Note 17 - Fair Value Measurements and Fair Values of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Financial Assets Measured at Fair Value on a Recurring and Nonrecurring Basis

For financial assets measured at fair value on a recurring and nonrecurring basis, the fair value measurements by level within the fair value hierarchy used were as follows:

December 31, 2023	Quoted prices in active markets for identical assets (Level 1)		Significant other observable input (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
Securities available-for-sale
U.S. Treasuries	$	—	$	6,451	$	—	$	6,451
U.S. Government agency securities		—		74,122		—		74,122
State and municipal securities		—		89,189		—		89,189
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities		—		224,238		—		224,238
Collateralized mortgage obligations (CMOs)		—		89,973		—		89,973
Corporate debt securities and money market funds		—		6,157		52		6,209
Total securities available-for-sale		—		490,130		52		490,182
Equity securities		5,910		—		—		5,910
Total recurring fair value measurements	$	5,910	$	490,130	$	52	$	496,092
Nonrecurring fair value measurements *
Impaired loans	$	—	$	—	$	164	$	164
Mortgage servicing rights		—		—		7		7
Total nonrecurring fair value measurements	$	—	$	—	$	171	$	171

* impairment

December 31, 2022	Quoted prices in active markets for identical assets (Level 1)		Significant other observable input (Level 2)		Significant unobservable inputs (Level 3)		Balance at end of period
Recurring fair value measurements
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 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
December 31, 2023	Fair value		Valuation techniques		Unobservable input		Value or range of values
Impaired loans	$	164	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-20% to -100%
					Liquidation expenses	(3)	-10%
Impaired loans		—	Financial statement values for UCC collateral		Financial statement value discounts	(4)	-100%
Mortgage servicing rights		7	Discounted cash flow		Remaining term		2 to 30 yrs
					Prepayment Speeds		104% to 214%
					Discount rate		12.0% to 12.5%

	Quantitative information about Level 3 fair value measurements
December 31, 2022	Fair value		Valuation techniques		Unobservable input		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 yrs
					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 securities available-for-sale 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 year ended December 31:

	Fair value measurements using significant unobservable inputs (Level 3)
Securities available-for-sale	2023			2022
Balance, beginning of year	$	53		$	75
Payments received		(1	)		(22	)
Sale of securities		—			—
Total gains or losses (realized/unrealized)
Included in earnings		—			—
Included in other comprehensive    income		—			—
Transfers in and/or out of Level 3		—			—
Balance, end of year	$	52		$	53

Financial and Off-balance Sheet Instruments

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

					Fair value measurements
December 31, 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	$	62,657	$	62,657	$	62,657	$	—	$	—
Investment securities:
Available-for-sale (1)		490,182		490,182		—		490,130		52
Equity		5,910		5,910		5,910		—		—
Restricted investment in bank stocks		2,730		2,730		—		2,730		—
Loand held for sale		549		560
Net loans		1,084,681		1,077,544		—		—		1,077,544
Mortgage servicing rights		415		585		—		—		585
Accrued interest receivable		6,101		6,101		—		6,101		—
Financial liabilities
Deposits with no stated maturities	$	1,173,732	$	1,173,732	$	1,173,732	$	—	$	—
Deposits with stated maturities		314,981		311,735		—		311,735		—
Short-term borrowings		94,094		94,094		94,094		—		—
Long-term debt		20,000		19,906		19,906		—		—
Accrued interest payable		5,294		5,294		—		5,294		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		79		—		79		—

(1) Includes derivatives designated as fair value hedging instruments.

					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
Equity		12,056		12,056		12,056		—		—
Restricted investment in bank 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		—