			$ (502)

XML

Note 8 - Specific Reserve for Loans Modified as TDR's (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Receivables [Abstract]
Legacy TDRs with no specific allowance recorded - unpaid principal balance	$ 4,052	$ 1,272
Legacy TDRs with an allowance recorded - unpaid principal balance	196	3,400
Unpaid principal balance	4,248	4,672
Legacy TDRs with an allowance recorded - related allowance	$ 245	$ 392

XML

Note 8 - Loans Disaggregated by Impairment Method (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses	$ 8,542	$ 10,531	$ 11,338	$ 11,297	$ 11,184
Allowance for loan losses - individually evaluated for impairment		696
Allowance for loan losses - collectively evaluated for impairment		9,333
Loans and leases receivable		1,039,637
Loans - individually evaluated for impairment		9,567
Loans - collectively evaluated for impairment		1,030,070
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses	789	1,316	2,260	2,710	3,368
Allowance for loan losses - individually evaluated for impairment		125
Allowance for loan losses - collectively evaluated for impairment		1,191
Loans and leases receivable		160,875
Loans - individually evaluated for impairment		1,821
Loans - collectively evaluated for impairment		159,054
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses		755	390	687	363
Allowance for loan losses - individually evaluated for impairment		0
Allowance for loan losses - collectively evaluated for impairment		755
Loans and leases receivable		62,955
Loans - individually evaluated for impairment		0
Loans - collectively evaluated for impairment		62,955
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses		5,002	5,170	4,336	4,280
Allowance for loan losses - individually evaluated for impairment		131
Allowance for loan losses - collectively evaluated for impairment		4,871
Loans and leases receivable		518,070
Loans - individually evaluated for impairment		5,309
Loans - collectively evaluated for impairment		512,761
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses		1,240	1,267	1,181	1,035
Allowance for loan losses - individually evaluated for impairment		321
Allowance for loan losses - collectively evaluated for impairment		919
Loans and leases receivable		103,419
Loans - individually evaluated for impairment		1,362
Loans - collectively evaluated for impairment		102,057
State and Political Subdivisions Portfolio Segment [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses	56	94	89	77	69
Allowance for loan losses - individually evaluated for impairment		0
Allowance for loan losses - collectively evaluated for impairment		94
Loans and leases receivable		20,971
Loans - individually evaluated for impairment		0
Loans - collectively evaluated for impairment		20,971
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses		502	501	482	542
Allowance for loan losses - individually evaluated for impairment		0
Allowance for loan losses - collectively evaluated for impairment		502
Loans and leases receivable		4,113
Loans - individually evaluated for impairment		45
Loans - collectively evaluated for impairment		4,068
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses	416	683	687	680	646
Allowance for loan losses - individually evaluated for impairment		0
Allowance for loan losses - collectively evaluated for impairment		683
Loans and leases receivable		105,654
Loans - individually evaluated for impairment		628
Loans - collectively evaluated for impairment		105,026
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses		437	465	412	376
Allowance for loan losses - individually evaluated for impairment		119
Allowance for loan losses - collectively evaluated for impairment		318
Loans and leases receivable		63,580
Loans - individually evaluated for impairment		402
Loans - collectively evaluated for impairment		63,178
Unallocated Financing Receivables [Member]
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses	$ 0	$ 502	$ 509	$ 732	$ 505

XML

Note 8 - Impaired Loans (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	$ 4,943
Unpaid principal balance - with no specific allowance	5,820
Recorded investment - with an allowance	4,624
Unpaid principal balance - with an allowance	5,169
Related allowance	696
Unpaid principal balance	10,989
Recorded investment	9,567
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	1,402
Unpaid principal balance - with no specific allowance	1,694
Recorded investment - with an allowance	419
Unpaid principal balance - with an allowance	601
Related allowance	125
Unpaid principal balance	2,295
Recorded investment	1,821
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	0
Unpaid principal balance - with no specific allowance	0
Recorded investment - with an allowance	0
Unpaid principal balance - with an allowance	0
Related allowance	0
Unpaid principal balance	0
Recorded investment	0
Commercial Portfolio Segment [Member] | Secured by Commercial Real Estate [Member]
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	2,198
Unpaid principal balance - with no specific allowance	2,608
Recorded investment - with an allowance	3,111
Unpaid principal balance - with an allowance	3,312
Related allowance	131
Unpaid principal balance	5,920
Recorded investment	5,309
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	430
Unpaid principal balance - with no specific allowance	482
Recorded investment - with an allowance	932
Unpaid principal balance - with an allowance	1,065
Related allowance	321
Unpaid principal balance	1,547
Recorded investment	1,362
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	45
Unpaid principal balance - with no specific allowance	62
Recorded investment - with an allowance	0
Unpaid principal balance - with an allowance	0
Related allowance	0
Unpaid principal balance	62
Recorded investment	45
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	628
Unpaid principal balance - with no specific allowance	678
Recorded investment - with an allowance	0
Unpaid principal balance - with an allowance	0
Related allowance	0
Unpaid principal balance	678
Recorded investment	628
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Impaired [Line Items]
Recorded investment - with no specific allowance	240
Unpaid principal balance - with no specific allowance	296
Recorded investment - with an allowance	162
Unpaid principal balance - with an allowance	191
Related allowance	119
Unpaid principal balance	487
Recorded investment	$ 402

XML

Note 9 - Financial Assets Measured at Fair Value on a Recurring and Nonrecurring Basis (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	$ 505,390,000	$ 546,525,000
Equity securities	4,765,000	12,056,000
US Treasury Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	6,922,000	301,000
US Government Agencies Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	86,226,000	86,709,000
US States and Political Subdivisions Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	83,630,000	95,367,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	233,361,000	256,161,000
Collateralized Mortgage Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	89,185,000	101,672,000
Corporate Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale		6,315,000
Corporate Debt Securities and Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	6,066,000
Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity securities	4,765,000	12,056,000
Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	505,338,000	546,472,000
Fair Value, Inputs, Level 2 [Member] | US Treasury Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	6,922,000	301,000
Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	86,226,000	86,709,000
Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	83,630,000	95,367,000
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	233,361,000	256,161,000
Fair Value, Inputs, Level 2 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	89,185,000	101,672,000
Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale		6,262,000
Fair Value, Inputs, Level 2 [Member] | Corporate Debt Securities and Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	6,014,000
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	52,000	53,000
Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale		53,000
Fair Value, Inputs, Level 3 [Member] | Corporate Debt Securities and Money Market Funds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	52,000
Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	510,155,000	558,581,000
Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	4,765,000	12,056,000
Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	505,338,000	546,472,000
Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	52,000	53,000
Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	790,000	3,929,000
Nonrecurring [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements		3,928,000
Nonrecurring [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	337,000
Nonrecurring [Member] | Mortgage loans held-for-sale [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	446,000
Nonrecurring [Member] | Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	7,000	1,000
Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	790,000	3,929,000
Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements		3,928,000
Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	337,000
Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mortgage loans held-for-sale [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	446,000
Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	$ 7,000	$ 1,000

XML

Note 9 - Fair Value Measurements and Disclosures (Details Textual)	3 Months Ended	9 Months Ended
	Sep. 30, 2023 USD ($) Issuer Security	Sep. 30, 2023 USD ($) Issuer Security	Sep. 30, 2022 USD ($)
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Number of underlying issuers | Issuer	3	3
Expected credit losses or prepayments		$ 0
Swap rate period		30 years
Measurement Input, Discount Rate [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Discount rate	8.34	8.34
Fair Value, Inputs, Level 3 [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value, measurement with unobservable inputs reconciliation, recurring basis, asset, gain (loss) included in earnings		$ 0	$ 0
Fair Value, Inputs, Level 3 [Member] | Collateralized Debt Obligations [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Number of trust preferred securities | Security	1	1
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Fair value, measurement with unobservable inputs reconciliation, recurring basis, asset, gain (loss) included in earnings	$ 0	$ 0

XML

Note 9 - Quantitative Information about Assets Measured at Fair Value (Details) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Loans held-for-sale		$ 446
Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		790	$ 3,929
Nonrecurring [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements			3,928
Nonrecurring [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		337
Nonrecurring [Member] | Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		7	1
Fair Value, Inputs, Level 3 [Member] | Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		790	3,929
Fair Value, Inputs, Level 3 [Member] | Nonrecurring [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements			3,928
Fair Value, Inputs, Level 3 [Member] | Nonrecurring [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		337
Fair Value, Inputs, Level 3 [Member] | Nonrecurring [Member] | Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		$ 7	$ 1
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value liquidation inputs	[1],[2]		(10.00%)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value liquidation inputs	[1],[2]	(10.00%)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Measurement Input, Comparability Adjustment [Member] | Minimum [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[2],[3]		(0.15)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Measurement Input, Comparability Adjustment [Member] | Minimum [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[2],[3]	(0.20)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Measurement Input, Comparability Adjustment [Member] | Maximum [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[2],[3]		(1)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Measurement Input, Comparability Adjustment [Member] | Maximum [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[2],[3]	(1)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Nonrecurring [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements	[2]		$ 3,634
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Nonrecurring [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements	[2]	$ 43
Fair Value, Inputs, Level 3 [Member] | Market Approach Valuation Technique [Member] | Minimum [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[4]		(30.00%)
Fair Value, Inputs, Level 3 [Member] | Market Approach Valuation Technique [Member] | Minimum [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[4]	(30.00%)
Fair Value, Inputs, Level 3 [Member] | Market Approach Valuation Technique [Member] | Maximum [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[4]		(100.00%)
Fair Value, Inputs, Level 3 [Member] | Market Approach Valuation Technique [Member] | Maximum [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs	[4]	(100.00%)
Fair Value, Inputs, Level 3 [Member] | Market Approach Valuation Technique [Member] | Nonrecurring [Member] | Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements	[4]		$ 294
Fair Value, Inputs, Level 3 [Member] | Market Approach Valuation Technique [Member] | Nonrecurring [Member] | Loans Individually Evaluated for Impairment [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements	[4]	$ 294
Fair Value, Inputs, Level 3 [Member] | Discounted Cash Flow Valuation Technique [Member] | Measurement Input, Expected Term [Member] | Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value expected term		2 years	2 years
Fair Value, Inputs, Level 3 [Member] | Discounted Cash Flow Valuation Technique [Member] | Measurement Input, Expected Term [Member] | Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value expected term		27 years	28 years
Fair Value, Inputs, Level 3 [Member] | Discounted Cash Flow Valuation Technique [Member] | Measurement Input, Discount Rate [Member] | Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs		12.00%	12.00%
Fair Value, Inputs, Level 3 [Member] | Discounted Cash Flow Valuation Technique [Member] | Measurement Input, Discount Rate [Member] | Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs		12.50%	12.50%
Fair Value, Inputs, Level 3 [Member] | Discounted Cash Flow Valuation Technique [Member] | Measurement Input, Prepayment Speeds [Member] | Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs		96.00%	113.00%
Fair Value, Inputs, Level 3 [Member] | Discounted Cash Flow Valuation Technique [Member] | Measurement Input, Prepayment Speeds [Member] | Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Nonrecurring fair value range of value inputs		206.00%	235.00%
Fair Value, Inputs, Level 3 [Member] | Discounted Cash Flow Valuation Technique [Member] | Nonrecurring [Member] | Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		$ 7	$ 1

[1] Appraisals and pending agreements of sale are adjusted by management for estimated liquidation expenses. The range is presented as a percent of the initial appraised value.

[2] Fair value is primarily determined through appraisals of the underlying collateral by independent parties, which generally includes various Level 3 inputs which are not always identifiable.

[3] Appraisals may be adjusted by management for qualitative factors such as economic conditions and the age of the appraisal. The range is presented as a percent of the initial appraised value.

[4] Values obtained from financial statements for UCC collateral (fixed assets and inventory) are discounted to estimated realizable liquidation value.

XML

Note 9 - Available-for-sale Securities Measured at Fair Value Using Significant Unobservable Inputs (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance, beginning of year	$ 53	$ 75
Payments received	(1)	(21)
Included in earnings	0	0
Included in other comprehensive (loss) income	0	1
Transfers in and/or out of Level 3	0	0
Balance, end of year	$ 52	$ 55

XML

Note 9 - Financial and Off-balance Sheet Instruments (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 55,141,000	$ 15,899,000
Available-for-sale	505,390,000	546,525,000
Equity securities	4,765,000	12,056,000
Restricted investment in stocks	2,730,000	5,193,000
Loans held for sale	446,000
Net loans	1,051,908,000	1,028,854,000
Mortgage servicing rights	430,000	469,000
Accrued interest receivable	5,590,000	5,038,000
Deposits	1,483,333,000	1,418,369,000
Short-term borrowings	96,703,000	161,327,000
Long-term debt	20,000,000	10,000,000
Accrued interest payable	3,278,000	467,000
Cash and cash equivalents	55,141,000	15,899,000
Restricted investment in stocks	2,730,000	5,193,000
Loans held for sale	446,000
Net loans	1,023,811,000	1,001,103,000
Mortgage servicing rights	608,000	638,000
Accrued interest receivable	5,590,000	5,038,000
Short-term borrowings	96,703,000	161,327,000
Long-term debt	19,718,000	10,000,000
Accrued interest payable	3,278,000	467,000
Fair Value, Inputs, Level 1 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Equity securities	4,765,000	12,056,000
Cash and cash equivalents	55,141,000	15,899,000
Short-term borrowings	96,703,000	161,327,000
Long-term debt	19,718,000	10,000,000
Fair Value, Inputs, Level 2 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Available-for-sale	505,338,000	546,472,000
Restricted investment in stocks	2,730,000	5,193,000
Loans held for sale	446,000
Accrued interest receivable	5,590,000	5,038,000
Accrued interest payable	3,278,000	467,000
Fair Value, Inputs, Level 3 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Available-for-sale	52,000	53,000
Net loans	1,023,811,000	1,001,103,000
Mortgage servicing rights	608,000	638,000
Standby Letters of Credit [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Commitments to extend credit	60,000	69,000
Standby Letters of Credit [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Commitments to extend credit	60,000	69,000
With No Stated Maturities [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Deposits	1,193,147,000	1,242,920,000
Deposits	1,193,147,000	1,242,920,000
With No Stated Maturities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Deposits	1,193,147,000	1,242,920,000
With Stated Maturities [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Deposits	290,186,000	175,449,000
Deposits	284,757,000	168,554,000
With Stated Maturities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Deposits	$ 284,757,000	$ 168,554,000

XML

Note 10 - Financial Instrument Commitments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Commitments And Contingencies Disclosure [Line Items]
Total financial instrument commitments	$ 395,342	$ 358,824
Commitments to Extend Credit [Member]
Commitments And Contingencies Disclosure [Line Items]
Total financial instrument commitments	375,448	339,312
Standby Letters of Credit [Member]
Commitments And Contingencies Disclosure [Line Items]
Total financial instrument commitments	$ 19,894	$ 19,512

XML

Note 10 - Commitments and Contingencies (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Commitments And Contingencies Disclosure [Line Items]
Right-of-use assets obtained in exchange for new operating lease liabilities	$ 369,000	$ 43,000
Standby Letters of Credit [Member]
Commitments And Contingencies Disclosure [Line Items]
Financial instrument commitments expire within one year	$ 14,817,000
Maximum [Member]
Commitments And Contingencies Disclosure [Line Items]
Standby letters of credit expiration period	1 year
Lessee leasing arrangements, operating leases, renewal term	10 years
Minimum [Member]
Commitments And Contingencies Disclosure [Line Items]
Lessee leasing arrangements, operating leases, renewal term	5 years

XML

Note 11 - Capital Ratios and Regulatory Minimum Requirements (Details) $ in Thousands	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
The Company [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital	$ 167,262	$ 162,725
Tier 1 capital	158,617	152,077
Common equity tier 1 capital	158,617	152,077
Tier 1 leverage capital	$ 158,617	$ 152,077
Capital to risk-weighted assets	0.1331	0.1319
Tier 1 capital to risk-weighted assets	0.1262	0.1233
Common equity tier 1 capital to risk-weighted assets	12.62%	12.33%
Tier 1 leverage capital to average assets	0.0895	0.0875
Capital required for capital adequacy	$ 100,569	$ 98,701
Tier 1 capital required for capital adequacy	75,427	74,025
Common equity tier 1 capital required for capital adequacy	56,570	55,519
Tier 1 leverage capital required for capital adequacy	$ 70,925	$ 69,507
Capital required for capital adequacy to risk-weighted assets	0.0800	0.0800
Tier 1 capital required for capital adequacy to risk-weighted assets	0.0600	0.0600
Common equity tier 1 capital required for capital adequacy to risk-weighted assets	4.50%	4.50%
Tier 1 leverage capital required for capital adequacy to average assets	0.04	0.0400
Capital required to be well capitalized	$ 125,711	$ 123,376
Tier 1 capital required to be well capitalized	$ 75,427	$ 74,025
Capital required to be well capitalized to risk-weighted assets	0.1000	0.1000
Tier 1 capital required to be well capitalized to risk-weighted assets	0.0600	0.0600
Bank [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital	$ 154,116	$ 149,908
Tier 1 capital	145,471	139,260
Common equity tier 1 capital	145,471	139,260
Tier 1 leverage capital	$ 145,471	$ 139,260
Capital to risk-weighted assets	0.1241	0.1252
Tier 1 capital to risk-weighted assets	0.1171	0.1163
Common equity tier 1 capital to risk-weighted assets	11.71%	11.63%
Tier 1 leverage capital to average assets	0.0825	0.0807
Capital required for capital adequacy	$ 99,353	$ 95,796
Tier 1 capital required for capital adequacy	74,515	71,847
Common equity tier 1 capital required for capital adequacy	55,886	53,886
Tier 1 leverage capital required for capital adequacy	$ 70,515	$ 69,009
Capital required for capital adequacy to risk-weighted assets	0.08	0.0800
Tier 1 capital required for capital adequacy to risk-weighted assets	0.06	0.0600
Common equity tier 1 capital required for capital adequacy to risk-weighted assets	4.50%	4.50%
Tier 1 leverage capital required for capital adequacy to average assets	0.04	0.0400
Capital required to be well capitalized	$ 124,191	$ 119,746
Tier 1 capital required to be well capitalized	99,353	95,896
Common equity tier 1 capital required to be well capitalized	80,724	77,835
Tier 1 leverage capital required to be well capitalized	$ 88,144	$ 86,261
Capital required to be well capitalized to risk-weighted assets	0.10	0.1000
Tier 1 capital required to be well capitalized to risk-weighted assets	0.08	0.0800
Common equity tier 1 capital required to be well capitalized to risk-weighted assets	6.50%	6.50%
Tier 1 leverage capital required to be well capitalized to average assets	0.05	0.0500

XML

Note 13 - Schedule of Notional Amounts of Derivative Instruments (Details) - Interest Rate Swap [Member] - Designated as Hedging Instrument [Member] $ in Thousands	Sep. 30, 2023 USD ($)
Derivative [Line Items]
Notional amount	$ 300,000
Fair value	10,623
State and Municipal Securities [Member]
Derivative [Line Items]
Notional amount	75,000
Fair value	3,041
U.S. Government agencies and GSE mortgage backed securities
Derivative [Line Items]
Notional amount	225,000
Fair value	$ 7,582

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Note 13 - Schedule of Derivative Designated as Fair Value Hedging Instruments of Statements on Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Derivative [Line Items]
Taxable	$ 3,443	$ 2,376	$ 8,179	$ 7,065
Total	18,497	$ 13,546	49,825	$ 37,682
Designated as Hedging Instrument [Member]
Derivative [Line Items]
Taxable	1,190		1,370
Total	$ 1,190		$ 1,370

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Note 13 - Schedule of Derivative Designated as Fair Value Hedging Instruments of Accumulated Other Comprehensive (Loss) Income (Details) - Designated as Hedging Instrument [Member] $ in Thousands	Sep. 30, 2023 USD ($)
Derivative [Line Items]
Total	$ 8,392
Accumulated Other Comprehensive Income (Loss) [Member]
Derivative [Line Items]
Total	$ 8,392