[QNB Logo] P.O. Box 9005
Quakertown, PA 18951-9005
215.538.5600
FAX 215.538.5765
www.QNB.com
FOR IMMEDIATE RELEASE
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QNB CORP. FIRST QUARTER NET INCOME INCREASES 12.5 PERCENT
QUAKERTOWN, PA (27 April 2004) QNB Corp. (OTC Bulletin Board: QNBC) the parent
company of The Quakertown National Bank (QNB), reported net income for the first
quarter of 2004 of $1,722,000 or $.54 per share on a diluted basis. This
represents a 12.5 percent increase in net income when compared to the $1,531,000
or $.49 a diluted share reported for the first quarter of 2003. All earnings per
share amounts have been restated to reflect the two-for-one stock split
effective on October 14, 2003.
Contributing to the increase in net income when comparing the two quarters was
higher net interest income and non-interest income. Net interest income
increased $130,000 as a 7.7 percent increase in average earning assets more than
offset a 19 basis point decline in the net interest margin. Average loans and
average investment securities increased 5.4 percent and 11.5 percent,
respectively. These volume increases were primarily funded by continued strong
growth in deposits. Average total deposits increased 8.5 percent when comparing
the two quarters. Included in net interest income in the first quarter of 2004
was $44,000 in interest recognized on the pay-off of two loans that had not been
accruing interest.
The net interest margin was 3.48 percent for the first quarter of 2004 compared
to 3.67 percent for the same period in 2003. Excluding the impact of the
recognition of non-accrual income, the net interest margin for the first quarter
of 2004 was 3.45 percent. The net interest margin for the three months ended
March 31, 2004 represents an increase from the 3.38 percent reported for the
fourth quarter of 2003.
Non-interest income for the three months ended March 31, 2004 was $1,370,000, a
$132,000 increase from the first quarter of 2003. When comparing these two
periods, gains on the sale of loans decreased $261,000 while the net gains on
the sale of investment securities increased $324,000. The decline in the gain on
the sale of loans relates to the slow-down in residential mortgage refinance
activity as a result of the increase in interest rates from the lows seen during
2003. Also contributing to the increase in non-interest income was higher
mortgage servicing income and deposit fee income.
"I am pleased with the record quarterly financial results we have achieved",
said Thomas J. Bisko, President and CEO. "We continue to be successful in
attracting a growing number of customers and core deposits and deploying them
into quality loans and investment securities. In addition, during the quarter we
announced our 9th consecutive year of double-digit increases in the cash
dividend paid to shareholders, as well as the planned opening of our first
supermarket branch."
QNB Corp. offers commercial and retail banking services through the seven
banking offices of its subsidiary, The Quakertown National Bank. In addition,
QNB provides trust and investment management services in conjunction with The
Trust Company of Lehigh Valley, retail brokerage services through Raymond James
Financial Services, Inc. and title insurance through Bankers Settlement Services
of Eastern Pennsylvania, LLC.
This press release may contain forward-looking statements as defined in the
Private Securities Litigation Act of 1995. Actual results and trends could
differ materially from those set forth in such statements due to various
factors. Such factors include the possibility that increased demand or prices
for the Company's financial services and products may not occur, changing
economic and competitive conditions, technological developments, and other risks
and uncertainties, including those detailed in the company's filings with the
Securities and Exchange Commission.
QNB CORP.
(Dollars in thousands, except per share data)
Three Months Ended
March 31,
2004 2003
INCOME:
Total interest income $ 6,228 $ 6,392
Total interest expense 2,211 2,505
Net interest income 4,017 3,887
Provision for loan losses - -
Total non-interest income 1,370 1,238
Total non-interest expense 3,169 3,138
Income before income taxes 2,218 1,987
Provision for income taxes 496 456
Net income $ 1,722 $ 1,531
NET INCOME PER SHARE:
Basic $ 0.56 $ 0.50
Diluted 0.54 0.49
Dividends 0.185 0.165
SELECTED PERIOD END BALANCES:
Total assets $540,640 $518,495
Federal funds sold 10,859 10,421
Investments 261,464 242,375
Loans held-for-sale 213 2,368
Total loans 234,911 227,510
Allowance for loan losses 2,919 2,933
Deposits 426,234 410,330
Borrowed funds 64,714 61,635
Shareholders' equity 45,898 41,952
SELECTED RATIOS:
Return on average assets 1.28% 1.24%
Return on average shareholders' equity 16.64% 16.38%
Net interest margin-tax equivalent 3.48% 3.67%
Efficiency ratio-tax equivalent 55.16% 57.22%
Average shareholders' equity to total average 7.71% 7.56%
assets
Non-performing assets to total assets .12% .12%
Allowance as a % of loans 1.24% 1.28%
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Contact: Thomas J. Bisko, CEO 215-538-5600 ext. 5612 or
Bret H. Krevolin, CFO ext. 5716
8:30 AM - 5:00 PM ET