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 March 31, 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 April 28, 2023
Common Stock, par value $0.625	3,597,345

QNB CORP. AND SUBSIDIARY

FORM 10-Q

QUARTER ENDED March 31, 2023

INDEX

	PART I - FINANCIAL INFORMATION
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)	PAGE
	Consolidated Balance Sheets at March 31, 2023 and December 31, 2022	2
	Consolidated Statements of Income for the Three Months Ended March 31, 2023 and 2022	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2023 and 2022	4
	Consolidated Statement of Shareholders’ Equity for the Three Months Ended March 31, 2023 and 2022	5
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	6
	Notes to Consolidated Financial Statements	7
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	35
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK	52
ITEM 4.	CONTROLS AND PROCEDURES	53
	PART II - OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	54
ITEM 1A.	RISK FACTORS	54
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	54
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	54
ITEM 4.	MINE SAFETY DISCLOSURES	54
ITEM 5.	OTHER INFORMATION	54
ITEM 6.	EXHIBITS	55
SIGNATURES		56
CERTIFICATIONS

1

QNB Corp. and Subsidiary

CONSOLIDATED BALANCE SHEETS

	(in thousands, except share data)
	(current period unaudited)
	March 31, 2023			December 31, 2022
Assets
Cash and due from banks	$	11,452		$	14,657
Interest-bearing deposits in banks		2,749			1,242
Total cash and cash equivalents		14,201			15,899
Investments:
Available-for-sale (amortized cost $629,187 and $649,217)		537,904			546,525
Equity securities (cost of $11,885 and $12,091)		11,908			12,056
Restricted investment in stocks		2,098			5,193
Loans held-for-sale		388			—
Loans receivable		1,011,956			1,039,385
Allowance for credit losses on loans		(8,191	)		(10,531	)
Loans receivable, net		1,003,765			1,028,854
Bank-owned life insurance		11,712			11,625
Premises and equipment, net		15,557			15,463
Accrued interest receivable		3,425			5,038
Net deferred tax assets		20,169			23,077
Other assets		5,372			4,767
Total assets	$	1,626,499		$	1,668,497
Liabilities
Deposits
Demand, non-interest bearing	$	212,259		$	231,849
Interest-bearing demand		430,737			452,927
Money market		143,790			127,043
Savings		387,788			431,101
Time less than $100		104,460			91,329
Time $100 through $250		112,608			59,650
Time greater than $250		32,948			24,470
Total deposits		1,424,590			1,418,369
Short-term borrowings		110,192			161,327
Long-term debt		—			10,000
Accrued interest payable		923			467
Other liabilities		6,920			7,376
Total liabilities		1,542,625			1,597,539
Shareholders' Equity
Common stock, par value $0.625 per share;
authorized 10,000,000 shares; 3,806,031 shares and 3,796,948
shares issued; 3,597,345 and 3,588,262 shares outstanding		2,379			2,373
Surplus		25,048			24,798
Retained earnings		132,598			128,951
Accumulated other comprehensive loss, net of tax		(72,114	)		(81,127	)
Treasury stock, at cost; 208,686 and 208,686 shares		(4,037	)		(4,037	)
Total shareholders' equity		83,874			70,958
Total liabilities and shareholders' equity	$	1,626,499		$	1,668,497

2

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 March 31,
(in thousands, except per share data - unaudited)	2023			2022
Interest income
Interest and fees on loans	$	12,714		$	9,003
Interest and dividends on available-for-sale & equity securities:
Taxable		2,279			2,274
Tax-exempt		374			517
Interest on interest-bearing balances and other interest income		96			15
Total interest income		15,463			11,809
Interest expense
Interest on deposits
Interest-bearing demand		1,377			237
Money market		342			106
Savings		1,077			321
Time less than $100		382			184
Time of $100 through $250		727			85
Time greater than $250		123			42
Interest on short-term borrowings		995			59
Interest on long-term debt		23			39
Total interest expense		5,046			1,073
Net interest income		10,417			10,736
(Reversal) provision for credit losses		(1,805	)		—
Net interest income after provision for loan losses		12,222			10,736
Non-interest income
Net (loss) gain on sales and calls of available-for-sale and equity securities		(465	)		36
Unrealized gain (loss) on investment equity securities		57			(8	)
Fees for services to customers		402			384
ATM and debit card		659			641
Retail brokerage and advisory		234			205
Bank-owned life insurance		86			81
Merchant		93			95
Net gain on sale of loans		6			—
Other		147			177
Total non-interest income		1,219			1,611
Non-interest expense
Salaries and employee benefits		4,563			4,266
Net occupancy		540			578
Furniture and equipment		837			687
Marketing		203			194
Third party services		609			667
Telephone, postage and supplies		167			194
State taxes		124			272
FDIC insurance premiums		175			217
Other		982			738
Total non-interest expense		8,200			7,813
Income before income taxes		5,241			4,534
Provision for income taxes		1,123			824
Net income	$	4,118		$	3,710
Earnings per share - basic	$	1.15		$	1.04
Earnings per share - diluted	$	1.15		$	1.04
Cash dividends per share	$	0.37		$	0.36
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 March 31,	Before tax amount		Tax expense		Net of tax amount		Before tax amount			Tax expense			Net of tax amount
Net income	$	5,241	$	1,123	$	4,118	$	4,534		$	824		$	3,710
Other comprehensive income (loss):
Net unrealized holding gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) arising during the period		11,152		2,342		8,810		(46,331	)		(9,731	)		(36,600	)
Reclassification adjustment for losses (gains) included in net income		257		54		203		(1	)		—			(1	)
Other comprehensive income (loss):		11,409		2,396		9,013		(46,332	)		(9,731	)		(36,601	)
Total comprehensive income (loss)	$	16,650	$	3,519	$	13,131	$	(41,798	)	$	(8,907	)	$	(32,891	)
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 March 31, 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, 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 acounting principle)					2,373		24,798		129,808			(81,127	)		(4,037	)		71,815
Net income					—		—		4,118			—			—			4,118
Other comprehensive income, net of tax					—		—		—			9,013			—			9,013
Cash dividends declared ($0.37 per share)					—		—		(1,328	)		—			—			(1,328	)
Stock issued in connection with dividend    reinvestment and stock purchase plan		9,083			6		230		—			—			—			236
Stock issued for employee stock purchase plan		—			—		—		—			—			—			—
Stock-based compensation expense					—		20		—			—			—			20
Balance, March 31, 2023		3,597,345		$	2,379	$	25,048	$	132,598		$	(72,114	)	$	(4,037	)	$	83,874
											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, January 1, 2022		3,553,629		$	2,350	$	23,683	$	118,163		$	(3,740	)	$	(3,962	)	$	136,494
Net income					—		—		3,710			—			—			3,710
Other comprehensive loss, net of tax					—		—		—			(36,601	)		—			(36,601	)
Cash dividends declared ($0.36 per share)					—		—		(1,279	)		—			—			(1,279	)
Stock issued in connection with dividend    reinvestment and stock purchase plan		6,177			4		223		—			—			—			227
Stock issued for employee stock purchase plan		—			—		—		—			—			—			—
Stock issued for options exercised		—			—		—		—			—			—			—
Stock-based compensation expense					—		22		—			—			—			22
Treasury stock purchase		(2,000	)		—		—		—			—			(75	)		(75	)
Balance, March 31, 2022		3,557,806		$	2,354	$	23,928	$	120,594		$	(40,341	)	$	(4,037	)	$	102,498
The accompanying notes are an integral part of the consolidated financial statements.

5

QNB Corp. and Subsidiary

CONSOLIDATED STATEMENTS OF CASH FLOWS

	(in thousands, unaudited)
For the Three Months Ended March 31,	2023			2022
Operating Activities
Net income	$	4,118		$	3,710
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		412			419
Provision for credit losses		(1,805	)		—
Net loss (gain) on calls and sales of debt and equity securities		465			(36	)
Net unrealized gain (loss) on equity securities		(57	)		8
Net gain on sale of loans		(6	)		—
Proceeds from sales of residential mortgages held-for-sale		388			—
Origination of residential mortgages held-for-sale		(770	)		—
Increase in cash surrender value of bank-owned life insurance		(86	)		(81	)
Stock-based compensation expense		20			22
Deferred income tax provision		284			131
Net decrease in income taxes payable		(284	)		(385	)
Net decrease in accrued interest receivable		1,613			323
Amortization of mortgage servicing rights and change in valuation allowance		11			15
Net amortization of premiums and discounts on investment securities		482			643
Net increase (decrease) in accrued interest payable		456			(34	)
Operating lease payments		(156	)		(154	)
Increase in other assets		(343	)		(759	)
Decrease in other liabilities		(663	)		(1,468	)
Net cash provided by operating activities		4,079			2,354
Investing Activities
Proceeds from payments, maturities and calls of investments available-for-sale		10,210			21,853
Proceeds from the sale of investments available-for-sale		9,081			—
Proceeds from the sale of equity securities		709			262
Purchases of investments available-for-sale		—			(33,312	)
Purchases of equity securities		(712	)		(477	)
Proceeds from redemption of investment in restricted stock		4,944			1,827
Purchases of restricted stock		(1,849	)		(1,835	)
Net decrease in loans		27,961			148
Net purchases of premises and equipment		(115	)		(93	)
Net cash provided by (used in) investing activities		50,229			(11,627	)
Financing Activities
Net decrease in non-interest bearing deposits		(19,590	)		(982	)
Net increase in interest-bearing deposits		25,811			2,990
Net (decrease) increase in short-term borrowings		(51,135	)		8,262
Repayment of long-term debt		(10,000	)		—
Cash dividends paid, net of reinvestment		(1,151	)		(1,131	)
Purchase of treasury shares		—			(75	)
Proceeds from issuance of common stock		59			79
Net cash (used in) provided by financing activities		(56,006	)		9,143
Decrease in cash and cash equivalents		(1,698	)		(130	)
Cash and cash equivalents at beginning of year		15,899			13,390
Cash and cash equivalents at end of period	$	14,201		$	13,260
Supplemental Cash Flow Disclosures
Interest paid	$	4,590		$	1,106
Net income taxes paid		1,123			1,078
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.

6

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-month period ended March 31, 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 March 31, 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.

7

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

8

3. STOCK-BASED COMPENSATION AND SHAREHOLDERS’ EQUITY

QNB sponsors stock-based compensation plans, 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 was $20,000 and $22,000 for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, there was approximately $236,000 of unrecognized compensation cost related to unvested share-based compensation award grants that is expected to be recognized over the next 59 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 March 31, 2023, 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 Three Months Ended March 31,	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 three months ended March 31, 2023 and 2022 was $4.11 and $5.20, respectively.

Stock option activity during the three months ended March 31, 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 March 31, 2023		121,550		$	34.29		4.59	$	—
Exercisable at March 31, 2023		41,375		$	37.37		1.35	$	—

	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		(21,250	)		37.69
Outstanding at March 31, 2022		122,050		$	37.49		3.01	$	117
Exercisable at March 31, 2022		44,500		$	40.86		1.39	$	—

9

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 March 31,
	2023		2022
Numerator for basic and diluted earnings per share - net income	$	4,118	$	3,710
Denominator for basic earnings per share - weighted    average shares outstanding		3,588,363		3,552,854
Effect of dilutive securities - employee stock options		—		1,602
Denominator for diluted earnings per share - adjusted    weighted average shares outstanding		3,588,363		3,554,456
Earnings per share - basic	$	1.15	$	1.04
Earnings per share - diluted		1.15		1.04

There were 121,550 and 92,200 stock options that were anti-dilutive for the three-month periods ended March 31, 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 three months ended March 31, 2023 and 2022, respectively. As of March 31, 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.

5. COMPREHENSIVE INCOME (LOSS)

The following shows the components of accumulated other comprehensive income (loss) at March 31, 2023 and December 31, 2022:

	March 31,			December 31,
	2023			2022
Unrealized net holding losses on available-for-sale    securities	$	(91,283	)	$	(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		—			—
Accumulated other loss		(91,283	)		(102,692	)
Tax effect		19,169			21,565
Accumulated other comprehensive loss, net of tax	$	(72,114	)	$	(81,127	)

The following table presents amounts reclassified out of accumulated other comprehensive income (loss) for the three months ended March 31, 2023 and 2022:

For the Three Months Ended March 31,	Amount reclassified from accumulated other comprehensive income
Details about accumulated other comprehensive income	2023			2022		Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	(257	)	$	1	Net gain on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—	Net other-than-temporary impairment losses on investment securities
		(257	)		1
Tax effect		54			—	Provision for income taxes
Total reclassification out of accumulated other comprehensive (loss) income, net of tax	$	(203	)	$	1	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 March 31, 2023 and December 31, 2022 were as follows:

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
March 31, 2023	value		gains		losses			cost
U.S. Treasury	$	—	$	—	$	—		$	—
U.S. Government agency		88,701		—		(13,243	)		101,944
State and municipal		89,917		—		(19,514	)		109,431
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		252,984		—		(41,314	)		294,298
Collateralized mortgage obligations (CMOs)		100,083		—		(16,800	)		116,883
Corporate debt		6,219		—		(412	)		6,631
Total investment debt securities available-for-sale	$	537,904	$	—	$	(91,283	)	$	629,187

			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 March 31, 2023 are 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.

March 31, 2023	Fair value		Amortized cost
Due in one year or less	$	329	$	338
Due after one year through five years		114,266		126,292
Due after five years through ten years		344,044		405,060
Due after ten years		79,265		97,497
Total investment debt securities available-for-sale	$	537,904	$	629,187

Proceeds from sales of investment securities available-for-sale were approximately $9,081,000 and $0 for the three months ended March 31, 2023 and 2022, respectively.

At March 31, 2023 and December 31, 2022, investment securities available-for-sale totaling approximately $283,019,000 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 other-than-temporary impairment (“OTTI”) of these investments. Gains and losses on

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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 other-than-temporary impairment charges:

	For the Three Months Ended March 31,
	2023			2022
Gross realized gains	$	—		$	1
Gross realized losses		(257	)		—
Other-than-temporary impairment		—			—
Total net gains (losses) on AFS securities	$	(257	)	$	1

The tax applicable to the net realized gains for both of the three-month periods ended March 31, 2023 and 2022 was $54,000 and $0, respectively.

QNB recognizes OTTI 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 months ended March 31, 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 March 31, 2023 and December 31, 2022:

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
March 31, 2023	securities		value		losses			value		losses			value		losses
U.S. Government agency		46	$	—	$	—		$	88,701	$	(13,243	)	$	88,701	$	(13,243	)
State and municipal		192		4,746		(223	)		85,171		(19,291	)		89,917		(19,514	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		191		4,584		(295	)		248,400		(41,019	)		252,984		(41,314	)
Collateralized mortgage obligations (CMOs)		128		8,213		(534	)		91,870		(16,266	)		100,083		(16,800	)
Corporate debt		4		2,909		(91	)		3,310		(321	)		6,219		(412	)
Total		561	$	20,452	$	(1,143	)	$	517,452	$	(90,140	)	$	537,904	$	(91,283	)

			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

12

of each security. The unrealized losses at March 31, 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 March 31, 2023. This security has a total amortized cost of approximately $61,000 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 March 31, 2023 and December 31, 2022, the Company had $11,908,000 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 months ended March 31, 2023 and 2022:

	For the Three Months Ended March 31,
	2023			2022
Net (loss) gains recognized during the period on equity securities	$	(151	)	$	27
Less: Net (losses) gains recognized during the period on equity securities sold during the period		(208	)		35
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	57		$	(8	)

Taxes applicable to the net losses recognized for the three months ended March 31, 2023 resulted in an expense of $44,000 compared to a net gain of $8,000 recognized for the three months ended March 31, 2022. Proceeds from sales of investment equity securities were $709,000 and $262,000 for the three months ended March 31, 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 $1,086,000, 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 March 31, 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 (1.5991 as of December 29, 2022), 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 OTTI periodically. As of March 31, 2023, there was no OTTI associated with these shares.

8. LOANS & ALLOWANCE FOR LOAN LOSSES

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.

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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.

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Major classes of loans are as follows:

	March 31,
	2023
Commercial:
Commercial and industrial	$	144,909
Construction and land development		59,639
Real estate secured by multi-family properties		98,886
Real estate secured by owner-occupied properties		156,812
Real estate secured by other commercial properties		257,944
Revolving real estate secured by 1-4 family properties-business		6,552
Real estate secured by 1st lien on 1-4 family properties-business		96,703
Real estate secured by junior lien on 1-4 family properties-business		3,457
State and political subdivisions		20,078
Retail:
1-4 family residential mortgages		106,758
Construction-individual		152
Revolving home equity secured by 1-4 family properties-personal		34,454
Real estate secured by 1st lien on 1-4 family properties-personal		10,697
Real estate secured by junior lien on 1-4 family properties-personal		11,355
Student loans		1,917
Overdrafts		103
Other consumer		1,736
Total loans		1,012,152
Net unearned (fees) costs		(196	)
Allowance for credit losses on loans		(8,191	)
Loans receivable, net	$	1,003,765

	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.

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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

16

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 March 31, 2023 and December 31, 2022:

	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	3,608	$	16,665	$	10,412	$	8,233	$	7,095	$	8,984	$	87,955	$	142,952
Special mention		—		—		—		—		—		—		28		28
Substandard		—		179		—		4		24		242		1,480		1,929
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	3,608	$	16,844	$	10,412	$	8,237	$	7,119	$	9,226	$	89,463	$	144,909
Construction and land development:
Risk rating
Pass	$	6,821	$	27,572	$	13,172	$	3,441	$	4,160	$	4,424	$	—	$	59,590
Special mention		—		—		—		—		—		49		—		49
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	6,821	$	27,572	$	13,172	$	3,441	$	4,160	$	4,473	$	—	$	59,639
Real estate secured by multi-family properties:
Risk rating
Pass	$	100	$	27,489	$	23,048	$	10,258	$	6,005	$	29,533	$	—	$	96,433
Special mention		—		—		—		—		718		1,735		—		2,453
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	100	$	27,489	$	23,048	$	10,258	$	6,723	$	31,268	$	—	$	98,886
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	1,338	$	27,684	$	29,038	$	19,841	$	12,403	$	59,744	$	—	$	150,048
Special mention		—		—		127		—		—		—		—		127
Substandard		—		—		6		—		—		6,631		—		6,637
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	1,338	$	27,684	$	29,171	$	19,841	$	12,403	$	66,375	$	—	$	156,812
Real estate secured by other commercial properties:
Risk rating
Pass	$	7,015	$	45,257	$	46,480	$	20,637	$	32,055	$	102,370	$	—	$	253,814
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		4,130		—		4,130
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	7,015	$	45,257	$	46,480	$	20,637	$	32,055	$	106,500	$	—	$	257,944

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	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	6,552	$	6,552
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	6,552	$	6,552
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	2,170		28,943		21,342		11,431		9,148		22,722		—		95,756
Special mention		—		193		139		—		—		—		—		332
Substandard		—		—		—		—		455		160		—		615
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by 1st lien on 1-4 family properties-business	$	2,170	$	29,136	$	21,481	$	11,431	$	9,603	$	22,882	$	—	$	96,703
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	306	$	632	$	567	$	633	$	45	$	1,006	$	—	$	3,189
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		268		—		268
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	306	$	632	$	567	$	633	$	45	$	1,274	$	—	$	3,457
State and political subdivisions:
Risk rating
Pass	$	—	$	40	$	5,017	$	25	$	5,931	$	9,065	$	—	$	20,078
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	—	$	40	$	5,017	$	25	$	5,931	$	9,065	$	—	$	20,078
Total Commercial Loans:
Risk rating
Pass		21,358		174,282		149,076		74,499		76,842		237,848		94,507		828,412
Special mention		—		193		266		—		718		1,784		28		2,989
Substandard		—		179		6		4		479		11,431		1,480		13,579
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	21,358	$	174,654	$	149,348	$	74,503	$	78,039	$	251,063	$	96,015	$	844,980

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

18

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 March 31, 2023 and December 2022:

	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Retail Loans
1-4 family residential mortgages:
Payment performance
Performing	$	3,029	$	15,329	$	33,433	$	21,625	$	4,797	$	28,097	$	—	$	106,310
Nonperforming		—		—		—		—		—		448		—		448
Total 1-4 family residential mortgages	$	3,029	$	15,329	$	33,433	$	21,625	$	4,797	$	28,545	$	—	$	106,758
Construction-individual:
Payment performance
Performing	$	—	$	—	$	152	$	—	$	—	$	—	$	—	$	152
Nonperforming		—		—		—		—		—		—		—		—
Total construction-individual	$	—	$	—	$	152	$	—	$	—	$	—	$	—	$	152
Revolving home equity secured by 1-4 family properties-personal:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	34,271	$	34,271
Nonperforming		—		—		—		—		—		—		183		183
Total revolving home equity secured by 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	—	$	34,454	$	34,454
Real estate secured by 1st lien on 1-4 family properties-personal:
Payment performance
Performing	$	639	$	1,771	$	3,486	$	1,117	$	1,109	$	2,438	$	—	$	10,560
Nonperforming		—		—		—		—		—		137		—		137
Total real estate secured by 1st lien Real estate secured by 1st lien on 1-4 family properties-personal	$	639	$	1,771	$	3,486	$	1,117	$	1,109	$	2,575	$	—	$	10,697
Real estate secured by junior lien on 1-4 family properties-personal:
Payment performance
Performing	$	946	$	1,887	$	2,613	$	1,510	$	766	$	3,633	$	—	$	11,355
Nonperforming		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-personal	$	946	$	1,887	$	2,613	$	1,510	$	766	$	3,633	$	—	$	11,355
Student loans:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	1,900	$	—	$	1,900
Nonperforming		—		—		—		—		—		17		—		17
Total student loans	$	—	$	—	$	—	$	—	$	—	$	1,917	$	—	$	1,917
Overdrafts:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	103	$	103
Nonperforming		—		—		—		—		—		—		—		—
Total overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	103	$	103
Other consumer:
Payment performance
Performing	$	163	$	474	$	446	$	175	$	155	$	78	$	202	$	1,693
Nonperforming		—		—		—		—		—		43		—		43
Total other consumer	$	163	$	474	$	446	$	175	$	155	$	121	$	202	$	1,736
Total Retail Loans:
Payment performance
Performing	$	4,777	$	19,461	$	40,130	$	24,427	$	6,827	$	36,146	$	34,576	$	166,344
Nonperforming		—		—		—		—		—		645		183		828
Total Retail Loans	$	4,777	$	19,461	$	40,130	$	24,427	$	6,827	$	36,791	$	34,759	$	167,172

19

December 31, 2022	Performing		Non-performing		Total
Retail:
1-4 family residential mortgages	$	104,933	$	721	$	105,654
Home equity loans and lines		62,900		680		63,580
Consumer		4,023		90		4,113
Total	$	171,856	$	1,491	$	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 March 31, 2023 and December 31, 2022:

March 31, 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	$	40	$	—	$	—	$	40	$	144,869	$	144,909
Construction and land development		—		—		—		—		59,639		59,639
Real estate secured by multi-family properties		—		—		—		—		98,886		98,886
Real estate secured by owner-occupied properties		2,978		—		—		2,978		153,834		156,812
Real estate secured by other commercial properties		1,588		—		—		1,588		256,356		257,944
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		6,552		6,552
Real estate secured by 1st lien on 1-4 family properties-business		—		—		9		9		96,694		96,703
Real estate secured by junior lien on 1-4 family properties-business		—		—		—		—		3,457		3,457
State and political subdivisions		—		—		—		—		20,078		20,078
Retail:
1-4 family residential mortgages		1,130		—		116		1,246		105,512		106,758
Construction-individual		—		—		—		—		152		152
Revolving home equity secured by 1-4 family properties-personal		—		53		—		53		34,401		34,454
Real estate secured by 1st lien on 1-4 family properties-personal		—		—		101		101		10,596		10,697
Real estate secured by junior lien on 1-4 family properties-personal		19		—		—		19		11,336		11,355
Student loans		—		—		—		—		1,917		1,917
Overdrafts		16		6		—		22		81		103
Other consumer		9		—		—		9		1,727		1,736
Total	$	5,780	$	59	$	226	$	6,065	$	1,006,087	$	1,012,152

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	$	2,288	$	1	$	596	$	2,885	$	157,990	$	160,875
Construction		—		—		—		—		62,955		62,955
Secured by commercial real estate		—		—		—		—		518,070		518,070
Secured by residential real estate		—		—		30		30		103,389		103,419
State and political subdivisions		—		—		—		—		20,971		20,971
Retail:
1-4 family residential mortgages		1,139		—		127		1,266		104,388		105,654
Home equity loans and lines		21		—		10		31		63,549		63,580
Consumer		20		11		—		31		4,082		4,113
Total	$	3,468	$	12	$	763	$	4,243	$	1,035,394	$	1,039,637

20

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 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 March 31, 2023:

March 31, 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	$	—	$	—	$	391	$	391
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		825		—		825
Real estate secured by other commercial properties		—		2,263		—		2,263
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		9		—		9
Real estate secured by junior lien on 1-4 family properties-business		—		—		245		245
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		448		—		448
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		25		158		183
Real estate secured by 1st lien on 1-4 family properties-personal		—		137		—		137
Real estate secured by junior lien on 1-4 family properties-personal		—		—				—
Student loans		—		17		—		17
Other consumer		—		43		—		43
Total	$	—	$	3,767	$	794	$	4,561

21

QNB recognized interest income of $14,000 on non-accrual loans during the three months ended March 31, 2023.

The following table presents the collateral-dependent loans by loan category at March 31, 2023:

March 31, 2023	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	294	$	97	$	391
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		825		—		—		825
Real estate secured by other commercial properties		2,263		—		—		2,263
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		9						9
Real estate secured by junior lien on 1-4 family properties-business		—		—		245		245
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		448		—		—		448
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		68		—		115		183
Real estate secured by 1st lien on 1-4 family properties-personal		137		—		—		137
Real estate secured by junior lien on 1-4 family properties-personal		—		—		—		—
Other consumer		—		43		—		43
Total	$	3,750	$	337	$	457	$	4,544
(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	$	—	$	3,369
Construction		—		—
Secured by commercial real estate		—		2,279
Secured by residential real estate		—		391
State and political subdivisions		—		—
Retail:
1-4 family residential mortgages		—		721
Home equity loans and lines		—		680
Consumer		—		90
Total	$	—	$	7,530

22

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

23

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

24

Activity in the allowance for credit losses on loans for the three months ended March 31, 2023 and 2022 are as follows:

For the Three Months Ended March 31, 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	)	$	(940	)	$	—		$	593	$	899
Construction and land development		755		(10	)		4			—			—		749
Real estate secured by multi-family properties		995		684			(102	)		—			—		1,577
Real estate secured by owner-occupied properties		1,549		(374	)		(203	)		—			—		972
Real estate secured by other commercial properties		2,458		(1,128	)		(239	)		—			—		1,091
Revolving real estate secured by 1-4 family properties-business		25		7			2			—			—		34
Real estate secured by 1st lien on 1-4 family properties-business		1,210		490			(430	)		—			3		1,273
Real estate secured by junior lien on 1-4 family properties-business		30		(14	)		242			—			—		258
State and political subdivisions		94		(20	)		(19	)		—			—		55
Retail:
1-4 family residential mortgages		682		(196	)		(81	)		—			—		405
Construction-individual		1		-			-			—			—		1
Revolving home equity secured by 1-4 family properties-personal		299		(7	)		(43	)		—			—		249
Real estate secured by 1st lien on 1-4 family properties-personal		57		15			(8	)		—			—		64
Real estate secured by junior lien on 1-4 family properties-personal		55		29			(9	)		—			2		77
Student loans		454		12			(17	)		(3	)		2		448
Overdrafts		8		3			31			(43	)		10		9
Other consumer		41		(8	)		29			(32	)		—		30
Unallocated		502		(502	)		-		N/A			N/A			—
Total	$	10,531	$	(1,089	)	$	(1,783	)	$	(78	)	$	610	$	8,191

For the Three Months Ended March 31, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	4,050	$	(658	)	$	—		$	32	$	3,424
Construction		346		43			—			—		389
Secured by commercial real estate		3,736		417			—			—		4,153
Secured by residential real estate		871		270			(38	)		19		1,122
State and political subdivisions		89		(1	)		—			—		88
Retail:
1-4 family residential mortgages		533		32			—			—		565
Home equity loans and lines		386		(22	)		(12	)		6		358
Consumer		265		356			(111	)		34		544
Unallocated		550		21		N/A			N/A			571
Total	$	10,826	$	458		$	(161	)	$	91	$	11,214

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 is 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 include the 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 classified as TDRs are considered non-performing.

25

The concessions made for the 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.

Since the implementation of ASU 326 on January 1, 2023, the Company measures loan modifications to borrowers in financial distress as either a TDR or a troubled debt modification ("TDM"). If the modification is not considered a TDR it is further analyzed for consideration as a 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 loans modified as TDRs or TDMs in 2023. 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 three months ended March 31, 2023 and 2022, respectively, on loans modified within 12 months prior to March 31, 2023 and 2022, respectively.

Performing TDRs (not reported as non-accrual or past due 90 days or more and still accruing) totaled $4,224,000 and $4,301,000 as of March 31, 2023 and December 31, 2022, respectively. Non-performing TDRs totaled $333,000 and $371,000 as of March 31, 2023 and December 31, 2022, respectively. Non-accrual TDRs are included in the specific reserve calculation in 2023. All TDRs were included in the specific reserve calculation for 2022.

The following table illustrates the specific reserve for loan losses allocated to loans modified as 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.

	March 31, 2023				December 31, 2022
	Unpaid principal balance		Related allowance		Unpaid principal balance		Related allowance
TDRs with no specific allowance recorded	$	4,312	$	—	$	1,272	$	—
TDRs with an allowance recorded		245		245		3,400		392
Total	$	4,557	$	245	$	4,672	$	392

As of March 31, 2023 and December 31, 2022, QNB had $7,000 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 months ended March 31, 2023 and 2022, resulting from loans previously modified as TDRs.

The Company has one loan secured by residential real estate for which foreclosure proceedings are in process at March 31, 2023 with a total recorded investment of $116,000.

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.

26

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 March 31, 2023:

March 31, 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	$	—	$	—	$	—	$	—
U.S. Government agency securities		—		88,701		—		88,701
State and municipal securities		—		89,917		—		89,917
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities		—		252,984		—		252,984
Collateralized mortgage obligations (CMOs)		—		100,083		—		100,083
Corporate debt securities		—		6,167		52		6,219
Total debt securities available-for-sale		—		537,852		52		537,904
Equity securities		11,908		—		—		11,908
Total recurring fair value measurements	$	11,908	$	537,852	$	52	$	549,812
Nonrecurring fair value measurements*
Impaired loans	$	—	$	—	$	337	$	337
Mortgage servicing rights		—		—		1		1
Total nonrecurring fair value measurements	$	—	$	—	$	338	$	338
*Impairment

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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 months ended March 31, 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-month period ended March 31, 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
March 31, 2023	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Impaired loans	$	43	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-20% 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		118% to 254%
					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 three months ended March 31, 2023 and 2022:

	Fair value measurements using significant unobservable inputs (Level 3)
	2023			2022
Balance, January 1,	$	53		$	75
Payments received		—			(22	)
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, March 31,	$	52		$	53

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 March 31, 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 or 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 March 31, 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 7.67% 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 March 31, 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 (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.

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.

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

					Fair value measurements
March 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	$	14,201	$	14,201	$	14,201	$	—	$	—
Investment securities:
Available-for-sale		537,904		537,904		—		537,852		52
Equities		11,908		11,908		11,908		—		—
Restricted investment in stocks		2,098		2,098		—		2,098		—
Loans held for sale		388		389		—		389		—
Net loans		1,003,765		980,285		—		—		980,285
Mortgage servicing rights		460		621		—		—		621
Accrued interest receivable		3,425		3,425		—		3,425		—
Financial liabilities
Deposits with no stated maturities	$	1,174,574	$	1,174,574	$	1,174,574	$	—	$	—
Deposits with stated maturities		250,016		244,751		—		244,751		—
Short-term borrowings		110,192		110,192		110,192		—		—
Long-term debt		—		—		—		—		—
Accrued interest payable		923		923		—		923		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		83		—		83		—

					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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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:

	March 31,		December 31,
	2023		2022
Commitments to extend credit and unused lines of credit	$	389,336	$	339,312
Standby letters of credit		20,359		19,512
Total financial instrument commitments	$	409,695	$	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 $17,633,000 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 March 31, 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 three months ended March 31, 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 the 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 March 31, 2023, that QNB and the Bank met capital adequacy requirements to which they were subject.

32

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
March 31, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	164,271		13.53	%	$	97,099		8.00	%	$	121,374		10.00	%
Bank		151,466		12.86			94,219	8.00				117,774	10.00
Tier 1 capital (to risk-weighted assets):
The Company	$	155,980		12.85			72,825	6.00				72,825	6.00
Bank		143,175		12.16			70,664	6.00				94,219	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		155,980		12.85			54,618	4.50			N/A		N/A
Bank		143,175		12.16			52,998	4.50				76,553	6.50
Tier 1 capital (to average assets):
The Company		155,980		9.07			68,766	4.00			N/A		N/A
Bank		143,175		8.39			68,249	4.00				85,311	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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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.

34

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 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.

35

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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.

Other-Than-Temporary Investment Security Impairment

Securities are evaluated periodically to determine whether a decline in their value is other-than-temporary. 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 “other-than-temporary” 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 other-than-temporary, the value of the equity security is reduced and a corresponding charge to earnings is recognized. There were no other-than-temporary impairment charges recorded during the three months ended March 31, 2023 and 2022, respectively.

The Company follows accounting guidance related to the recognition and presentation of other-than-temporary 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 other-than-temporarily 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 other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. There were no credit-related other-than-temporary impairment charges in the three months ended March 31, 2023 or 2022, respectively.

Allowance for Loan Losses

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.

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CONDITION AND RESULTS OF OPERATIONS

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 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 stock-based compensation plans, 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 first quarter of 2023 of $4,118,000, or $1.15 per share on a diluted basis, compared to net income of $3,710,000, or $1.04 per share on a diluted basis, for the same period in 2022. The Bank contributed $4,287,000 to net income for the three months ended March 31, 2023 compared to $3,708,000 for the same period 2022; and the holding company contributed negative $169,000 to net income for the three months ended March 31, 2023 compared to income of $2,000 for the same period 2022. The results

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CONDITION AND RESULTS OF OPERATIONS

at the Bank were primarily due to the reversal for credit losses in loans of $1,783,000. 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 0.97% and 10.81%, respectively, for the quarter ended Mach 31, 2023 compared with 0.90% and 10.60%, respectively, for the quarter ended March 31, 2022.

Total assets as of March 31, 2023 were $1,626,499,000, compared with $1,668,497,000 at December 31, 2022. Loans receivable at March 31, 2023 were $1,011,956,000, a $27,429,000 decrease from $1,039,385,000 at December 31, 2022. Total deposits of $1,424,590,000 at March 31, 2023 increased $6,221,000 compared with total deposits of $1,418,369,000 at December 31, 2022.

Results for the three months ended March 31, 2023 include the following significant components:

•Net interest income decreased $319,000, or 2.97%, to $10,417,000 for the three months ended March 31, 2023.

•Net interest margin on a tax-equivalent basis decreased 16 basis points to 2.55% for the quarter compared to 2.71% for the same period in 2022.

•QNB reversed $1,783,000 in its provision for credit losses on loans for the quarter ended March 31, 2023, compared with no provision for the same period in 2022.

•Non-interest income decreased $392,000, to $1,219,000 for the first quarter compared with the same period in 2022. Excluding realized and unrealized gains (losses) on securities and gains on sales of loans, non-interest income increased $38,000, or 2.4%, to $1,621,000 for the quarter compared with the same period in 2022.

•Non-interest expense increased $365,000 to $8,178,000 for the quarter compared to the same period in 2022.

•Total non-performing loans were $8,785,000, or 0.87% of loans receivable at March 31, 2023, compared to $9,121,000, or 0.88% of loans receivable at December 31, 2022. Loans on non-accrual status were $4,561,000 at March 31, 2023 compared with $4,820,000 at December 31, 2022. Net loan recoveries for the three months ended March 31, 2023 were $532,000, compared with $47,000 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-month periods ended March 31, 2023 and 2022.

	For the Three Months Ended March 31,
	2023		2022
Total interest income	$	15,463	$	11,809
Total interest expense		5,046		1,073
Net interest income		10,417		10,736
Tax-equivalent adjustment		150		184
Net interest income (fully taxable-equivalent)	$	10,567	$	10,920

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QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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.

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QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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

	For the Three Months Ended
	March 31, 2023								March 31, 2022
	Average			Average					Average			Average
	Balance			Rate			Interest		Balance			Rate			Interest
Assets
Investment securities (AFS & Equity):
U.S. Treasury securities	$	269			1.49	%	$	1	$	89			0.74	%	$	—
U.S. Government agencies		101,943			1.11			283		99,979			1.08			270
State and municipal		111,150			2.23			621		129,790			2.41			781
Mortgage-backed and CMOs		417,137			1.62			1,685		461,137			1.49			1,718
Corporate debt securities		6,636			4.40			73		6,700			4.34			73
Equities		12,096			3.39			101		12,414			3.20			98
Total investment securities		649,231			1.70			2,764		710,109			1.66			2,940
Loans:
Commercial real estate		681,615			4.52			7,602		597,661			4.04			5,957
Residential real estate		105,698			3.55			937		101,431			3.23			818
Home equity loans		56,645			6.23			870		54,618			3.36			453
Commercial and industrial		152,756			8.22			3,096		140,588			4.57			1,585
Consumer loans		4,089			6.73			68		4,735			5.05			59
Tax-exempt loans		20,591			3.49			177		19,569			3.41			165
Total loans, net of unearned income*		1,021,394			5.06			12,750		918,602			3.99			9,037
Other earning assets		7,001			5.71			99		6,689			0.97			16
Total earning assets		1,677,626			3.77			15,613		1,635,400			2.97			11,993
Cash and due from banks		12,881								13,082
Allowance for loan losses		(9,937	)							(11,204	)
Other assets		38,597								38,107
Total assets	$	1,719,167							$	1,675,385
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Interest-bearing demand	$	317,615			0.39	%		302	$	338,296			0.18	%		146
Municipals		111,954			3.89			1,075		116,516			0.32			91
Money market		130,627			1.06			342		141,296			0.30			106
Savings		406,072			1.08			1,077		437,645			0.30			321
Time < $100		101,208			1.53			382		92,692			0.80			184
Time $100 through $250		97,617			3.02			727		48,537			0.71			85
Time > $250		27,723			1.80			123		24,970			0.69			42
Total interest-bearing deposits		1,192,816			1.37			4,028		1,199,952			0.33			975
Short-term borrowings		134,918			2.99			995		71,480			0.33			59
Long-term debt		5,833			1.57			23		10,000			1.57			39
Total interest-bearing liabilities		1,333,567			1.53			5,046		1,281,432			0.34			1,073
Non-interest-bearing deposits		221,948								244,097
Other liabilities		9,149								7,870
Shareholders' equity		154,503								141,986
Total liabilities and shareholders' equity	$	1,719,167							$	1,675,385
Net interest rate spread					2.24	%							2.63	%
Margin/net interest income					2.55	%	$	10,567					2.71	%	$	10,920

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 months ended March 31, 2023 and 2022.

Non-accrual loans are included in earning assets.

* Includes loans held-for-sale

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QNB CORP. AND SUBSIDIARY

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CONDITION AND RESULTS OF OPERATIONS

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
	March 31, 2023 compared
	to March 31, 2022
	Total			Due to change in:
	Change			Volume			Rate
Interest income:
Investment securities (AFS & Equity):
U.S. Treasury securities	$	1		$	1		$	—
U.S. Government agencies		13			5			8
State and municipal		(160	)		(112	)		(48	)
Mortgage-backed and CMOs		(33	)		(164	)		131
Corporate debt securities		—			(1	)		1
Equities		3			(3	)		6
Total Investment securities (AFS & Equity)		(176	)		(274	)		98
Loans:
Commercial real estate		1,645			837			808
Residential real estate		119			34			85
Home equity loans		417			17			400
Commercial and industrial		1,511			137			1,374
Consumer loans		9			(8	)		17
Tax-exempt loans		12			8			4
Total Loans		3,713			1,025			2,688
Other earning assets		83			1			82
Total interest income		3,620			752			2,868
Interest expense:
Interest-bearing deposits:
Interest-bearing demand		156			(9	)		165
Municipals		984			(4	)		988
Money market		236			(9	)		245
Savings		756			(23	)		779
Time < $100		198			17			181
Time $100 through $250		642			85			557
Time > $250		81			5			76
Total interest-bearing deposits		3,053			62			2,991
Short-term borrowings		936			52			884
Long-term debt		(16	)		(16	)		—
Total interest expense		3,973			98			3,875
Net interest income	$	(353	)	$	654		$	(1,007	)

Net Interest Income and Net Interest Margin – Quarterly Comparison

Average earning assets for the first quarter of 2023 were $1,677,626,000, an increase of $42,226,000, or 2.6%, from the first quarter of 2022, with average loans increasing $102,792,0000, or 11.2%, and average investment securities decreasing $60,878,000, or 8.6%, over the same period in 2022. Cash generated from maturities and sales in the investment portfolio and an increase in borrowed funds of $52,135,000 supported loan growth. Average loans as a percent of average earning assets was 60.9% for the first quarter of 2023, compared with 56.2% for the first quarter of 2022. On the funding side, average deposits decreased $29,285,000, or 2.0%, to $1,414,049,000 for the first quarter of 2023 primarily due to a decrease in non-interest bearing demand products. Average short-term borrowed funds, which consisted primarily of average commercial repurchase agreements and over-night FHLB borrowings, increased $63,438,000 to $134,918,000 during the first quarter of 2023 compared to $71,480,000 for the same period in 2022.

The net interest margin for the first quarter of 2023 decreased 16 basis points to 2.55% from 2.71% 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

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

interest rates starting in March 2022 has compressed the net interest margin as QNB is liability sensitive; but 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 $3,620,000, or 30.2%, to $15,613,000 for the first quarter of 2023; total interest expense increased $3,973,000 to $5,046,000. The rate on Municipal deposits increased 357 basis points in the first quarter of 2023 compared to the same period in 2022.

The yield on earning assets on a tax-equivalent basis increased 80 basis points to 3.77% for the first quarter of 2023, from 2.97% for the first quarter of 2022. The cost of interest-bearing liabilities was 1.53% for the first quarter of 2023, compared with 0.34% for the same period in 2022.

Interest income on investment securities (available-for-sale and equity) decreased $176,000 when comparing the quarters ended March 31, 2023 and 2022. The average yield on the investment portfolio was 1.70% for the first quarter of 2023 compared with 1.66% for the same period in 2022.

QNB invested in U.S. Treasury securities during 2022 which yielded 1.49%; the securities matured in the first quarter of 2023. Income on U.S. Government agency securities increased $13,000 as the average balances increased $1,964,000 and the rate increased three basis points.

Interest income on municipal securities, which are primarily tax-exempt, decreased $160,000 due to a $18,6404,000 decrease in average balances and an 18 basis-point decrease in rate. 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 decreased $33,000 while average balances decreased $44,000,000 and yield increased 13 basis points. 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.

Income on loans increased $3,713,000 to $12,750,000 when comparing the first quarters of 2023 and 2022, with a $102,792,000 increase in average balances contributing to an increase in interest income of $1,025,000 and a 107-basis point increase in yield contributing to a $2,688,000 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 $1,645,000 when comparing the first quarters of 2023 and 2022, primarily due to increased average balances of $83,954,000, or 14.0%, and a 48-basis point increase in rate from 4.04% in 2022 to 4.52% in 2023.

Income on commercial and industrial loans increased $1,511,000 when comparing the first quarters of 2023 and 2022. The average yield on these loans increased 365 basis points to 8.22% resulting in an increase in income of $1,374,000; average balances increased $12,168,000, to $152,756,000 for the first quarter of 2023 resulting in a $137,000 increase in interest income. Many of the loans in this category are indexed to the prime interest rate.

Tax-exempt loan income was $177,000 for the first quarter of 2023, an increase of $12,000 from the same period in 2022. Average balances increased $1,022,000, or 11.2%, to $20,591,000 for the first quarter of 2023, resulting in an increase of $8,000 in income. The yield on municipal loans increased eight basis points, to 3.49% for the first quarter of 2023, compared with the same period in 2022, resulting in an increase of $4,000 in interest income.

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 $119,000 when comparing the first quarter of 2023 to the same period in 2022. Average residential mortgage loan balances increased by $4,267,000, or 4.2%, to $105,698,000 for the first quarter of 2023 compared to the same period in 2022, which contributed a $34,000 increase in interest income. The average yield on the portfolio increased 32 basis points and contributed an increase of $85,000 to interest income. QNB chose to

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CONDITION AND RESULTS OF OPERATIONS

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 $2,027,000 to $56,645,000; interest income increased $417,000 as the average yield increased 287 basis points to 6.23%. The yield on the consumer portfolio increased 168 basis points to 6.73% for the first quarter of 2023 and there was a $646,000 decrease in average balances resulting in a net $8,000 decrease in interest income.

Earning assets are funded by deposits and borrowed funds. Interest expense increased $3,973,000, when comparing the first 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 $22,149,000 to $221,948,000 for the first quarter of 2023. Average interest-bearing demand accounts decreased $20,681,000, or 6.1%, to $317,615,000 for the first quarter of 2023. Interest expense on interest-bearing demand accounts increased $156,000 to $302,000 for the same period, as the average rate paid increased 21 basis points to 0.39% for the first quarter of 2023. Included in this category is QNB-Rewards checking, a higher-rate checking account product that pays 1.25% on balances up to $25,000 and 0.35% for balances over $25,000. In order to receive the higher rate, a customer must receive an electronic statement, have one direct deposit or other ACH transaction and have at least 12 check card purchase transactions post and clear per statement cycle. For the first quarter of 2023, the average balance in this product was $98,186,000 and the related interest expense was $97,000 for an average yield of 0.40%. In comparison, the average balance of the QNB-Rewards accounts for the first quarter of 2022 was $103,020,000 and the related interest expense was $80,000 for an average yield of 0.31%. This product also generates fee income through the use of the check card. Also included in this category are business interest-checking accounts which include several large-deposit customers for which competitive pricing is used to maintain these deposits and reduce the reliance on higher-cost short-term borrowings. Business interest-checking balances decreased $6,223,000 comparing first quarter of 2023 to 2022; however, interest expense increased $138,000 primarily related to an increase in rate of 95 basis points.

Interest expense on municipal interest-bearing demand accounts increased $984,000 to $1,075,000 for the first quarter of 2023. The average interest rate paid on municipal interest-bearing demand accounts increased 357 basis points to 3.89% for the first quarter of 2023 over the same quarter of 2022, and average balances decreased $4,562,000, or 3.9%, to $111,954,000. 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.

Average money market accounts decreased $10,669,000, or 7.6%, to $130,627,000 for the first quarter of 2023 compared with the same period in 2022. Interest expense on money market accounts increased $236,000 to $342,000, and the average interest rate paid on money market accounts increased 76 basis point to 1.06% for the first quarter of 2023. Most of the balances in this category are in a product that pays a tiered rate based on account balances.

Interest expense on savings accounts increased $756,000 when comparing the first quarter of 2023 to the same quarter of 2022. The average interest rate paid on savings accounts increased 78 basis points to 1.08% for the first quarter of 2023. When comparing these same periods, average savings accounts decreased $31,573,000, or 7.2%, to $406,072,000 for the first 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 first quarter of 2023 of $304,409,000 compared to $334,096,000 in the same period of 2022. The average yield paid on these accounts was 1.36% for the first quarter of 2023 and 0.35% 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 $1,886,000 when comparing the first quarter of 2023 to the same period in 2022.

Interest expense on time deposits totaled $1,232,000 for the first quarter of 2023 compared to $311,000 in 2022. Average total time deposits increased $60,349,000 to $226,548,000 for the first 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 145 basis points from 0.76% to 2.21% when comparing the first quarter of 2023 to the same period in 2022.

Approximately $143,200,000, or 57%, of time deposits at March 31, 2023 will mature over the next 12 months. The average rate paid on these time deposits is approximately 2.60%. 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 were comprised primarily of sweep accounts structured as repurchase agreements with our commercial customers at March 31, 2023 and March 31, 2022. At March 31, 2023 short-term borrowing also included overnight FHLB borrowing and

43

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

short-term Federal Reserve Bank ("FRB") borrowing. Interest expense on short-term borrowings increased $936,000 for the first quarter of 2023 to $995,000 when compared to the same period in 2022. When comparing these same periods, average balances increased $63,438,000 to $134,918,000. The yield on customer repos increased 73 basis points for the first quarter of 2023 to 1.06%. The yield on the short-term FHLB borrowing was 4.88% for the first quarter of 2023. 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. Average balances of the FRB borrowing were $8,889,000 in short-term borrowings. 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.

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 through the provision for credit losses for the three months ended March 31, 2023 of $1,783,000 for the allowance for credit losses on loans and $22,000 for the allowance for credit losses for unused commitments compared to no adjustment to the allowance for loan losses and an additional $7,000 through non-interest expense for the reserve on unused commitments for the same period in 2022.

QNB's allowance for credit losses on loans of $8,191,000 represents 0.81% of loans receivable at March 31, 2023 compared with an allowance for loan losses of $10,531,000, or 1.01% of loans receivable, at December 31, 2022, and $11,231,000, or 1.21%, at March 31, 2022. Management believes the allowance for credit losses on loans at March 31, 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 recoveries were $532,000 for the three months ended March 31, 2023 compared to net recoveries of $47,000 for the three months ended March 31, 2022. Recoveries of approximately $610,000 during the three months ended March 31, 2023 consisted of one commercial real estate loan of $582,000, $18,000 in repayments from borrowers of previously charged-off credits and overdrafts recoveries of $10,000. These were offset by $78,000 in charge-offs comprising a $43,000 student loan, a $3,000 home-equity loan and overdrafts of $32,000. Annualized net recoveries as a percentage of average loans receivable were 0.21% for the three months ended March 31, 2023, compared to annualized net recoveries of 0.02% for the three months ended March 31, 2022.

44

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Non-performing assets were $8,785,000 at March 31, 2023 compared to $9,121,000 as of December 31, 2022 and $11,647,000 at March 31, 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 0.87% of loans receivable at March 31, 2023, 0.88% at December 31, 2022, and 1.26% of loans receivable at March 31, 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 March 31, 2023, $4,335,000, or approximately 95%, of the loans classified as non-accrual are current or past due less than 30 days. Commercial loans classified as substandard or doubtful totaled $13,579,000, a decrease of $105,000 from the $13,684,000 reported at December 31, 2022 and a decrease of $5,493,000, or 28.8%, from the $19,072,000 reported at March 31, 2022. The decrease in classified loans since December 31, 2022 and since March 31, 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 March 31, 2023, December 31, 2022, or March 31, 2022. Total loans 30 days or more past due, which includes non-accrual loans by actual number of days delinquent, represented 0.60% of loans receivable at March 31, 2023 compared with 0.23% at December 31, 2022, and 0.39% at March 31, 2022.

Troubled debt restructured loans, not classified as non-accrual loans or loans past due 90 days or more and accruing, were $4,224,000 at March 31, 2022, compared with $4,301,000 at December 31, 2022, and $4,375,000 at March 31, 2022. There were no new troubled debt restructuring or modifications identified during the three months ended March 31, 2023. QNB had no other real estate owned or repossessed assets at March 31, 2023, December 31, 2022 or March 31, 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.

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

	March 31,			December 31,			March 31,
	2023			2022			2022
Non-accrual loans	$	4,561		$	4,820		$	7,272
Loans past due 90 days or more and still accruing interest		—			—			—
Troubled debt restructured loans (not already included above)		4,224			4,301			4,375
Total non-performing loans		8,785			9,121			11,647
Total non-performing assets	$	8,785		$	9,121		$	11,647
Total loans (excluding loans held-for-sale):
Average total loans (YTD)	$	1,021,265		$	967,438		$	918,602
Total loans		1,011,956			1,039,385			926,369
Allowance for credit losses on loans		8,191			10,531			11,231
Allowance for loan losses to:
Non-performing loans		93.24	%		115.46	%		96.43	%
Total loans (excluding held-for-sale)		0.81	%		1.01	%		1.21	%
Average total loans (excluding held-for-sale)		0.80	%		1.09	%		1.22	%
Non-performing loans / total loans (excluding held-for-sale)		0.87	%		0.88	%		1.26	%
Non-performing assets / total assets		0.54	%		0.55	%		0.71	%

45

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

An analysis of net loan charge-offs (recoveries) for the three months ended March 31, 2023 compared to 2022 is as follows:

	For the Three Months Ended March 31,
	2023			2022
Net (recoveries) charge-offs	$	(532	)	$	(47	)
Net annualized (recoveries) charge-offs to:
Total loans		(0.21	%)		(0.02	%)
Average total loans excluding held-for-sale		(0.21	%)		(0.02	%)
Allowance for loan losses		(26.34	%)		(1.70	%)

At March 31 2023 and December 31, 2022, the recorded investment in loans for which impairment has been identified totaled $4,561,000 and $9,567,000 of which $3,767,000 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 $794,000 and $4,624,000 at March 31, 2023 and December 31, 2022, respectively, and the related allowance for loan losses associated with these loans was $457,000 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.

NON-INTEREST INCOME

Non-Interest Income Comparison
	For the Three Months Ended March 31,						Change from prior year
	2023			2022			Amount			Percent
Net gain on sales of investment securities	$	(465	)	$	36		$	(501	)		-1391.7	%
Unrealized gain (loss) on investment equity securities		57			(8	)		65			(812.5	)
Fees for services to customers		402			384			18			4.7
ATM and debit card		659			641			18			2.8
Retail brokerage and advisory		234			205			29			14.1
Bank-owned life insurance		86			81			5			6.2
Merchant		93			95			(2	)		(2.1	)
Net gain on sale of loans		6			—			6		N/M
Other		147			177			(30	)		(16.9	)
Total	$	1,219		$	1,611		$	(392	)		-24.3	%

Quarter to Quarter Comparison

Total non-interest income for the first quarter of 2023 was $1,219,000, a decrease of $392,000, compared to $1,611,000 for the first quarter of 2022. Excluding realized and unrealized gains (losses) on securities and gains on sales of loans, non-interest income increased $38,000, or 2.4%, to $1,621,000 for the quarter ended March 31, 2023 compared with the same period in 2022

During the first quarter of 2023, unrealized gains on investment equity securities of $57,000 were recorded compared to losses of $8,000 in the same period of 2022. The unrealized losses and gains for the three months ended March 31, 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 3.39%. 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 March 31, 2023 is $2.37 per diluted share. Details of the equity portfolio’s contribution to net income since January 1, 2016 is detailed in the following table.

46

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Net Income (Expense) on Equity Securities
	For the Year Ended December 31,																						For the Three Months Ended March 31,
		2016			2017			2018			2019			2020			2021			2022			2023			2022
Equity Securities:
Tax-equivalent dividends*		$	233		$	249		$	300		$	274		$	392		$	437		$	399		$	101		$	2,940
Net gain (loss) on sales			758			1,557			(79	)		1,781			585			1,788			405			(208	)		35
OTTI			(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	)		57			(8	)
Tax-equivalent income before tax			799			1,726			(115	)		2,825			930			3,151			(222	)		(50	)		2,967
Tax expense (benefit)*			324			700			(33	)		816			269			910			(64	)		(14	)		857
Net income		$	475		$	1,026		$	(82	)	$	2,009		$	661		$	2,241		$	(158	)	$	(36	)	$	2,110
Earnings per share - basic		$	0.14		$	0.30		$	(0.02	)	$	0.57		$	0.19		$	0.63		$	(0.04	)	$	(0.01	)	$	0.59
Earnings per share - diluted		$	0.14		$	0.30		$	(0.02	)	$	0.57		$	0.19		$	0.63		$	(0.04	)	$	(0.01	)	$	0.59
Tax-equivalent yield*			3.13	%		3.49	%		3.08	%		3.31	%		3.54	%		3.02	%		3.32	%		3.39	%		1.66	%
*Based on Federal tax rates of 34% for the 2016 period and 21% for all 2017, 2018, 2019, 2020, 2021, 2022 and 2023 periods.

QNB originates residential mortgage loans for sale in the secondary market. Net gain on sale of loans was $6,000 for first quarter of 2023; there were no sales in the first 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. Proceeds from the sale of residential mortgages were $388,000 for the first quarter of 2023.

Fees for services to customers increased $18,000 to $402,000 for the first quarter of 2023, due primarily to an increase in net overdraft income. ATM and debit card income decreased $18,000 to $659,000 for the first quarter of 2023, compared to the same period in 2022, due primarily to debit card interchange fee income.

QNB provides securities and advisory services under the name QNB Financial Services. Retail brokerage and advisory fees increased for the first quarter of 2023 compared to the same period in 2022. Advisory fees decreased $12,000 for the first quarter of 2023 compared with the same period in 2022 due to a decrease in the value of assets under management, while transactional fees increased $41,000 when comparing the first quarters of 2023 and 2022 due to sales of annuity products.

Other non-interest income decreased $30,000. There was a decrease in title company income of $19,000 due to the decreased volume of mortgage originations and a decrease of $11,000 in mortgages servicing fees.

47

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

NON-INTEREST EXPENSE

Non-Interest Expense Comparison
	For the Three Months Ended March 31,				Change from prior year
	2023		2022		Amount			Percent
Salaries and employee benefits	$	4,563	$	4,266	$	297			7.0	%
Net occupancy		540		578		(38	)		(6.6	)
Furniture and equipment		837		687		150			21.8
Marketing		203		194		9			4.6
Third-party services		609		667		(58	)		(8.7	)
Telephone, postage and supplies		167		194		(27	)		(13.9	)
State taxes		124		272		(148	)		(54.4	)
FDIC insurance premiums		175		217		(42	)		(19.4	)
Other		982		738		244			33.1
Total	$	8,200	$	7,813	$	387			5.0	%

Quarter to Quarter Comparison

Total non-interest expense was $8,200,000 for the first quarter of 2023, an increase of $387,000 compared to the first 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 $297,000, or 7.0%, to $4,563,000 when comparing the two quarters. Salary expense and related payroll taxes increased $361,000 to $3,967,000 during the first 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, decreased $61,000 when comparing the two quarters due to a decrease in medical claims.

Net occupancy and furniture and equipment expenses combined increased $112,000, or 8.9%, when comparing the first quarters of 2023 and 2022. This is due primarily to increased software maintenance expense. Marketing expense increased $9,000, or 4.6%, to $203,000 for the quarter ended March 31, 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 decreased $58,000 primarily due to lower legal costs. State taxes decreased $148,000, or 54.4%, due to lower banks shares tax as there was a decline in capital from year-end 2021 to year-end 2022. FDIC insurance premiums decreased $42,000 due to a reduction in the assessment rate.

Other non-interest expense increased $224,000, or 33.1%, due to a $144,000 increase in deposit-related charge-offs related to fraud, an increase in check-card expense of $51,000, and an increase in director fees of $28,000.

INCOME TAXES

QNB utilizes an asset and liability approach for financial accounting and reporting of income taxes. As of March 31, 2023, QNB’s net deferred tax asset was $20,169,000. The primary components of deferred taxes are deferred tax assets of which $19,169,000 relates to investment securities fair value adjustments and $1,720,000 relates to the allowance for credit losses on loans. 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 decrease in the balance of net deferred tax assets when comparing March 31, 2023 to December 31, 2022 is due to the improvement in unrealized losses on available for sale securities at March 31, 2023 compared to December 31, 2022, contributing $2,396,000 of the increase.

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.

48

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Applicable income tax expense was $1,123,000 for the quarter ended March 31, 2023, compared to $824,000 for the quarter ended March 31, 2022. The effective tax rate for the first quarter ended March 31, 2023 was 21.4% compared with 18.2% for the same period in 2022. The increase in the effective tax rate for the three months ended March 31, 2023 as pre-tax income was higher in 2023 compared to 2022 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 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 March 31, 2023 were $1,626,499,000 compared with $1,668,497,000 at December 31, 2022. Cash and cash equivalents decreased $1,698,000 from $15,899,000 at December 31, 2022 to $14,201,000 at March 31, 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 $8,621,000, due to maturities and prepayments of $10,210,000 and sales of $9,081,000; partly offset by improvement in the fair value mark of $11,409,000.

Loans receivable decreased $27,429,000 with commercial loans decreasing $26,565,000 to $844,980,000 at March 31, 2023, compared with $871,545,000 at year-end 2022.

Deposits grew $6,221,000 from December 31, 2022 to March 31, 2023. Non-interest-bearing demand deposits decreased $19,590,000, with balances of $212,259,000 at March 31, 2023 compared with $213,849,000 at year-end 2022. Interest-bearing demand balances, excluding municipal deposits, decreased $12,325,000, or 3.7%, to $322,261,000, with decreases in personal interest-bearing checking and the business checking product as customer used funds to paydown higher-yielding loans or moving funds to high-yielding products. The $16,747,000 increase in money market accounts was primarily to a new premium money market product offered to both personal and business customers. The $43,313,000 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 $74,567,000 from December 31, 2022 to March 31, 2023 as customers took advantage of higher-yields time deposits, moving from lower-yielding products. Municipal deposit balances decreased $9,865,000, to $108,476,000, during the first three 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 31.7%, from $161,327,000 at December 31, 2022 to $110,192,000 at March 31, 2023. Commercial sweep accounts comprised most of balance of the short-term borrowing in both periods and decreased $9,117,000; 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 March 31, 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 pre-payment penalties. 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.

49

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 March 31, 2023 the Bank had a maximum borrowing availability with the FHLB of approximately $392,410,000, which is net of a $350,000 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 five correspondent banks totaling $91,000,000. At March 31, 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 March 31, 2023.

Liquid sources of funds, including cash, available-for-sale and equity investment securities, and loans held-for-sale have decreased $10,079,000 since December 31, 2022, totaling $564,401,000 at March 31, 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 $6,221,000, net proceeds from available-for-sale investment activities provided $19,291,000, and net payments on loans provided $27,961,000 in net proceeds; combined the proceeds enabled the net paydown on short-term borrowings and long-term debt of $61,135,000. 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 $283,019,000 and $237,645,000 of available-for-sale debt securities at March 31, 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.

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 March 31, 2023 was $83,874,000, or 5.16% of total assets, compared with shareholders' equity of $70,958,000, or 4.25% of total assets, at December 31, 2022. Shareholders’ equity at March 31, 2023 included a negative adjustment of $71,114,000 compared to a negative adjustment of $81,127,000 at December 31, 2022, related to unrealized holding losses, net of taxes, on investment securities available-for-sale. Without these adjustments, shareholders' equity to total assets would have been 9.18% and 8.68% at March 31, 2023 and December 31, 2022, respectively.

Average shareholders' equity and average total assets were $154,503,000 and $1,719,167,000 for the three months ended March 31, 2023, an increase of 8.8% and 2.6%, respectively, from the averages for the three months ended March 31, 2022. The ratio of average total equity to average total assets was 10.81% for the three months ended March 31, 2023 compared to 8.47% for the same period in 2022.

Retained earnings at March 31, 2023 were impacted by three months of net income totaling $4,118,000 and the cumulative effect of a change in accounting policy of $857,0000, offset by dividends declared and paid of $1,328,000 for the three-month period. QNB offers a Dividend Reinvestment and Stock Purchase Plan (the “Plan”) to provide participants a convenient and economical method for investing

50

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 $236,000 to capital during the three months ended March 31, 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 March 31, 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:

	March 31,			December 31,
Capital Analysis	2023			2022
Regulatory Capital
Shareholders' equity	$	83,874		$	70,958
Net unrealized securities losses, net of tax		72,114			81,127
Deferred tax assets on net operating loss		—			—
Disallowed intangible assets		(8	)		(8	)
Common equity tier I capital		155,980			152,077
Tier 1 capital		155,980			152,077
Allowable portion: Allowance for loan losses and reserve    for unfunded commitments		8,291			10,648
Total regulatory capital	$	164,271		$	162,725
Risk-weighted assets	$	1,213,742		$	1,233,758
Quarterly average assets for leverage capital purposes	$	1,719,159		$	1,737,671

	March 31,			December 31,
Capital Ratios	2023			2022
Common equity tier I capital / risk-weighted assets		12.85	%		12.33	%
Tier 1 capital / risk-weighted assets		12.85			12.33
Total regulatory capital / risk-weighted assets		13.53			13.19
Tier 1 capital / average assets (leverage ratio)		9.07			8.75

At March 31, 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 March 31, 2023.

51

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 liability sensitive when its liabilities (deposits and borrowings) reprice faster than its earning assets (loans and securities). 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 March 31, 2023 is liability 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 March 31, 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	March 31,
(in basis points)	2023			2022
+300		-8.93	%		-16.85	%
+200		-5.88	%		-10.53	%
+100		-2.91	%		-4.57	%
-100		2.37	%		-1.49	%
-200		2.62	%		-5.71	%
-300		1.40	%		-11.64	%

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.

QNB is not subject to foreign currency exchange or commodity price risk. At March 31, 2023, QNB did not have any hedging transactions in place such as interest rate swaps, caps, or floors.

52

QNB CORP. AND SUBSIDIARY

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

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 fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

53

QNB CORP. AND SUBSIDIARY

PART II. OTHER INFORMATION

September 30, 2022

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 March 31, 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
January 1, 2023 through January 31, 2023		—	$	—		—		98,000
February 1, 2023 through February 28, 2023		—		—		—		98,000
March 1, 2023 through March 31, 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.

54

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 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.

55

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:        May 10, 2023	By:	/s/ David W. Freeman
		David W. Freeman
		Chief Executive Officer
Date:        May 10, 2023	By:	/s/ Jeffrey Lehocky
		Jeffrey Lehocky
		Chief Financial Officer
Date:         May 10, 2023	By:	/s/ Mary E. Liddle
		Mary E. Liddle
		Chief Accounting Officer, QNB Bank

56

EX-31

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:         May 10, 2023	By:	/s/ David W Freeman
		David W. Freeman
		Chief Executive Officer

EX-31

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:            May 10, 2023	By:	/s/ Jeffrey Lehocky
		Jeffrey Lehocky
		Chief Financial Officer

EX-32

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 March 31, 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:     May 10, 2023	By:	/s/ David W. Freeman
		David W. Freeman
		Chief Executive Officer

EX-32

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 March 31, 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:      May 10, 2023	By:	/s/ Jeffrey Lehocky
		Jeffrey Lehocky
		Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2023	Apr. 28, 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		3,597,345
Amendment Flag	false
Entity Central Index Key	0000750558
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
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 ($)	Mar. 31, 2023	Dec. 31, 2022
Assets
Cash and due from banks	$ 11,452,000	$ 14,657,000
Interest-bearing deposits in banks	2,749,000	1,242,000
Total cash and cash equivalents	14,201,000	15,899,000
Investments:
Available-for-sale (amortized cost $629,187 and $649,217)	537,904,000	546,525,000
Equity securities (cost of $11,885 and $12,081)	11,908,000	12,056,000
Restricted investment in stocks	2,098,000	5,193,000
Loans held-for-sale	388,000
Loans receivable	1,011,956,000	1,039,385,000
Allowance for credit losses on loans	(8,191,000)	(10,531,000)
Net loans	1,003,765,000	1,028,854,000
Bank-owned life insurance	11,712,000	11,625,000
Premises and equipment, net	15,557,000	15,463,000
Accrued interest receivable	3,425,000	5,038,000
Net deferred tax assets	20,169,000	23,077,000
Other assets	5,372,000	4,767,000
Total assets	1,626,499,000	1,668,497,000
Deposits
Demand, non-interest bearing	212,259,000	231,849,000
Interest-bearing demand	430,737,000	452,927,000
Money market	143,790,000	127,043,000
Savings	387,788,000	431,101,000
Time less than $100	104,460,000	91,329,000
Time $100 through $250	112,608,000	59,650,000
Time greater than $250	32,948,000	24,470,000
Total deposits	1,424,590,000	1,418,369,000
Short-term borrowings	110,192,000	161,327,000
Long-term debt		10,000,000
Accrued interest payable	923,000	467,000
Other liabilities	6,920,000	7,376,000
Total liabilities	1,542,625,000	1,597,539,000
Shareholders' Equity
Common stock, par value $0.625 per share; authorized 10,000,000 shares; 3,806,031 shares and 3,796,948 shares issued; 3,597,345 and 3,588,262 shares outstanding	2,379,000	2,373,000
Surplus	25,048,000	24,798,000
Retained earnings	132,598,000	128,951,000
Accumulated other comprehensive loss, net of tax	(72,114,000)	(81,127,000)
Treasury stock, at cost; 208,686 and 208,686 shares	(4,037,000)	(4,037,000)
Total shareholders' equity	83,874,000	70,958,000
Total liabilities and shareholders' equity	$ 1,626,499,000	$ 1,668,497,000

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Statement Of Financial Position [Abstract]
Available-for-sale, amortized cost	$ 629,187	$ 649,217
Equity securities, cost	$ 11,885	$ 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)	3,806,031	3,796,948
Common stock, shares outstanding (in shares)	3,597,345	3,588,262
Treasury stock, shares (in shares)	208,686	208,686

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Interest income
Interest and fees on loans	$ 12,714	$ 9,003
Interest and dividends on available-for-sale & equity securities:
Taxable	2,279	2,274
Tax-exempt	374	517
Interest on interest-bearing balances and other interest income	96	15
Total interest income	15,463	11,809
Interest on deposits
Interest-bearing demand	1,377	237
Money market	342	106
Savings	1,077	321
Time less than $100	382	184
Time of $100 through $250	727	85
Time greater than $250	123	42
Interest on short-term borrowings	995	59
Interest on long-term debt	23	39
Total interest expense	5,046	1,073
Net interest income	10,417	10,736
(Reversal) provision for credit losses	(1,805)
Net interest income after provision for loan losses	12,222	10,736
Non-interest income
Net gain on sales and calls of available-for-sale and equity securities	(465)	36
Unrealized (loss) gain on investment equity securities	57	(8)
Fees for services to customers	402	384
ATM and debit card	659	641
Retail brokerage and advisory	234	205
Bank-owned life insurance	86	81
Merchant	93	95
Net gain on sale of loans	6
Other	147	177
Total non-interest income	1,219	1,611
Non-interest expense
Salaries and employee benefits	4,563	4,266
Net occupancy	540	578
Furniture and equipment	837	687
Marketing	203	194
Third party services	609	667
Telephone, postage and supplies	167	194
State taxes	124	272
FDIC insurance premiums	175	217
Other	982	738
Total non-interest expense	8,200	7,813
Income before income taxes	5,241	4,534
Provision for income taxes	1,123	824
Net income	$ 4,118	$ 3,710
Earnings per share - basic	$ 1.15	$ 1.04
Earnings per share - diluted	1.15	1.04
Cash dividends per share	$ 0.37	$ 0.36

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement Of Income And Comprehensive Income [Abstract]
Net income, Before tax amount	$ 5,241	$ 4,534
Net unrealized holding (losses) gains on available-for-sale securities:
Unrealized holding (losses) gains arising during the period, Before tax amount	11,152	(46,331)
Reclassification adjustment for losses (gains) included in net income, Before tax amount	257	(1)
Other comprehensive (loss) income, Before tax amount	11,409	(46,332)
Unrealized holding (losses) gains arising during the period, Tax expense (benefit)	2,342	(9,731)
Reclassification adjustment for losses (gains) included in net income, Tax expense (benefit)	54
Other comprehensive (loss) income, Tax expense (benefit)	2,396	(9,731)
Unrealized holding (losses) gains arising during the period, Net of tax amount	8,810	(36,600)
Reclassification adjustment for losses (gains) included in net income, Net of tax amount	203	(1)
Other comprehensive (loss) income, Net of tax amount	9,013	(36,601)
Total comprehensive (loss) income, Before tax amount	16,650	(41,798)
Tax expense (benefit)	1,123	824
Total comprehensive (loss) income, Tax expense (benefit)	3,519	(8,907)
Net income	4,118	3,710
Total comprehensive (loss) income, Net of tax amount	$ 13,131	$ (32,891)

XML

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	3,710							3,710
Other comprehensive income (loss), net of tax	(36,601)										(36,601)
Cash dividends declared	(1,279)							(1,279)
Stock issued in connection with dividend reinvestment and stock purchase plan	227			$ 4		223
Stock issued in connection with dividend reinvestment and stock purchase plan (in shares)				6,177
Stock-based compensation expense	22					22
Treasury stock purchase	(75)												(75)
Treasury stock purchase (in shares)				(2,000)
Balance at Mar. 31, 2022	102,498			$ 2,354		23,928		120,594			(40,341)		(4,037)
Balance (in shares) at Mar. 31, 2022				3,557,806
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	$ 4,118							4,118
Other comprehensive income (loss), net of tax	9,013										9,013
Cash dividends declared	(1,328)							(1,328)
Stock issued in connection with dividend reinvestment and stock purchase plan	236			$ 6		230
Stock issued in connection with dividend reinvestment and stock purchase plan (in shares)				9,083
Stock-based compensation expense	20					20
Balance at Mar. 31, 2023	$ 83,874			$ 2,379		$ 25,048		$ 132,598			$ (72,114)		$ (4,037)
Balance (in shares) at Mar. 31, 2023	3,597,345			3,597,345

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Consolidated Statement of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Retained Earnings [Member]
Cash dividends declared, per share (in dollars per share)	$ 0.37	$ 0.36

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating Activities
Net income	$ 4,118,000	$ 3,710,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	412,000	419,000
Provision for credit losses	(1,805,000)
Net loss (gain) on calls and sales of debt and equity securities	465,000	(36,000)
Net unrealized gain on equity securities	(57,000)	8,000
Net gain on sale of loans	(6,000)
Proceeds from sales of residential mortgages held-for-sale	388,000
Origination of residential mortgages held-for-sale	(770,000)
Increase in cash surrender value of bank-owned life insurance	(86,000)	(81,000)
Stock-based compensation expense	20,000	22,000
Deferred income tax provision	284,000	131,000
Net decrease in income taxes payable	(284,000)	(385,000)
Net decrease in accrued interest receivable	1,613,000	323,000
Amortization of mortgage servicing rights and change in valuation allowance	11,000	15,000
Net amortization of premiums and discounts on investment securities	482,000	643,000
Net increase (decrease) in accrued interest payable	456,000	(34,000)
Operating lease payments	(156,000)	(154,000)
Increase in other assets	(343,000)	(759,000)
Decrease in other liabilities	(663,000)	(1,468,000)
Net cash provided by operating activities	4,079,000	2,354,000
Investing Activities
Proceeds from payments, maturities and calls of investments available-for-sale	10,210,000	21,853,000
Proceeds from the sale of investments available-for-sale	9,081,000	0
Proceeds from the sale of equity securities	709,000	262,000
Purchases of investments available-for-sale		(33,312,000)
Purchases of equity securities	(712,000)	(477,000)
Proceeds from redemption of investment in restricted stock	4,944,000	1,827,000
Purchases of restricted stock	(1,849,000)	(1,835,000)
Net decrease in loans	27,961,000	148,000
Net purchases of premises and equipment	(115,000)	(93,000)
Net cash provided (used in) investing activities	50,229,000	(11,627,000)
Financing Activities
Net decrease in non-interest bearing deposits	(19,590,000)	(982,000)
Net increase in interest-bearing deposits	25,811,000	2,990,000
Net decrease in short-term borrowings	(51,135,000)	8,262,000
Repayment of long-term debt	(10,000,000)
Cash dividends paid, net of reinvestment	(1,151,000)	(1,131,000)
Purchase of treasury shares		(75,000)
Proceeds from issuance of common stock	59,000	79,000
Net cash (used in) provided by financing activities	(56,006,000)	9,143,000
(Decrease) increase in cash and cash equivalents	(1,698,000)	(130,000)
Cash and cash equivalents at beginning of year	15,899,000	13,390,000
Cash and cash equivalents at end of period	14,201,000	13,260,000
Supplemental Cash Flow Disclosures
Interest paid	4,590,000	1,106,000
Net income taxes paid	1,123,000	1,078,000
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

3 Months Ended

Mar. 31, 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-month period ended March 31, 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 March 31, 2023 for items that should potentially be recognized or disclosed in these consolidated financial statements.

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Note 2 - Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2023

New Accounting Pronouncements And Changes In Accounting Principles [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

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Note 3 - Stock-based Compensation and Shareholders' Equity

3 Months Ended

Mar. 31, 2023

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation and Shareholders Equity

3. STOCK-BASED COMPENSATION AND SHAREHOLDERS’ EQUITY

QNB sponsors stock-based compensation plans, 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 was $20,000 and $22,000 for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, there was approximately $236,000 of unrecognized compensation cost related to unvested share-based compensation award grants that is expected to be recognized over the next 59 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 March 31, 2023, 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 Three Months Ended March 31,	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 three months ended March 31, 2023 and 2022 was $4.11 and $5.20, respectively.

Stock option activity during the three months ended March 31, 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 March 31, 2023		121,550		$	34.29		4.59	$	—
Exercisable at March 31, 2023		41,375		$	37.37		1.35	$	—

	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		(21,250	)		37.69
Outstanding at March 31, 2022		122,050		$	37.49		3.01	$	117
Exercisable at March 31, 2022		44,500		$	40.86		1.39	$	—

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Note 4 - Earnings Per Share & Share Repurchase Plan

3 Months Ended

Mar. 31, 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 March 31,
	2023		2022
Numerator for basic and diluted earnings per share - net income	$	4,118	$	3,710
Denominator for basic earnings per share - weighted    average shares outstanding		3,588,363		3,552,854
Effect of dilutive securities - employee stock options		—		1,602
Denominator for diluted earnings per share - adjusted    weighted average shares outstanding		3,588,363		3,554,456
Earnings per share - basic	$	1.15	$	1.04
Earnings per share - diluted		1.15		1.04

There were 121,550 and 92,200 stock options that were anti-dilutive for the three-month periods ended March 31, 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 three months ended March 31, 2023 and 2022, respectively. As of March 31, 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)

3 Months Ended

Mar. 31, 2023

Other Comprehensive Income Loss Tax [Abstract]

Comprehensive Income (Loss)

5. COMPREHENSIVE INCOME (LOSS)

The following shows the components of accumulated other comprehensive income (loss) at March 31, 2023 and December 31, 2022:

	March 31,			December 31,
	2023			2022
Unrealized net holding losses on available-for-sale    securities	$	(91,283	)	$	(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		—			—
Accumulated other loss		(91,283	)		(102,692	)
Tax effect		19,169			21,565
Accumulated other comprehensive loss, net of tax	$	(72,114	)	$	(81,127	)

The following table presents amounts reclassified out of accumulated other comprehensive income (loss) for the three months ended March 31, 2023 and 2022:

For the Three Months Ended March 31,	Amount reclassified from accumulated other comprehensive income
Details about accumulated other comprehensive income	2023			2022		Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	(257	)	$	1	Net gain on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—	Net other-than-temporary impairment losses on investment securities
		(257	)		1
Tax effect		54			—	Provision for income taxes
Total reclassification out of accumulated other comprehensive (loss) income, net of tax	$	(203	)	$	1	Net of tax

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Note 6 - Investment Securities

3 Months Ended

Mar. 31, 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 March 31, 2023 and December 31, 2022 were as follows:

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
March 31, 2023	value		gains		losses			cost
U.S. Treasury	$	—	$	—	$	—		$	—
U.S. Government agency		88,701		—		(13,243	)		101,944
State and municipal		89,917		—		(19,514	)		109,431
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		252,984		—		(41,314	)		294,298
Collateralized mortgage obligations (CMOs)		100,083		—		(16,800	)		116,883
Corporate debt		6,219		—		(412	)		6,631
Total investment debt securities available-for-sale	$	537,904	$	—	$	(91,283	)	$	629,187

			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 March 31, 2023 are 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.

March 31, 2023	Fair value		Amortized cost
Due in one year or less	$	329	$	338
Due after one year through five years		114,266		126,292
Due after five years through ten years		344,044		405,060
Due after ten years		79,265		97,497
Total investment debt securities available-for-sale	$	537,904	$	629,187

Proceeds from sales of investment securities available-for-sale were approximately $9,081,000 and $0 for the three months ended March 31, 2023 and 2022, respectively.

At March 31, 2023 and December 31, 2022, investment securities available-for-sale totaling approximately $283,019,000 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 other-than-temporary impairment (“OTTI”) 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 other-than-temporary impairment charges:

	For the Three Months Ended March 31,
	2023			2022
Gross realized gains	$	—		$	1
Gross realized losses		(257	)		—
Other-than-temporary impairment		—			—
Total net gains (losses) on AFS securities	$	(257	)	$	1

The tax applicable to the net realized gains for both of the three-month periods ended March 31, 2023 and 2022 was $54,000 and $0, respectively.

QNB recognizes OTTI 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 months ended March 31, 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 March 31, 2023 and December 31, 2022:

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
March 31, 2023	securities		value		losses			value		losses			value		losses
U.S. Government agency		46	$	—	$	—		$	88,701	$	(13,243	)	$	88,701	$	(13,243	)
State and municipal		192		4,746		(223	)		85,171		(19,291	)		89,917		(19,514	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		191		4,584		(295	)		248,400		(41,019	)		252,984		(41,314	)
Collateralized mortgage obligations (CMOs)		128		8,213		(534	)		91,870		(16,266	)		100,083		(16,800	)
Corporate debt		4		2,909		(91	)		3,310		(321	)		6,219		(412	)
Total		561	$	20,452	$	(1,143	)	$	517,452	$	(90,140	)	$	537,904	$	(91,283	)

			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 March 31, 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 March 31, 2023. This security has a total amortized cost of approximately $61,000 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 March 31, 2023 and December 31, 2022, the Company had $11,908,000 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 months ended March 31, 2023 and 2022:

	For the Three Months Ended March 31,
	2023			2022
Net (loss) gains recognized during the period on equity securities	$	(151	)	$	27
Less: Net (losses) gains recognized during the period on equity securities sold during the period		(208	)		35
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	57		$	(8	)

Taxes applicable to the net losses recognized for the three months ended March 31, 2023 resulted in an expense of $44,000 compared to a net gain of $8,000 recognized for the three months ended March 31, 2022. Proceeds from sales of investment equity securities were $709,000 and $262,000 for the three months ended March 31, 2023 and 2022, respectively.

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Note 7 - Restricted Investment in Stocks

3 Months Ended

Mar. 31, 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 $1,086,000, 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 March 31, 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 (1.5991 as of December 29, 2022), 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 OTTI periodically. As of March 31, 2023, there was no OTTI associated with these shares.

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Note 8 - Loans & Allowance for Loan Losses

3 Months Ended

Mar. 31, 2023

Receivables [Abstract]

Loans & Allowance for Loan Losses

8. LOANS & ALLOWANCE FOR LOAN LOSSES

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:

	March 31,
	2023
Commercial:
Commercial and industrial	$	144,909
Construction and land development		59,639
Real estate secured by multi-family properties		98,886
Real estate secured by owner-occupied properties		156,812
Real estate secured by other commercial properties		257,944
Revolving real estate secured by 1-4 family properties-business		6,552
Real estate secured by 1st lien on 1-4 family properties-business		96,703
Real estate secured by junior lien on 1-4 family properties-business		3,457
State and political subdivisions		20,078
Retail:
1-4 family residential mortgages		106,758
Construction-individual		152
Revolving home equity secured by 1-4 family properties-personal		34,454
Real estate secured by 1st lien on 1-4 family properties-personal		10,697
Real estate secured by junior lien on 1-4 family properties-personal		11,355
Student loans		1,917
Overdrafts		103
Other consumer		1,736
Total loans		1,012,152
Net unearned (fees) costs		(196	)
Allowance for credit losses on loans		(8,191	)
Loans receivable, net	$	1,003,765

	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 March 31, 2023 and December 31, 2022:

	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	3,608	$	16,665	$	10,412	$	8,233	$	7,095	$	8,984	$	87,955	$	142,952
Special mention		—		—		—		—		—		—		28		28
Substandard		—		179		—		4		24		242		1,480		1,929
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	3,608	$	16,844	$	10,412	$	8,237	$	7,119	$	9,226	$	89,463	$	144,909
Construction and land development:
Risk rating
Pass	$	6,821	$	27,572	$	13,172	$	3,441	$	4,160	$	4,424	$	—	$	59,590
Special mention		—		—		—		—		—		49		—		49
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	6,821	$	27,572	$	13,172	$	3,441	$	4,160	$	4,473	$	—	$	59,639
Real estate secured by multi-family properties:
Risk rating
Pass	$	100	$	27,489	$	23,048	$	10,258	$	6,005	$	29,533	$	—	$	96,433
Special mention		—		—		—		—		718		1,735		—		2,453
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	100	$	27,489	$	23,048	$	10,258	$	6,723	$	31,268	$	—	$	98,886
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	1,338	$	27,684	$	29,038	$	19,841	$	12,403	$	59,744	$	—	$	150,048
Special mention		—		—		127		—		—		—		—		127
Substandard		—		—		6		—		—		6,631		—		6,637
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	1,338	$	27,684	$	29,171	$	19,841	$	12,403	$	66,375	$	—	$	156,812
Real estate secured by other commercial properties:
Risk rating
Pass	$	7,015	$	45,257	$	46,480	$	20,637	$	32,055	$	102,370	$	—	$	253,814
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		4,130		—		4,130
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	7,015	$	45,257	$	46,480	$	20,637	$	32,055	$	106,500	$	—	$	257,944

	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	6,552	$	6,552
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	6,552	$	6,552
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	2,170		28,943		21,342		11,431		9,148		22,722		—		95,756
Special mention		—		193		139		—		—		—		—		332
Substandard		—		—		—		—		455		160		—		615
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by 1st lien on 1-4 family properties-business	$	2,170	$	29,136	$	21,481	$	11,431	$	9,603	$	22,882	$	—	$	96,703
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	306	$	632	$	567	$	633	$	45	$	1,006	$	—	$	3,189
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		268		—		268
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	306	$	632	$	567	$	633	$	45	$	1,274	$	—	$	3,457
State and political subdivisions:
Risk rating
Pass	$	—	$	40	$	5,017	$	25	$	5,931	$	9,065	$	—	$	20,078
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	—	$	40	$	5,017	$	25	$	5,931	$	9,065	$	—	$	20,078
Total Commercial Loans:
Risk rating
Pass		21,358		174,282		149,076		74,499		76,842		237,848		94,507		828,412
Special mention		—		193		266		—		718		1,784		28		2,989
Substandard		—		179		6		4		479		11,431		1,480		13,579
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	21,358	$	174,654	$	149,348	$	74,503	$	78,039	$	251,063	$	96,015	$	844,980

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 March 31, 2023 and December 2022:

	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Retail Loans
1-4 family residential mortgages:
Payment performance
Performing	$	3,029	$	15,329	$	33,433	$	21,625	$	4,797	$	28,097	$	—	$	106,310
Nonperforming		—		—		—		—		—		448		—		448
Total 1-4 family residential mortgages	$	3,029	$	15,329	$	33,433	$	21,625	$	4,797	$	28,545	$	—	$	106,758
Construction-individual:
Payment performance
Performing	$	—	$	—	$	152	$	—	$	—	$	—	$	—	$	152
Nonperforming		—		—		—		—		—		—		—		—
Total construction-individual	$	—	$	—	$	152	$	—	$	—	$	—	$	—	$	152
Revolving home equity secured by 1-4 family properties-personal:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	34,271	$	34,271
Nonperforming		—		—		—		—		—		—		183		183
Total revolving home equity secured by 1-4 family properties-personal	$	—	$	—	$	—	$	—	$	—	$	—	$	34,454	$	34,454
Real estate secured by 1st lien on 1-4 family properties-personal:
Payment performance
Performing	$	639	$	1,771	$	3,486	$	1,117	$	1,109	$	2,438	$	—	$	10,560
Nonperforming		—		—		—		—		—		137		—		137
Total real estate secured by 1st lien Real estate secured by 1st lien on 1-4 family properties-personal	$	639	$	1,771	$	3,486	$	1,117	$	1,109	$	2,575	$	—	$	10,697
Real estate secured by junior lien on 1-4 family properties-personal:
Payment performance
Performing	$	946	$	1,887	$	2,613	$	1,510	$	766	$	3,633	$	—	$	11,355
Nonperforming		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-personal	$	946	$	1,887	$	2,613	$	1,510	$	766	$	3,633	$	—	$	11,355
Student loans:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	1,900	$	—	$	1,900
Nonperforming		—		—		—		—		—		17		—		17
Total student loans	$	—	$	—	$	—	$	—	$	—	$	1,917	$	—	$	1,917
Overdrafts:
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	103	$	103
Nonperforming		—		—		—		—		—		—		—		—
Total overdrafts	$	—	$	—	$	—	$	—	$	—	$	—	$	103	$	103
Other consumer:
Payment performance
Performing	$	163	$	474	$	446	$	175	$	155	$	78	$	202	$	1,693
Nonperforming		—		—		—		—		—		43		—		43
Total other consumer	$	163	$	474	$	446	$	175	$	155	$	121	$	202	$	1,736
Total Retail Loans:
Payment performance
Performing	$	4,777	$	19,461	$	40,130	$	24,427	$	6,827	$	36,146	$	34,576	$	166,344
Nonperforming		—		—		—		—		—		645		183		828
Total Retail Loans	$	4,777	$	19,461	$	40,130	$	24,427	$	6,827	$	36,791	$	34,759	$	167,172

December 31, 2022	Performing		Non-performing		Total
Retail:
1-4 family residential mortgages	$	104,933	$	721	$	105,654
Home equity loans and lines		62,900		680		63,580
Consumer		4,023		90		4,113
Total	$	171,856	$	1,491	$	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 March 31, 2023 and December 31, 2022:

March 31, 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	$	40	$	—	$	—	$	40	$	144,869	$	144,909
Construction and land development		—		—		—		—		59,639		59,639
Real estate secured by multi-family properties		—		—		—		—		98,886		98,886
Real estate secured by owner-occupied properties		2,978		—		—		2,978		153,834		156,812
Real estate secured by other commercial properties		1,588		—		—		1,588		256,356		257,944
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		6,552		6,552
Real estate secured by 1st lien on 1-4 family properties-business		—		—		9		9		96,694		96,703
Real estate secured by junior lien on 1-4 family properties-business		—		—		—		—		3,457		3,457
State and political subdivisions		—		—		—		—		20,078		20,078
Retail:
1-4 family residential mortgages		1,130		—		116		1,246		105,512		106,758
Construction-individual		—		—		—		—		152		152
Revolving home equity secured by 1-4 family properties-personal		—		53		—		53		34,401		34,454
Real estate secured by 1st lien on 1-4 family properties-personal		—		—		101		101		10,596		10,697
Real estate secured by junior lien on 1-4 family properties-personal		19		—		—		19		11,336		11,355
Student loans		—		—		—		—		1,917		1,917
Overdrafts		16		6		—		22		81		103
Other consumer		9		—		—		9		1,727		1,736
Total	$	5,780	$	59	$	226	$	6,065	$	1,006,087	$	1,012,152

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	$	2,288	$	1	$	596	$	2,885	$	157,990	$	160,875
Construction		—		—		—		—		62,955		62,955
Secured by commercial real estate		—		—		—		—		518,070		518,070
Secured by residential real estate		—		—		30		30		103,389		103,419
State and political subdivisions		—		—		—		—		20,971		20,971
Retail:
1-4 family residential mortgages		1,139		—		127		1,266		104,388		105,654
Home equity loans and lines		21		—		10		31		63,549		63,580
Consumer		20		11		—		31		4,082		4,113
Total	$	3,468	$	12	$	763	$	4,243	$	1,035,394	$	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 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 March 31, 2023:

March 31, 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	$	—	$	—	$	391	$	391
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		825		—		825
Real estate secured by other commercial properties		—		2,263		—		2,263
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		9		—		9
Real estate secured by junior lien on 1-4 family properties-business		—		—		245		245
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		448		—		448
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		25		158		183
Real estate secured by 1st lien on 1-4 family properties-personal		—		137		—		137
Real estate secured by junior lien on 1-4 family properties-personal		—		—				—
Student loans		—		17		—		17
Other consumer		—		43		—		43
Total	$	—	$	3,767	$	794	$	4,561

QNB recognized interest income of $14,000 on non-accrual loans during the three months ended March 31, 2023.

The following table presents the collateral-dependent loans by loan category at March 31, 2023:

March 31, 2023	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	294	$	97	$	391
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		825		—		—		825
Real estate secured by other commercial properties		2,263		—		—		2,263
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		9						9
Real estate secured by junior lien on 1-4 family properties-business		—		—		245		245
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		448		—		—		448
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		68		—		115		183
Real estate secured by 1st lien on 1-4 family properties-personal		137		—		—		137
Real estate secured by junior lien on 1-4 family properties-personal		—		—		—		—
Other consumer		—		43		—		43
Total	$	3,750	$	337	$	457	$	4,544
(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	$	—	$	3,369
Construction		—		—
Secured by commercial real estate		—		2,279
Secured by residential real estate		—		391
State and political subdivisions		—		—
Retail:
1-4 family residential mortgages		—		721
Home equity loans and lines		—		680
Consumer		—		90
Total	$	—	$	7,530

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 months ended March 31, 2023 and 2022 are as follows:

For the Three Months Ended March 31, 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	)	$	(940	)	$	—		$	593	$	899
Construction and land development		755		(10	)		4			—			—		749
Real estate secured by multi-family properties		995		684			(102	)		—			—		1,577
Real estate secured by owner-occupied properties		1,549		(374	)		(203	)		—			—		972
Real estate secured by other commercial properties		2,458		(1,128	)		(239	)		—			—		1,091
Revolving real estate secured by 1-4 family properties-business		25		7			2			—			—		34
Real estate secured by 1st lien on 1-4 family properties-business		1,210		490			(430	)		—			3		1,273
Real estate secured by junior lien on 1-4 family properties-business		30		(14	)		242			—			—		258
State and political subdivisions		94		(20	)		(19	)		—			—		55
Retail:
1-4 family residential mortgages		682		(196	)		(81	)		—			—		405
Construction-individual		1		-			-			—			—		1
Revolving home equity secured by 1-4 family properties-personal		299		(7	)		(43	)		—			—		249
Real estate secured by 1st lien on 1-4 family properties-personal		57		15			(8	)		—			—		64
Real estate secured by junior lien on 1-4 family properties-personal		55		29			(9	)		—			2		77
Student loans		454		12			(17	)		(3	)		2		448
Overdrafts		8		3			31			(43	)		10		9
Other consumer		41		(8	)		29			(32	)		—		30
Unallocated		502		(502	)		-		N/A			N/A			—
Total	$	10,531	$	(1,089	)	$	(1,783	)	$	(78	)	$	610	$	8,191

For the Three Months Ended March 31, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	4,050	$	(658	)	$	—		$	32	$	3,424
Construction		346		43			—			—		389
Secured by commercial real estate		3,736		417			—			—		4,153
Secured by residential real estate		871		270			(38	)		19		1,122
State and political subdivisions		89		(1	)		—			—		88
Retail:
1-4 family residential mortgages		533		32			—			—		565
Home equity loans and lines		386		(22	)		(12	)		6		358
Consumer		265		356			(111	)		34		544
Unallocated		550		21		N/A			N/A			571
Total	$	10,826	$	458		$	(161	)	$	91	$	11,214

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 is 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 include the 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 classified as TDRs are considered non-performing.

The concessions made for the 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.

Since the implementation of ASU 326 on January 1, 2023, the Company measures loan modifications to borrowers in financial distress as either a TDR or a troubled debt modification ("TDM"). If the modification is not considered a TDR it is further analyzed for consideration as a 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 loans modified as TDRs or TDMs in 2023. 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 three months ended March 31, 2023 and 2022, respectively, on loans modified within 12 months prior to March 31, 2023 and 2022, respectively.

Performing TDRs (not reported as non-accrual or past due 90 days or more and still accruing) totaled $4,224,000 and $4,301,000 as of March 31, 2023 and December 31, 2022, respectively. Non-performing TDRs totaled $333,000 and $371,000 as of March 31, 2023 and December 31, 2022, respectively. Non-accrual TDRs are included in the specific reserve calculation in 2023. All TDRs were included in the specific reserve calculation for 2022.

The following table illustrates the specific reserve for loan losses allocated to loans modified as 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.

	March 31, 2023				December 31, 2022
	Unpaid principal balance		Related allowance		Unpaid principal balance		Related allowance
TDRs with no specific allowance recorded	$	4,312	$	—	$	1,272	$	—
TDRs with an allowance recorded		245		245		3,400		392
Total	$	4,557	$	245	$	4,672	$	392

As of March 31, 2023 and December 31, 2022, QNB had $7,000 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 months ended March 31, 2023 and 2022, resulting from loans previously modified as TDRs.

The Company has one loan secured by residential real estate for which foreclosure proceedings are in process at March 31, 2023 with a total recorded investment of $116,000.

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Note 9 - Fair Value Measurements and Disclosures

3 Months Ended

Mar. 31, 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 March 31, 2023:

March 31, 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	$	—	$	—	$	—	$	—
U.S. Government agency securities		—		88,701		—		88,701
State and municipal securities		—		89,917		—		89,917
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities		—		252,984		—		252,984
Collateralized mortgage obligations (CMOs)		—		100,083		—		100,083
Corporate debt securities		—		6,167		52		6,219
Total debt securities available-for-sale		—		537,852		52		537,904
Equity securities		11,908		—		—		11,908
Total recurring fair value measurements	$	11,908	$	537,852	$	52	$	549,812
Nonrecurring fair value measurements*
Impaired loans	$	—	$	—	$	337	$	337
Mortgage servicing rights		—		—		1		1
Total nonrecurring fair value measurements	$	—	$	—	$	338	$	338
*Impairment

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 months ended March 31, 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-month period ended March 31, 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
March 31, 2023	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Impaired loans	$	43	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-20% 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		118% to 254%
					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 three months ended March 31, 2023 and 2022:

	Fair value measurements using significant unobservable inputs (Level 3)
	2023			2022
Balance, January 1,	$	53		$	75
Payments received		—			(22	)
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, March 31,	$	52		$	53

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 March 31, 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 or 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 March 31, 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 7.67% 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 March 31, 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 (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.

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
March 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	$	14,201	$	14,201	$	14,201	$	—	$	—
Investment securities:
Available-for-sale		537,904		537,904		—		537,852		52
Equities		11,908		11,908		11,908		—		—
Restricted investment in stocks		2,098		2,098		—		2,098		—
Loans held for sale		388		389		—		389		—
Net loans		1,003,765		980,285		—		—		980,285
Mortgage servicing rights		460		621		—		—		621
Accrued interest receivable		3,425		3,425		—		3,425		—
Financial liabilities
Deposits with no stated maturities	$	1,174,574	$	1,174,574	$	1,174,574	$	—	$	—
Deposits with stated maturities		250,016		244,751		—		244,751		—
Short-term borrowings		110,192		110,192		110,192		—		—
Long-term debt		—		—		—		—		—
Accrued interest payable		923		923		—		923		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		83		—		83		—

					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

3 Months Ended

Mar. 31, 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:

	March 31,		December 31,
	2023		2022
Commitments to extend credit and unused lines of credit	$	389,336	$	339,312
Standby letters of credit		20,359		19,512
Total financial instrument commitments	$	409,695	$	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 $17,633,000 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 March 31, 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 three months ended March 31, 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

3 Months Ended

Mar. 31, 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 the 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 March 31, 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
March 31, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	164,271		13.53	%	$	97,099		8.00	%	$	121,374		10.00	%
Bank		151,466		12.86			94,219	8.00				117,774	10.00
Tier 1 capital (to risk-weighted assets):
The Company	$	155,980		12.85			72,825	6.00				72,825	6.00
Bank		143,175		12.16			70,664	6.00				94,219	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		155,980		12.85			54,618	4.50			N/A		N/A
Bank		143,175		12.16			52,998	4.50				76,553	6.50
Tier 1 capital (to average assets):
The Company		155,980		9.07			68,766	4.00			N/A		N/A
Bank		143,175		8.39			68,249	4.00				85,311	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

3 Months Ended

Mar. 31, 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 2 - Recent Accounting Pronouncements (Tables)

3 Months Ended

Mar. 31, 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)

3 Months Ended

Mar. 31, 2023

Disclosure Of Compensation Related Costs Sharebased Payments [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 Three Months Ended March 31,	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 three months ended March 31, 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 March 31, 2023		121,550		$	34.29		4.59	$	—
Exercisable at March 31, 2023		41,375		$	37.37		1.35	$	—

	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		(21,250	)		37.69
Outstanding at March 31, 2022		122,050		$	37.49		3.01	$	117
Exercisable at March 31, 2022		44,500		$	40.86		1.39	$	—

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

3 Months Ended

Mar. 31, 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 March 31,
	2023		2022
Numerator for basic and diluted earnings per share - net income	$	4,118	$	3,710
Denominator for basic earnings per share - weighted    average shares outstanding		3,588,363		3,552,854
Effect of dilutive securities - employee stock options		—		1,602
Denominator for diluted earnings per share - adjusted    weighted average shares outstanding		3,588,363		3,554,456
Earnings per share - basic	$	1.15	$	1.04
Earnings per share - diluted		1.15		1.04

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Note 5 - Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2023

Other Comprehensive Income Loss Tax [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

The following shows the components of accumulated other comprehensive income (loss) at March 31, 2023 and December 31, 2022:

	March 31,			December 31,
	2023			2022
Unrealized net holding losses on available-for-sale    securities	$	(91,283	)	$	(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		—			—
Accumulated other loss		(91,283	)		(102,692	)
Tax effect		19,169			21,565
Accumulated other comprehensive loss, net of tax	$	(72,114	)	$	(81,127	)

Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss)

The following table presents amounts reclassified out of accumulated other comprehensive income (loss) for the three months ended March 31, 2023 and 2022:

For the Three Months Ended March 31,	Amount reclassified from accumulated other comprehensive income
Details about accumulated other comprehensive income	2023			2022		Affected line item in statement of income
Unrealized net holding (losses) gains on available-for-sale securities	$	(257	)	$	1	Net gain on sales of investments available-for-sale
Other-than-temporary impairment on investment securities		—			—	Net other-than-temporary impairment losses on investment securities
		(257	)		1
Tax effect		54			—	Provision for income taxes
Total reclassification out of accumulated other comprehensive (loss) income, net of tax	$	(203	)	$	1	Net of tax

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Note 6 - Investment Securities (Tables)

3 Months Ended

Mar. 31, 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 March 31, 2023 and December 31, 2022 were as follows:

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
March 31, 2023	value		gains		losses			cost
U.S. Treasury	$	—	$	—	$	—		$	—
U.S. Government agency		88,701		—		(13,243	)		101,944
State and municipal		89,917		—		(19,514	)		109,431
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		252,984		—		(41,314	)		294,298
Collateralized mortgage obligations (CMOs)		100,083		—		(16,800	)		116,883
Corporate debt		6,219		—		(412	)		6,631
Total investment debt securities available-for-sale	$	537,904	$	—	$	(91,283	)	$	629,187

			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 March 31, 2023 are shown in the following table.

March 31, 2023	Fair value		Amortized cost
Due in one year or less	$	329	$	338
Due after one year through five years		114,266		126,292
Due after five years through ten years		344,044		405,060
Due after ten years		79,265		97,497
Total investment debt securities available-for-sale	$	537,904	$	629,187

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 other-than-temporary impairment (“OTTI”) of these investments.

	For the Three Months Ended March 31,
	2023			2022
Gross realized gains	$	—		$	1
Gross realized losses		(257	)		—
Other-than-temporary impairment		—			—
Total net gains (losses) on AFS securities	$	(257	)	$	1

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 March 31, 2023 and December 31, 2022:

			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
March 31, 2023	securities		value		losses			value		losses			value		losses
U.S. Government agency		46	$	—	$	—		$	88,701	$	(13,243	)	$	88,701	$	(13,243	)
State and municipal		192		4,746		(223	)		85,171		(19,291	)		89,917		(19,514	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		191		4,584		(295	)		248,400		(41,019	)		252,984		(41,314	)
Collateralized mortgage obligations (CMOs)		128		8,213		(534	)		91,870		(16,266	)		100,083		(16,800	)
Corporate debt		4		2,909		(91	)		3,310		(321	)		6,219		(412	)
Total		561	$	20,452	$	(1,143	)	$	517,452	$	(90,140	)	$	537,904	$	(91,283	)

			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 months ended March 31, 2023 and 2022:

	For the Three Months Ended March 31,
	2023			2022
Net (loss) gains recognized during the period on equity securities	$	(151	)	$	27
Less: Net (losses) gains recognized during the period on equity securities sold during the period		(208	)		35
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	57		$	(8	)

XML

Note 8 - Loans & Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2023

Troubled Debt Restructuring [Member]

Allowance for Loan Losses

	March 31, 2023				December 31, 2022
	Unpaid principal balance		Related allowance		Unpaid principal balance		Related allowance
TDRs with no specific allowance recorded	$	4,312	$	—	$	1,272	$	—
TDRs with an allowance recorded		245		245		3,400		392
Total	$	4,557	$	245	$	4,672	$	392

Retail and Commercial Loans [Member]

Major Classes of Loans

Major classes of loans are as follows:

	March 31,
	2023
Commercial:
Commercial and industrial	$	144,909
Construction and land development		59,639
Real estate secured by multi-family properties		98,886
Real estate secured by owner-occupied properties		156,812
Real estate secured by other commercial properties		257,944
Revolving real estate secured by 1-4 family properties-business		6,552
Real estate secured by 1st lien on 1-4 family properties-business		96,703
Real estate secured by junior lien on 1-4 family properties-business		3,457
State and political subdivisions		20,078
Retail:
1-4 family residential mortgages		106,758
Construction-individual		152
Revolving home equity secured by 1-4 family properties-personal		34,454
Real estate secured by 1st lien on 1-4 family properties-personal		10,697
Real estate secured by junior lien on 1-4 family properties-personal		11,355
Student loans		1,917
Overdrafts		103
Other consumer		1,736
Total loans		1,012,152
Net unearned (fees) costs		(196	)
Allowance for credit losses on loans		(8,191	)
Loans receivable, net	$	1,003,765

	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
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial Loans
Commercial and industrial:
Risk rating
Pass	$	3,608	$	16,665	$	10,412	$	8,233	$	7,095	$	8,984	$	87,955	$	142,952
Special mention		—		—		—		—		—		—		28		28
Substandard		—		179		—		4		24		242		1,480		1,929
Doubtful		—		—		—		—		—		—		—		—
Total commercial and industrial	$	3,608	$	16,844	$	10,412	$	8,237	$	7,119	$	9,226	$	89,463	$	144,909
Construction and land development:
Risk rating
Pass	$	6,821	$	27,572	$	13,172	$	3,441	$	4,160	$	4,424	$	—	$	59,590
Special mention		—		—		—		—		—		49		—		49
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total construction and land development	$	6,821	$	27,572	$	13,172	$	3,441	$	4,160	$	4,473	$	—	$	59,639
Real estate secured by multi-family properties:
Risk rating
Pass	$	100	$	27,489	$	23,048	$	10,258	$	6,005	$	29,533	$	—	$	96,433
Special mention		—		—		—		—		718		1,735		—		2,453
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by multi-family properties	$	100	$	27,489	$	23,048	$	10,258	$	6,723	$	31,268	$	—	$	98,886
Real estate secured by owner-occupied properties:
Risk rating
Pass	$	1,338	$	27,684	$	29,038	$	19,841	$	12,403	$	59,744	$	—	$	150,048
Special mention		—		—		127		—		—		—		—		127
Substandard		—		—		6		—		—		6,631		—		6,637
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by owner-occupied properties	$	1,338	$	27,684	$	29,171	$	19,841	$	12,403	$	66,375	$	—	$	156,812
Real estate secured by other commercial properties:
Risk rating
Pass	$	7,015	$	45,257	$	46,480	$	20,637	$	32,055	$	102,370	$	—	$	253,814
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		4,130		—		4,130
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by other commercial properties	$	7,015	$	45,257	$	46,480	$	20,637	$	32,055	$	106,500	$	—	$	257,944

	Term Loans by Origination Year
March 31, 2023	2023		2022		2021		2020		2019		Prior		Revolving		Total
Revolving real estate secured by 1-4 family properties-business:
Risk rating
Pass	$	—	$	—	$	—	$	—	$	—	$	—	$	6,552	$	6,552
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total revolving real estate secured by 1-4 family properties-business	$	—	$	—	$	—	$	—	$	—	$	—	$	6,552	$	6,552
Real estate secured by 1st lien on 1-4 family properties-business:
Risk rating
Pass	$	2,170		28,943		21,342		11,431		9,148		22,722		—		95,756
Special mention		—		193		139		—		—		—		—		332
Substandard		—		—		—		—		455		160		—		615
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by 1st lien on 1-4 family properties-business	$	2,170	$	29,136	$	21,481	$	11,431	$	9,603	$	22,882	$	—	$	96,703
Real estate secured by junior lien on 1-4 family properties-business:
Risk rating
Pass	$	306	$	632	$	567	$	633	$	45	$	1,006	$	—	$	3,189
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		268		—		268
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	306	$	632	$	567	$	633	$	45	$	1,274	$	—	$	3,457
State and political subdivisions:
Risk rating
Pass	$	—	$	40	$	5,017	$	25	$	5,931	$	9,065	$	—	$	20,078
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total real estate secured by junior lien on 1-4 family properties-business	$	—	$	40	$	5,017	$	25	$	5,931	$	9,065	$	—	$	20,078
Total Commercial Loans:
Risk rating
Pass		21,358		174,282		149,076		74,499		76,842		237,848		94,507		828,412
Special mention		—		193		266		—		718		1,784		28		2,989
Substandard		—		179		6		4		479		11,431		1,480		13,579
Doubtful		—		—		—		—		—		—		—		—
Total Commercial loans	$	21,358	$	174,654	$	149,348	$	74,503	$	78,039	$	251,063	$	96,015	$	844,980

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

Past Due Loans

March 31, 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	$	40	$	—	$	—	$	40	$	144,869	$	144,909
Construction and land development		—		—		—		—		59,639		59,639
Real estate secured by multi-family properties		—		—		—		—		98,886		98,886
Real estate secured by owner-occupied properties		2,978		—		—		2,978		153,834		156,812
Real estate secured by other commercial properties		1,588		—		—		1,588		256,356		257,944
Revolving real estate secured by 1-4 family properties-business		—		—		—		—		6,552		6,552
Real estate secured by 1st lien on 1-4 family properties-business		—		—		9		9		96,694		96,703
Real estate secured by junior lien on 1-4 family properties-business		—		—		—		—		3,457		3,457
State and political subdivisions		—		—		—		—		20,078		20,078
Retail:
1-4 family residential mortgages		1,130		—		116		1,246		105,512		106,758
Construction-individual		—		—		—		—		152		152
Revolving home equity secured by 1-4 family properties-personal		—		53		—		53		34,401		34,454
Real estate secured by 1st lien on 1-4 family properties-personal		—		—		101		101		10,596		10,697
Real estate secured by junior lien on 1-4 family properties-personal		19		—		—		19		11,336		11,355
Student loans		—		—		—		—		1,917		1,917
Overdrafts		16		6		—		22		81		103
Other consumer		9		—		—		9		1,727		1,736
Total	$	5,780	$	59	$	226	$	6,065	$	1,006,087	$	1,012,152

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	$	2,288	$	1	$	596	$	2,885	$	157,990	$	160,875
Construction		—		—		—		—		62,955		62,955
Secured by commercial real estate		—		—		—		—		518,070		518,070
Secured by residential real estate		—		—		30		30		103,389		103,419
State and political subdivisions		—		—		—		—		20,971		20,971
Retail:
1-4 family residential mortgages		1,139		—		127		1,266		104,388		105,654
Home equity loans and lines		21		—		10		31		63,549		63,580
Consumer		20		11		—		31		4,082		4,113
Total	$	3,468	$	12	$	763	$	4,243	$	1,035,394	$	1,039,637

Non-accrual Loans

March 31, 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	$	—	$	—	$	391	$	391
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		—		825		—		825
Real estate secured by other commercial properties		—		2,263		—		2,263
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		—		9		—		9
Real estate secured by junior lien on 1-4 family properties-business		—		—		245		245
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		—		448		—		448
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		—		25		158		183
Real estate secured by 1st lien on 1-4 family properties-personal		—		137		—		137
Real estate secured by junior lien on 1-4 family properties-personal		—		—				—
Student loans		—		17		—		17
Other consumer		—		43		—		43
Total	$	—	$	3,767	$	794	$	4,561

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	$	—	$	3,369
Construction		—		—
Secured by commercial real estate		—		2,279
Secured by residential real estate		—		391
State and political subdivisions		—		—
Retail:
1-4 family residential mortgages		—		721
Home equity loans and lines		—		680
Consumer		—		90
Total	$	—	$	7,530

Allowance for Loan Losses

Activity in the allowance for credit losses on loans for the three months ended March 31, 2023 and 2022 are as follows:

For the Three Months Ended March 31, 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	)	$	(940	)	$	—		$	593	$	899
Construction and land development		755		(10	)		4			—			—		749
Real estate secured by multi-family properties		995		684			(102	)		—			—		1,577
Real estate secured by owner-occupied properties		1,549		(374	)		(203	)		—			—		972
Real estate secured by other commercial properties		2,458		(1,128	)		(239	)		—			—		1,091
Revolving real estate secured by 1-4 family properties-business		25		7			2			—			—		34
Real estate secured by 1st lien on 1-4 family properties-business		1,210		490			(430	)		—			3		1,273
Real estate secured by junior lien on 1-4 family properties-business		30		(14	)		242			—			—		258
State and political subdivisions		94		(20	)		(19	)		—			—		55
Retail:
1-4 family residential mortgages		682		(196	)		(81	)		—			—		405
Construction-individual		1		-			-			—			—		1
Revolving home equity secured by 1-4 family properties-personal		299		(7	)		(43	)		—			—		249
Real estate secured by 1st lien on 1-4 family properties-personal		57		15			(8	)		—			—		64
Real estate secured by junior lien on 1-4 family properties-personal		55		29			(9	)		—			2		77
Student loans		454		12			(17	)		(3	)		2		448
Overdrafts		8		3			31			(43	)		10		9
Other consumer		41		(8	)		29			(32	)		—		30
Unallocated		502		(502	)		-		N/A			N/A			—
Total	$	10,531	$	(1,089	)	$	(1,783	)	$	(78	)	$	610	$	8,191

For the Three Months Ended March 31, 2022	Balance, beginning of period		Provision for (credit to) loan losses			Charge-offs			Recoveries		Balance, end of period
Commercial:
Commercial and industrial	$	4,050	$	(658	)	$	—		$	32	$	3,424
Construction		346		43			—			—		389
Secured by commercial real estate		3,736		417			—			—		4,153
Secured by residential real estate		871		270			(38	)		19		1,122
State and political subdivisions		89		(1	)		—			—		88
Retail:
1-4 family residential mortgages		533		32			—			—		565
Home equity loans and lines		386		(22	)		(12	)		6		358
Consumer		265		356			(111	)		34		544
Unallocated		550		21		N/A			N/A			571
Total	$	10,826	$	458		$	(161	)	$	91	$	11,214

Collateral-dependent Loans By Loan Category

The following table presents the collateral-dependent loans by loan category at March 31, 2023:

March 31, 2023	Real Estate Secured		Other (1)		Deficiency in Collateral		Total Collateral Dependent Nonaccrual Loans
Commercial:
Commercial and industrial	$	—	$	294	$	97	$	391
Construction and land development		—		—		—		—
Real estate secured by multi-family properties		—		—		—		—
Real estate secured by owner-occupied properties		825		—		—		825
Real estate secured by other commercial properties		2,263		—		—		2,263
Revolving real estate secured by 1-4 family properties-business		—		—		—		—
Real estate secured by 1st lien on 1-4 family properties-business		9						9
Real estate secured by junior lien on 1-4 family properties-business		—		—		245		245
State and political subdivisions		—		—		—		—
Retail:
1-4 family residential mortgages		448		—		—		448
Construction-individual		—		—		—		—
Revolving home equity secured by 1-4 family properties-personal		68		—		115		183
Real estate secured by 1st lien on 1-4 family properties-personal		137		—		—		137
Real estate secured by junior lien on 1-4 family properties-personal		—		—		—		—
Other consumer		—		43		—		43
Total	$	3,750	$	337	$	457	$	4,544
(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

XML

Note 9 - Fair Value Measurements and Disclosures (Tables)

3 Months Ended

Mar. 31, 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 March 31, 2023:

March 31, 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	$	—	$	—	$	—	$	—
U.S. Government agency securities		—		88,701		—		88,701
State and municipal securities		—		89,917		—		89,917
U.S. Government agencies and sponsored    enterprises (GSEs):
Mortgage-backed securities		—		252,984		—		252,984
Collateralized mortgage obligations (CMOs)		—		100,083		—		100,083
Corporate debt securities		—		6,167		52		6,219
Total debt securities available-for-sale		—		537,852		52		537,904
Equity securities		11,908		—		—		11,908
Total recurring fair value measurements	$	11,908	$	537,852	$	52	$	549,812
Nonrecurring fair value measurements*
Impaired loans	$	—	$	—	$	337	$	337
Mortgage servicing rights		—		—		1		1
Total nonrecurring fair value measurements	$	—	$	—	$	338	$	338
*Impairment

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
March 31, 2023	Fair value		Valuation techniques		Unobservable inputs		Value or range of values
Impaired loans	$	43	Appraisal of collateral	(1)	Appraisal adjustments	(2)	-20% 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		118% to 254%
					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 three months ended March 31, 2023 and 2022:

	Fair value measurements using significant unobservable inputs (Level 3)
	2023			2022
Balance, January 1,	$	53		$	75
Payments received		—			(22	)
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, March 31,	$	52		$	53

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
March 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	$	14,201	$	14,201	$	14,201	$	—	$	—
Investment securities:
Available-for-sale		537,904		537,904		—		537,852		52
Equities		11,908		11,908		11,908		—		—
Restricted investment in stocks		2,098		2,098		—		2,098		—
Loans held for sale		388		389		—		389		—
Net loans		1,003,765		980,285		—		—		980,285
Mortgage servicing rights		460		621		—		—		621
Accrued interest receivable		3,425		3,425		—		3,425		—
Financial liabilities
Deposits with no stated maturities	$	1,174,574	$	1,174,574	$	1,174,574	$	—	$	—
Deposits with stated maturities		250,016		244,751		—		244,751		—
Short-term borrowings		110,192		110,192		110,192		—		—
Long-term debt		—		—		—		—		—
Accrued interest payable		923		923		—		923		—
Off-balance sheet instruments
Commitments to extend credit	$	—	$	—	$	—	$	—	$	—
Standby letters of credit		—		83		—		83		—

					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		—

XML

Note 10 - Commitments And Contingencies (Tables)

3 Months Ended

Mar. 31, 2023

Commitments And Contingencies Disclosure [Abstract]

Financial Instrument Commitments

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

	March 31,		December 31,
	2023		2022
Commitments to extend credit and unused lines of credit	$	389,336	$	339,312
Standby letters of credit		20,359		19,512
Total financial instrument commitments	$	409,695	$	358,824

XML

Note 11 - Regulatory Restrictions (Tables)

3 Months Ended

Mar. 31, 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
March 31, 2023	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	164,271		13.53	%	$	97,099		8.00	%	$	121,374		10.00	%
Bank		151,466		12.86			94,219	8.00				117,774	10.00
Tier 1 capital (to risk-weighted assets):
The Company	$	155,980		12.85			72,825	6.00				72,825	6.00
Bank		143,175		12.16			70,664	6.00				94,219	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		155,980		12.85			54,618	4.50			N/A		N/A
Bank		143,175		12.16			52,998	4.50				76,553	6.50
Tier 1 capital (to average assets):
The Company		155,980		9.07			68,766	4.00			N/A		N/A
Bank		143,175		8.39			68,249	4.00				85,311	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

XML

Note 2 - Recent Accounting Pronouncements (Details Textual) - USD ($)		3 Months Ended
	Jan. 01, 2023	Mar. 31, 2023	Dec. 31, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Retained earnings	$ 129,808,000	$ 132,598,000	$ 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

XML

Note 2 - Recent Accounting Pronouncements - Impact of Adoption (Details) - USD ($) $ in Thousands		3 Months Ended
	Jan. 01, 2023	Mar. 31, 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		$ 1,012,152	$ 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	132,598	128,951
Commercial Portfolio Segment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		844,980
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		144,909	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		59,639
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		98,886
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		156,812
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		257,944
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		6,552
Allowance for credit losses on loans (ACL)	(32)
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Business [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		96,703
Allowance for credit losses on loans (ACL)	(1,700)
Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lein 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		20,078	$ 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		106,758
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		152
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		34,454
Allowance for credit losses on loans (ACL)	(292)
Retail Portfolio Segment [Member] | Real Estate Secured By First Lein on One to Four Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		10,697
Allowance for credit losses on loans (ACL)	(72)
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans		11,355
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		1,917
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		103
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		$ 1,736
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 Lein 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 Lein 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]
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 Lein 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 Lein 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] | 1-4 Family Residential Mortgages [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loans	105,654
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 Lein 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 Lein 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] | 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 Lein 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 Lein 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
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Allocated share-based compensation expense	$ 20,000	$ 22,000
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized	$ 236,000
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition	59 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	21,250
Share-based compensation arrangement by share-based payment award, options, outstanding, number	121,550	122,050	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	$ 5.20
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
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
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)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disclosure Of Compensation Related Costs Sharebased Payments [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) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 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)	(21,250)
Outstanding ending-Number of options (in shares)	121,550	122,050
Exercisable-Number of options (in shares)	41,375	44,500
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	37.69
Outstanding ending-Weighted average exercise price (in dollars per share)	34.29	37.49
Exercisable-Weighted average exercise price (in dollars per share)	$ 37.37	$ 40.86
Outstanding ending-Weighted average remaining contractual term	4 years 7 months 2 days	3 years 3 days
Exercisable-Weighted average remaining contractual term	1 year 4 months 6 days	1 year 4 months 20 days
Outstanding ending-Aggregate intrinsic value		$ 117

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Note 4 - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Numerator for basic and diluted earnings per share - net income	$ 4,118	$ 3,710
Denominator for basic earnings per share - weighted average shares outstanding	3,588,363	3,552,854
Effect of dilutive securities - employee stock options		1,602
Denominator for diluted earnings per share - adjusted weighted average shares outstanding	3,588,363	3,554,456
Earnings per share - basic	$ 1.15	$ 1.04
Earnings per share - diluted	$ 1.15	$ 1.04

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Note 4 - Earnings Per Share & Share Repurchase Plan (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 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
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
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	92,200

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Note 5 - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other loss	$ (91,283)	$ (102,692)
Tax effect	19,169	21,565
Accumulated other comprehensive loss, net of tax	(72,114)	(81,127)
Unrealized Net Holding Losses on Available-for-sale Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other loss	$ (91,283)	$ (102,692)

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Note 5 - Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Income before income taxes	$ 5,241	$ 4,534
Tax effect	(1,123)	(824)
Net income	4,118	3,710
Reclassification out of Accumulated Other Comprehensive Income
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Unrealized net holding gains on available-for-sale securities	(257)	1
Income before income taxes	(257)	1
Tax effect	54
Net income	$ (203)	$ 1

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Note 6 - Available-for-Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	$ 537,904	$ 546,525
Investment securities available-for-sale, debt securities gross unrealized holding gains		2
Investment securities available-for-sale, debt securities gross unrealized holding losses	(91,283)	(102,694)
Investment securities available-for-sale, debt securities amortized cost	629,187	649,217
US Treasury Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities		301
Investment securities available-for-sale, debt securities gross unrealized holding gains		2
Investment securities available-for-sale, debt securities amortized cost		299
US Government Agencies Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	88,701	86,709
Investment securities available-for-sale, debt securities gross unrealized holding losses	(13,243)	(15,233)
Investment securities available-for-sale, debt securities amortized cost	101,944	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	89,917	95,367
Investment securities available-for-sale, debt securities gross unrealized holding losses	(19,514)	(23,494)
Investment securities available-for-sale, debt securities amortized cost	109,431	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	252,984	256,161
Investment securities available-for-sale, debt securities gross unrealized holding losses	(41,314)	(45,303)
Investment securities available-for-sale, debt securities amortized cost	294,298	301,464
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	100,083	101,672
Investment securities available-for-sale, debt securities gross unrealized holding losses	(16,800)	(18,338)
Investment securities available-for-sale, debt securities amortized cost	116,883	120,010
Corporate Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment securities available-for-sale, debt securities	6,219	6,315
Investment securities available-for-sale, debt securities gross unrealized holding losses	(412)	(326)
Investment securities available-for-sale, debt securities amortized cost	$ 6,631	$ 6,641

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Note 6 - Investment Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Investments Debt And Equity Securities [Abstract]
Due in one year or less, Fair value	$ 329
Due after one year through five years, Fair value	114,266
Due after five years through ten years, Fair value	344,044
Due after ten years, Fair value	79,265
Investment debt securities available-for-sale, Fair value	537,904	$ 546,525
Due in one year or less, Amortized cost	338
Due after one year through five years, Amortized cost	126,292
Due after five years through ten years, Amortized cost	405,060
Due after ten years, Amortized cost	97,497
Investment securities available-for-sale, debt securities amortized cost	$ 629,187	$ 649,217

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Note 6 - Investment Securities (Details Textual)	3 Months Ended
	Mar. 31, 2023 USD ($) Security	Mar. 31, 2022 USD ($)	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	$ 283,019,000		$ 237,645,000
Debt Securities, Available-for-Sale, Restriction Type [Extensible Enumeration]	us-gaap:AssetPledgedAsCollateralMember		us-gaap:AssetPledgedAsCollateralMember
Other than temporary impairment, credit losses recognized in earnings	$ 0	0
Available-for-sale, amortized cost	629,187,000		$ 649,217,000
Available-for-sale	537,904,000		546,525,000
Investment equity securities	11,908,000		$ 12,056,000
Proceeds from sale of investment equity securities	$ 709,000	262,000
Pooled Trust Preferred Security [Member]
Investment Securities [Line Items]
Number of trust preferred securities | Security	1
Available-for-sale, amortized cost	$ 61,000
Available-for-sale	52,000
Equity Securities [Member]
Investment Securities [Line Items]
Income tax expense (benefit) related to net recognized gains (losses) on sales of securities	44,000	(8,000)
Debt Securities [Member]
Investment Securities [Line Items]
Income tax expense (benefit) related to net realized gains (losses) on sales of securities	$ 54,000	$ 0

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Note 6 - Realized Gain (Loss) on Investments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Investments Debt And Equity Securities [Abstract]
Gross realized gains	$ 0	$ 1
Gross realized losses	(257)	0
Other-than-temporary impairment	0	0
Total net gains (losses) on AFS securities	$ (257)	$ 1

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Note 6 - Debt Securities in a Continuous Unrealized Loss Position (Details) $ in Thousands	Mar. 31, 2023 USD ($) Security	Dec. 31, 2022 USD ($) Security
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	561	592
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 20,452	$ 154,673
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(1,143)	(19,245)
Debt Securities in an unrealized loss position 12 months or longer, fair value	517,452	391,551
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(90,140)	(83,449)
Debt Securities in an unrealized loss position, fair value	537,904	546,224
Debt Securities in an unrealized loss position, unrealized losses	$ (91,283)	$ (102,694)
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		$ 3,647
Debt Securities in an unrealized loss position less than 12 months, unrealized losses		(353)
Debt Securities in an unrealized loss position 12 months or longer, fair value	$ 88,701	83,062
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(13,243)	(14,880)
Debt Securities in an unrealized loss position, fair value	88,701	86,709
Debt Securities in an unrealized loss position, unrealized losses	$ (13,243)	$ (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	$ 4,746	$ 50,156
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(223)	(7,816)
Debt Securities in an unrealized loss position 12 months or longer, fair value	85,171	45,210
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(19,291)	(15,678)
Debt Securities in an unrealized loss position, fair value	89,917	95,366
Debt Securities in an unrealized loss position, unrealized losses	$ (19,514)	$ (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	$ 4,584	$ 58,811
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(295)	(6,775)
Debt Securities in an unrealized loss position 12 months or longer, fair value	248,400	197,351
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(41,019)	(38,528)
Debt Securities in an unrealized loss position, fair value	252,984	256,162
Debt Securities in an unrealized loss position, unrealized losses	$ (41,314)	$ (45,303)
Collateralized Mortgage Obligations [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	128	129
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 8,213	$ 35,797
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(534)	(3,983)
Debt Securities in an unrealized loss position 12 months or longer, fair value	91,870	65,875
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(16,266)	(14,355)
Debt Securities in an unrealized loss position, fair value	100,083	101,672
Debt Securities in an unrealized loss position, unrealized losses	$ (16,800)	$ (18,338)
Corporate Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
No. of debt securities | Security	4	4
Debt Securities in an unrealized loss position less than 12 months, fair value	$ 2,909	$ 6,262
Debt Securities in an unrealized loss position less than 12 months, unrealized losses	(91)	(318)
Debt Securities in an unrealized loss position 12 months or longer, fair value	3,310	53
Debt Securities in an unrealized loss position 12 months or longer, unrealized losses	(321)	(8)
Debt Securities in an unrealized loss position, fair value	6,219	6,315
Debt Securities in an unrealized loss position, unrealized losses	$ (412)	$ (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
	Mar. 31, 2023	Mar. 31, 2022
Equity Securities [Abstract]
Net (loss) gains recognized during the period on equity securities	$ (151)	$ 27
Less: Net (losses) gains recognized during the period on equity securities sold during the period	(208)	35
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$ 57	$ (8)

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Note 7 - Restricted Investment in Stocks (Details Textual)	3 Months Ended
	Mar. 31, 2023 USD ($) shares	Dec. 31, 2022 USD ($)	Dec. 29, 2022
Investment Holdings [Line Items]
Restricted investment in stocks	$ 2,098,000	$ 5,193,000
Other than temporary impairment charge of restricted investment	0
Investment in Federal Home Loan Bank Stock [Member]
Investment Holdings [Line Items]
Restricted investment in stocks	1,086,000
Investment in Atlantic Community Bankers Bank Stock [Member]
Investment Holdings [Line Items]
Restricted investment in stocks	12,000
Investment In SHCPFIC Preferred Stock [Member]
Investment Holdings [Line Items]
Restricted investment in stocks	$ 1,000,000
Number of shares owned | shares	100
VISA Class B Stock [Member]
Investment Holdings [Line Items]
Restricted investment in stocks	$ 0
Number of shares owned | shares	6,502
VISA Class A Stock [Member]
Investment Holdings [Line Items]
Conversion factor per share			1.5991

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Note 8 - Loans & Allowance for Loan Losses (Details Textual)	3 Months Ended
	Mar. 31, 2023 USD ($) Contract Loan	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)
Accounts Notes And Loans Receivable [Line Items]
Total troubled debt restructuring	$ 4,557,000		$ 4,672,000
Over drafts reclassified as loans receivables			132,000
Net unearned (fees) costs	(196,000)		(252,000)
Loans and leases receivable, impaired, commitment to lend	7,000		5,000
Financing receivables, impaired, troubled debt restructuring, write-down	$ 0	$ 0
Financing receivable, modifications, subsequent default, number of contracts | Contract	0
Interest income on non-accrual loans	$ 14,000
Performing Financial Instruments [Member]
Accounts Notes And Loans Receivable [Line Items]
Total troubled debt restructuring	4,224,000		4,301,000
Nonperforming Financial Instruments [Member]
Accounts Notes And Loans Receivable [Line Items]
Total troubled debt restructuring	$ 333,000		$ 371,000
Residential Portfolio Segment [Member]
Accounts Notes And Loans Receivable [Line Items]
Mortgage loan on real estate number of loan in foreclosure | Loan	1
Mortgage loans in process of foreclosure, amount	$ 116,000
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	Mar. 31, 2023	Dec. 31, 2022
Accounts Notes And Loans Receivable [Line Items]
Loans	$ 1,012,152	$ 1,039,637
Net unearned (fees) costs	(196)	(252)
Allowance for credit losses on loans	(8,191)	(10,531)
Net loans	1,003,765	1,028,854
Commercial Portfolio Segment [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	844,980
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	144,909	160,875
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	59,639
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-Family Properties [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	98,886
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	156,812
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	257,944
Commercial Portfolio Segment [Member] | Revolving Real Estate Secured By 1-4 Family Properties-Business [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	6,552
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Business [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	96,703
Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lein 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	20,078	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
State and Political Subdivisions Portfolio Segment [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans		20,971
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	152
Retail Portfolio Segment [Member] | Revolving Home Equity Secured By 1-4 Family Properties-Personal [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	34,454
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	10,697
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	11,355
Retail Portfolio Segment [Member] | Student Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	1,917
Retail Portfolio Segment [Member] | Overdrafts [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	103
Retail Portfolio Segment [Member] | Other Consumer [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	1,736
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans	$ 106,758	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	Mar. 31, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment [Line Items]
Total	$ 1,012,152	$ 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	21,358
2022	174,654
2021	149,348
2020	74,503
2019	78,039
Prior	251,063
Revolving	96,015
Total	844,980
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	3,608
2022	16,844
2021	10,412
2020	8,237
2019	7,119
Prior	9,226
Revolving	89,463
Total	144,909	160,875
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment [Line Items]
2023	6,821
2022	27,572
2021	13,172
2020	3,441
2019	4,160
Prior	4,473
Revolving	0
Total	59,639
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	100
2022	27,489
2021	23,048
2020	10,258
2019	6,723
Prior	31,268
Revolving	0
Total	98,886
Commercial Portfolio Segment [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	1,338
2022	27,684
2021	29,171
2020	19,841
2019	12,403
Prior	66,375
Revolving	0
Total	156,812
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	7,015
2022	45,257
2021	46,480
2020	20,637
2019	32,055
Prior	106,500
Revolving	0
Total	257,944
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	6,552
Total	6,552
Commercial Portfolio Segment [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	2,170
2022	29,136
2021	21,481
2020	11,431
2019	9,603
Prior	22,882
Revolving	0
Total	96,703
Commercial Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	306
2022	632
2021	567
2020	633
2019	45
Prior	1,274
Revolving	0
Total	3,457
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	40
2021	5,017
2020	25
2019	5,931
Prior	9,065
Revolving	0
Total	20,078	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	21,358
2022	174,282
2021	149,076
2020	74,499
2019	76,842
Prior	237,848
Revolving	94,507
Total	828,412
Commercial Portfolio Segment [Member] | Pass [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	3,608
2022	16,665
2021	10,412
2020	8,233
2019	7,095
Prior	8,984
Revolving	87,955
Total	142,952	157,914
Commercial Portfolio Segment [Member] | Pass [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment [Line Items]
2023	6,821
2022	27,572
2021	13,172
2020	3,441
2019	4,160
Prior	4,424
Revolving	0
Total	59,590
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured by Multi-Family Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	100
2022	27,489
2021	23,048
2020	10,258
2019	6,005
Prior	29,533
Revolving	0
Total	96,433
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	1,338
2022	27,684
2021	29,038
2020	19,841
2019	12,403
Prior	59,744
Revolving	0
Total	150,048
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	7,015
2022	45,257
2021	46,480
2020	20,637
2019	32,055
Prior	102,370
Revolving	0
Total	253,814
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	6,552
Total	6,552
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured By 1st Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	2,170
2022	28,943
2021	21,342
2020	11,431
2019	9,148
Prior	22,722
Revolving	0
Total	95,756
Commercial Portfolio Segment [Member] | Pass [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	306
2022	632
2021	567
2020	633
2019	45
Prior	1,006
Revolving	0
Total	3,189
Commercial Portfolio Segment [Member] | Pass [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	40
2021	5,017
2020	25
2019	5,931
Prior	9,065
Revolving	0
Total	20,078
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	193
2021	266
2020	0
2019	718
Prior	1,784
Revolving	28
Total	2,989
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	28
Total	28	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	49
Revolving	0
Total	49
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	718
Prior	1,735
Revolving	0
Total	2,453
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	127
2020	0
2019	0
Prior	0
Revolving	0
Total	127
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 Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	193
2021	139
2020	0
2019	0
Prior	0
Revolving	0
Total	332
Commercial Portfolio Segment [Member] | Special Mention [Member] | Real Estate Secured By Junior Lein 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	179
2021	6
2020	4
2019	479
Prior	11,431
Revolving	1,480
Total	13,579
Commercial Portfolio Segment [Member] | Substandard [Member] | Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	179
2021	0
2020	4
2019	24
Prior	242
Revolving	1,480
Total	1,929	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	0
Revolving	0
Total	0
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	0
Prior	0
Revolving	0
Total	0
Commercial Portfolio Segment [Member] | Substandard [Member] | Real Estate Secured By Owner-Occupied Properties [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	6
2020	0
2019	0
Prior	6,631
Revolving	0
Total	6,637
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	4,130
Revolving	0
Total	4,130
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 Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	455
Prior	160
Revolving	0
Total	615
Commercial Portfolio Segment [Member] | Substandard [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	268
Revolving	0
Total	268
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
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 Lein 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 Lein on 1-4 Family Properties-Business [Member]
Financing Receivable Recorded Investment [Line Items]
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	Mar. 31, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment [Line Items]
Total	$ 1,012,152	$ 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		171,856
Nonperforming Financial Instruments [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		1,491
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	3,029
2022	15,329
2021	33,433
2020	21,625
2019	4,797
Prior	28,545
Revolving	0
Total	106,758	105,654
Retail Portfolio Segment [Member] | Construction - Individual [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	152
2020	0
2019	0
Prior	0
Revolving	0
Total	152
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	34,454
Total	34,454
Retail Portfolio Segment [Member] | Real Estate Secured By First Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	639
2022	1,771
2021	3,486
2020	1,117
2019	1,109
Prior	2,575
Revolving	0
Total	10,697
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	946
2022	1,887
2021	2,613
2020	1,510
2019	766
Prior	3,633
Revolving	0
Total	11,355
Retail Portfolio Segment [Member] | Student Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	0
2020	0
2019	0
Prior	1,917
Revolving	0
Total	1,917
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	103
Total	103
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
2023	163
2022	474
2021	446
2020	175
2019	155
Prior	121
Revolving	202
Total	1,736
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	4,777
2022	19,461
2021	40,130
2020	24,427
2019	6,827
Prior	36,791
Revolving	34,759
Total	167,172
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		4,023
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
2023	3,029
2022	15,329
2021	33,433
2020	21,625
2019	4,797
Prior	28,097
Revolving	0
Total	106,310	104,933
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Construction - Individual [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021	152
2020	0
2019	0
Prior	0
Revolving	0
Total	152
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	34,271
Total	34,271
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	639
2022	1,771
2021	3,486
2020	1,117
2019	1,109
Prior	2,438
Revolving	0
Total	10,560
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment [Line Items]
2023	946
2022	1,887
2021	2,613
2020	1,510
2019	766
Prior	3,633
Revolving	0
Total	11,355
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	1,900
Revolving	0
Total	1,900
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	103
Total	103
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
2023	163
2022	474
2021	446
2020	175
2019	155
Prior	78
Revolving	202
Total	1,693
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Total		62,900
Retail Portfolio Segment [Member] | Performing Financial Instruments [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	4,777
2022	19,461
2021	40,130
2020	24,427
2019	6,827
Prior	36,146
Revolving	34,576
Total	166,344
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total		90
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	448
Revolving	0
Total	448	721
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	183
Total	183
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	137
Revolving	0
Total	137
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Real Estate Secured By Junior 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	0
Revolving	0
Total	0
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	43
Revolving	0
Total	43
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment [Line Items]
Total		$ 680
Retail Portfolio Segment [Member] | Nonperforming Financial Instruments [Member] | Total Retail Loans [Member]
Financing Receivable Recorded Investment [Line Items]
2023	0
2022	0
2021
2020	0
2019	0
Prior	645
Revolving	183
Total	$ 828

XML

Note 8 - Past Due Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	$ 1,012,152	$ 1,039,637
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	5,780	3,468
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	59	12
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	226	763
Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	6,065	4,243
Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,006,087	1,035,394
Commercial Portfolio Segment [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	844,980
Commercial Portfolio Segment [Member] | Commercial and industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	144,909	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	40	2,288
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
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	596
Commercial Portfolio Segment [Member] | Commercial and industrial | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	40	2,885
Commercial Portfolio Segment [Member] | Commercial and industrial | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	144,869	157,990
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	59,639
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	59,639
Commercial Portfolio Segment [Member] | Real Estate Secured by Multi-family Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	98,886
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	98,886
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	156,812
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	2,978
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	2,978
Commercial Portfolio Segment [Member] | Real estate secured by owner-occupied properties | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	153,834
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	257,944
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	1,588
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	0
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	1,588
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	256,356
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	6,552
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	6,552
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	96,703
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	0
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	9
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	9
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	96,694
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	0
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	0
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	3,457
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	20,078	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	20,078
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		30
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		30
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		103,389
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		20
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		11
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		31
Retail Portfolio Segment [Member] | Current Loans [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		4,082
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	106,758
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	1,130
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	0
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	116
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,246
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	105,512
Retail Portfolio Segment [Member] | Construction-individual [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	152
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	152
Retail Portfolio Segment [Member] | Revolving home equity secured by 1-4 family properties-personal
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	34,454
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	53
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	53
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	34,401
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	10,697
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member] | 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 Junior Lein on 1-4 Family Properties-Personal [Member] | 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 [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	101
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	101
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	10,596
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	11,355
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	19
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	0
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	19
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	11,336
Retail Portfolio Segment [Member] | Student Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,917
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	0
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	0
Retail Portfolio Segment [Member] | Student Loans [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,917
Retail Portfolio Segment [Member] | Overdrafts [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	103
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	6
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	22
Retail Portfolio Segment [Member] | Overdrafts [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	81
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,736
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	9
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	9
Retail Portfolio Segment [Member] | Other Consumer [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	1,727
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans	$ 106,758	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		1,139
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		0
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		127
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		1,266
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		104,388
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		21
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		10
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member] | Financing Receivables, Past Due [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		31
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member] | Current Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans		$ 63,549

XML

Note 8 - Non-accrual Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		$ 0
Loans receivable		7,530
Commercial Portfolio Segment [Member] | Commercial and industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	$ 0	0
Loans receivable	391	3,369
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	391
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	825
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	825
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	2,263
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	2,263
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	9
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	9
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	245
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	245
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		2,279
Commercial Portfolio Segment [Member] | Secured by Residential Real Estate [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		391
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	4,561
Retail Portfolio Segment [Member] | Consumer Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		90
Retail Portfolio Segment [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	3,767
Retail Portfolio Segment [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	794
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	448
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	448
Retail Portfolio Segment [Member] | 1-4 Family Residential Mortgages [Member] | Nonaccrual With Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
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	183
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	25
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	158
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	0
Loans receivable	137
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	137
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member] | 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	0
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	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	43
Retail Portfolio Segment [Member] | Other Consumer [Member] | Nonaccrual With No Specifically-Related ACL
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable	43
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		721
Retail Portfolio Segment [Member] | Home Equity Loans and Lines [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loans receivable		0
Loans receivable		$ 680

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Note 8 - Collateral-dependent Loans (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Commercial Portfolio Segment [Member] | Commercial and industrial
Financing Receivable Recorded Investment Past Due [Line Items]
Real Estate Secured	$ 0
Other	294
Deficiency in Collateral	97
Total Collateral Dependent Nonaccrual Loans	391
Commercial Portfolio Segment [Member] | Construction and Land Development [Member]
Financing Receivable Recorded Investment 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 Recorded Investment 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 Recorded Investment Past Due [Line Items]
Real Estate Secured	825
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	825
Commercial Portfolio Segment [Member] | Real Estate Secured by Other Commercial Properties [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Real Estate Secured	2,263
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	2,263
Commercial Portfolio Segment [Member] | Revolving real estate secured by 1-4 family properties-business [Member]
Financing Receivable Recorded Investment 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 Recorded Investment Past Due [Line Items]
Real Estate Secured	9
Total Collateral Dependent Nonaccrual Loans	9
Commercial Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-business [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	245
Total Collateral Dependent Nonaccrual Loans	245
Commercial Portfolio Segment [Member] | State and Political Subdivisions [Member]
Financing Receivable Recorded Investment 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 Recorded Investment Past Due [Line Items]
Real Estate Secured	3,750
Other	337
Deficiency in Collateral	457
Total Collateral Dependent Nonaccrual Loans	4,544
Retail Portfolio Segment [Member] | Family Residential Mortgages [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Real Estate Secured	448
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	448
Retail Portfolio Segment [Member] | Construction-individual [Member]
Financing Receivable Recorded Investment 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 Recorded Investment Past Due [Line Items]
Real Estate Secured	68
Other	0
Deficiency in Collateral	115
Total Collateral Dependent Nonaccrual Loans	183
Retail Portfolio Segment [Member] | Real Estate Secured By Junior Lein on 1-4 Family Properties-Personal [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Real Estate Secured	137
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	137
Retail Portfolio Segment [Member] | Real estate secured by junior lein on 1-4 family properties-personal
Financing Receivable Recorded Investment Past Due [Line Items]
Real Estate Secured	0
Other	0
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	0
Retail Portfolio Segment [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Real Estate Secured	0
Other	43
Deficiency in Collateral	0
Total Collateral Dependent Nonaccrual Loans	$ 43

XML

Note 8 - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	$ 10,531	$ 10,826
Provision for (credit to) loan losses	(1,783)	458
Charge-offs	78	(161)
Recoveries	610	91
Allowance for loan losses, end of period	8,191	11,214
Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	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	1,316	4,050
Provision for (credit to) loan losses	(940)	(658)
Charge-offs	0	0
Recoveries	593	32
Allowance for loan losses, end of period	899	3,424
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	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	4
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	749
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	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	(102)
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	1,577
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	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	(203)
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	972
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	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	(239)
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	1,091
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	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	2
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	34
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	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	(430)
Charge-offs	0
Recoveries	3
Allowance for loan losses, end of period	1,273
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	1,210
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	242
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	258
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	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	755	346
Provision for (credit to) loan losses		43
Charge-offs		0
Recoveries		0
Allowance for loan losses, end of period		389
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	5,002	3,736
Provision for (credit to) loan losses		417
Charge-offs		0
Recoveries		0
Allowance for loan losses, end of period		4,153
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	1,240	871
Provision for (credit to) loan losses		270
Charge-offs		38
Recoveries		19
Allowance for loan losses, end of period		1,122
State and Political Subdivisions Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	94	89
Provision for (credit to) loan losses	(19)	(1)
Charge-offs	0	0
Recoveries	0	0
Allowance for loan losses, end of period	55	88
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	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	502	265
Provision for (credit to) loan losses		356
Charge-offs		(111)
Recoveries		34
Allowance for loan losses, end of period		544
Retail Portfolio Segment [Member] | Construction - Individual [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Provision for (credit to) loan losses	0
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	1
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	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	(43)
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	249
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	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	(8)
Charge-offs	0
Recoveries	0
Allowance for loan losses, end of period	64
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	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	(9)
Charge-offs	0
Recoveries	2
Allowance for loan losses, end of period	77
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	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	(17)
Charge-offs	3
Recoveries	2
Allowance for loan losses, end of period	448
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	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	31
Charge-offs	43
Recoveries	10
Allowance for loan losses, end of period	9
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	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	29
Charge-offs	32
Recoveries	0
Allowance for loan losses, end of period	30
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	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] | Family Residential Mortgages [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	683	533
Provision for (credit to) loan losses	(81)	32
Charge-offs	0	0
Recoveries	0	0
Allowance for loan losses, end of period	405	565
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	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] | Home Equity Loans And Lines [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	437	386
Provision for (credit to) loan losses		(22)
Charge-offs		12
Recoveries		6
Allowance for loan losses, end of period		358
Unallocated [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	502	550
Provision for (credit to) loan losses	0	21
Charge-offs		0
Recoveries		0
Allowance for loan losses, end of period	0	$ 571
Unallocated [Member] | Prior to adoption of ASC 326
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, beginning of period	502
Unallocated [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	Mar. 31, 2023	Dec. 31, 2022
Receivables [Abstract]
TDRs with no specific allowance recorded - unpaid principal balance	$ 4,312	$ 1,272
TDRs with an allowance recorded - unpaid principal balance	245	3,400
Unpaid principal balance	4,557	4,672
TDRs with an allowance recorded - related allowance	$ 245	$ 392

XML

Note 8 - Loans Disaggregated by Impairment Method (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Credit Losses Related To Financing Receivables Current And Noncurrent [Line Items]
Allowance for loan losses	$ 8,191	$ 10,531	$ 11,214	$ 10,826
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	899	1,316	3,424	4,050
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	389	346
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	4,153	3,736
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	1,122	871
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	55	94	88	89
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	544	265
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	405	683	565	533
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	358	386
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	$ 571	$ 550

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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

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Note 9 - Financial Assets Measured at Fair Value on a Recurring and Nonrecurring Basis (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	$ 537,904,000	$ 546,525,000
Equity securities	11,908,000	12,056,000
US Treasury Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale		301,000
US Government Agencies Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	88,701,000	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	89,917,000	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	252,984,000	256,161,000
Collateralized Mortgage Obligations [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	100,083,000	101,672,000
Corporate Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale	6,219,000	6,315,000
Fair Value, Inputs, Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Equity securities	11,908,000	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	537,852,000	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		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	88,701,000	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	89,917,000	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	252,984,000	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	100,083,000	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	6,167,000	6,262,000
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	52,000	53,000
Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	549,812,000	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	11,908,000	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	537,852,000	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	338,000	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	337,000	3,928,000
Nonrecurring [Member] | Mortgage Servicing Rights [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Asset fair value measurements	1,000	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	338,000	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	337,000	3,928,000
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	$ 1,000	$ 1,000

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Note 9 - Fair Value Measurements and Disclosures (Details Textual)	3 Months Ended
	Mar. 31, 2023 USD ($) Security Issuer	Mar. 31, 2022 USD ($)
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Number of underlying issuers | Issuer	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	0.0767
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
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

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Note 9 - Quantitative Information about Assets Measured at Fair Value (Details) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 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		$ 389
Nonrecurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Asset fair value measurements		338	$ 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		337	3,928
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		1	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		338	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		337	3,928
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		$ 1	$ 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%)	(10.00%)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Measurement Input, Comparability Adjustment [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	[2],[3]	(0.20)	(0.15)
Fair Value, Inputs, Level 3 [Member] | Appraisal Valuation Technique [Member] | Measurement Input, Comparability Adjustment [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	[2],[3]	(1)	(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]	$ 43	$ 3,634
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%)	(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%)	(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	$ 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		28 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		118.00%	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		254.00%	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		$ 1	$ 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.

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Note 9 - Available-for-sale Securities Measured at Fair Value Using Significant Unobservable Inputs (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance, beginning of year	$ 53	$ 75
Payments received	0	(22)
Included in earnings	0	0
Included in other comprehensive (loss) income	1	0
Transfers in and/or out of Level 3	0	0
Balance, end of year	$ 52	$ 53

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Note 9 - Financial and Off-balance Sheet Instruments (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 14,201,000	$ 15,899,000
Available-for-sale	537,904,000	546,525,000
Equity securities	11,908,000	12,056,000
Restricted investment in stocks	2,098,000	5,193,000
Loans held for sale	388,000
Net loans	1,003,765,000	1,028,854,000
Mortgage servicing rights	460,000	469,000
Accrued interest receivable	3,425,000	5,038,000
Deposits	1,424,590,000	1,418,369,000
Short-term borrowings	110,192,000	161,327,000
Long-term debt		10,000,000
Accrued interest payable	923,000	467,000
Cash and cash equivalents	14,201,000	15,899,000
Restricted investment in stocks	2,098,000	5,193,000
Loans held for sale	389,000
Net loans	980,285,000	1,001,103,000
Mortgage servicing rights	621,000	638,000
Accrued interest receivable	3,425,000	5,038,000
Short-term borrowings	110,192,000	161,327,000
Long-term debt		10,000,000
Accrued interest payable	923,000	467,000
Fair Value, Inputs, Level 1 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Equity securities	11,908,000	12,056,000
Cash and cash equivalents	14,201,000	15,899,000
Short-term borrowings	110,192,000	161,327,000
Long-term debt		10,000,000
Fair Value, Inputs, Level 2 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Available-for-sale	537,852,000	546,472,000
Restricted investment in stocks	2,098,000	5,193,000
Loans held for sale	389,000
Accrued interest receivable	3,425,000	5,038,000
Accrued interest payable	923,000	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	980,285,000	1,001,103,000
Mortgage servicing rights	621,000	638,000
Standby Letters of Credit [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Commitments to extend credit	83,000	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	83,000	69,000
With No Stated Maturities [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Deposits	1,174,574,000	1,242,920,000
Deposits	1,174,574,000	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	1,174,574,000	1,242,920,000
With Stated Maturities [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Deposits	250,016,000	175,449,000
Deposits	244,751,000	168,554,000
With Stated Maturities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Deposits	$ 244,751,000	$ 168,554,000

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Note 10 - Financial Instrument Commitments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Commitments And Contingencies Disclosure [Line Items]
Total financial instrument commitments	$ 409,695	$ 358,824
Commitments to Extend Credit [Member]
Commitments And Contingencies Disclosure [Line Items]
Total financial instrument commitments	389,336	339,312
Standby Letters of Credit [Member]
Commitments And Contingencies Disclosure [Line Items]
Total financial instrument commitments	$ 20,359	$ 19,512

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Note 10 - Commitments and Contingencies (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 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	$ 17,633,000
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

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Note 11 - Capital Ratios and Regulatory Minimum Requirements (Details) $ in Thousands	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
The Company [Member]
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital	$ 164,271	$ 162,725
Tier 1 capital	155,980	152,077
Common equity tier 1 capital	155,980	152,077
Tier 1 leverage capital	$ 155,980	$ 152,077
Capital to risk-weighted assets	0.1353	0.1319
Tier 1 capital to risk-weighted assets	0.1285	0.1233
Common equity tier 1 capital to risk-weighted assets	12.85%	12.33%
Tier 1 leverage capital to average assets	0.0907	0.0875
Capital required for capital adequacy	$ 97,099	$ 98,701
Tier 1 capital required for capital adequacy	72,825	74,025
Common equity tier 1 capital required for capital adequacy	54,618	55,519
Tier 1 leverage capital required for capital adequacy	$ 68,766	$ 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	0.0400	0.0400
Capital required to be well capitalized	$ 121,374	$ 123,376
Tier 1 capital required to be well capitalized	$ 72,825	$ 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	$ 151,466	$ 149,908
Tier 1 capital	143,175	139,260
Common equity tier 1 capital	143,175	139,260
Tier 1 leverage capital	$ 143,175	$ 139,260
Capital to risk-weighted assets	0.1286	0.1252
Tier 1 capital to risk-weighted assets	0.1216	0.1163
Common equity tier 1 capital to risk-weighted assets	12.16%	11.63%
Tier 1 leverage capital to average assets	0.0839	0.0807
Capital required for capital adequacy	$ 94,219	$ 95,796
Tier 1 capital required for capital adequacy	70,664	71,847
Common equity tier 1 capital required for capital adequacy	52,998	53,886
Tier 1 leverage capital required for capital adequacy	$ 68,249	$ 69,009
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	0.0400	0.0400
Capital required to be well capitalized	$ 117,774	$ 119,746
Tier 1 capital required to be well capitalized	94,219	95,896
Common equity tier 1 capital required to be well capitalized	76,553	77,835
Tier 1 leverage capital required to be well capitalized	$ 85,311	$ 86,261
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	0.0800	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	0.0500	0.0500