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Item 8. Financial Statements and Supplementary Data

2023-03-03 compared with 2022-03-03 · 558 added, 445 removed, 1972 unchanged (34% of the section changed)

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Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors

To the Shareholders, Board of Directors, and Audit Committee

CNB Financial Corporation

Clearfield, Pennsylvania

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of CNB Financial Corporation (the "Corporation") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the threeyear period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

We also have audited the Corporation’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by COSO.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of CNB Financial Corporation (the "Corporation") as of December 31, 2022, the related consolidated statement of income and comprehensive income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2022 and the related notes (collectively referred to as the "financial statements").

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Corporation’s internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 3, 2023, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Corporation’s management.

Our responsibility is to express an opinion on the Corporation’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

Change in Accounting Principle

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Measurement of Credit Losses on Financial Instruments.

The Corporation adopted the new credit loss standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

Basis for Opinions

The Corporation’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Corporation’s financial statements and an opinion on the Corporation’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Corporation in accordance with the U.S.

The Corporation adopted the new credit losses standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

Critical Audit Matter

The critical audit matter communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Credit Losses on Loans

As described in Notes 1 and 4 to the financial statements, the Corporation establishes an allowance representing the estimate of expected credit losses over the estimated life of the existing portfolio of loans.

The Corporation measures expected credit losses based on a pooled loan basis when similar risk characteristics exist by primarily applying a discounted cash flow ("DCF") model.

The DCF model discounts instrument-level contractual cash flows, adjusting for prepayments and curtailments, and incorporates loss expectations based on past events, current conditions, and forecasted macroeconomic indicators using reasonable and supportable forecasts.

The quantitative estimated losses provided by the DCF model are supplemented by qualitative factors that include changes related to relevant data, such as differences in underwriting standards, changes in environmental conditions, delinquency levels, segment growth rates and changes in duration within new markets, or other relevant factors not considered in the DCF model.

We identified the allowance for credit losses on loans as a critical audit matter.

Auditing management’s estimate of the allowance involved a high degree of subjectivity due to the significant judgment required in determining the (1) significant assumptions within the DCF model and (2) measurement of the qualitative factors applied to the loan portfolio.

The primary procedures performed to address the critical audit matter included:

• Obtained an understanding, evaluated the design, and tested the operating effectiveness of the Corporation’s internal controls over the allowance for credit losses process, including controls over both the DCF and qualitative elements of the allowance.

This included controls over the review of the relevance and reliability of data used to determine the estimates and the review of the appropriateness of the key assumptions and judgments used in the determination of the qualitative factors.

• Evaluated the completeness and accuracy of data used in the DCF model and the reasonableness of management’s judgments and the relevance of data used in applying the qualitative factors.

• We involved FORVIS’ valuation specialists to assist in evaluating the appropriateness of model inputs and assumptions and testing the design of the model calculation through a re-performance of the discounted cash flow.

The 2021 and 2020 financial statements were audited by other auditors whose unqualified reports on those statements thereon, dated March 3, 2022, included an emphasis paragraph that described the change in accounting principle discussed in Note 1.

/s/ FORVIS, LLP (Formerly, BKD, LLP)

We have served as the Corporation’s auditor since 2022.

Indianapolis, Indiana

March 3, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders, Board of Directors, and Audit Committee

CNB Financial Corporation

Clearfield, Pennsylvania

Opinion on the Internal Control over Financial Reporting

We have audited CNB Financial Corporation’s (the "Corporation") internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated balance sheet of the Company as of December 31, 2022, and the related consolidated statement of income and comprehensive income, changes in shareholders’ equity and cash flows for each of the year ended December 31, 2022, and our report dated March 3, 2023, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definitions and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Loans

The allowance for credit losses (the “ACL”) as described in Notes 1 and 4 is an accounting estimate of expected credit losses over the estimated life of loans.

The Corporation’s loan portfolio, measured at amortized cost, is presented at the net amount expected to be collected.

Estimates of expected credit losses for loans are based on historical experience, current conditions and reasonable and supportable forecasts over the life of the loans.

The Corporation measures expected credit losses based on pooled loans when similar risk characteristics exist primarily using a discounted cash flow (“DCF”) model.

The DCF model discounts instrument-level cash flows, adjusting for prepayments and curtailments, and incorporates loss expectations based on inputs of current and forecasted macroeconomic indicators.

The Corporation adjusts its quantitative model for certain qualitative factors to reflect the extent to which management expects current conditions and reasonable and supportable forecasts to differ from the conditions that existed for the period over which historical information was evaluated.

The qualitative framework reflects changes related to relevant data, such as differences in underwriting standards, changes in environmental conditions, delinquency levels, segment growth rates and changes in duration within new markets, or other relevant factors not considered in the base model.

The ACL was identified by us as a critical audit matter because of the extent of auditor judgment applied and significant audit effort to evaluate the significant subjective and complex judgments made by management.

The principal considerations resulting in our determination included the following:

• Significant auditor judgment and audit effort to evaluate the significant assumptions input into the DCF model, including assistance by our valuation services specialists.

• Significant auditor judgment and audit effort to evaluate the qualitative factors used in the calculation.

The primary procedures performed to address the critical audit matter included:

• Testing the effectiveness of management’s controls addressing:

◦ Evaluation of the appropriateness of the loss driver analysis and probability of default and loss given default curves input into the model.

◦ Evaluation of the relevance and reliability of data used in the DCF model.

◦ Evaluation of the appropriateness of the key assumptions and judgments used in the determination of qualitative factors.

• Substantive testing including:

◦ Evaluating the appropriateness of the loss driver analysis and probability of default and loss given default curves in the DCF model, assisted by our valuation services specialists.

◦ Evaluating the relevance and reliability of data used in the DCF model.

◦ Evaluating management’s judgments and the relevance of data used in applying qualitative factors, including evaluating assumptions for reasonableness.

/s/ FORVIS, LLP (Formerly, BKD, LLP)

Indianapolis, Indiana

March 3, 2023

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors of CNB Financial Corporation

Clearfield, Pennsylvania

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of CNB Financial Corporation (the "Corporation") as of December 31, 2021, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Corporation’s management.

Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Crowe LLP

We have served as the Corporation’s auditor since 2000.

We served as the Corporation's auditor from 2000 through March 3, 2022.

Columbus, Ohio

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Dollars in thousands, except share data

December 31, December 31,

Cash and due from banks $ 58,884 $ 42,440

Interest bearing deposits with other banks 689,758 488,326

Interest-bearing deposits with Federal Reserve 43,401 684,306

Interest-bearing deposits with other financial institutions 4,000 5,452

Total cash and cash equivalents 106,285 732,198

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371,409 697,191

Debt securities held-to-maturity, at amortized cost (fair value $ 367,388 as of December 31, 2022 and $ — , as of December 31, 2021)

Equity securities 9,615 10,366

Loans held for sale 231 849

PPP 45,203 155,529

Syndicated 125,761 22,064

All other 3,463,828 3,194,196

Total loans 3,634,792 3,371,789

Loans receivable

PPP loans, net of deferred processing fees 159 45,203

Syndicated loans 156,649 125,761

Loans 4,118,370 3,463,828

Total loans receivable 4,275,178 3,634,792

allowance for credit losses ( 43,436 ) ( 37,588 )

Net loans 3,597,204 3,337,449

FHLB and other equity interests 23,276 21,018

Net loans receivable 4,231,742 3,597,204

FHLB and other restricted stock holdings and investments 30,715 23,276

Premises and equipment, net 68,535 61,659

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LIABILITIES AND SHAREHOLDERS’ EQUITY

Non-interest bearing deposits $ 792,086 $ 627,114

Noninterest-bearing demand deposits $ 898,437 $ 792,086

Interest-bearing demand deposits 1,007,202 1,079,336

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Total deposits 4,622,437 4,715,619

Short-term borrowings 132,396 —

Subordinated debentures 20,620 20,620

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Preferred stock, Series A non-cumulative perpetual,

$ 0 par value;

No par value;

$ 1,000 liquidation preference;

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57,785 57,785

Common stock, $ 0 par value;

Common stock, no par value;

50,000,000 shares authorized;

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( 2,967 ) ( 2,477 )

Accumulated other comprehensive income (loss) ( 394 ) 15,074

Accumulated other comprehensive loss ( 52,520 ) ( 394 )

Total shareholders’ equity 530,762 442,847

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Net unrealized gains on equity securities ( 1,149 ) 790 253

Realized gains on Visa Class B shares 0 0 463

Mortgage banking 1,237 3,147 3,354

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Card processing and interchange income 7,797 7,796 5,727

Other 2,909 1,573 2,147

Other non-interest income 5,223 2,909 1,573

Total non-interest income 34,766 33,434 28,059

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Net occupancy expense 13,298 12,381 12,333

Amortization of core deposit intangible 107 206 567

Technology expense 17,041 11,723 7,153

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FDIC insurance 2,796 2,509 2,414

Merger costs, prepayment penalties and branch closure costs 0 12,642 170

Dues and subscriptions 2,089 1,843 1,876

Card processing and interchange expenses 4,801 3,836 3,135

Other 12,958 10,554 10,365

Other non-interest expenses 17,088 15,154 12,603

Merger costs, prepayment penalties and branch closure costs — — 12,642

Total non-interest expenses 137,622 116,433 107,326

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NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 58,886 $ 53,405 $ 31,596

EARNINGS PER COMMON SHARE:

Basic $ 3.16 $ 1.97 $ 2.63

Diluted $ 3.16 $ 1.97 $ 2.63

PER COMMON SHARE DATA:

Basic Earnings Per Common Share $ 3.26 $ 3.16 $ 1.97

Diluted Earnings Per Common Share $ 3.26 $ 3.16 $ 1.97

Cash Dividends Declared $ 0.700 $ 0.685 $ 0.680

NET INCOME $ 63,188 $ 57,707 $ 32,743

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Net change in unrealized gains (losses) on available-for-sale securities, net of reclassification and tax $ ( 53,576 ) $ ( 16,044 ) $ 8,140

Amortization of unrealized gains from held-to-maturity securities, net of tax 875 — —

Change in actuarial gain, for post-employment health care plan, net of amortization and tax 150 275 219

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Balance, January 1, 2020 $ — $ 99,335 $ 201,503 $ ( 2,811 ) $ 6,939 $ 304,966

Cumulative-effect adjustment due to the adoption of ASU No.

2016-13 — — ( 3,391 ) — — ( 3,391 )

Net income — — 32,743 — — 32,743

Other comprehensive income — — — — 8,135 8,135

Forfeiture of restricted stock award grants ( 2,699 shares)

Restricted stock award grants ( 36,968 shares)

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Performance based restricted stock award grants ( 8,351 shares)

— ( 217 ) — 217 — —

Stock-based compensation expense — 1,410 — — — 1,410

Issuance of common stock, net of issuance costs ( 115,790 shares)

— 3,257 — — — 3,257

Purchase of treasury stock ( 66,600 shares)

— — — ( 981 ) — ( 981 )

Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting ( 10,467 )

Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting ( 7,349 shares)

— — — ( 213 ) — ( 213 )

Purchase of treasury stock for the purpose of tax withholding related to performance based restricted stock award vesting ( 294 )

Purchase of treasury stock for the purpose of tax withholding related to performance based restricted stock award vesting ( 3,458 shares)

— — — ( 113 ) — ( 113 )

Issuance of preferred equity, net of issuance costs 57,785 — — — — 57,785

Acquisition of Bank of Akron — 24,667 — — — 24,667

Preferred cash dividend declared — — ( 1,147 ) — — ( 1,147 )

Cash dividends declared ($ 0.68 per share)

1 unchanged sentence

Balance, December 31, 2020 57,785 127,518 218,727 ( 2,967 ) 15,074 416,137

Cumulative-effect adjustment due to the adoption of ASU No.

2016-13 ( 3,391 ) ( 3,391 )

Net income — — 57,707 — — 57,707

Other comprehensive income — — — — ( 15,468 ) ( 15,468 )

Forfeiture of restricted stock award grants ( 2,669 shares)

— 64 — ( 64 ) — —

Restricted stock award grants ( 55,218 shares)

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Stock-based compensation expense — 1,411 — — 1,411

Issuance of common stock, net of issuance costs ( 115,790 shares)

Contribution of treasury stock ( 3,000 shares)

— ( 81 ) — 81 — —

Stock-based contribution expense — 75 — — 75

Purchase of treasury stock ( 36,359 shares)

— — — ( 1,000 ) — ( 1,000 )

Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting ( 7,349 )

Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting ( 6,782 shares)

— — — ( 143 ) — ( 143 )

Purchase of treasury stock for the purpose of tax withholding related to performance based restricted stock award vesting ( 3,458 )

Purchase of treasury stock for the purpose of tax withholding related to performance based restricted stock award vesting ( 941 shares)

— — — ( 20 ) — ( 20 )

Issuance of preferred equity, net of issuance costs 57,785 57,785

Acquisition of Bank of Akron 24,667 24,667

Preferred cash dividend declared — — ( 4,302 ) — — ( 4,302 )

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Forfeiture of restricted stock award grants ( 1,440 shares)

— 36 — ( 36 ) — —

Restricted stock award grants ( 57,823 shares)

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Contribution of treasury stock ( 3,000 shares)

— ( 44 ) — 44 — —

Stock-based contribution expense — 84 — — — 84

Issuance of common stock, net of issuance costs ( 4,257,446 shares)

— 94,051 — — — 94,051

Purchase of treasury stock ( 50,166 shares)

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Preferred cash dividend declared — — ( 4,302 ) — — ( 4,302 )

Cash dividends declared ($ 0.685 per share)

Cash dividends declared ($ 0.70 per common share)

— — ( 12,557 ) — — ( 12,557 )

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core deposit intangible, and mortgage servicing rights 6,573 6,241 6,082

Amortization (accretion) of securities, deferred loan fees and costs,

net yield and credit mark on acquired loans, and unearned income ( 2,127 ) ( 1,955 ) ( 870 )

Accretion of securities, deferred loan fees and costs, net yield and credit mark on

acquired loans, and unearned income ( 3,316 ) ( 2,127 ) ( 1,955 )

Net amortization of deferred costs on borrowings 303 177 —

Accretion of deferred PPP processing fees ( 1,889 ) ( 8,737 ) ( 5,140 )

Deferred taxes ( 1,691 ) 1,390 ( 204 )

Deferred tax (benefit) expense ( 1,814 ) ( 1,691 ) 1,390

Net realized gains on sales of available-for-sale securities ( 651 ) ( 783 ) ( 2,190 )

Net realized and unrealized losses (gains) on equity securities 1,149 ( 790 ) ( 328 )

Proceeds from sale of Visa Class B shares 0 0 463

Gain on sale of Visa Class B shares 0 0 ( 463 )

Gain on sale of loans ( 2,737 ) ( 2,961 ) ( 990 )

Net losses (gains) on dispositions of premises and equipment and foreclosed assets 230 1,097 ( 377 )

Proceeds from sale of loans 95,258 82,619 43,198

Gain on sale of loans held for sale ( 1,285 ) ( 2,737 ) ( 2,961 )

Net (gains) losses on dispositions of premises and equipment and foreclosed assets ( 170 ) 230 1,097

Proceeds from sale of loans receivable 29,151 95,258 82,619

Origination of loans held for sale ( 34,181 ) ( 95,411 ) ( 87,528 )

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Gain on bank owned life insurance (death benefit proceeds in excess of cash surrender value) ( 883 ) ( 454 ) —

Stock-based compensation expense 1,411 1,410 1,346

Restricted stock compensation expense 1,248 1,411 1,410

Stock-based contribution expense 84 75 —

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Purchase of available-for-sale securities ( 48,433 ) ( 341,140 ) ( 224,080 )

Proceeds from maturities, prepayments and calls of held-to-maturity securities 23,995 — —

Purchases of held-to-maturity securities ( 213,853 ) — —

Purchase of equity securities ( 398 ) ( 407 ) ( 2,447 )

Proceeds from loans held for sale previously classified as portfolio loans — 1,921 —

Loan origination and payments, net ( 246,043 ) ( 244,903 ) ( 335,965 )

Net increase in loans receivable ( 630,605 ) ( 246,043 ) ( 244,903 )

Purchase of bank owned life insurance ( 11,644 ) ( 22,000 ) —

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CASH FLOWS FROM FINANCING ACTIVITIES:

Net change in:

Checking, money market and savings accounts 623,967 702,452 459,162

Certificates of deposit ( 90,092 ) ( 42,510 ) 32,379

Net (decrease) increase in checking, money market and savings accounts ( 153,191 ) 623,967 702,452

Net increase (decrease) in certificates of deposit 60,009 ( 90,092 ) ( 42,510 )

Purchase of treasury stock ( 1,671 ) ( 1,163 ) ( 1,307 )

Proceeds from stock offering, net of issuance costs 0 3,257 1,423

Proceeds from common stock offering, net of issuance costs 94,051 — 3,257

Proceeds from preferred stock offering, net of issuance costs — — 57,785

Cash dividends paid on common stock ( 11,550 ) ( 10,981 ) ( 10,358 )

Cash dividends paid on preferred stock ( 4,302 ) ( 1,147 ) 0

Cash dividends paid, common stock ( 12,557 ) ( 11,550 ) ( 10,981 )

Cash dividends paid, preferred stock ( 4,302 ) ( 4,302 ) ( 1,147 )

Proceeds from issuance of subordinated notes, net of issuance costs — 83,484 —

1 unchanged sentence

Repayments on long-term borrowings — ( 50,000 ) ( 459,892 )

Net change in short-term borrowings 132,396 — —

NET CASH PROVIDED BY FINANCING ACTIVITIES 114,735 550,344 479,642

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 199,504 339,720 147,411

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 625,913 ) 199,504 339,720

CASH AND CASH EQUIVALENTS, Beginning 732,198 532,694 192,974

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Transfers from loans held for investment to loans held for sale — 1,921 —

Transfer of securities from available-for-sale to held-to-maturity 220,757 — —

Grant of restricted stock awards from treasury stock 1,000 1,374 934

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The Corporation and its other subsidiaries are subject to examination by federal and state regulators.

The Corporation’s market area is primarily concentrated in the central and northwest regions of the Commonwealth of Pennsylvania, the central and northeast regions of the state of Ohio, western New York and Roanoke, Virginia.

The Corporation’s market area is primarily concentrated in the Central and Northwest regions of the Commonwealth of Pennsylvania, the Central and Northeast regions of the state of Ohio, Western New York, and Southwest Virginia.

Basis of Financial Presentation

2 unchanged sentences

All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Reclassifications had no effect on prior year net income or shareholders’ equity.

Risks and Uncertainties

The worldwide spread of COVID-19 has created significant uncertainty in the global economy.

There have been no comparable recent events that provide guidance as to the effects the global COVID-19 pandemic may have, and, as a result, the ultimate impact of the COVID-19 pandemic and the extent to which the COVID-19 pandemic and the related government responses impact the Corporation’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

Use of Estimates

2 unchanged sentences

These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

The Corporation's business is dependent upon the willingness and ability of its employees and customers to conduct banking and other financial transactions.

If the global response to contain the COVID-19 pandemic requires further restricted measures or is unsuccessful, the Corporation could experience a material adverse effect on its business, financial condition, results of operations and cash flows.

Since the extent to which the COVID-19 pandemic impacts its operations will depend on future developments that are highly uncertain, the Corporation cannot estimate the impact on its business, financial condition or near or long-term financial or operational results with reasonable certainty.

Accordingly, the Corporation is disclosing potentially material items of which it is aware.

Asset valuation :

Currently, the Corporation does not expect the COVID-19 pandemic to affect its ability to account timely for the assets on its balance sheet;

however, this could change in future periods due to any number of potential impacts from the COVID-19 pandemic.

The COVID-19 pandemic could cause a decline in the Corporation's stock price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform a goodwill impairment test, resulting in an impairment charge being recorded for that period.

In the event that the Corporation concludes that all or a portion of its goodwill is impaired, a non-cash charge for the amount of such impairment would be recorded to earnings.

The Corporation is working with customers directly affected by the COVID-19 pandemic.

The Corporation has offered assistance in accordance with regulator guidelines.

As a result of the current economic slowdown related to the COVID-19 pandemic, the Corporation is engaging in more frequent communication with borrowers to better understand their situation and the challenges faced, allowing it to respond proactively as needs and issues arise.

Determining the appropriateness of the allowance for credit losses on loans is complex and requires judgment by management about the effect of matters that are inherently uncertain.

Subsequent evaluations of the then-existing loan portfolio, in light of the factors then prevailing, may result in significant changes in the allowance for credit losses on loans in those future periods.

Should economic conditions worsen, the Corporation could experience further increases in its required allowance for credit losses and record additional provision expense.

It is possible that the Corporation's asset quality measures could worsen at future measurement periods if the effects of the COVID-19 pandemic are prolonged.

The allowance for credit losses on loans receivable and off-balance-sheet credit exposures, the fair values of financial instruments, goodwill and the status of contingencies are particularly subject to change.

Operating Segments

While the Corporation monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis, and operating segments are aggregated into one as operating results for all segments are similar.

Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

While the Corporation's chief operating decision makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis, and operating divisions are aggregated into one as operating results for all divisions are similar.

Accordingly, all of the financial service operations are considered to be aggregated in one reportable operating segment.

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Corporation defines cash and cash equivalents as cash and due from banks, interest bearing deposits with other banks, and Federal funds sold.

Net cash flows are reported for customer loan and deposit transactions, interest bearing time deposits with other banks and borrowings with original maturities of 90 days or less.

For purposes of the consolidated statement of cash flows, the Corporation defines cash and cash equivalents as cash and due from banks and interest bearing deposits with the Federal Reserve and other financial institutions.

Net cash flows are reported for customer loan and deposit transactions, interest bearing time deposits with other financial institutions and borrowings with original maturities of 90 days or less.

Interest-Bearing Deposits in Other Financial Institutions

Interest-bearing deposits in other financial institutions are carried at cost.

Restrictions on Cash

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Debt Securities

Debt securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity.

Debt securities are classified as available for sale when they might be sold before maturity.

Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Debt securities are classified as held-to-maturity ("HTM") and carried at amortized cost when management has the positive intent and ability to hold them to maturity.

Debt securities are classified as available-for-sale ("AFS") when they might be sold before maturity.

Securities AFS are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount.

Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated.

Premiums on callable debt securities are amortized to their earliest call date.

Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

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Accrued interest for a security placed on nonaccrual is reversed against interest income.

There was no accrued interest related to debt securities reversed against interest income for the year ended December 31, 2021.

Allowance for Credit Losses (Debt Securities Available-for Sale)

For available-for-sale debt securities in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.

There was no accrued interest related to debt securities reversed against interest income for the years ended December 31, 2022 and 2021, respectively.

Allowance for Credit Losses (Debt Securities AFS)

For AFS debt securities in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis.

If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income.

For debt securities available-for-sale that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors.

For debt securities AFS that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors.

In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

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Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense.

Losses are charged against the allowance when management confirms that an available-for-sale security is uncollectable or when either of the criteria regarding intent or requirement to sell is met.

As of December 31, 2021 and December 31, 2020, the Corporation determined that the unrealized loss positions in available-for-sale debt securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded.

See Note 3, "Debt Securities," and Note 6, "Fair Value Measurements," for more information about available-for-sale debt securities.

Accrued interest receivable on available-for-sale debt securities totaled $ 2.2 million and $ 2.2 million at December 31, 2021 and December 31, 2020, respectivley, and is excluded from the estimate of credit losses.

Losses are charged against the allowance when management confirms that an AFS security is uncollectable or when either of the criteria regarding intent or requirement to sell is met.

As of December 31, 2022 and December 31, 2021, the Corporation determined that the unrealized loss positions in AFS debt securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded.

See Note 3, "Debt Securities," and Note 6, "Fair Value Measurements," for more information about AFS debt securities.

Accrued interest receivable on AFS debt securities totaled $ 1.5 million and $ 2.2 million at December 31, 2022 and December 31, 2021, respectively, and was reported in accrued interest receivable and other assets on the consolidated balance sheets.

Allowance for Credit Losses (Debt Securities HTM)

Management measures expected credit losses on HTM debt securities on a collective basis by major security type.

Accrued interest receivable on HTM debt securities totaled $ 1.3 million and zero at December 31, 2022 and 2021, respectively, and was reported in accrued interest receivable and other assets on the consolidated balance sheets and is excluded from the estimate of credit losses.

Management classifies the HTM portfolio into the following major security types:

government sponsored entities and residential & multi-family mortgages.

All of the residential & multi-family mortgages held by the Corporation are issued by U.S.

government entities and agencies.

These securities are either explicitly or implicitly guaranteed by the U.S.

government, are highly rated by major rating agencies and have a long history of no credit losses.

Equity Securities

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Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

Interest income on mortgage and commercial loans is discontinued and placed on nonaccrual status at the time the loan is 90 days delinquent unless the loan is well secured and in process of collection.

Consumer loans continue to accrue interest until they are recorded as charge-offs no later than 180 days past due unless the loan is in the process of collection.

Interest income on mortgage, consumer and commercial loans is discontinued and placed on nonaccrual status at the time the loan is 90 days delinquent unless the loan is well secured and in process of collection.

Past-due status is based on the contractual terms of the loan.

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The Corporation also modifies some loans that are not classified as TDRs as the modification is due to a restructuring where the effective interest rate on the debt is reduced to reflect a decrease in market interest rates.

The Corporation has implemented various consumer and commercial loan modification programs to provide its borrowers relief from the economic impacts of COVID-19.

In accordance with the CARES Act, loans to borrowers experiencing financial difficulty related to the COVID-19 pandemic which were granted short-term modifications after March 1, 2020 and which were not more than 30 days past due as of December 31, 2019 are exempt from TDR classification.

In addition, for loans modified in response to the COVID-19 pandemic that do not meet the above delinquency criteria (e.g., more than 30 days past due as of December 31, 2019), the Corporation applies the guidance included in an interagency statement issued by the bank regulatory agencies.

This guidance states that loan modifications performed in light of the COVID-19 pandemic, including loan payment deferrals that are up to six months in duration, that were granted to borrowers who were less than 30 days past due as of the implementation date of a loan modification program are exempt from TDR classification.

For loan modifications that include a payment deferral and are not TDRs, the borrower’s past due and nonaccrual status will not be impacted during the deferral period.

Interest income will continue to be recognized over the contractual life of the loan.

Concentration of Credit Risk

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Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economies of Pennsylvania, Ohio, New York and Virginia.

At December 31, 2022 no industry concentration existed which exceeded 10% of the total loan portfolio.

Allowance for Credit Losses - Loans

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The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.

Allowance for Credit Losses on Off-Balance Sheet ("OBS") Credit Exposures

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Management estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation.

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Management estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by the Bank and applying the loss factors used in the allowance for credit losses on loans methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan segment.

The estimate of credit losses on OBS credit exposures is not material at December 31, 2021 or December 31, 2020.

The estimate of credit losses on OBS credit exposures is $ 603 thousand and zero at December 31, 2022 and 2021, respectively, and was reported in accrued interest payable and other liabilities on the consolidated balance sheets .

Mortgage Servicing Rights

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Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type.

Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.

If the Corporation later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.

Impairment is recognized through a valuation allowance, to the extent that fair value is less than the carrying amount.

If the Corporation later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income.

Changes in valuation allowances are reported with mortgage banking income on the income statement.

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Late fees and ancillary fees related to loan servicing are not material.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been relinquished.

Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets.

Foreclosed Assets

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Generally, the Corporation cannot practically determine the interest rate implicit in the lease so the Corporation's incremental borrowing rate is used as the discount rate for the lease.

The Corporation uses Federal Home Loan Bank ("FHLB") of Pittsburgh advance interest rates, which have been deemed as the Company's incremental borrowing rate, at lease inception based upon the term of the lease.

The Corporation uses Federal Home Loan Bank ("FHLB") of Pittsburgh advance interest rates, which have been deemed as the Corporation's incremental borrowing rate, at lease inception based upon the term of the lease.

The Corporation's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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FHLB stock is held as a long-term investment, is valued at its cost basis and is analyzed for impairment based on the ultimate recoverability of the par value.

The Company evaluates impairment quarterly.

The Corporation evaluates impairment quarterly.

The decision of whether impairment exists is a matter of judgment that reflects our view of the FHLB’s long-term performance, which includes factors such as the following:

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Both cash and stock dividends are reported as income.

Qualified Affordable Housing Project Investments

The Corporation has investments in various real estate limited partnerships that acquire, develop, own and operate low and moderate-income housing.

These investments are made directly in Low Income Housing Tax Credit ("LIHTC") partnerships formed by third parties.

As a limited partner in these operating partnerships, the Corporation receives tax credits and tax deductions for losses incurred by the underlying properties.

The Corporation accounts for its ownership interest in LIHTC partnerships in accordance with Accounting Standards Update ("ASU") 2014-01, "Investments – Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Qualified Affordable Housing Projects." The standard permits an entity to amortize the initial cost of the investment in proportion to the amount of the tax credits and other tax benefits received and recognize the net investment performance in the income statement as a component of income tax expense.

There were no impairment losses during the year resulting from the forfeiture or ineligibility of tax credits related to qualified affordable housing project investments.

Bank Owned Life Insurance

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The Corporation has no intangible assets with an indefinite useful life.

The Corporation has selected December 31st as the date to perform the annual impairment test.

The Corporation has selected December 31 as the date to perform the annual impairment test.

Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values.

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For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings as fair values change.

For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings.

For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income (loss) and is reclassified into earnings in the same periods during which the hedged transaction affects earnings.

Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged.

Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income.

Accrued settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged.

Accrued settlements on derivatives not designated or that do not qualify for hedge accounting are reported in non-interest income.

Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

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In addition, the Corporation obtains collateral above certain thresholds of the fair value of its hedges for each counterparty based upon their credit standing and the Corporation has netting agreements with the dealers with which it does business.

Treasury Stock

The purchase of the Corporation’s common stock is recorded at cost.

Purchases of the stock are made in the open market based on market prices.

At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a first-in-first-out basis.

Stock-Based Compensation

Compensation cost is recognized for restricted stock awards issued to employees, based on the fair value of these awards at the date of grant.

The market price of the Corporation’s common stock at the date of grant is used for restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period.

For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

Certain of the restricted stock awards are performance based and costs are recognized based upon certain performance conditions.

The Corporation's accounting policy is to recognize forfeitures as they occur

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For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense.

The Corporation recognizes interest and/or penalties, if any, related to income tax matters in income tax expense.

Retirement Plans

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The Corporation presents comprehensive income as part of the Consolidated Statements of Income and Comprehensive Income.

Other comprehensive income and loss consists of unrealized holding gains and losses on the available for sale securities portfolio, changes in the unrecognized actuarial gain and transition obligation related to the Corporation’s post retirement benefits plans, and changes in the fair value of the Corporation’s interest rate swaps, net of tax.

Other comprehensive income and loss consists of unrealized holding gains and losses on the AFS securities portfolio, amortization of AFS securities transferred to HTM, changes in the unrecognized actuarial gain and transition obligation related to the Corporation’s post retirement benefits plans, and changes in the fair value of the Corporation’s interest rate swaps, net of tax.

Loss Contingencies

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Management does not believe there now are such matters that will have a material effect on the financial statements.

Treasury Stock

The purchase of the Corporation’s common stock is recorded at cost.

Purchases of the stock are made in the open market based on market prices.

At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a first-in-first-out basis.

Fair Value of Financial Instruments

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Adoption of New Accounting Standards

Accounting Standards Adopted in 2020

On January 1, 2020, the Corporation adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and HTM debt securities.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments.

standby letters of credit, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases.

In addition, ASC 326 made changes to the accounting for available-for-sale debt securities.

One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

In addition, ASC 326 made changes to the accounting for AFS debt securities.

One such change is to require credit losses to be presented as an allowance rather than as a write-down on AFS debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Corporation adopted ASC 326 using the modified retrospective approach method for all financial assets measured at amortized cost and OBS credit exposures.

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Decrease in retained earnings $ 3,391

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment" ("ASU 2017-04").

ASU 2017-04 simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in the previous two-step impairment test.

Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference.

The impairment charge will be limited to the amount of goodwill allocated to that reporting unit.

The standard eliminates the prior requirement to calculate a goodwill impairment charge using Step 2, which requires an entity to calculate any impairment charge by comparing the implied fair value of goodwill with its carrying amount.

ASU 2017-04 was effective for the Corporation on January 1, 2020 and did not have a material impact on the Corporation's financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement." ASU 2018-13 modifies disclosure requirements on fair value measurements based on the concepts in the Concepts Statement, including the consideration of costs and benefits.

The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.

All other amendments should be applied retrospectively to all periods presented upon their effective date.

ASU 2018-13 was effective for the Corporation on January 1, 2020 and did not have a material impact on the Corporation's financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" ("ASU 2018-15").

ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license).

The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments.

ASU 2018-15 was effective for the Corporation on January 1, 2020 and did not have a material impact on the Corporation's financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, - Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

ASU 2020-04 provides optional expedients and exceptions for accounting related to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

The amendments in this update are effective for all entities as of March 12, 2020, and based upon the amendments provided in ASU 2022-06 discussed below, can generally be applied through December 31, 2024.

The adoption of ASU 2020-04 did not significantly impact the Corporation's financial statements and related disclosures.

Accounting Standards Adopted in 2021

In August 2018, the FASB issued ASU 2018-14, "Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." ASU 2018-14 amends ASC 715-20, "Compensation - Retirement Benefits - Defined Benefit Plans - General." The amended guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans.

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Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period.

ASU 2018-14 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statement disclosures.

ASU 2018-14 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12 "Income Taxes (Topic 740):

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Early adoption is permitted.

ASU 2019-12 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statements.

ASU 2019-12 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statements and related disclosures.

In January 2020, the FASB issued ASU 2020-01 - Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.

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GAAP by reducing diversity in practice and increasing comparability of the accounting for these transactions.

ASU 2020-01 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statement disclosures.

In March 2020, the FASB issued ASU 2020-04, - Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

ASU 2020-04 applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

ASU 2020-04 was effective upon issuance and generally can be applied through December 31, 2022.

The adoption of ASU 2020-04 did not have a material impact on the Corporation's financial statement disclosures.

ASU 2020-01 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statements and related disclosures.

In October 2020, the FASB issued ASU 2020-08 - Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs.

ASU 2020-08 clarifies that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period.

ASU 2020-08 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statement disclosures.

ASU 2020-08 was effective for the Corporation on January 1, 2021 and did not have a material impact on the Corporation's financial statements and related disclosures.

In January 2021, the FASB issued ASU 2021-01 - Reference Rate Reform (Topic 848).

ASU 2021-01 expands and clarifies the scope of ASU No.

2020-04 to include derivatives affected by changes in interest rates used for margining, discounting, or contract price alignment, commonly referred to as the "discounting transaction." Derivatives impacted by the discounting transaction will be eligible for certain optional expedients and exceptions related to contract modifications and hedge accounting as defined in Topic 848.

The adoption of ASU 2021-01 did not significantly impact the Corporation's financial statements and related disclosures.

In August 2021, FASB issued ASU 2021-06 - Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services—Investment Companies (Topic 946).

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Effects of Newly Issued But Not Yet Effective Accounting Standards

In March 2020, the FASB issued ASU 2020-04, - Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

ASU 2020-04 applies only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.

The Corporation is currently evaluating the impact of the reference rate reform on the Corporation's consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01 - Reference Rate Reform (Topic 848).

ASU 2021-01 expands and clarifies the scope of ASU No.

2020-04 to include derivatives affected by changes in interest rates used for margining, discounting, or contract price alignment, commonly referred to as the “discounting transaction.” Derivatives impacted by the discounting transaction will be eligible for certain optional expedients and exceptions related to contract modifications and hedge accounting as defined in Topic 848.

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.

The Corporation is currently evaluating the impact of the reference rate reform on the Corporation's consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815):

Fair Value Hedging - Portfolio Layer Method." Under prior guidance, entities can apply the last-of-layer hedging method to hedge the exposure of a closed portfolio of prepayable financial assets to fair value changes due to changes in interest rates for a portion of the portfolio that is not expected to be affected by prepayments, defaults, and other events affecting the timing and amount of cash flows.

ASU 2022-01 expands the last-of-layer method, which permits only one hedge layer, to allow multiple hedged layers of a single closed portfolio.

To reflect that expansion, the last-of-layer method is renamed the portfolio layer method.

ASU 2022-01 also (i) expands the scope of the portfolio layer method to include non-prepayable financial assets, (ii) specifies eligible hedging instruments in a single-layer hedge, (iii) provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method and (iv) specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.

ASU 2022-01 will be effective for the Corporation on January 1, 2023.

The Corporation is evaluating the effect that ASU 2022-01 will have on its consolidated financial statements and related disclosures.

In March 2022, the FASB issued ASU No.

2022-02, "Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures." This ASU eliminates the separate recognition and measurement guidance for TDRs by creditors.

The elimination of the TDRs guidance may be adopted prospectively for loan modifications after adoption or on a modified retrospective basis, which would also apply to loans previously modified, resulting in a cumulative effect adjustment to retained earnings in the period of adoption for changes in the allowance for credit losses.

This guidance is effective for the Corporation on January 1, 2023, with early adoption permitted.

The Corporation is evaluating the effect that ASU 2022-02 will have on its consolidated financial statements and related disclosures.

In June 2022, FASB issued ASU No.

2022-03, "Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." In this ASU, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value.

The ASU also requires certain disclosures for equity securities that are subject to contractual restrictions.

This guidance is effective for the Corporation on January 1, 2024, with early adoption permitted.

The Corporation is evaluating the effect that ASU 2022-03 will have on its consolidated financial statements and related disclosures.

In December 2022, FASB issued ASU No.

2022-06 - Reference Rate Reform (Topic 848).

ASU 2022-06 extends the period of time preparers can utilize the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01, which are discussed above.

ASU 2022-06, which was effective upon issuance, defers the sunset date of this prior guidance from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief guidance in Topic 848.

ASU 2022-06 did not have a material impact on the Corporation's financial statements and related disclosures.

Business Combinations

On July 17, 2020, the Corporation completed its previously announced acquisition of Bank of Akron, pursuant to the Merger Agreement.

Under the terms of the Merger Agreement, Bank of Akron merged with and into the Bank (the "Merger"), with the Bank continuing as the surviving entity.

Banking offices of Bank of Akron continue to operate under the trade name BankOnBuffalo, a division of the Bank.

Pursuant to the Merger Agreement, for each share of Bank of Akron common stock, Bank of Akron shareholders were entitled to elect to receive either (x) $ 215.00 in cash or (y) 6.6729 shares of the Corporation's common stock and also received cash in lieu of fractional shares.

Elections were subject to proration procedures whereby at least 75 % of the shares of Bank of Akron common stock were exchanged for shares of the Corporation's common stock.

On July 17, 2020, the Corporation completed its previously announced acquisition of Bank of Akron for either (x) $ 215.00 in cash or (y) 6.6729 shares of the Corporation's common stock and also received cash in lieu of fractional shares.

Based on the elections and proration procedures, the total consideration payable to Bank of Akron shareholders was approximately $ 40.8 million, comprised of approximately $ 16.1 million in cash and 1,501,321 shares of the Corporation's common stock, net of fractional shares, valued at approximately $ 24.7 million based on the July 17, 2020 closing price of $ 16.43 per share of the Corporation's common stock.

Bank of Akron's results of operations were included in the Corporation's results of operations beginning July 17, 2020.

The Corporation incurred no merger-related expenses during the year ended December 31, 2021 and $ 4.0 million of merger-related expenses during the year ended December 31, 2020, consisting largely of professional services of attorneys, accountants, investment bankers and other advisors.

There were $ 170 thousand in merger-related expenses incurred during the year ended December 31, 2019.

July 17, 2020

Merger consideration

Value of stock consideration assigned to Bank of Akron common shares exchanged for stock paid to shareholders

Value of cash consideration for Bank of Akron common stock exchanged for cash

Total merger consideration $ 40,793

Core deposit intangible ("CDI") of $ 613 thousand and goodwill of $ 5.0 million were recognized as a result of the acquisition.

Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities.

Goodwill recognized in this transaction is not deductible for income tax purposes.

July 17, 2020

Identifiable net assets acquired, at fair value

Assets acquired

Cash and due from banks $ 78,830

Interest bearing deposits with other banks 10,148

Investment securities 29,407

Loans, net of allowance for credit losses on PCD loans 319,063

Premises and equipment, net 4,265

Core deposit intangible 613

Deferred tax assets 2,777

Bank owned life insurance 8,187

Accrued interest receivable and other assets 5,307

Total assets acquired $ 458,597

Liabilities assumed

Deposits $ 419,475

Accrued interest payable and other liabilities 3,348

Total liabilities assumed 422,823

Total fair value of identifiable net assets 35,774

Total merger consideration 40,793

Goodwill recognized $ 5,019

The Corporation accounted for this transaction under the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires purchased assets and liabilities assumed and consideration exchanged to be recorded at their respective estimated fair values at the date of acquisition.

The determination of estimated fair values required management to make certain estimates about discount rates, future expected cash flows, market conditions at the time of the acquisition and other future events that are highly subjective in nature and subject to refinement for up to one year after the closing date of acquisition as additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier.

The calculation of goodwill is subject to change for up to one year after the closing date of transaction as additional information relative to the closing date estimates and uncertainties becomes available.

There were no adjustments recorded to goodwill or closing date fair values subsequent to December 31, 2020 and the measurement period closed in July 2021.

Financial assets acquired in a business combination after January 1, 2020 are recorded in accordance with ASC Topic 326, after which acquired assets are separated into two types.

Purchased credit deteriorated ("PCD") assets are acquired assets that, as of the acquisition date, have experienced a more-than-insignificant deterioration in credit quality since origination.

Non-PCD assets are acquired assets that have experienced no or insignificant deterioration in credit quality since origination.

To distinguish between the two types of acquired assets, the Corporation evaluates risk characteristics that have been determined to be indicators of deteriorated credit quality.

In the case of loans, the determining criteria may involve general characteristics, such as loan payment history or changes in creditworthiness since the loan was originated, while others are relevant to recent economic conditions, such as borrowers in industries impacted by the COVID-19 pandemic.

The estimated fair values of the securities were calculated utilizing Level 2 inputs.

The securities acquired are bought and sold in active markets.

Prices for these instruments were obtained through security industry sources that actively participate in the buying and selling of securities.

Bank of Akron’s loan portfolio was recorded at fair value at the date of acquisition.

A valuation of Bank of Akron’s loan portfolio was performed as of the acquisition date in accordance with ASC 820 to assess the fair value of the loan portfolio, considering adjustments for market discount rates, credit, and liquidity.

The loan portfolio was segmented into two groups:

non-PCD loans and PCD loans.

The non-PCD loans were pooled based on similar characteristics, such as loan type, fixed or adjustable interest rates, payment type, index rate and caps/floors, and nonaccrual status.

The PCD loans were valued on a pooled basis and at the loan level with similar characteristics noted above.

Premises and Equipment

Fair values are based upon appraisal values.

In addition to owned properties, Bank of Akron operated one property subject to a lease agreement.

Core deposit intangible

The CDI on non-maturing deposits was determined by evaluating the underlying characteristics of the deposit relationships, including customer attrition, deposit interest rates and maintenance costs, fee income and costs of alternative funding using the discounted cash flow approach.

The core deposit intangibles represent the costs saved by the Corporation between maintaining the existing deposits and obtaining alternative funds over the life of the deposit base.

Fixed maturity deposits

In determining the fair value of certificates of deposit, the cash flows of the contractual interest payments during the specific period of the certificates of deposit and scheduled principal payout were discounted to present value at market-based interest rates.

Supplemental Pro Forma Financial Information

The following table presents certain unaudited pro forma financial information for illustrative purposes only, for the year ended December 31, 2020 and 2019, respectively, as if Bank of Akron had been acquired on January 1, 2019.

This unaudited pro forma information combines the historical results of Bank of Akron with the Corporation’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods.

The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition.

The unaudited pro forma information does not consider any changes to the provision expense resulting from recording loan assets at fair value, cost savings or business synergies.

As a result, actual amounts would have differed from the unaudited pro forma information presented and the differences could be significant.

December 31, 2020 December 31, 2019

Net interest income $ 137,097 $ 119,062

Net income $ 34,628 $ 42,343

Basic earnings per common share $ 2.01 $ 2.54

Diluted earnings per common share $ 2.01 $ 2.54

Securities available-for-sale at December 31, 2021 and 2020 were as follows:

December 31, 2021 December 31, 2020

Amortized Gross Unrealized Fair Amortized Unrealized Fair

Cost Gains Losses Value Cost Gains Losses Value

The Corporation incurred no merger-related expenses during the years ended December 31, 2022 and 2021, respectively, and $ 4.0 million of merger-related expenses during the year ended December 31, 2020, consisting largely of professional services of attorneys, accountants, investment bankers and other advisors.

Securities AFS at December 31, 2022 and 2021 were as follows:

December 31, 2022

Amortized Gross Unrealized Allowance For Fair

Cost Gains Losses Credit Losses Value

Gov’t sponsored entities $ 3,213 $ — $ ( 84 ) $ — $ 3,129

3 unchanged sentences

Pooled SBA 13,823 — ( 1,144 ) — 12,679

Other 0 0 0 0 1,020 0 ( 41 ) 979

Total $ 432,992 $ 24 $ ( 61,607 ) $ — $ 371,409

December 31, 2021

Amortized Gross Unrealized Allowance For Fair

Cost Gains Losses Credit Losses Value

Gov’t sponsored entities $ 110,788 $ 2,728 $ ( 1,768 ) $ — $ 111,748

State & political subdivisions 103,232 2,162 ( 1,682 ) — 103,712

Residential & multi-family mortgage 437,021 4,127 ( 6,513 ) — 434,635

Corporate notes & bonds 28,257 250 ( 443 ) — 28,064

Pooled SBA 18,787 283 ( 38 ) — 19,032

Total $ 698,085 $ 9,550 $ ( 10,444 ) $ — $ 697,191

Debt securities HTM at December 31, 2022 and 2021 are as follows:

December 31, 2022

Amortized Gross Unrealized Allowance For Fair

Cost Gains Losses Credit Losses Value

Gov’t sponsored entities $ 307,711 $ — $ ( 27,276 ) $ — $ 280,435

Residential & multi-family mortgage 97,054 — ( 10,101 ) — 86,953

Total $ 404,765 $ — $ ( 37,377 ) $ — $ 367,388

December 31, 2021

Amortized Gross Unrealized Allowance For Fair

Cost Gains Losses Credit Losses Value

Gov’t sponsored entities $ — $ — $ — $ — $ —

Residential & multi-family mortgage — — — — —

Total $ — $ — $ — $ — $ —

The Corporation elected to transfer 23 AFS securities with an aggregate fair value of $ 101.1 million to a classification of HTM on January 1, 2022.

In accordance with FASB ASC 320-10-55-24, the transfer from AFS to HTM must be recorded at the fair value of the AFS securities at the time of transfer.

The net unrealized holding gain of $ 373 thousand, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated pre-tax amount retained in the carrying value of the HTM securities.

Such amounts will be amortized to comprehensive income over the remaining life of the securities.

The Corporation elected to transfer 51 AFS securities with an aggregate fair value of $ 112.6 million to a classification of HTM on April 1, 2022.

The net unrealized holding loss of $ 6.0 million, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated pre-tax amount retained in the carrying value of the HTM securities.

Such amounts will be amortized to comprehensive income over the remaining life of the securities.

Information pertaining to security sales is as follows:

4 unchanged sentences

The tax provision related to these net realized gains at December 31, 2022, 2021 and 2020 were $ 137 thousand, $ 164 thousand, and $ 460 thousand, respectively.

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at December 31, 2021:

December 31, 2021

Amortized Cost Fair Value

The following is a schedule of the contractual maturity of securities AFS and HTM, excluding equity securities, at December 31, 2022:

Available-for-sale Held-to-maturity

Amortized Cost Fair Value Amortized Cost Fair Value

1 year or less $ 4,693 $ 4,661 $ 5,058 $ 4,966

11 unchanged sentences

Government sponsored entities, in an amount greater than 10 % of shareholders’ equity.

Securities with unrealized losses at December 31, 2021 and 2020, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

AFS debt securities with unrealized losses at December 31, 2022 and 2021, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

December 31, 2022 Less than 12 Months 12 Months or More Total

8 unchanged sentences

Pooled SBA 5,107 ( 314 ) 7,572 ( 830 ) 12,679 ( 1,144 )

338,919 $ ( 7,075 ) $ 92,055 $ ( 3,369 ) $ 430,974 $ ( 10,444 )

Total $ 123,629 $ ( 8,810 ) $ 241,330 $ ( 52,797 ) $ 364,959 $ ( 61,607 )

December 31, 2021 Less than 12 Months 12 Months or More Total

8 unchanged sentences

Pooled SBA 4,394 ( 37 ) 127 ( 1 ) 4,521 ( 38 )

Other 0 0 979 ( 41 ) 979 ( 41 )

73,462 ( 199 ) 8,965 ( 563 ) 82,427 ( 762 )

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

At December 31, 2021 and 2020, management performed an assessment for possible other-than-temporary impairment of the Corporation’s debt securities, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources.

Based on the results of the assessment, management believes impairment of these debt securities at December 31, 2021 and 2020 to be temporary.

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment.

Total $ 338,919 $ ( 7,075 ) $ 92,055 $ ( 3,369 ) $ 430,974 $ ( 10,444 )

HTM debt securities with unrealized losses at December 31, 2022 and 2021, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

December 31, 2022 Less than 12 Months 12 Months or More Total

Description of Securities Fair

Value Unrealized

Gov’t sponsored entities $ 143,556 $ ( 10,063 ) $ 136,879 $ ( 17,213 ) $ 280,435 $ ( 27,276 )

Residential & multi-family mortgage 24,132 ( 2,253 ) 62,821 ( 7,848 ) 86,953 ( 10,101 )

Total $ 167,688 $ ( 12,316 ) $ 199,700 $ ( 25,061 ) $ 367,388 $ ( 37,377 )

December 31, 2021 Less than 12 Months 12 Months or More Total

Description of Securities Fair

Value Unrealized

Gov’t sponsored entities $ — $ — $ — $ — $ — $ —

State & political subdivisions — — — — — —

Total $ — $ — $ — $ — $ — $ —

The Corporation evaluates securities for possible credit allowance on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

As of December 31, 2022 and 2021, management performed an assessment for allowance for credit losses on the Corporation’s AFS debt securities in an unrealized loss position and as of December 31, 2022 management performed an assessment for allowance for credit losses on the Corporation's HTM debt securities.

First an assessment was performed to determine if the Corporation intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost.

Management determined it does not intend to sell and will not be required to sell any of the securities before recovery of its amortized cost.

Next, management performed an evaluation relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources.

For financial institution issuers, management monitors information from quarterly "call" report filings that are used to generate Uniform Bank Performance Reports.

All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed as appropriate given the following considerations;

the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of December 31, 2021 and 2020, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred.

Based on the results of the assessment, management believes the decline in fair value is not the result of credit losses.

As a result no credit allowance is required as of December 31, 2022.

As of December 31, 2022 and 2021 management concluded that the securities described in the previous paragraph did not decline in fair value due to credit factors for the following reasons:

• There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

• All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

In addition, the rise in interest rates is the primary driver of the decline in fair value as of December 31, 2022.

Equity securities at December 31, 2022 and 2021 were as follows:

3 unchanged sentences

Money market 479 506

Corporate notes and bonds 579 569

Government sponsored entities 0 50

Corporate notes 757 579

Total $ 9,615 $ 10,366

During December 31, 2021, 2020, and 2019, the Corporation sold equity securities.

Proceeds were $ 0 in December 31, 2021, $ 5.9 million in December 31, 2020 and $ 301 thousand in December 31, 2019, resulting in net realized gains of $ 0 in December 31, 2021, $ 75 thousand in December 31, 2020, and $ 16 thousand in December 31, 2019.

During 2019, the Corporation sold Visa Class B shares.

The proceeds and realized gain related to the sale of the Visa Class B shares were $ 463 thousand.

Total net loans at December 31, 2021 and 2020 are summarized as follows:

During the year ended December 31, 2022, 2021, and 2020, the proceeds from sold equity securities were zero in December 31, 2022, zero in December 31, 2021 and $ 5.9 million in December 31, 2020, resulting in net realized gains of zero in December 31, 2022, zero in December 31, 2021, and $ 75 thousand in December 31, 2020.

Loans Receivable and Allowance for Credit Losses

Total net loans receivable at December 31, 2022 and 2021 are summarized as follows:

2022 Percentage

28 unchanged sentences

Net deferred loan origination fees (costs) included in the above loan table $ 4,463 $ 5,667

1 PPP loans, net of deferred PPP processing fees, both those disbursed in 2020 and those disbursed in 2021, are included in the Commercial and Industrial classification and totaled $ 45.2 million and $ 155.5 million as of December 31, 2021 and 2020, respectively.

In addition, syndicated loans, net of deferred fees and costs, are included in the Commercial and Industrial classification and totaled $ 125.8 million and $ 22.1 million as of December 31, 2021 and 2020, respectively.

The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within central and northwest Pennsylvania, central and northeast Ohio, western New York and Roanoke, Virginia.

1 PPP loans, net of deferred PPP processing fees, both those disbursed in 2020 and those disbursed in 2021, are included in the Commercial and Industrial classification.

The Corporation’s outstanding loans receivable and related unfunded commitments are primarily concentrated within Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York and Southwest Virginia.

The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties.

2 unchanged sentences

These policies delegate the authority to extend loans under specific guidelines and underwriting standards.

These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors.

As a result of the adoption of ASC 326 effective January 1, 2020, there is a lack of comparability in both the allowance and provisions for credit losses for the periods presented.

Beginning with the quarter ended December 31, 2020, the Corporation adopted ASC 326 and subsequent results are presented using the current expected credit losses (“CECL”) methodology.

Prior to the quarter ended December 31, 2020, the results were reported in accordance with the incurred loss methodology and have not been restated.

PPP loans, both those disbursed in 2020 and those disbursed in 2021, are included in the commercial and industrial classification and, as the PPP loans are fully guaranteed by the Small Business Administration, no required allowance for credit losses was recorded against the PPP loans, net of deferred PPP processing fees, outstanding of $ 45.2 million and $ 155.5 million as of December 31, 2021 and 2020, respectively.

These policies are prepared by the Corporation’s management and reviewed and approved annually by the Corporation’s Board of Directors.

During the second quarter of 2020, the Corporation began originating loans to qualified small businesses under the Paycheck Protection Program ("PPP") administered by the Small Business Administration ("SBA") under the provisions of the Coronavirus Aid, Relief, and Economic Security Act.

PPP loans, both those disbursed in 2020 and those disbursed in 2021, are included in the commercial and industrial classification and, as the PPP loans are fully guaranteed by the Small Business Administration, no required allowance for credit losses was recorded against the PPP loans, net of deferred PPP processing fees, outstanding of $ 159 thousand and $ 45.2 million as of December 31, 2022 and 2021, respectively.

Syndicated loans, net of deferred fees and costs, are included in the commercial and industrial classification and totaled $ 156.6 million and $ 125.8 million as of December 31, 2022 and 2021, respectively.

Transactions in the allowance for credit losses for the year ended December 31, 2022 were as follows:

Allowance (Charge-offs) Recoveries Provision (Benefit) for Credit Loss Expense Ending Allowance

Allowance (Charge-offs) Recoveries Provision (Benefit) for Credit Losses on Loans Receivable (1)

Ending Allowance

$ 151 $ — $ — $ 8 $ 159

23 unchanged sentences

Total loans $ 37,588 $ ( 2,985 ) $ 847 $ 7,986 $ 43,436

(1) Excludes provision for credit losses related to unfunded commitments.

Note 20, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.

The Corporation's allowance for credit losses is influenced by loan volumes, risk rating migration, delinquency status and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions.

For the year ended December 31, 2021, the allowance for credit losses increased due to the growth in the Corporation's loan portfolio, coupled with qualitative adjustments in the Corporation's residential and consumer loan portfolios, growth in new market areas, and qualitative adjustments related to the continued uncertainty with the pandemic and economic environment.

These factors were partially offset by improvements in the Corporation's historical loss rates and quantitative inputs including the unemployment forecast and prepayment and curtailment speeds, as well as the impact of net charge-offs and improvements or resolutions in the Corporation's individually evaluated loans.

There is still a significant amount of uncertainty related to the economic impact of COVID-19, including duration, new variants, future government responses, and the resiliency of the U.S.

During 2021, management reviewed internal and external factors to consider the need for any qualitative adjustments to the quantitative model.

Specifically, management reevaluated the loss given default assumptions that utilize Frye Jacobs, the time period used for prepayment and curtailment speeds and the unemployment forecast.

Management will continue to evaluate its estimate of expected credit losses as new information becomes available.

Transactions in the allowance for loan losses for the year ended December 31, 2020 were as follows:

(Before ASC 326 Adoption) Impact of ASC 326 Adoption Initial Allowance on Loans Purchased with Credit Deterioration (Charge-offs) Recoveries Provision (Benefit) for Credit Loss Expense Ending Allowance (After ASC 326 Adoption)

For the year ended December 31, 2022, the allowance for credit losses increased due to the growth in the Corporation's loan portfolio, including growth in new market areas.

This was partially offset by improvements in the Corporation's historical loss rates, as well as the impact of net charge-offs.

There is still a significant amount of uncertainty related to the domestic and global economy, continued supply chain challenges, persistent inflation and the COVID-19 pandemic.

Management will continue to proactively evaluate its estimate of expected credit losses as new information becomes available.

Transactions in the allowance for credit losses for the year ended December 31, 2021 were as follows:

Allowance (Charge-offs) Recoveries Provision (Benefit) for Credit Losses on Loans Receivable (1)

Ending Allowance

$ 221 $ — $ — $ ( 70 ) $ 151

23 unchanged sentences

Total loans $ 34,340 $ ( 3,384 ) $ 629 $ 6,003 $ 37,588

Transactions in the allowance for loan losses for the year ended December 31, 2019 were as follows:

Industrial, and

Agricultural Commercial

Mortgages Residential

Estate Consumer Credit

Cards Overdrafts Total

Allowance for loan losses, January 1, 2019 $ 7,341 $ 7,490 $ 2,156 $ 2,377 $ 103 $ 237 $ 19,704

Charge-offs ( 205 ) ( 3,391 ) ( 386 ) ( 2,200 ) ( 116 ) ( 453 ) ( 6,751 )

Recoveries 17 124 73 154 15 113 496

Provision for loan losses 1,134 2,729 ( 344 ) 2,080 82 343 6,024

Allowance for loan losses, December 31, 2019 $ 8,287 $ 6,952 $ 1,499 $ 2,411 $ 84 $ 240 $ 19,473

The following table presents information related to impaired loans by class of loan as of and for the year ended December 31, 2019:

Year Ended December 31, 2019

Investment Interest

Recognized Cash Basis

With an allowance recorded:

Commercial, industrial, and agricultural $ 1,750 $ 90 $ 90

Commercial mortgage 6,586 119 119

Residential real estate 191 13 13

Overdrafts 0 0 0

With no related allowance recorded:

Commercial, industrial, and agricultural 4,919 208 208

Commercial mortgage 3,985 158 158

Residential real estate 294 11 11

(1) Excludes provision for credit losses related to unfunded commitments.

Transactions in the allowance for credit losses for the year ended December 31, 2020 were as follows:

Ending Allowance (After ASC 326 Adoption)

$ 190 $ 61 $ — $ — $ — $ ( 30 ) $ 221

Owner-occupied, nonfarm nonresidential properties

2,390 ( 754 ) 82 ( 61 ) 12 2,031 3,700

Agricultural production and other loans to farmers

25 5 — — — ( 6 ) 24

Commercial and Industrial

4,105 ( 631 ) 216 ( 2,779 ) 39 5,283 6,233

Obligations (other than securities and leases) of states and political subdivisions

1,022 ( 231 ) — — — 207 998

41 8 — — — 19 68

Other construction loans and all land development and other land loans 2,327 780 228 — 125 ( 1,504 ) 1,956

Multifamily (5 or more) residential properties

1,087 312 24 — — 1,301 2,724

Non-owner occupied, nonfarm nonresidential properties

3,980 2,547 335 ( 1,522 ) 52 3,266 8,658

1-4 Family Construction 56 ( 35 ) — — — 61 82

Home equity lines of credit 180 421 22 ( 6 ) 1 367 985

Residential Mortgages secured by first liens 1,220 1,100 73 ( 285 ) 65 2,366 4,539

Residential Mortgages secured by junior liens 114 135 — ( 158 ) 2 148 241

Other revolving credit plans 296 378 — ( 137 ) 21 ( 51 ) 507

Automobile 156 ( 96 ) — ( 29 ) 2 99 132

Other consumer 1,960 1,021 — ( 1,513 ) 130 1,364 2,962

Credit cards 84 ( 58 ) — ( 153 ) 14 179 66

Overdrafts 240 — — ( 435 ) 185 254 244

Total $ 17,725 $ 599 $ 599

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of December 31, 2021:

Total loans $ 19,473 $ 4,963 $ 980 $ ( 7,078 ) $ 648 $ 15,354 $ 34,340

(1) Excludes provision for credit losses related to unfunded commitments.

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of December 31, 2022 and 2021, respectively:

December 31, 2022

Nonaccrual Nonaccrual With No Allowance for Credit Loss Loans Past Due over 89 Days Still Accruing

1 unchanged sentence

Owner-occupied, nonfarm nonresidential properties

2,055 1,987 —

Commercial and Industrial

12 unchanged sentences

Total loans $ 20,986 $ 14,293 $ 1,121

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of December 31, 2020:

December 31, 2021

Nonaccrual Nonaccrual With No Allowance for Credit Loss Loans Past Due over 89 Days Still Accruing

2 unchanged sentences

Commercial and Industrial

7,060 1,653 8

Other construction loans and all land development and other land loans 516 77 —

12 unchanged sentences

The Corporation does not recognize interest income while loans are on nonaccrual status.

The following tables present the amortized cost basis of collateral-dependent loans by class of loans that are individually evaluated as of December 31, 2021:

The following tables present the amortized cost basis of loans receivable that are individually evaluated and collateral-dependent by class of loans as of December 31, 2022 and 2021, respectively:

December 31, 2022

Real Estate Collateral Non-Real Estate Collateral

4 unchanged sentences

Non-owner occupied, nonfarm nonresidential properties

Home equity lines of credit 335 —

Residential Mortgages secured by first liens 1,150 —

Total loans $ 11,051 $ 1,908

The following tables present the amortized cost basis of collateral-dependent loans by class of loans that are individually evaluated as of December 31, 2020:

December 31, 2021

Real Estate Collateral Non-Real Estate Collateral

65 unchanged sentences

Troubled Debt Restructurings

During the years ended December 31, 2021 and 2020, the terms of certain loans were modified as troubled debt restructurings.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without a loan modification.

This evaluation is performed using the Corporation’s internal underwriting policies.

The Corporation has no further loan commitments to customers whose loan receivables are classified as a TDR.

During the years ended December 31, 2022 and 2021, the terms of certain loans were modified as TDRs.

The modification of the terms of such loans included either or both of the following:

2 unchanged sentences

The Corporation had an amortized cost in troubled debt restructurings of $ 12.4 million and $ 16.6 million as of December 31, 2022 and 2021, respectively.

The Corporation has allocated $ 2.6 million and $ 779 thousand of allowance for those loans as of December 31, 2021 and 2020, respectively.

The Corporation has allocated $ 2.2 million and $ 2.6 million of allowance for those loans as of December 31, 2022 and 2021, respectively.

The following table presents loans by class modified as troubled debt restructurings that occurred during the years ended December 31, 2022, 2021, and 2020:

4 unchanged sentences

Outstanding Recorded

Investment Type of Modification

Commercial and Industrial

2 $ 3,336 $ 3,336

Multifamily (5 or more) residential properties

1 $ 96 $ 96 Extend Amortization

Non-owner occupied, nonfarm nonresidential properties

1 1,604 1,604

1 1,784 1,784 Modify Rate and Extend Amortization

Total loans 2 $ 1,880 $ 1,880

4 unchanged sentences

Outstanding Recorded

Owner-occupied, nonfarm nonresidential properties

1 $ 260 $ 260

Investment Type of Modification

Commercial and Industrial

6 1,140 1,140

Other construction loans and all land development and other land loans 1 46 46

2 $ 3,336 $ 3,336 Modify Payment

Multifamily (5 or more) residential properties

1 717 717 Modify Payment

Non-owner occupied, nonfarm nonresidential properties

1 3,684 3,684

Residential Mortgages secured by first liens 2 309 309

1 1,604 1,604 Modify Payment

Total loans 4 $ 5,657 $ 5,657

4 unchanged sentences

Outstanding Recorded

Commercial mortgages 1 $ 383 $ 383

Total 1 $ 383 $ 383

The troubled debt restructurings described above increased the allowance for credit losses by immaterial amounts for the years ended December 31, 2021, 2020, and 2019, respectively.

There were no loans modified as troubled debt restructures for which there was a payment default within twelve months following the modification during the years ended December 31, 2021, 2020 and 2019, respectively, and no principal balances were forgiven in connection with the loan restructurings.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

Investment Type of Modification

Owner-occupied, nonfarm nonresidential properties

1 $ 260 $ 260 Modify Payment

Commercial and Industrial

6 1,140 1,140 Modify Payment

Other construction loans and all land development and other land loans 1 46 46 Modify Rate and Extend Amortization

Non-owner occupied, nonfarm nonresidential properties

1 3,684 3,684 Modify Rate and Modify Payment

Residential Mortgages secured by first liens 2 309 309 Modify Payment

Total loans 11 $ 5,439 $ 5,439

The TDRs described above increased the allowance for credit losses by immaterial amounts for the years ended December 31, 2022, 2021, and 2020, respectively.

A loan receivable is considered to be in payment default once it is 90 days contractually past due under the modified terms.

There were no loans receivable modified as TDRs for which there was a payment default within twelve months following the modification during the years ended December 31, 2022, 2021 and 2020, respectively, and no principal balances were forgiven in connection with the loan receivable restructurings.

1 unchanged sentence

The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring.

Generally, nonperforming troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months ) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Generally, nonperforming TDRs are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months ) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Credit Quality Indicators

The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:

The Corporation categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as:

current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

2 unchanged sentences

Special Mention:

Loans classified as special mention have a potential weakness that deserves management’s close attention.

A loan classified as special mention has a potential weakness that deserves management’s close attention.

If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation’s credit position at some future date.

Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables represent the Corporation's credit risk profile by risk rating as of December 31, 2021 and 2020.

Loans not rated as special mention, substandard, or doubtful are considered to be pass rated loans.

A loan classified as substandard is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

The loan has a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

A substandard loan is characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

A loan classified as doubtful has all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables represent the Corporation's commercial credit risk profile by risk rating as of December 31, 2022 and 2021, respectively.

Loans receivable not rated as special mention, substandard, or doubtful are considered to be pass rated loans.

December 31, 2022

36 unchanged sentences

Total loans $ 2,424,318 $ 30,132 $ 45,919 $ 1,379 $ 77,430 $ 2,501,748

The following tables detail the amortized cost of loans, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2021.

The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2022.

The current period originations may include modifications, extensions and renewals.

57 unchanged sentences

Total $ 341,378 $ 154,901 $ 51,709 $ 70,955 $ 47,023 $ 118,643 $ 10,706 $ — $ 795,315

The following tables detail the amortized cost of loans, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2020.

The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2021.

The current period originations may include modifications, extensions and renewals.

16 unchanged sentences

Substandard — — — — — — — — —

Doubtful 0 0 0 0 0 0 0 0 0

— — — — — — — — —

Total $ 211 $ 103 $ 76 $ 198 $ — $ — $ 791 $ — $ 1,379

16 unchanged sentences

Total $ 5,851 $ 5,305 $ 552 $ 3 $ — $ — $ 2,268 $ — $ 13,979

(1) Consists of one loan relationship that was originated in 2015 and modified in 2021.

The modification met the requirements to disclose the loan relationship as a new loan during the current period.

Term Loans Amortized Cost Basis by Origination Year

19 unchanged sentences

The Corporation considers the performance of the loan portfolio and its impact on the allowance for credit losses.

For 1-4 family construction, home equity lines of credit, residential mortgages secured by first liens, residential mortgages secured by junior liens, automobile, credit cards, other revolving credit plans and other consumer segments, the Corporation also evaluates credit quality based on the performance status the loan, which was previously presented, and by payment activity.

Nonperforming loans include loans on nonaccrual status and loans past due over 89 days and still accruing interest.

For 1-4 family construction, home equity lines of credit, residential mortgages secured by first liens, residential mortgages secured by junior liens, automobile, credit cards, other revolving credit plans and other consumer segments, the Corporation evaluates credit quality based on the performance status of the loan, which was previously presented, and by payment activity.

Nonperforming loans include loans receivable on nonaccrual status and loans receivable past due over 89 days and still accruing interest.

December 31, 2022 December 31, 2021

8 unchanged sentences

Total loans $ 1,294,785 $ 5,769 $ 1,300,554 $ 1,117,706 $ 5,125 $ 1,122,831

The following tables detail the amortized cost of loans, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2021.

The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by payment activity within each portfolio segment as of December 31, 2022.

The current period originations may include modifications, extensions and renewals.

35 unchanged sentences

Total $ 27,102 $ 12,340 $ 5,418 $ 2,198 $ 782 $ 1,304 $ — $ — $ 49,144

The following tables detail the amortized cost of loans, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2020.

The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by payment activity within each portfolio segment as of December 31, 2021.

The current period originations may include modifications, extensions and renewals.

48 unchanged sentences

Par value of acquired loans at acquisition $ 23,811

The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday, a subsidiary that offers small balance unsecured and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics than are typical in the Bank’s consumer loan portfolio, are considered to be subprime loans.

Holiday’s loan portfolio, included in other consumer loans above, is summarized as follows at December 31, 2022 and 2021:

15 unchanged sentences

Operating expenses, net of rental income 104 85 240

$ 117 $ 586 $ ( 61 )

Total $ 59 $ 117 $ 586

Fair Value Measurement

8 unchanged sentences

Investment Securities :

The fair values of most equity securities and debt securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather relying on the securities’ relationship to other benchmark quoted securities (Level 2).

These models utilize the market approach with standard inputs that include, but are not limited to benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data.

For certain securities that observable inputs about the specific issuer are not available, fair values are estimated using observable data from other securities presumed to be similar or other market data on other similar securities (Level 3).

The fair values for investment securities are determined by quoted market prices, if available (Level 1).

For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing.

Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Loans Held for Sale :

33 unchanged sentences

Mutual funds 1,406 1,406 — —

Certificates of deposit 506 506 0 0

Money market 479 479 — —

Corporate notes and bonds 757 757 — —

13 unchanged sentences

Pooled SBA 19,032 — 19,032 —

Other 979 979 0 0

Total Securities Available-For-Sale $ 697,191 $ 4,995 $ 692,196 $ —

3 unchanged sentences

Mutual funds 2,566 2,566 — —

Certificates of deposit 404 404 0 0

Money market 506 506 — —

Corporate notes and bonds 579 579 — —

Government sponsored entities 50 0 50 0

Total Equity Securities $ 10,366 $ 10,366 $ — $ —

Interest rate swaps $ ( 2,512 ) $ — $ ( 2,512 ) $ —

The table below presents a reconciliation of the fair value of securities available for sale measured on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2021:

The table below presents a reconciliation of the fair value of securities AFS measured on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2021:

States and Political Subdivisions Corporate Notes and Bonds

7 unchanged sentences

The Corporation's corporate notes and bonds with a fair value of $ 8.3 million for the year ended December 31, 2021 were transferred out of Level 3 and into Level 2 because of available observable market data for these investments.

The table below presents a reconciliation of the fair value of securities AFS measured on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2020:

States and Political Subdivisions Residential & Multi-Family Mortgage

5 unchanged sentences

Balance, December 31, 2020 $ 64 $ —

The Corporation's states and political subdivsions with a fair value of $ 358 thousand and residential and multi-family mortgage of $ 2.8 million for the year ended December 31, 2020 were transferred out of Level 3 and into Level 2 because of available observable market data for these investments.

The Corporation's states and political subdivisions with a fair value of $ 358 thousand and residential and multi-family mortgage of $ 2.8 million for the year ended December 31, 2020 were transferred out of Level 3 and into Level 2 because of available observable market data for these investments.

Assets and liabilities measured at fair value on a non-recurring basis are as follows at December 31, 2022 and 2021:

13 unchanged sentences

Non-owner occupied, nonfarm nonresidential 3,867 — — 3,867

Home equity lines of credit 335 — — 335

Residential mortgages secured by first liens 944 — — 944

Fair Value Measurements at December 31, 2021 Using

12 unchanged sentences

Non-owner occupied, nonfarm nonresidential 2,889 — — 2,889

Residential mortgages secured by first liens 659 0 0 659

A loan is considered to be a collateral dependent loan when, based on current information and events, the Corporation expects repayment of the financial assets to be provided substantially through the operation or sale of the collateral and the Corporation has determined that the borrower is experiencing financial difficulty as of the measurement date.

9 unchanged sentences

Technique Unobservable Inputs Range

Collateral-dependent loans - Farmland $ 920 Valuation of third party appraisal on underlying collateral Loss severity rates 60 % ( 60 %)

Collateral-dependent loans - Owner-occupied, nonfarm nonresidential properties 194 Valuation of third party appraisal on underlying collateral Loss severity rates 0 %- 60 % ( 57 %)

Collateral-dependent loans - Commercial and industrial 3,102 Valuation of third party appraisal on underlying collateral Loss severity rates 0 %- 59 % ( 42 %)

Collateral-dependent loans - Other construction loans and all land development loans and other land loans 248 Valuation of third party appraisal on underlying collateral Loss severity rates 25 % ( 25 %)

Collateral-dependent loans - Multifamily (5 or more) residential properties 627 Valuation of third party appraisal on underlying collateral Loss severity rates 0 %- 57 % ( 26 %)

Collateral-dependent loans - Non-owner occupied, nonfarm nonresidential 2,889 Valuation of third party appraisal on underlying collateral Loss severity rates 25 %- 60 % ( 34 %)

Collateral-dependent loans receivable:

Farmland $ 829 Valuation of third party appraisal on underlying collateral Loss severity rates 20 % ( 20 %)

Owner-occupied, nonfarm nonresidential properties 1,071 Valuation of third party appraisal on underlying collateral Loss severity rates 25 %- 100 % ( 29 %)

Commercial and industrial 1,631 Valuation of third party appraisal on underlying collateral Loss severity rates 3 %- 49 % ( 23 %)

Other construction loans and all land development loans and other land loans 501 Valuation of third party appraisal on underlying collateral Loss severity rates 33 % ( 33 %)

Multifamily (5 or more) residential properties 613 Valuation of third party appraisal on underlying collateral Loss severity rates 19 %- 25 % ( 23 %)

Non-owner occupied, nonfarm nonresidential 3,867 Valuation of third party appraisal on underlying collateral Loss severity rates 15 %- 53 % ( 35 %)

Home equity lines of credit 335 Valuation of third party appraisal on underlying collateral Loss severity rates 15 % ( 15 %)

Residential mortgages secured by first liens 944 Valuation of third party appraisal on underlying collateral Loss severity rates 15 %- 27 % ( 21 %)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2021:

1 unchanged sentence

Technique Unobservable Inputs Range

Collateral-dependent loans - Farmland $ 659 Valuation of third party appraisal on underlying collateral Loss severity rates 45 %- 54 % ( 47 %)

Collateral-dependent loans - Owner-occupied, nonfarm nonresidential properties 329 Valuation of third party appraisal on underlying collateral Loss severity rates 60 %- 90 % ( 80 %)

Collateral-dependent loans - Commercial and industrial 3,680 Valuation of third party appraisal on underlying collateral Loss severity rates 0 %- 100 % ( 39 %)

Collateral-dependent loans - Other construction loans and all land development loans and other land loans 1,790 Valuation of third party appraisal on underlying collateral Loss severity rates 25 %- 41 % ( 28 %)

Collateral-dependent loans - Multifamily (5 or more) residential properties 0 Valuation of third party appraisal on underlying collateral Loss severity rates 58 % ( 58 %)

Collateral-dependent loans - Non-owner occupied, nonfarm nonresidential 9,622 Valuation of third party appraisal on underlying collateral Loss severity rates 25 %- 100 % ( 29 %)

Collateral-dependent loans - Residential mortgages secured by first liens 659 Valuation of third party appraisal on underlying collateral Loss severity rates 31 % ( 31 %)

Collateral-dependent loans receivable:

Farmland $ 920 Valuation of third party appraisal on underlying collateral Loss severity rates 60 % ( 60 %)

Owner-occupied, nonfarm nonresidential properties 194 Valuation of third party appraisal on underlying collateral Loss severity rates 0 %- 60 % ( 57 %)

Commercial and industrial 3,102 Valuation of third party appraisal on underlying collateral Loss severity rates 0 %- 59 % ( 42 %)

Other construction loans and all land development loans and other land loans 248 Valuation of third party appraisal on underlying collateral Loss severity rates 25 % ( 25 %)

Multifamily (5 or more) residential properties 627 Valuation of third party appraisal on underlying collateral Loss severity rates 0 %- 57 % ( 26 %)

Non-owner occupied, nonfarm nonresidential 2,889 Valuation of third party appraisal on underlying collateral Loss severity rates 25 %- 60 % ( 34 %)

Fair Value of Financial Instruments

3 unchanged sentences

Cash and cash equivalents $ 106,285 $ 106,285 $ — $ — $ 106,285

Securities available for sale 697,191 4,995 692,196 0 697,191

Debt securities available-for-sale 371,409 — 371,409 — 371,409

Debt securities held-to-maturity 404,765 — 367,388 — 367,388

Equity securities 9,615 9,615 — — 9,615

Loans held for sale 231 — 231 — 231

Net loans 3,597,204 0 0 3,613,452 3,613,452

FHLB and other equity interests 23,276 n/a n/a n/a n/a

Net loans receivable 4,231,742 — — 4,157,843 4,157,843

FHLB and other restricted stock holdings and investments 30,715 n/a n/a n/a n/a

Interest rate swaps 1,850 — 1,850 — 1,850

1 unchanged sentence

Deposits $ ( 4,622,437 ) $ ( 4,175,976 ) $ ( 445,788 ) $ — $ ( 4,621,764 )

Short-term borrowings ( 132,396 ) — ( 132,396 ) — ( 132,396 )

Subordinated debentures ( 104,584 ) — ( 117,378 ) — ( 117,378 )

16 unchanged sentences

Accrued interest payable ( 886 ) — ( 886 ) — ( 886 )

While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances.

While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet dates, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances.

The estimated fair values would also not apply to subsequent dates.

21 unchanged sentences

No valuation allowance was deemed necessary at December 31, 2022, 2021, and 2020.

The fair value of interest rate lock commitments and forward commitments to sell loans was not material at December 31, 2021 or 2020.

The fair value of interest rate lock commitments and forward commitments to sell loans were not material at December 31, 2022 or 2021.

Premises and Equipment

9 unchanged sentences

Depreciation on premises and equipment amounted to $ 5.3 million in 2022, $ 5.3 million in 2021 and $ 4.6 million in 2020.

Operating lease assets represent our right to use an underlying asset during the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents our incremental borrowing rate at the lease commencement date.

Operating lease assets represent the Corporation's right to use an underlying asset during the lease term and operating lease liabilities represent the Corporation's obligation to make lease payments arising from the lease.

Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Corporation's incremental borrowing rate at the lease commencement date.

Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income.

The Corporation leases certain full-serve branch offices, land and equipment.

The Corporation leases certain full-service branch offices, land and equipment.

Leases with an initial term of twelve months or less are not recorded on the balance sheet.

56 unchanged sentences

The qualitative assessment indicated that it was more likely than not that the fair value exceeded its carrying value, resulting in no impairment.

The Corporation engaged a third party to perform a quantitative analysis of its goodwill at June 30, 2020 due to the on-going economic market disruption caused by the COVID-19 pandemic and the resultant impact on the Corporation's stock price.

In addition, interim qualitative analyses were performed as of March 31, 2020 and September 30, 2020 as a result of COVID-19 and for the annual impairment analysis at December 31, 2020.

The results of the quantitative analysis and the qualitative analyses did not indicate the Corporation's goodwill was impaired.

Intangible Assets

1 unchanged sentence

in 2013, the Corporation recorded a core deposit intangible asset of $ 4.8 million.

During the years ended December 31, 2021, 2020, and 2019, the Corporation recorded amortization expense of $ 0 , $ 94 thousand and $ 316 thousand, respectively.

The net carrying values at December 31, 2021 and 2020 was $ 0 , respectively.

During the years ended December 31, 2022, 2021, and 2020, the Corporation recorded amortization expense of zero , zero and $ 94 thousand, respectively.

The net carrying values at December 31, 2022 and 2021 was zero , respectively.

No other intangible assets were required to be recorded in connection with the acquisition of FC Banc Corp.

In connection with its acquisition of Lake National Bank in 2016, the Corporation recorded a core deposit intangible asset of $ 1.6 million.

During the year ended December 31, 2021, 2020, and 2019, the Corporation recorded amortization expense of $ 0 , $ 66 thousand, and $ 251 thousand, respectively.

The net carrying values at December 31, 2021 and 2020 was $ 0 , respectively.

During the year ended December 31, 2022, 2021, and 2020, the Corporation recorded amortization expense of zero , zero , and $ 66 thousand, respectively.

The net carrying values at December 31, 2022 and 2021 was zero , respectively.

No other intangible assets were required to be recorded in connection with the acquisition of Lake National Bank.

In connection with its acquisition of Bank of Akron in 2020, the Corporation recorded a core deposit intangible asset of $ 613 thousand.

During the year ended December 31, 2021 and 2020, the Corporation recorded amortization expense of $ 107 thousand and $ 46 thousand, respectively.

During the year ended December 31, 2022, 2021 and 2020, the Corporation recorded amortization expense of $ 96 thousand, $ 107 thousand, $ 46 thousand, respectively.

The net carrying value at December 31, 2022 and 2021 was $ 364 thousand and $ 460 thousand, respectively.

6 unchanged sentences

Thereafter 3,695

Total $ 446,461

Certificates of deposit of $250 thousand or more totaled $ 135.4 million and $ 116.6 million at December 31, 2022 and 2021, respectively.

The Corporation had $ 52.9 million and $ 23.6 million in reciprocal ICS deposits at December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, the Corporation had available one $ 10 million unsecured line of credit with an unaffiliated institution, at a variable interest rate with a floor as defined in the agreement.

At December 31, 2022 and 2021, the Corporation had available one $ 10 million unsecured line of credit with an unaffiliated institution.

Borrowings under the line of credit bear interest at a variable rate equal to SOFR plus 2.85 %.

There were no borrowings on the line of credit at December 31, 2022 and 2021.

6 unchanged sentences

The Bank could obtain advances of up to approximately $ 757.8 million from the FHLB at December 31, 2022 and $ 932.7 million at December 31, 2021.

At December 31, 2021 and December 31, 2020, the Bank had no outstanding advances from the FHLB.

During 2020 CNB prepaid the entire balance of its borrowings from the FHLB, totaling $ 190.4 million.

The pre-payment penalty associated with these prepayments totaled approximately $ 7.9 million and the weighted average rate associated with these borrowings was 2.20 %.

At December 31, 2022 and December 31, 2021, outstanding advances from the FHLB are as follows:

Open Repo borrowing at an interest rate of 4.45 % at December 31, 2022.

The maximum amount of the Open Repo borrowing available is $ 250,000 .

$ 132,396 $ —

Total $ 132,396 $ —

At December 31, 2022 and 2021, municipal deposit letters of credit issued by the FHLB on behalf of the Bank naming applicable municipalities as beneficiaries were $ 75.5 million and $ 10.4 million, respectively.

26 unchanged sentences

These subordinated notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital guidelines and were given an investment grade rating of BBB- by Kroll Bond Rating Agency.

The unamortized debt issuance costs were $ 1.3 million as of December 31, 2021.

The unamortized debt issuance costs were $ 1.0 million and $ 1.3 million as of December 31, 2022 and December 31, 2021, respectively.

Employee Benefit Plans

2 unchanged sentences

Employees 21 years of age or over with a minimum of one-year with 1,000 hours of service are eligible for matching contributions by the Corporation at 100 % for every 1 % contributed up to 3 % then 50 % for every 1 % contributed up to the next 2 % in total of the employee’s compensation.

The Corporation’s matching contribution and related expenses were $ 1.2 million, $ 1.1 million and $ 906 thousand for the years ended December 31, 2021, 2020, and 2019, respectively.

The Corporation’s matching contribution and related expenses were $ 1.6 million, $ 1.2 million and $ 1.1 million for the years ended December 31, 2022, 2021, and 2020, respectively.

A profit sharing discretionary non-contributory pension plan component is in place for employees 21 years of age or over with a minimum of one-year with 1,000 hours of service and allows employer contributions in an amount equal to a percentage of eligible compensation plus 5.7 % of the compensation in excess of $ 147 thousand, subject to a $ 305 thousand salary limit.

3 unchanged sentences

At December 31, 2022 and 2021, obligations of $ 9.7 million and $ 8.8 million, respectively, were included in other liabilities for this plan.

Expenses related to this plan were $ 2.1 million for the year ended December 31, 2021, $ 992 thousand for the year ended December 31, 2020 and $ 724 thousand for the year ended December 31, 2019.

Expenses related to this plan were $ 1.3 million for the year ended December 31, 2022, $ 2.1 million for the year ended December 31, 2021 and $ 992 thousand for the year ended December 31, 2020.

The Corporation has established a Survivor Benefit Plan for the benefit of outside directors.

20 unchanged sentences

Tax effect ( 204 ) ( 165 )

Total $ 768 $ 617

The accumulated benefit obligation was $ 1.2 million and $ 1.5 million at December 31, 2022 and 2021, respectively.

35 unchanged sentences

Bank owned life insurance ( 721 ) ( 0.9 ) ( 554 ) ( 0.8 ) ( 367 ) ( 0.9 )

Tax credits, net of amortization ( 193 ) ( 0.3 ) ( 215 ) ( 0.3 ) ( 104 ) ( 0.3 )

Effect of state tax 908 1.2 476 0.7 576 1.4

14 unchanged sentences

Unrealized loss on securities available-for-sale 12,914 188

Unrealized loss on securities held-to-maturity 1,265 —

Operating lease liability 7,645 4,845

2 unchanged sentences

Deferred tax liabilities:

Unrealized gain on securities available for sale 0 4,077

Premises and equipment 3,409 3,093

2 unchanged sentences

Mortgage servicing rights 399 366

Unrealized gain on interest rate swap 32 —

Operating lease asset 7,397 4,649

Other 220 293

13,916 11,114

42 unchanged sentences

As of December 31, 2022 and 2021, there was $ 1.2 million and $ 1.1 million, respectively, of total unrecognized compensation cost related to non-vested shares granted under the restricted stock award plan.

The fair value of shares vesting during the year end December 31, 2021, 2020, and 2019 was $ 835 thousand, $ 1.1 million and $ 1.5 million, respectively.

The fair value of shares vesting during the year end December 31, 2022, 2021, and 2020 was $ 1.4 million, $ 835 thousand and $ 1.1 million, respectively.

In addition to the time-based restricted stock disclosed above, the Corporation’s Board of Directors grants performance-based restricted stock awards ("PBRSAs") to key employees.

15 unchanged sentences

Failure to meet capital requirements can result in regulatory enforcement actions.

The net unrealized gain or loss on available for sale securities is excluded from computing regulatory capital.

The net unrealized gain or loss on AFS securities is excluded from computing regulatory capital.

Management believes as of December 31, 2022 the Corporation and the Bank meet all capital adequacy requirements to which they are subject.

17 unchanged sentences

Total Capital to Risk Weighted Assets

Consolidated $ 541,651 14.92 % $ 381,093 10.50 % N/A

Consolidated $ 688,164 16.08 % $ 449,370 10.50 % N/A N/A

Bank 525,048 12.32 447,436 10.50 $ 426,130 10.00 %

Tier 1 (Core) Capital to Risk Weighted Assets

Consolidated $ 427,988 11.79 % $ 308,504 8.50 % N/A

Consolidated 566,454 13.24 363,776 8.50 N/A N/A

Bank 489,374 11.48 362,210 8.50 340,904 8.00

Common equity Tier 1 to Risk Weighted Assets

Consolidated $ 350,203 9.65 % $ 254,062 7.00 % N/A

Consolidated 488,669 11.42 299,580 7.00 N/A N/A

Bank 481,995 11.31 298,291 7.00 276,984 6.50

Tier 1 (Core) Capital to Average Assets

Consolidated $ 427,988 8.22 % $ 208,208 4.00 % N/A

Consolidated 566,454 10.74 210,988 4.00 N/A N/A

Bank 489,374 9.22 212,283 4.00 265,354 5.00

1 unchanged sentence

Total Capital to Risk Weighted Assets

Consolidated $ 462,457 14.32 % $ 339,107 10.50 % N/A

Consolidated $ 541,651 14.92 % $ 381,093 10.50 % N/A N/A

Bank 475,231 13.16 379,180 10.50 $ 361,123 10.00 %

Tier 1 (Core) Capital to Risk Weighted Assets

Consolidated $ 384,650 11.91 % $ 274,516 8.50 % N/A

Consolidated 427,988 11.79 308,504 8.50 N/A N/A

Bank 447,055 12.38 306,955 8.50 288,899 8.00

Common equity Tier 1 to Risk Weighted Assets

Consolidated $ 306,865 9.50 % $ 226,072 7.00 % N/A

Consolidated 350,203 9.65 254,062 7.00 N/A N/A

Bank 439,676 12.18 252,786 7.00 234,730 6.50

Tier 1 (Core) Capital to Average Assets

Consolidated $ 384,650 8.11 % $ 189,728 4.00 % N/A

Consolidated 427,988 8.22 208,208 4.00 N/A N/A

Bank 447,055 8.63 207,109 4.00 258,887 5.00

2 unchanged sentences

During 2022, $ 248.2 million of accumulated net earnings of the Bank included in consolidated shareholders’ equity, plus any 2023 net profits retained to the date of the dividend declared, is available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements described above.

Interest Rate Swaps

Derivative Instruments

On September 7, 2018, the Corporation executed an interest rate swap agreement with a 5-year term and an effective date of September 15, 2018 in order to hedge cash flows associated with $ 10.0 million of a subordinated note that was issued by the Corporation during 2007 and elected cash flow hedge accounting for the agreement.

5 unchanged sentences

The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021, and 2020:

As of December 31 Liability Derivative

Liability Derivative

Balance Sheet Fair value

Location December 31, 2022 December 31, 2021

Interest rate contract Accrued interest payable and other liabilities $( 388 ) $( 768 )

Interest rate contract Accrued interest receivable (payable) and other assets (liabilities) $ 150 $( 388 )

For the Year Ended December 31, 2022 (a) (b) (c) (d) (e)

1 unchanged sentence

For the Year Ended December 31, 2021

Interest rate contract $( 224 ) Interest expense – subordinated

debentures $( 224 ) Other

Interest rate contract 301 Interest expense – subordinated debentures ( 276 ) Other

For the Year Ended December 31, 2020

6 unchanged sentences

Amounts reported in accumulated other comprehensive loss related to the interest rate swap will be reclassified to interest expense as interest payments are made on the subordinated debentures.

Such amounts reclassified from accumulated other comprehensive loss to interest expense in the next twelve months are expected to be $ 278 thousand.

As of December 31, 2021 and 2020, a cash collateral balance of $ 1.1 million and $ 1.1 million, respectively, was maintained with the counterparty to the interest rate swaps.

Such amounts reclassified from accumulated other comprehensive loss to interest expense in the next twelve months are expected to be a $ 179 thousand benefit.

As of December 31, 2022 and 2021, a cash collateral balance of $ 200 thousand and $ 1.1 million, respectively, was maintained with the counterparty to the interest rate swaps.

These balances are included in interest bearing deposits with other banks on the consolidated balance sheets.

5 unchanged sentences

Because the Corporation acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Corporation’s results of operations.

The Corporation pledged cash collateral to another financial institution with a balance $ 3.4 million as of December 31, 2021 and $ 4.9 million as of December 31, 2020.

The Corporation pledged cash collateral to another financial institution with a balance $ 173 thousand as of December 31, 2022 and $ 3.4 million as of December 31, 2021.

This balance is included in interest bearing deposits with other banks on the consolidated balance sheets.

3 unchanged sentences

The following table provides information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of December 31, 2022 and 2021:

Current Notional

Amount Average

14 unchanged sentences

(b) Reported in accrued interest payable and other liabilities within the consolidated balance sheets

Off-Balance Sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs.

These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates.

Commitments may expire without being used.

Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated.

The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial instruments with off-balance sheet risk was as follows at December 31, 2021 and 2020:

Off-Balance Sheet Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

Loan commitments are made to accommodate the financial needs of the Corporation’s customers commitments that result in market risk.

Standby letters of credit commit the Corporation to make payments on behalf of customers when certain specified future events occur.

They are primarily issued to facilitate customers’ trade transactions.

Both arrangements have credit risk, essentially the same as that involved in extending loans to customers, and are subject to the Corporation’s normal credit policies.

Collateral is obtained based on a credit assessment of the customer.

The Corporation's maximum obligation to extend credit for loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding as of December 31, 2022 and 2021 were as follows:

December 31, 2022 December 31, 2021

4 unchanged sentences

Commitments to make loans are generally made for periods of 60 days or less.

The fixed rate loan commitments at December 31, 2021 have interest rates ranging from 0.56 % to 9.00 % and maturities ranging from six months to approximately 31 years.

The fixed rate loan commitments at December 31, 2020 have interest rates ranging from 1.24 % to 18.00 % and maturities ranging from four months to 35 years.

Other Off-Balance Sheet Commitments

The Corporation makes investments in limited partnerships, including certain small business investment corporations and low income housing partnerships.

Capital contributions for investments in small business companies ("SBIC") and other limited partnerships, reported in FHLB and other equity interests on the consolidated balance sheet, as of December 31, 2021 and 2020 were $ 14.5 million and $ 11.8 million, respectively.

Unfunded capital commitments in investments in SBIC's and other limited partnerships totaled $ 8.0 million and $ 3.7 million as of December 31, 2021 and 2020, respectively.

Capital contributions for investments in small business companies ("SBICs") and other limited partnerships, reported in FHLB and other restricted stock holdings and investments on the consolidated balance sheet, as of December 31, 2022 and 2021 were $ 17.0 million and $ 14.5 million, respectively.

Unfunded capital commitments in investments in SBICs and other limited partnerships totaled $ 5.5 million and $ 8.0 million as of December 31, 2022 and 2021, respectively.

These investments are accounted for either under the equity method of accounting.

The carrying value of investments in the low income housing partnerships, reported in FHLB and other equity interests on the consolidated balance sheet, as of December 31, 2021 and 2020 were $ 5.3 million and $ 6.0 million, respectively.

Qualified Affordable Housing Project Investments

The carrying value of investments in the low income housing partnerships, reported in FHLB and other restricted stock holdings and investments on the consolidated balance sheet, as of December 31, 2022 and 2021 were $ 4.5 million and $ 5.3 million, respectively.

The related amortization for the twelve months ended December 31, 2022, 2021 and 2020 were $ 803 thousand, $ 691 thousand and $ 634 thousand, respectively.

Unfunded commitments, reported in accrued interest payable and other liabilities on the consolidated balance sheet, as of December 31, 2022 and 2021 were $ 1.0 million and $ 2.1 million, respectively.

Allowance for Credit Losses on Unfunded Loan Commitments

The Corporation maintains an allowance for credit losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements.

The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans receivable, modified to take into account the probability of a draw-down on the commitment.

The provision for credit losses on unfunded loan commitments is included in the provision for credit losses on the Corporation's consolidated statements of income.

The allowance for unfunded commitments is included in other liabilities in the consolidated balance sheets.

Note 4, "Loans Receivable and Allowance for Credit Losses," in the consolidated financial statements provides more detail concerning the provision for credit losses related to the loan portfolio of the Corporation.

The following table presents activity in the allowance for credit losses on unfunded loan commitments for the years ended December 31, 2022 and 2021, respectively:

Year ended December 31,

2022 2021 2020

Beginning balance $ — $ — $ —

Provision for credit losses on unfunded loan commitments (1)

Ending balance $ 603 $ — $ —

(1) Excludes provision for credit losses related to the loan portfolio.

The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business.

It is the opinion of management the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Corporation.

Parent Company Only Financial Information

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Investment in non-bank subsidiaries 21,566 20,327

Deferreds and current receivable 1,798 1,788

Deferred assets and current receivables 1,782 1,798

Other assets 931 1,044

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Net proceeds from issuance of common stock 94,051 — 3,257

Net advance (to) from subsidiary 0 ( 850 ) 650

Net cash provided by (used in) financing activities 16,469 46,757 ( 9,576 )

Net increase (decrease) in cash 36,306 9,979 395

Net advance to subsidiary — — ( 850 )

Net cash provided by financing activities 75,485 16,469 46,757

Net increase in cash 95,797 36,306 9,979

Cash beginning of year 47,035 10,729 750

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Net-of-tax amount ( 53,576 ) ( 16,044 ) 8,140

Amortization of unrealized gains from held-to-maturity securities 1,107 — —

Tax effect ( 232 ) — —

Net-of-tax amount 875 — —

Actuarial gain (loss) on postemployment health care plan 303 391 277

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Unrealized gains (losses) on securities available-for-sale $ ( 706 ) $ ( 53,576 ) $ ( 54,282 )

Amortization of unrealized gains from held-to-maturity securities — 875 875

Unrealized gain on postretirement benefits plan 618 150 768

50 unchanged sentences

The revenue on the sale is recorded upon the transfer of control of the property to the buyer and the other real estate owned asset is derecognized.

Subsequent Events

Subsequent to December 31, 2022, on February 17, 2023, the Corporation purchased 100,000 shares with an average price paid, including commissions, of $ 24.05 .

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On March 4, 2022, the Corporation’s Audit Committee dismissed Crowe LLP ("Crowe") as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2022, and all quarterly periods therein.

The Corporation’s Audit Committee participated in and approved the decision to change its independent registered public accounting firm.

The audit reports of Crowe on the consolidated financial statements of the Corporation and its subsidiaries as of and for the years ended December 31, 2021 and 2020 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

During the fiscal years ended December 31, 2021 and 2020 and the subsequent interim period through March 3, 2022, there were no:

(1) disagreements (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) with Crowe on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have cause them to make reference to the subject matter of the disagreements in connection with their reports, or (2) reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).

Also, on March 4, 2022, the Corporation engaged FORVIS, LLP (formerly known as BKD, LLP) ("FORVIS") as the Corporation’s independent registered public accounting firm starting with the fiscal year ending December 31, 2022.

The engagement was approved by the Corporation’s Audit Committee.

During the fiscal years ended December 31, 2021 and 2020, and through March 3, 2022, the Corporation did not consult with FORVIS with respect to (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might have been rendered on the Corporation’s consolidated financial statements, or (2) any matters that were either the subject of a disagreement (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

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-K

Item 8. Financial Statements and Supplementary Data