What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-08 compared with 2024-08-09 · 170 added, 133 removed, 891 unchanged (25% of the section changed)

1 unchanged sentence

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited) June 30,

(Unaudited) September 30,

2024 December 31,

8 unchanged sentences

Loans Held for Sale 428 —

Loans, Net of Allowance for Credit Losses of $ 9,527 and $ 9,707 at June 30, 2024 and December 31, 2023, Respectively

Loans, Net of Allowance for Credit Losses of $ 9,479 and $ 9,707 at September 30, 2024 and December 31, 2023, Respectively

1,056,276 1,100,689

21 unchanged sentences

Common Stock, $ 0.4167 Par Value;

35,000,000 Shares Authorized, 5,783,588 Shares Issued and 5,141,911 Shares Outstanding at June 30, 2024, with 5,759,378 and 5,118,713 Shares Issued and Outstanding at December 31, 2023.

35,000,000 Shares Authorized, 5,789,438 Shares Issued and 5,129,921 Shares Outstanding at September 30, 2024, with 5,759,378 and 5,118,713 Shares Issued and Outstanding at December 31, 2023.

Capital Surplus

2 unchanged sentences

89,607 83,392

Treasury Stock, at Cost ( 641,677 and 640,665 Shares at June 30, 2024 and December 31, 2023, Respectively)

Treasury Stock, at Cost ( 659,517 and 640,665 Shares at September 30, 2024 and December 31, 2023, Respectively)

( 15,042 ) ( 14,545 )

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

22 unchanged sentences

Net Gain (Loss) on Sales of Loans 18 — 49 ( 3 )

Net Loss on Securities ( 31 ) ( 100 ) ( 197 ) ( 332 )

Net Gain (Loss) on Securities 245 ( 37 ) 49 ( 369 )

Net Gain on Purchased Tax Credits 12 7 37 22

Gain on Sale of Subsidiary 138 — 138 —

Net Gain on Disposal of Premises and Equipment — — 274 11

28 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Net Income $ 3,219 $ 2,672 $ 10,065 $ 9,586

Other Comprehensive Loss:

Change in Unrealized Loss on Investment Securities Available-for-Sale ( 344 ) ( 2,704 ) ( 1,972 ) ( 124 )

Other Comprehensive Income (Loss):

Change in Unrealized Gain (Loss) on Investment Securities Available-for-Sale 5,644 ( 4,248 ) 3,672 ( 4,372 )

Income Tax Effect ( 1,203 ) 916 ( 835 ) 942

Other Comprehensive Loss, Net of Income Tax Effect ( 271 ) ( 2,121 ) ( 1,604 ) ( 98 )

Total Comprehensive Income $ 2,379 $ 636 $ 5,243 $ 6,817

Other Comprehensive Income (Loss), Net of Income Tax Effect 4,441 ( 3,332 ) 2,837 ( 3,430 )

Total Comprehensive Income (Loss) $ 7,660 $ ( 660 ) $ 12,902 $ 6,156

The accompanying notes are an integral part of these consolidated financial statements

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

Three Months Ended June 30, 2024 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

Three Months Ended September 30, 2024 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

(Dollars in thousands, except share and per share data)

March 31, 2024 5,783,788 $ 2,411 $ 85,501 $ 86,308 $ ( 14,550 ) $ ( 18,080 ) $ 141,590

June 30, 2024 5,783,588 $ 2,410 $ 85,718 $ 87,673 $ ( 14,568 ) $ ( 18,351 ) $ 142,882

Comprehensive Income:

Net Income — — — 3,219 — — 3,219

Other Comprehensive Loss — — — — — ( 271 ) ( 271 )

Restricted Stock Awards Forfeited ( 200 ) ( 1 ) 19 — ( 18 ) — —

Other Comprehensive Income — — — — — 4,441 4,441

Stock-Based Compensation Expense — — 215 — — — 215

Exercise of Stock Options 5,850 3 139 — ( 148 ) — ( 6 )

Treasury stock purchased, at cost ( 18,220 shares)

— — — — ( 326 ) — ( 326 )

Dividends Paid ($ 0.25 Per Share)

— — — ( 1,285 ) — — ( 1,285 )

June 30, 2024 5,783,588 $ 2,410 $ 85,718 $ 87,673 $ ( 14,568 ) $ ( 18,351 ) $ 142,882

Three Months Ended June 30, 2023 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

September 30, 2024 5,789,438 $ 2,413 $ 86,072 $ 89,607 $ ( 15,042 ) $ ( 13,910 ) $ 149,140

Three Months Ended September 30, 2023 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

(Dollars in thousands, except share and per share data)

March 31, 2023 5,730,908 $ 2,388 $ 84,118 $ 68,834 $ ( 13,927 ) $ ( 24,218 ) $ 117,195

Comprehensive Income:

June 30, 2023 5,733,408 $ 2,389 $ 84,325 $ 70,314 $ ( 14,100 ) $ ( 26,339 ) $ 116,589

Comprehensive Loss:

Net Income — — — 2,672 — — 2,672

Other Comprehensive Loss — — — — — ( 3,332 ) ( 3,332 )

Restricted Stock Awards Forfeited — — 21 — ( 21 ) — —

Restricted Stock Awards Granted 9,000 4 ( 4 ) — — — —

Stock-Based Compensation Expense — — 196 — — — 196

Exercise of Stock Options — — — — 45 — 45

Treasury Stock Purchased, at cost ( 8,792 shares)

— — — — ( 197 ) — ( 197 )

Dividends Paid ($ 0.25 Per Share)

— — — ( 1,279 ) — — ( 1,279 )

June 30, 2023 5,733,408 $ 2,389 $ 84,325 $ 70,314 $ ( 14,100 ) $ ( 26,339 ) $ 116,589

September 30, 2023 5,742,408 $ 2,393 $ 84,517 $ 71,707 $ ( 14,100 ) $ ( 29,671 ) $ 114,846

The accompanying notes are an integral part of these consolidated financial statements

Six Months Ended June 30, 2024 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

Nine Months Ended September 30, 2024 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

(Dollars in thousands, except share and per share data)

2 unchanged sentences

Net Income — — — 10,065 — — 10,065

Other Comprehensive Loss — — — — — ( 1,604 ) ( 1,604 )

Other Comprehensive Income — — — — — 2,837 2,837

Restricted Stock Awards Granted 25,410 11 ( 11 ) — — — —

6 unchanged sentences

— — — ( 3,850 ) — — ( 3,850 )

June 30, 2024 5,783,588 $ 2,410 $ 85,718 $ 87,673 $ ( 14,568 ) $ ( 18,351 ) $ 142,882

Six Months Ended June 30, 2023 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

September 30, 2024 5,789,438 $ 2,413 $ 86,072 $ 89,607 $ ( 15,042 ) $ ( 13,910 ) $ 149,140

Nine Months Ended September 30, 2023 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

(Dollars in thousands, except share and per share data)

13 unchanged sentences

— — — ( 3,832 ) — — ( 3,832 )

June 30, 2023 5,733,408 $ 2,389 $ 84,325 $ 70,314 $ ( 14,100 ) $ ( 26,339 ) $ 116,589

September 30, 2023 5,742,408 $ 2,393 $ 84,517 $ 71,707 $ ( 14,100 ) $ ( 29,671 ) $ 114,846

The accompanying notes are an integral part of these consolidated financial statements

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30, 2024 2023

Nine Months Ended September 30, 2024 2023

(Dollars in thousands)

5 unchanged sentences

(Recovery) Provision for Credit Losses - Loans ( 105 ) 863

Provision (Recovery) for Credit Losses - Unfunded Commitments 57 ( 60 )

Loss on Securities 197 332

(Recovery) Provision for Credit Losses - Unfunded Commitments ( 9 ) 54

(Gain) Loss on Securities ( 49 ) 369

Gain on Purchased Tax Credits ( 37 ) ( 22 )

4 unchanged sentences

(Gain) Loss on Sale of Loans ( 49 ) 3

Gain on Sale of Other Real Estate Owned and Repossessed Assets 30 —

Loss (Gain) on Sale of Other Real Estate Owned and Repossessed Assets 30 ( 13 )

Noncash Expense for Stock-Based Compensation 591 557

Increase in Accrued Interest Receivable ( 1,160 ) ( 600 )

Valuation adjustment on real estate owned — 119

Gain on Disposal of Premises and Equipment ( 274 ) ( 11 )

Decrease in Deferred Income Tax ( 522 ) —

Increase in Deferred Income Tax 1,035 —

Decrease in Taxes Payable ( 4,314 ) ( 632 )

10 unchanged sentences

Proceeds From a Claim on Bank-Owned Life Insurance 2,678 731

Investment in Low Income Housing Tax Credit

Proceeds From Sale of Other Real Estate Owned 132 142

8 unchanged sentences

Exercise of Stock Options ( 6 ) 45

NET CASH PROVIDED BY FINANCING ACTIVITIES 80,038 3,916

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 82,474 ( 24,388 )

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 79,102 ( 51,103 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30, 2024 2023

Nine Months Ended September 30, 2024 2023

(Dollars in thousands)

5 unchanged sentences

SUPPLEMENTAL NONCASH DISCLOSURE:

Proceeds Receivable from Claims on Bank-Owned Life Insurance — 664

Other Real Estate Acquired in Settlement of Loans 150 248

Securities Purchased Not Settled 7,556 —

Syndicated Loans Purchased and Sold Not Settled, net 6,000 ( 1,967 )

Right of Use Asset Recognized 1,419 —

Lease Liability Recognized 1,452 —

Unfunded Commitment in Low Income Housing Tax Credit

The accompanying notes are an integral part of these consolidated financial statements

14 unchanged sentences

All these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim financial statements.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Interim results are not necessarily indicative of results for a full year.

50 unchanged sentences

If the fair value of the collateral is less than the amortized cost basis of the loan, the Company will charge off the difference between the fair value of the collateral, less estimated costs to sell at the reporting date, and the amortized cost basis of the loan.

ACL on Off-Balance Sheet Commitments

ACL on Off-Balance Sheet Unfunded Commitments

The Company is required to include unfunded commitments that are expected to be funded in the future within the allowance calculation, other than those that are unconditionally cancellable.

18 unchanged sentences

The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans and available for sale securities.

Accrued interest receivable on loans is reported as a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 4.1 million at June 30, 2024 and $ 4.7 million at December 31, 2023 and is excluded from the estimate of credit losses.

Accrued interest receivable on available of sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 1.5 million at June 30, 2024 and $ 947,000 at December 31, 2023 and is excluded from the estimate of credit losses.

Accrued interest receivable on loans is reported as a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 4.0 million at September 30, 2024 and $ 4.1 million at December 31, 2023 and is excluded from the estimate of credit losses.

Accrued interest receivable on available of sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 2.2 million at September 30, 2024 and $ 947,000 at December 31, 2023 and is excluded from the estimate of credit losses.

Recent Accounting Standards

10 unchanged sentences

For all entities, the amendments in ASU 2022-06 are effective upon issuance.

As of June 30, 2024, the Company does not have any instruments tied to the LIBOR reference rate.

As of September 30, 2024, the Company does not have any instruments tied to the LIBOR reference rate.

The adoption of this guidance is not expected to have a material effect on the Company's consolidated statements of financial condition and results of operations.

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.

This ASU expanded the use of the proportional amortization method of accounting - previously allowed only for investments in low-income housing tax credit structures - to equity investments in other tax credit structures that meet certain criteria.

Common tax credit programs that investors access via tax equity structures and that may now be eligible for application of the proportional amortization method include:

new markets tax credits, historic rehabilitation tax credit programs and renewable energy tax credit programs.

This ASU took effect in reporting periods beginning after December 15, 2023, with early adoption permitted.

The adoption of this ASU on January 1, 2024, did not have a material impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures (Topic 820), to improve reportable segment disclosures by requiring public entities to disclose significant expense categories and amounts for each reportable segment, where significant expense categories are defined as those that are regularly reported to an entity's chief operating decision-maker and included in a segment's reported measures of profit or loss.

For public companies, the requirements will become effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

2 unchanged sentences

The following table presents the amortized cost and fair value of securities available-for-sale at the dates indicated:

June 30, 2024

September 30, 2024

(Dollars in thousands)

30 unchanged sentences

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at the dates indicated:

June 30, 2024

September 30, 2024

Less than 12 months

23 unchanged sentences

2 $ 8,513 $ ( 87 ) 39 $ 103,422 $ ( 21,633 ) 41 $ 111,935 $ ( 21,720 )

For debt securities, the Company does not believe that any individual unrealized loss as of June 30, 2024 or December 31, 2023, represents a credit related impairment.

For debt securities, the Company does not believe that any individual unrealized loss as of September 30, 2024 or December 31, 2023, represents a credit related impairment.

The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate a credit related impairment.

The unrealized losses on securities at June 30, 2024 and December 31, 2023 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities.

The unrealized losses on securities at September 30, 2024 and December 31, 2023 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities.

The Company does not intend to sell, and it is more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.

Total securities available to be pledged have a fair value of $ 249.8 million at June 30, 2024 and $ 196.8 million at December 31, 2023 of which securities with a fair value of $ 171.1 million and $ 157.3 million at June 30, 2024 and December 31, 2023, respectively, were pledged to secure uninsured public deposits, borrowings or for other purposes as required or permitted by law.

Total securities available to be pledged have a fair value of $ 260.3 million at September 30, 2024 and $ 196.8 million at December 31, 2023 of which securities with a fair value of $ 175.1 million and $ 157.3 million at September 30, 2024 and December 31, 2023, respectively, were pledged to secure uninsured public deposits, borrowings or for other purposes as required or permitted by law.

The scheduled maturities of securities available-for-sale are summarized as follows.

2 unchanged sentences

however, regular principal payments and prepayments of principal are received on a monthly basis.

June 30, 2024

September 30, 2024

(Dollars in thousands)

8 unchanged sentences

There was no realized gain or loss on sales of debt securities for the periods indicated.

All gains and losses presented in the table below are reported in Net Loss on Securities on the Consolidated Statements of Income.

All gains and losses presented in the table below are reported in Net Gain (Loss) on Securities on the Consolidated Statements of Income.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Equity Securities

Net Unrealized Loss Recognized on Securities Held $ ( 31 ) $ ( 100 ) $ ( 197 ) $ ( 332 )

Net Unrealized Gain (Loss) Recognized on Securities Held $ 245 $ ( 37 ) $ 49 $ ( 369 )

Net Realized Gain Recognized on Securities Sold — — — —

Net Loss on Equity Securities $ ( 31 ) $ ( 100 ) $ ( 197 ) $ ( 332 )

Net Loss on Securities $ ( 31 ) $ ( 100 ) $ ( 197 ) $ ( 332 )

Net Gain (Loss) on Equity Securities $ 245 $ ( 37 ) $ 49 $ ( 369 )

Net Gain (Loss) on Securities $ 245 $ ( 37 ) $ 49 $ ( 369 )

Loans and Allowance for Credit Losses

8 unchanged sentences

Commercial real estate loans generally present a higher level of credit risk than loans secured by residences.

This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income-producing properties, and the increased difficulty in evaluating and monitoring these types of loans.

Furthermore, the repayment of commercial real estate loans is typically dependent upon the successful operation of the

related real estate project.

Furthermore, the repayment of commercial real estate loans is typically dependent upon the successful operation of the related real estate project.

If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired.

7 unchanged sentences

The following table presents the classifications of loans as of the dates indicated:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(Dollars in thousands)

9 unchanged sentences

$ 1,056,276 $ 1,100,689

Total unamortized net deferred loan fees were $ 870,000 and $ 1.0 million at June 30, 2024 and December 31, 2023, respectively.

Total unamortized net deferred loan fees were $ 714,000 and $ 1.0 million at September 30, 2024 and December 31, 2023, respectively.

The Company uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio.

7 unchanged sentences

There were no loans in the criticized category of Loss.

Classified Loans by Origination Year (as of June 30, 2024)

Classified Loans by Origination Year (as of September 30, 2024)

(dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total

80 unchanged sentences

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated:

June 30, 2024

September 30, 2024

(Dollars in Thousands)

17 unchanged sentences

$ 1,103,523 $ 4,406 $ 227 $ — $ 4,633 $ 2,240 $ 1,110,396

Additional interest income that would have been recorded if the loans that were nonaccrual at June 30, 2024 were current was $ 21,000 and $ 40,000 for the three and six months ended June 30, 2024, respectively, and $ 61,000 and $ 86,000 for the three and six months ended June 30, 2023, respectively.

Additional interest income that would have been recorded if the loans that were nonaccrual at September 30, 2024 were current was $ 16,000 and $ 58,000 for the three and nine months ended September 30, 2024, respectively, and $ 41,000 and $ 127,000 for the three and nine months ended September 30, 2023, respectively.

The following table sets forth the amounts for amortized cost basis of loans on nonaccrual status, loans past due 90 days still accruing, and categories of nonperforming assets at the date indicated.

June 30, 2024

September 30, 2024

Nonaccrual With No ACL Nonaccrual With ACL Loans Past Due 90 Days Still Accruing Total Nonperforming Assets

20 unchanged sentences

Total Nonperforming Assets

No interest income on nonaccrual loans was recognized during the three and six months ended June 30, 2024 and June 30, 2023.

No interest income on nonaccrual loans was recognized during the three and nine months ended September 30, 2024 and September 30, 2023.

All modifications and refinancing, including those with borrowers that are experiencing financial difficulty are subject to the modification guidance in ASC 310-20.

3 unchanged sentences

Additionally, the effective interest rate should be recalculated based on the amortized cost basis of the new loan and a reassessment of contractual cash flow.

For the three and six months ended June 30, 2024 and June 30, 2023, there were no new loan modifications to borrowers experiencing financial difficulty.

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $ 1.0 million and $ 907,000 at June 30, 2024 and December 31, 2023, respectively.

For the three and nine months ended September 30, 2024 and September 30, 2023, there were no new loan modifications to borrowers experiencing financial difficulty.

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $ 1.3 million and $ 907,000 at September 30, 2024 and December 31, 2023, respectively.

The activity in the ACL - Loans is summarized below by primary segments for the periods indicated:

(Dollars in thousands)

March 31, 2024 $ 2,832 $ 2,948 $ 870 $ 1,587 $ 1,084 $ 261 $ 9,582

June 30, 2024 $ 2,844 $ 3,082 $ 744 $ 1,485 $ 1,131 $ 241 $ 9,527

— — — — ( 159 ) — ( 159 )

— — — 45 41 — 86

Provision (Recovery) for Credit Losses - Loans 10 134 ( 126 ) ( 148 ) 162 ( 20 ) 12

June 30, 2024 $ 2,844 $ 3,082 $ 744 $ 1,485 $ 1,131 $ 241 $ 9,527

(Recovery) Provision for Credit Losses - Loans ( 226 ) 621 ( 51 ) ( 248 ) ( 90 ) 19 25

September 30, 2024 $ 2,618 $ 3,703 $ 693 $ 1,282 $ 923 $ 260 $ 9,479

Residential Real

3 unchanged sentences

(Dollars in thousands)

March 31, 2023 $ 2,156 $ 3,056 $ 805 $ 1,997 $ 2,098 $ 158 $ 10,270

June 30, 2023 $ 2,356 $ 3,216 $ 938 $ 2,140 $ 1,848 $ 168 $ 10,666

Charge-offs ( 109 ) — — — ( 168 ) — ( 277 )

1 unchanged sentence

Provision (Recovery) for Credit Losses - Loans 625 104 102 ( 317 ) ( 272 ) 49 291

June 30, 2023 $ 2,356 $ 3,216 $ 938 $ 2,140 $ 1,848 $ 168 $ 10,666

September 30, 2023 $ 2,899 $ 3,329 $ 1,040 $ 1,919 $ 1,444 $ 217 $ 10,848

(Dollars in thousands)

2 unchanged sentences

13 — — 132 109 — 254

Provision (Recovery) for Credit Losses - Loans ( 296 ) 452 105 ( 285 ) ( 98 ) ( 8 ) ( 130 )

June 30, 2024 $ 2,844 $ 3,082 $ 744 $ 1,485 $ 1,131 $ 241 $ 9,527

(Recovery) Provision for Credit Losses - Loans ( 524 ) 1,073 54 ( 531 ) ( 188 ) 11 ( 105 )

September 30, 2024 $ 2,618 $ 3,703 $ 693 $ 1,282 $ 923 $ 260 $ 9,479

(Dollars in thousands)

3 unchanged sentences

41 32 — 862 94 — — 1,029

Provision (Recovery) 228 627 ( 52 ) 118 ( 397 ) 48 — 572

June 30, 2023 $ 2,356 $ 3,216 $ 938 $ 2,140 $ 1,848 $ 168 $ — $ 10,666

Provision (Recovery) for Credit Losses - Loans 853 731 50 ( 199 ) ( 669 ) 97 — 863

September 30, 2023 $ 2,899 $ 3,329 $ 1,040 $ 1,919 $ 1,444 $ 217 $ — $ 10,848

Loans that do not share risk characteristics are evaluated on an individual basis.

For loans that are individually evaluated and collateral dependent, financial loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL - Loans is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

During the three and nine months ended September 30, 2024 and September 30, 2023, there were no loans that required a credit loss to be individually assigned.

The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (accrued interest payable and other liabilities on the Consolidated Statement of Financial Condition), with adjustments to the reserve recognized in provision for credit losses - unfunded commitments on the Consolidated Statement of Income.

1 unchanged sentence

(in thousands) Allowance for Credit Losses

Balance at March 31, 2024

Recovery for Credit Losses - Unfunded Commitments ( 48 )

Balance at June 30, 2024

(in thousands) Allowance for Credit Losses

Balance at March 31, 2023 $ 718

Impact of CECL Adoption —

Recovery for Credit Losses - Unfunded Commitments ( 66 )

Balance at September 30, 2024 $ 491

(in thousands) Allowance for Credit Losses

Balance at June 30, 2023 $ 658

Provision for Credit Losses - Unfunded Commitments 115

Balance at September 30, 2023 $ 773

(in thousands) Allowance for Credit Losses

Balance at December 31, 2023 $ 500

Provision for Credit Losses - Unfunded Commitments 57

Balance at June 30, 2024 $ 557

Recovery for Credit Losses - Unfunded Commitments ( 9 )

Balance at September 30, 2024 $ 491

(in thousands) Allowance for Credit Losses

1 unchanged sentence

Impact of CECL Adoption 719

Recovery for Credit Losses - Unfunded Commitments ( 60 )

Balance at June 30, 2023 $ 658

Loans that do not share risk characteristics are evaluated on an individual basis.

During the three and six months ended June 30, 2024 and June 30, 2023, there were no loans that required a credit loss to be individually assigned.

Provision for Credit Losses - Unfunded Commitments 54

Balance at September 30, 2023 $ 773

Derivatives and Hedging Activities

8 unchanged sentences

These adjustments are included in Accrued Interest Payable and Other Liabilities on the Company's Consolidated Statement of Financial Condition.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(Dollars in Thousands)

26 unchanged sentences

These instruments are classified as Level 2.

There were no transfers into or out of Level 3 during the six months ended June 30, 2024 or year ended December 31, 2023.

There were no transfers into or out of Level 3 during the nine months ended September 30, 2024 or year ended December 31, 2023.

The following table presents the financial assets measured at fair value on a recurring basis and reported on the Consolidated Statements of Financial Condition as of the dates indicated, by level within the fair value hierarchy:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(Dollars in thousands)

34 unchanged sentences

Fair value is measured based on the value of the collateral securing the loans and is classified as Level 3 in the fair value hierarchy.

At June 30, 2024 and December 31, 2023, the Company did not have any loans that would be required to be remeasured.

At September 30, 2024 and December 31, 2023, the Company did not have any loans that would be required to be remeasured.

The fair value of mortgage servicing rights ("MSRs") is determined by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions.

2 unchanged sentences

Since the valuation model includes significant unobservable inputs as listed above, MSRs are classified as Level 3.

At June 30, 2024 and December 31, 2023, the Company did not have any MSRs that would be required to be remeasured.

At September 30, 2024 and December 31, 2023, the Company did not have any MSRs that would be required to be remeasured.

Other real estate owned ("OREO") properties are evaluated at the time of acquisition and recorded at fair value, less estimated selling costs.

1 unchanged sentence

The fair value of an OREO property is determined from a qualified independent appraisal and is classified as Level 3 in the fair value hierarchy.

As of June 30, 2024 the Company did not have any OREO that would be required to be remeasured.

As of September 30, 2024 the Company did not have any OREO that would be required to be remeasured.

At December 31, 2023, OREO measured at fair value less costs to sell had no net carrying value, which consisted of the outstanding balance of $ 37,000 less write-downs of $ 37,000 .

6 unchanged sentences

The following table presents the estimated fair values of the Company’s financial instruments at the dates indicated.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(Dollars in thousands)

35 unchanged sentences

The following table presents the unused and available credit balances of financial instruments whose contracts represent credit risk at the dates indicated:

September 30,

2024 December 31,

23 unchanged sentences

For secured letters of credit, the collateral is typically Company deposit instruments or customer business assets.

The Company recorded no liability associated with standby letters of credit as of June 30, 2024 and December 31, 2023.

The Company recorded no liability associated with standby letters of credit as of September 30, 2024 and December 31, 2023.

The Company evaluates all contracts at commencement to determine if a lease is present.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

3 unchanged sentences

Total Lease Expense $ 149 $ 84 $ 341 $ 253

September 30,

2024 December 31,

4 unchanged sentences

Weighted Average Discount Rate 4.16 % 2.86 %

September 30,

(Dollars in thousands)

14 unchanged sentences

The Bank recorded an operating lease ROU asset and corresponding lease liability of $ 1.0 million.

On April 8, 2024, the Bank entered into a lease agreement under which the Bank will lease retail property located in Uniontown, Pennsylvania.

On April 8, 2024, the Bank entered into a lease agreement under which the Bank will lease retail property for the operation of a full-service branch office located in Uniontown, Pennsylvania.

The lease agreement is for an initial term of five years with specified renewal options.

1 unchanged sentence

The Bank recorded an operating lease ROU asset and corresponding lease liability of $ 410,000 .

There were no new lease agreements which commenced during the six months ended June 30, 2023.

There were no new lease agreements which commenced during the nine months ended September 30, 2023.

Segment and Related Information

At June 30, 2024, the Company’s business activities were comprised of one operating segment, which is community banking.

At September 30, 2024, the Company’s business activities were comprised of one operating segment, which is community banking.

In prior reporting periods, the Company's business activities were comprised of two operating segments, community banking and insurance brokerage services.

4 unchanged sentences

The sale of assets was completed on December 8, 2023 and resulted in a pre-tax gain of $ 24.6 million.

Assets remaining in the EU subsidiary at June 30, 2024 and December 31, 2023 consisted primarily of cash received from the sale of assets.

Assets remaining in the EU subsidiary at September 30, 2024 and December 31, 2023 consisted primarily of cash received from the sale of assets.

The EU subsidiary is expected to be merged into the Bank, with the remaining assets and liabilities being transferred to the Bank during 2025.

4 unchanged sentences

(Dollars in thousands)

June 30, 2024

September 30, 2024

Assets $ 1,559,417 $ 26,182 $ 164,038 $ ( 187,896 ) $ 1,561,741

5 unchanged sentences

Stockholders' Equity 137,359 21,259 139,834 ( 158,618 ) 139,834

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Interest and Dividend Income $ 19,752 $ — $ 1,306 $ ( 1,285 ) $ 19,773

4 unchanged sentences

Net Interest and Dividend Income After Net Recovery for Credit Losses 11,649 — 1,151 ( 1,285 ) 11,515

Noninterest Income (Loss) 714 — ( 26 ) — 688

Noninterest Income 874 146 213 — 1,233

Noninterest Expense 8,777 — 5 — 8,782

Undistributed Net Income of Subsidiary 106 — 1,876 ( 1,982 ) —

Income Before Income Tax Expense (Benefit) 3,377 — 2,619 ( 2,786 ) 3,210

Income Tax Expense (Benefit) 591 — ( 31 ) — 560

Income Before Income Tax Expense 3,852 146 3,235 ( 3,267 ) 3,966

Income Tax Expense 691 40 16 — 747

Net Income $ 3,161 $ 106 $ 3,219 $ ( 3,267 ) $ 3,219

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Interest and Dividend Income $ 56,636 $ — $ 3,914 $ ( 3,851 ) $ 56,699

2 unchanged sentences

Recovery for Credit Losses - Loans ( 105 ) — — — ( 105 )

Provision for Credit Losses - Unfunded Commitments 57 — — — 57

Net Interest and Dividend Income After Net Recovery for Credit Losses 23,403 — 2,298 ( 2,566 ) 23,135

Noninterest Income (Loss) 2,787 — ( 183 ) — 2,604

Recovery for Credit Losses - Unfunded Commitments ( 9 ) — — — ( 9 )

Net Interest and Dividend Income After Recovery for Credit Losses 35,052 — 3,449 ( 3,851 ) 34,650

Noninterest Income 3,662 146 31 — 3,839

Noninterest Expense 26,178 — 19 — 26,197

7 unchanged sentences

(Dollars in thousands)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Interest and Dividend Income $ 15,853 $ 1 $ 1,298 $ ( 1,278 ) $ 15,874

2 unchanged sentences

Provision for Credit Losses - Loans 291 — — — 291

Recovery for Credit Losses - Unfunded Commitments ( 60 ) — — — ( 60 )

Net Interest and Dividend Income After Net Provision for Credit Losses 10,824 2 1,140 ( 1,278 ) 10,688

Provision for Credit Losses - Unfunded Commitments 115 — — — 115

Net Interest and Dividend Income After Provision for Credit Losses 10,445 1 1,143 ( 1,278 ) 10,311

Noninterest Income (Loss) 1,006 1,436 ( 30 ) — 2,412

4 unchanged sentences

Net Income $ 2,807 $ 214 $ 2,672 $ ( 3,021 ) $ 2,672

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Interest and Dividend Income $ 45,257 $ 5 $ 3,889 $ ( 3,830 ) $ 45,321

2 unchanged sentences

Provision for Credit Losses - Loans 863 — — — 863

Recovery for Credit Losses - Unfunded Commitments ( 60 ) — — — ( 60 )

Net Interest and Dividend Income After Net Provision for Credit Losses 22,460 3 2,282 ( 2,553 ) 22,192

Provision for Credit Losses - Unfunded Commitments 54 — — — 54

Net Interest and Dividend Income After Provision for Credit Losses 32,904 5 3,423 ( 3,830 ) 32,502

Noninterest Income (Loss) 2,918 4,937 ( 362 ) — 7,493

12 unchanged sentences

Forfeited ( 21,816 ) 25.12

Outstanding Options at June 30, 2024 411,297 $ 23.61 6.0

Exercisable Options at June 30, 2024 217,323 $ 24.32 3.5

Outstanding Options at September 30, 2024 403,348 $ 23.58 5.7

Exercisable Options at September 30, 2024 212,034 $ 24.21 3.2

Number of Shares Weighted Average Exercise Price Weighted Average Remaining Service Period in Years

Nonvested Options at June 30, 2024 193,974 $ 22.82 8.8

Nonvested Options at September 30, 2024 190,973 $ 22.89 8.6

Summary of Significant Assumptions for Newly Issued Stock Options

10 unchanged sentences

Forfeited ( 1,990 ) 22.63

Nonvested Restricted Stock at June 30, 2024 84,164 $ 22.78 3.3

Nonvested Restricted Stock at September 30, 2024 81,364 $ 22.84 3.0

The Company recognizes expense over a five-year vesting period for the restricted stock awards and stock options.

Stock-based compensation expense related to restricted stock awards and stock options was $ 198,000 and $ 187,000 for the three months ended June 30, 2024 and 2023.

Stock-based compensation expense was $ 376,000 and $ 361,000 for the six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023, total unrecognized compensation expense was $ 799,000 and $ 505,000 , respectively, related to stock options, and $ 1.6 million and $ 1.4 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at June 30, 2024 and December 31, 2023 exceeds the exercise price of the stock options.

The intrinsic value of stock options was $ 165,000 and $ 335,000 at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024 there were 287,500 shares of common stock available and reserved under the 2024 Plan to be issued as restricted stock awards or units based on the terms of the Plan.

At June 30, 2024, no shares have been granted under the 2024 Plan.

Under the 2021 Plan, there were 161,464 shares available at December 31, 2023 to be issued in connection with the exercise of stock

options, and 64,586 shares to be issued as restricted stock awards or units.

The 2021 Plan shall remain in effect as long as any awards are outstanding, but as a result of the approval of the 2024 Plan, no more awards can be granted under the 2021 Plan.

Stock-based compensation expense related to restricted stock awards and stock options was $ 215,000 and $ 196,000 for the three months ended September 30, 2024 and 2023.

Stock-based compensation expense was $ 591,000 and $ 557,000 for the nine months ended September 30, 2024 and 2023.

As of September 30, 2024 and December 31, 2023, total unrecognized compensation expense was $ 761,000 and $ 505,000 , respectively, related to stock options, and $ 1.5 million and $ 1.4 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at September 30, 2024 and December 31, 2023 exceeds the exercise price of the stock options.

The intrinsic value of stock options was $ 1.8 million and $ 335,000 at September 30, 2024 and December 31, 2023, respectively.

At September 30, 2024 there were 287,500 shares of common stock available and reserved under the 2024 Plan to be issued as restricted stock awards or units based on the terms of the Plan.

At September 30, 2024, no shares have been granted under the 2024 Plan.

Under the 2021 Plan, there were 161,464 shares available at December 31, 2023 to be issued in connection with the exercise of stock options, and 64,586 shares to be issued as restricted stock awards or units.

The 2021 Plan shall remain in effect

as long as any awards are outstanding, but as a result of the approval of the 2024 Plan, no more awards can be granted under the 2021 Plan.

Variable Interest Entities

The Company has an investment interest in the following non-consolidated entity that meets the definition of a variable interest entity ("VIE").

Low Income Housing Tax Credit Investments

The Company makes equity investments in an entity that sponsors affordable housing and other community development projects that qualify for the Low Income Housing Tax Credit ("LIHTC") program pursuant to Section 42 of the Internal Revenue Code.

The purpose of this investment is not only to assist the Bank in meeting its responsibilities under the Community Reinvestment Act, but also to provide an investment return, primarily through the realization of tax benefits.

The LIHTC partnership is managed by unrelated general partners that have the power to direct the activities which most significantly affect the performance of the partnership.

The Company is therefore not the primary beneficiary of the LIHTC partnership and accordingly, does not consolidate this VIE.

The Company's funding requirements are limited to its invested capital and any additional unfunded commitments for future equity contributions.

The Company's maximum exposure to loss as a result of its involvement is limited to the carrying amounts of the investments, including the unfunded commitments.

The investment in the LIHTC partnership is included in Accrued Interest Receivable and Other Assets and unfunded commitments are included in Accrued Interest Payable and Other Liabilities on the Consolidated Statements of Financial Condition.

The Company currently expects to fund these commitments by the end of 2035.

The following table presents the balances of the Company's LIHTC investments and related unfunded commitments:

September 30, 2024 December 31, 2023

(Dollars in thousands)

Low Income Housing Tax Credit Investments $ 6,000 $ —

Amortization — —

Net Low Income Housing Tax Credit Investments $ 6,000 $ —

Unfunded Commitments $ 5,396 $ —

The Company accounts for qualifying LIHTC investments under the proportional amortization method.

Under this method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance as a component of income tax expense.

During the three and nine month periods ended September 30, 2024 and 2023, there were no tax credits, other tax benefits or investment amortization recognized as the investment fund is not yet closed.

Subsequent Events

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements