4 unchanged sentences
Year Ended December 31, 2024 Versus Year Ended December 31, 2023
−Removed: Net income decreased to $5,560,000 for the year ended December 31, 2023, as compared to $14,024,000 for the prior year, a decrease of 60.4%.
−Removed: Earnings per share, both basic and diluted, for 2023 was $0.91 as compared to $2.35 in 2022, a decrease of 61.3%.
+Added: Net income decreased to a net loss of $13,203,000 for the year ended December 31, 2024, as compared to net income of $5,560,000 for the prior year, a decrease of $18,763,000 which was primarily due to the Corporation recognizing a full goodwill impairment charge of $19,133,000 during the first quarter of 2024.
+Added: Earnings per share, both basic and diluted, for 2024 was $(2.14) as compared to $0.91 in 2023.
Dividends per share for 2024 and 2023 were $1.12.
2 unchanged sentences
Total interest income in 2024 amounted to $71,422,000, an increase of $14,434,000 or 25.3% from 2023.
−Removed: The increase in interest income is due to increased interest rates, growth in real estate loans secured by commercial properties and Commercial and Industrial loans, and increased interest income earned on securities, offset by a $317,000 decrease in Paycheck Protection Program loan fees due to the discontinuation of the SBA program.
+Added: The increase in interest income is due to increased interest rates, growth in real estate loans secured by commercial properties, and increased interest income earned on securities.
Total interest expense of $39,143,000 increased $11,271,000 or 40.4% from 2023.
−Removed: The majority of this increase is related to increases in interest paid to depositors to retain and grow deposit relationships and increases in interest paid on short-term and long-term borrowings primarily through the Federal Home Loan Bank due to increases in volume and rate of borrowings.
+Added: The majority of this increase is related to increases in interest paid to depositors to retain and grow deposit relationships and increases in interest paid on long-term borrowings through the Federal Home Loan Bank due to increases in both average volume and rate of borrowings in 2024 over 2023.
Selected financial data and performance ratios of the Corporation for the past five years are presented below in Table 1.
17 unchanged sentences
Income tax expense
+Added: Net (loss) income
PER SHARE DATA:
+Added: Net (loss) income
PERFORMANCE RATIOS:
3 unchanged sentences
Average equity to average assets
−Removed: Net interest income, as indicated below in Table 2, decreased by $8,384,000 or 22.4% to $29,116,000 for the year ended December 31, 2023.
−Removed: The Corporation’s net interest income on a fully tax equivalent basis decreased by $9,979,000, or 25.3% to $29,390,000 in 2023 as compared to $39,369,000 in 2022.
+Added: Net interest income, as indicated below in Table 2, increased by $3,163,000 or 10.9% to $32,279,000 for the year ended December 31, 2024.
+Added: The Corporation’s net interest income on a fully tax equivalent basis increased by $2,907,000, or 9.9% to $32,297,000 in 2024 as compared to $29,390,000 in 2023.
Table 2 — Reconciliation of Taxable Equivalent Net Interest Income
12 unchanged sentences
Consumer, net 4
−Removed: Fees on Loans
+Added: Fees on Loans and fair value adjustment
Total Loans 5
44 unchanged sentences
Net interest margins are presented on a tax-equivalent basis.
−Removed: In 2023, the yield on earning assets increased by 0.73% and the rate paid on interest bearing liabilities increased by 1.90%.
+Added: the yield on earning assets increased by 0.66% and the rate paid on interest bearing liabilities increased by 0.71%.
Yields increased for a majority of interest earning assets and interest bearing liabilities during 2024, mainly as a result of the current high interest rate environment.
−Removed: The Federal Open Market Committee (FOMC) raised the fed funds target rate 11 times for a total of 525 basis points between March 2022 and July 2023, it has remained at the target rate of 5.25% to 5.5% through December 31, 2023.
−Removed: The yield on loans increased from 4.41% in 2022 to 4.90% in 2023 mainly due to loans originating and repricing at higher interest rates during 2023.
+Added: The yield on loans increased from 4.90% in 2023 to 5.55% in 2024 mainly due to loans originating and repricing at higher interest rates during the latter part of 2023 and 2024.
The securities portfolio yield increased to 4.65% in 2024 as compared to 3.92% in 2023.
The increase was mainly the result of the elevated rate environment impacting variable rate securities and purchases of higher yielding securities in 2024.
−Removed: The average rate paid on short-term borrowings increased 2.45% from 2.82% in 2022 to 5.27% in 2023 due to higher interest rates paid on a significantly higher average overnight borrowing balance.
+Added: The average rate paid on short-term borrowings decreased 0.31% from 5.27% in 2023 to 4.96% in 2024.
The rate paid on savings, NOW, money market, and interest checking accounts increased 0.31% from 2.10% to 2.41% and the average rate paid on time deposits increased 1.47% from 2.75% to 4.22%.
Interest income exempt from federal tax was $1,352,000 in 2024 and $1,570,000 in 2023.
−Removed: Interest income exempt from federal tax decreased due to the sales of tax-exempt municipal securities in 2023.
+Added: Interest income exempt from federal tax decreased due to the maturity of tax-exempt municipal securities in 2024.
Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental rate of 21%.
−Removed: The decrease in net interest margin at December 31, 2023 compared to December 31, 2022 was primarily due to increased yields on deposits and borrowings in 2023, as compared to 2022.
−Removed: Fully tax equivalent net interest income decreased by $9,979,000 or 25.3% to $29,390,000 at December 31, 2023 compared to $39,369,000 at December 31, 2022.
−Removed: During 2023, the Federal Reserve increased the federal-funds rate by 1.00%, resulting in a target range of 5.25% - 5.50%.
−Removed: The Corporation could experience a decrease in net interest income if market rates remain static or continue to increase, as the Corporation’s net interest income continues to be liability sensitive.
+Added: The increase in net interest margin at December 31, 2024 compared to December 31, 2023 was primarily due to increased yields on loans and securities in 2024, as compared to 2023.
+Added: Fully tax equivalent net interest income increased by $2,907,000 or 9.9% to $32,297,000 at December 31, 2024 compared to $29,390,000 at December 31, 2023.
+Added: During 2024, the Federal Reserve decreased the federal-funds rate by 1.00%, resulting in a target range of 4.25% - 4.50%.
+Added: The Corporation could experience a decrease in net interest income if market rates remain static or increase, as the Corporation’s net interest income continues to be liability sensitive.
To negate the potential impact of a decreasing net interest margin, the Corporation will continue to focus on attracting organic loan growth and core deposits such as checking, savings, and money market accounts, thereby further reducing its dependence on higher priced certificates of deposit and short-term borrowings.
1 unchanged sentence
The Corporation also entered into four rate swap contracts effective September 20, 2023.
−Removed: Of the four swaps, two were fair value interest rate swaps with a combined notional amount of $50,000,000, hedging fixed-rate available-for-sale debt securities, and two were cash flow interest rate swaps with a combined notional amount of $100,000,000, hedging specific short-term wholesale funding positions.
+Added: Of the four swaps, two were fair value interest rate swaps with a combined notional amount of $50,000,000, hedging fixed-rate debt securities available-for-sale, and two were cash flow interest rate swaps with a combined notional amount of $100,000,000, hedging specific short-term wholesale funding positions.
+Added: The Corporation entered into one additional swap contract effective September 4, 2024 with a notional amount of $75,000,000, hedging a specified pool of the Bank’s fixed-rate loans.
See Note 12 – Derivative Instruments and Hedging Activities on page 92 for further analysis.
5 unchanged sentences
and, (iii) changes in rate and volume (changes in average volume multiplied by changes in average rate).
−Removed: In 2023, the decrease in net interest income on a fully tax equivalent basis of $9,979,000 resulted from a decrease in volume of $2,100,000 and a decrease of $7,879,000 due to changes in rate.
+Added: In 2024, the increase in net interest income on a fully tax equivalent basis of $2,907,000 resulted from an increase in volume of $1,911,000 and an increase of $996,000 due to changes in rate.
Table 4 — Rate/Volume Analysis
19 unchanged sentences
PROVISION FOR CREDIT LOSSES
−Removed: For the year ended December 31, 2023, the provision for credit losses resulted in a credit balance of $217,000, compared to a credit balance of $264,000 for the year ended December 31, 2022.
+Added: For the year ended December 31, 2024, the provision for credit losses resulted in a balance of $1,640,000, compared to a credit balance of $217,000 for the year ended December 31, 2023.
The increase in the provision for credit losses in 2024 as compared to 2023 resulted from the Corporation’s analysis of the current loan portfolio, including historic losses, past-due trends, current economic conditions, loan portfolio growth, and other relevant factors.
1 unchanged sentence
Charge-off and recovery activity in the allowance for credit losses resulted in net charge-offs of $893,000 and $13,000 for the years ended December 31, 2024 and 2023, respectively.
−Removed: See Analysis of Allowance for Credit Losses (Post-Adoption of ASU No.
−Removed: 2016-13) and Analysis of Allowance for Loan Losses (Pre-Adoption of ASU No.
−Removed: 2016-13) tables on pages 37 and 38 for further discussion.
−Removed: Gross charge-offs amounted to $57,000 at December 31, 2023, as compared to $206,000 at December 31, 2022.
−Removed: The decreased level of charge-offs for the year ended December 31, 2023 was mainly due to a charge-off in the amount of $148,000 that was completed during the third quarter of 2022 on a commercial and industrial loan to a residential home builder.
−Removed: The business ceased operations as a result of financial difficulties;
−Removed: however, the circumstances were not suggestive of a regional industry issue.
−Removed: This charge-off contributed to the increased balance of net charge-offs in 2022 compared to 2023 but was not indicative of a significant change in asset quality in the overall loan portfolio.
−Removed: See Table 11 – Analysis of Allowance for Credit Losses for further details.
+Added: See Analysis of Allowance for Credit Losses table on page 37 for further discussion.
The allowance for credit losses as a percentage of average loans outstanding was 0.83% as of December 31, 2024 and 0.79% as of December 31, 2023.
−Removed: The decrease in the allowance for credit losses as a percentage of average loans outstanding is mainly the result of a decrease of $1,349,000 in the balance of the allowance for credit losses from $8,274,000 at December 31, 2022 to $6,925,000 at December 31, 2023, mainly due to the one-time-cumulative adjustment which was made upon the adoption of the CECL model in the first quarter of 2023, decreasing the allowance for credit losses by $1,119,000.
−Removed: Total average loans outstanding also increased by $66,508,000 from $807,169,000 at December 31, 2022 to $873,677,000 at December 31, 2023 which further contributed to the decrease in the allowance for credit losses as a percentage of average loans at December 31, 2023 as compared to December 31, 2022.
On a quarterly basis, management performs, and the Corporation’s Audit Committee and the Board of Directors review a detailed analysis of the adequacy of the allowance for credit losses.
10 unchanged sentences
Non-interest income through December 31, 2024 was $6,697,000, an increase of 8.8%, or $541,000, from 2023.
−Removed: The increase was due to less net securities losses and increased net gains (losses) on sales of mortgage loans in 2023.
−Removed: During 2023, net securities losses decreased $728,000 to a net loss of $118,000.
−Removed: The decrease was due to the Corporation recognizing $99,000 in net gains on the sales of debt securities in 2023 as compared to $753,000 in net losses on the sales of debt securities in 2022.
−Removed: The Corporation then recognized $217,000 in net losses on held equity securities in 2023, due to market valuation fluctuations, as compared to recognizing $94,000 in net losses on held equity securities in 2022.
−Removed: Gains (losses) on sales of mortgage loans amounted to a net gain of $65,000 in 2023 as compared to a net loss of $7,000 in 2022.
−Removed: The increase in net gains (losses) on sales of mortgage loans in 2023 was due to more individual loans sold in 2023 along with many of the loans sold in 2022 being sold at a loss due to rapid upward movement in interest rates.
+Added: The increase was due to net securities gains realized in 2024 compared to net securities losses realized in 2023 and increased trust department income in 2024.
+Added: During 2024, net securities gains (losses) increased $223,000 to a net gain of $105,000.
+Added: The increase was due to the Corporation recognizing $105,000 in net gains on held equity securities in 2024 vs recognizing $217,000 in net losses on held equity securities offset by $99,000 in net gains on sold debt securities in 2023.
+Added: Gains on sales of mortgage loans amounted to a net gain of $80,000 in 2024 as compared to a net gain of $65,000 in 2023.
+Added: The increase in net gains on sales of mortgage loans in 2024 was due to more individual loans sold in 2024.
The Corporation continues to service the majority of mortgages which are sold, through maturity of the loans.
2 unchanged sentences
Income related to an increase in cash surrender value of life insurance increased by $48,000 or 7.7% mainly as a result of increased interest rates on the related policies.
−Removed: Other income, consisting primarily of income from the sale of retail non-deposit investment products, safe deposit box rentals, and miscellaneous fees, decreased $16,000, or 5.9% in 2023 as compared to 2022 as the Corporation recognized less rental income from leased properties in 2023 as there was an agreement with a new tenant at one location for one year free of rent.
+Added: Other income, consisting primarily of income from the sale of retail non-deposit investment products, safe deposit box rentals, and miscellaneous fees, increased $60,000, or 23.3% in 2024 as compared to 2023 as the Corporation recognized more income from retail investment annuities in 2024.
Table 5 — Non-Interest Income
9 unchanged sentences
Total non-interest expense amounted to $50,584,000, an increase of $21,339,000, or 73.0% in 2024.
−Removed: Expenses associated with employees (salaries and employee benefits) continue to be the largest non-interest expenditure.
+Added: The Company recognized goodwill impairment in the amount of $19,133,000 during the first quarter of 2024.
+Added: This was the result of goodwill impairment testing performed due to the decrease of the Company’s stock price during the first quarter of 2024 as a triggering event.
+Added: The goodwill impairment has no impact on regulatory capital ratios, liquidity or the Company’s cash balances.
+Added: Aside from the one-time goodwill impairment charge recognized in 2024, expenses associated with employees (salaries and employee benefits) continue to be the largest non-interest expenditure.
Salaries and employee benefits amounted to $17,228,000 or 34.1% of total non-interest expense in 2024 and $16,055,000 or 54.9% in 2023.
Salaries and employee benefits increased $1,173,000, or 7.3% in 2024.
−Removed: The increase in 2023 was due to increased salaries to offer more competitive wages in an effort to increase retention and support the Corporation’s growth, new hires related to the new full-service branch, and bonuses paid to all employees in January 2023.
+Added: The increase in 2024 was mainly due to a $592,000 increase in salaries in an effort to offer more competitive wages in our various markets, increase retention and support the Corporation’s growth, plus increased costs associated with employee health insurance which were $357,000 greater in 2024.
The number of full-time equivalent employees was 209 as of December 31, 2024 and 215 as of December 31, 2023.
−Removed: Net occupancy expense increased $183,000, or 9.5% in 2023 as compared to 2022 as the result of increased bank building and leasehold improvement costs as the result of purchasing and renovating new branch locations in 2023.
−Removed: Net furniture and equipment and computer expense increased $121,000, or 5.8% in 2023 compared to 2022.
−Removed: The increase in 2023 was mainly due to higher software costs as the Corporation upgraded internal IT systems and implemented a new accounting system in 2023.
+Added: Net occupancy, furniture and equipment and computer expense increased $18,000, or 0.4% in 2024 compared to 2023.
Professional services increased $177,000, or 12.3% in 2024 as compared to 2023.
−Removed: The higher expense was the result of increases in annual audit expenses along with additional audit expenses relating to year end 2022, primarily due to newly adopted ACL methodology and securities valuation costs, and higher consulting fees associated with implementing new internal systems contracts in 2023.
−Removed: Pennsylvania shares tax expense decreased $377,000, or 30.5% in 2023 as compared to 2022.
−Removed: This was mainly due to the unrealized loss position of the Corporation’s debt securities portfolio at December 31, 2022 resulting in lower equity.
+Added: The higher expense was the result of increases in annual audit fees and audit expenses relating to the adoption of CECL as well as goodwill impairment.
+Added: Pennsylvania shares tax expense increased $209,000, or 24.3% in 2024 as compared to 2023.
+Added: This increase was mainly due to the Corporation recording a true-up for Pennsylvania shares tax expense for the 2023 shares tax return in the third quarter of 2024 which resulted in $70,000 net expense, as compared to receiving a shares tax refund of $52,000 in 2023 for the 2022 tax return, along with a $163,000 expense true up for the 2024 tax year.
FDIC insurance expense increased $394,000, or 56.0% in 2024 as compared to 2023.
FDIC insurance expense varies with changes in net asset size, risk ratings, and FDIC derived assessment rates.
−Removed: ATM and debit card fees expense increased $247,000, or 27.5% in 2023 as compared to 2022.
−Removed: The increase was the result of third-party pricing increases, increased debit card transaction volume and increased ATM fraud in 2023.
−Removed: Data processing fees increased $389,000, or 42.5% in 2023 as compared to 2022.
−Removed: This increase was the result of third party pricing increases, credits used to lower third party costs in 2022 and increased costs associated with the preparation for and implementation of the Corporation’s new online and mobile banking platforms.
−Removed: Advertising expense increased $139,000, or 35.7% in 2023 as compared to 2022 as the result of the Corporation marketing the new full-service Bethlehem branch, along with utilizing more television, billboard, digital and social
−Removed: media advertising in 2023.
−Removed: Other non-interest expense decreased $118,000, or 3.9% in 2023 as compared to 2022.
−Removed: Other non-interest expense was higher in 2022 mainly due to a fraud reimbursement to one customer and a fraud settlement related to another customer’s deposit relationship.
−Removed: The overall level of non-interest expense remains low, relative to the Corporation’s peers (community banks from $1 billion to $3 billion in assets).
−Removed: The Corporation’s total non-interest expense was 2.21% of average assets in 2023 and 2.04% in 2022, which places the Corporation among the leaders in its peer financial institution categories in controlling non-interest expense.
+Added: ATM and debit card fees expense decreased $143,000, or 12.5% in 2024 as compared to 2023.
+Added: The decrease was the result of lower electronic funds transfer expenses, decreased ATM fraud and the application of vendor credits in 2024.
+Added: Data processing fees decreased $282,000, or 21.6% in 2024 as compared to 2023.
+Added: This decrease was the result of lower internet banking expenses as the result of a new vendor relationship for online banking and the application of vendor relationship credits in 2024 resulting from contract negotiations, along with implementation fees recognized in 2023.
+Added: Advertising expense increased $32,000, or 6.1% in 2024 as compared to 2023 as the result of the Corporation marketing the new full-service Bethlehem branch, along with utilizing more television, billboard, digital and social media advertising in 2024.
+Added: Other non-interest expense increased $628,000, or 21.8% in 2024 as compared to 2023.
+Added: Other non-interest expense was higher in 2024 mainly as the result of monthly amortization of a new low income housing partnership that began in the fourth quarter of 2023.
Table 6 — Non-Interest Expense
10 unchanged sentences
Data processing fees
+Added: Goodwill impairment
+Added: Management of the Corporation believes that investors’ understanding of the Corporation’s performance is enhanced by disclosing non-GAAP financial measures without the effects of the impairment as a reasonable basis for comparison of the Corporation’s ongoing results of operations.
+Added: These non-GAAP measures should not be considered a substitute for GAAP-basis measures and results.
+Added: Our non-GAAP measures may not be comparable to non-GAAP
+Added: measures of other companies.
+Added: The following Non-GAAP Reconciliation Schedule provides a reconciliation of these non-GAAP financial measures to the most closely analogous measure determined in accordance with GAAP.
+Added: NON-GAAP RECONCILIATION SCHEDULE
+Added: FIRST KEYSTONE AND SUBSIDIARY
+Added: (Dollars in thousands)
+Added: Net interest income after provision for credit losses
+Added: Total non-interest income
+Added: Total non-interest expense
+Added: Income tax benefit (expense)
+Added: Net (loss) income
+Added: Other expense:
+Added: Goodwill impairment
Income tax expense
−Removed: Income tax expense for the year ended December 31, 2023, was $684,000 as compared to $2,294,000 for the year ended December 31, 2022.
+Added: After tax adjustment to GAAP
+Added: Adjusted net income
+Added: Adjusted return on average assets
+Added: Adjusted return on average equity
+Added: INCOME TAX EXPENSE
+Added: Income tax resulted in a benefit for the year ended December 31, 2024 of $45,000 as compared to income tax expense of $684,000 for the year ended December 31, 2023.
The effective income tax rate was (0.3)% in 2024 and 11.0% in 2023.
−Removed: The decrease in the effective tax rate for 2023 was due to lower pre-tax earnings in relation to the amount of tax-exempt income earned on securities and more low-income housing tax credits.
−Removed: The Corporation recognized $484,000 and $249,000 of tax credits from low-income housing partnerships for the years ended December 31, 2023 and 2022, respectively.
+Added: The decrease in the effective tax rate for 2024 was mainly due to a federal income tax benefit at the statutory 21% rate generated due to the net loss that resulted from the full goodwill impairment charge recorded effective March 31, 2024, along with more low-income housing tax credits, offset by an increase in the effective tax rate to add back the impact of the portion of the full goodwill impairment charge that is non-deductible for tax purposes.
+Added: The Corporation recognized $840,000 and $484,000 of tax credits from low-income housing partnerships for the years ended December 31, 2024 and 2023, respectively included in tax expense.
+Added: The Corporation expects to carry forward $328,000 and $0 of low-income housing tax credits as of December 31, 2024 and December 31, 2023, respectively, which will begin to expire in the year 2044.
FINANCIAL CONDITION
Total assets increased to $1,428,583,000 at year-end 2024, an increase of 0.9% from year-end 2023.
−Removed: Total debt securities available-for-sale increased $19,524,000 or 5.2% to $392,968,000 as of December 31, 2023.
−Removed: The increase was mainly due to the purchase of several securities in the combined amount of $81,463,000, offset by the sales of tax-exempt municipals in the combined amount of $23,131,000, principal paydowns, and calls and maturities during 2023.
+Added: Total debt securities available-for-sale decreased $2,680,000 or 0.7% to $390,288,000 as of December 31, 2024.
+Added: The decrease was mainly due to $65,459,000 in securities purchased during 2024 as part of the execution of a balance sheet leverage strategy, offset by principal paydowns, maturities, and calls of $69,878,000 completed during the same period.
Net loans increased in 2024 from $904,153,000 to $940,779,000, a 4.1% increase.
−Removed: Loan demand grew in 2023 as the Bank has realized an increase in loan originations, primarily commercial real estate and commercial and industrial loans.
+Added: Loan demand grew in 2024 as the Bank has realized an increase in loan originations, primarily commercial real estate loans.
The cash surrender value of bank owned life insurance totaled $26,679,000 at December 31, 2024, an increase of $669,000 or 2.6% from 2023.
This increase represents tax-free income included in non-interest income on the consolidated statements of income.
−Removed: Investments in low-income housing partnerships were $5,961,000 at year-end 2023, an increase of 58.4% from year-end 2022.
−Removed: The Corporation became a limited partner in a new real estate venture during 2021 with an initial investment of $435,000.
−Removed: In 2023, capital contributions and other payments in the combined amount of $2,429,000 were made in relation to the new real estate venture.
+Added: Investments in low-income housing partnerships were $5,152,000 at year-end 2024, a decrease of 13.6% from year-end 2023.
+Added: The decrease is mainly the result of $819,000 in amortization recognized during the year ended December 31, 2024 on two low-income housing partnerships in which the Corporation is a limited partner, offset by a final capital contribution payment of $10,000 that was made in 2024 in relation to a new real estate venture in which the Corporation became a limited partner in 2021.
Investing in low-income housing real estate ventures enables the Corporation to recognize tax credits and satisfy Community Reinvestment Act initiatives.
−Removed: As of December 31, 2023, total deposits amounted to $980,439,000, a decrease of 1.3% from 2022.
−Removed: The decrease is due to a decrease in non-interest bearing deposits and a decrease in municipal deposits, offset by an increase in interest bearing deposits including a $40,250,000 increase in Brokered CDs.
−Removed: The Corporation has also experienced a shift from transactional deposits to term deposits due to higher CD rate offerings.
+Added: As of December 31, 2024, total deposits amounted to $1,045,880,000, an increase of 6.7% from 2023.
+Added: The increase is mainly due to a $40,100,000 increase in CDs as the Corporation has experienced a shift from transactional deposits to term deposits and a $33,899,000 increase in Brokered CDs.
The Corporation continues to maintain and manage its asset growth.
The Corporation’s strong equity capital position provides an opportunity to further leverage its asset growth.
−Removed: Short and long-term borrowings increased in 2023 by $97,050,000, mainly due to the execution of a balance sheet leverage strategy that included $100,000,000 in new long-term borrowings to fund increases in the securities portfolio.
−Removed: Total stockholders’ equity increased to $121,615,000 at December 31, 2023, an increase of $1,229,000, primarily due to an increase in surplus.
+Added: Short and long-term borrowings decreased $35,042,000 from $275,468,000 in 2023 to $240,426,000 in 2024 mainly due to the maturity of a $20,000,000 long-term note in the third quarter of 2024, along with increased deposits in 2024.
+Added: Total stockholders’ equity decreased to $106,782,000 at December 31, 2024, a decrease of $14,833,000, primarily due to a decrease in retained earnings due to the full goodwill impairment charge.
SEGMENT REPORTING
9 unchanged sentences
No securities were established in a trading account.
−Removed: Debt securities available-for-sale increased $19,524,000 or 5.2% to $392,968,000 in 2023.
+Added: Debt securities available-for-sale decreased $2,680,000 or 0.7% to $390,288,000 in 2024.
At December 31, 2024, the net unrealized loss, net of the tax effect, on these securities was $24,454,000 and was included in stockholders’ equity as accumulated other comprehensive loss.
36 unchanged sentences
Marketable equity securities consist of common stock investments in other commercial banks and bank holding companies.
−Removed: At December 31, 2023 and 2022, the Corporation had $1,482,000 and $1,699,000, respectively, in equity securities recorded at fair value, a decrease of $217,000 or 12.8%.
+Added: At December 31, 2024 and 2023, the Corporation had $1,587,000 and $1,482,000, respectively, in equity securities recorded at fair value, an increase of $105,000 or 7.1%.
Total loans increased to $948,451,000 as of December 31, 2024, compared to a balance of $911,078,000 as of December 31, 2023.
1 unchanged sentence
Total loans increased $37,373,000, or 4.1% in 2024 compared to an increase of $52,609,000, or 6.1% in 2023.
−Removed: Continued demand for borrowing by businesses accounted for the 6.1% increase in the loan portfolio from December 31, 2022 to December 31, 2023.
The Real Estate portfolio increased $40,308,000 or 5.0% from $811,493,000 at December 31, 2023 to $851,801,000 at December 31, 2024.
−Removed: The increase in the Real Estate portfolio for the year ended December 31, 2023 was mainly the result of $110,819,000 in new loan originations, which were offset by loan payoffs of $39,675,000 and a decrease of $8,886,000 in utilization of existing real estate lines of credit, along with regular principal payments and other typical fluctuations in the Real Estate portfolio.
−Removed: The Agricultural portfolio decreased $189,000 or 22.0% from $860,000 at December 31, 2022 to $671,000 at December 31, 2023.
−Removed: The decrease in the Agricultural portfolio for the year ended December 31, 2023 was mainly the result of an increase of $6,000 in utilization of existing agricultural lines of credit, offset with regular principal payments and other typical fluctuations in the Agricultural portfolio.
−Removed: There were no new agricultural loans originated during the year ended December 31, 2023 and payoffs of agricultural loans for the year ended December 31, 2023 did not have a material impact on the change in the portfolio balance.
−Removed: Overall, the Commercial and Industrial portfolio increased $10,832,000 or 19.3% from $56,077,000 at December 31, 2022 to $66,909,000 at December 31, 2023.
−Removed: The increase in the Commercial and Industrial portfolio during the year ended December 31, 2023 was mainly attributable to the portion of the Commercial and Industrial portfolio, excluding PPP loans, which increased $10,945,000 during the year ended December 31, 2023.
−Removed: The increase was attributable to $12,592,000 in new loan originations along with an increase of $1,824,000 in utilization of existing commercial and industrial lines of credit offset by loan payoffs of $1,556,000, as well as regular principal payments and other typical amortization in the Commercial and Industrial portfolio.
−Removed: The portion of the Commercial and Industrial portfolio attributable to PPP loans decreased $113,000 from December 31, 2022 to December 31, 2023 with all PPP loans paid off or forgiven as of December 31, 2023.
−Removed: Consumer loans increased $117,000 or 2.1% from $5,707,000 at December 31, 2022 to $5,824,000 at December 31, 2023.
−Removed: The increase is mainly attributable to new loan originations of $2,545,000, offset by loan payoffs of $1,082,000 and a decrease of $4,000 in utilization of existing consumer lines of credit, along with regular principal payments.
+Added: The increase in the Real Estate portfolio for the year ended December 31, 2024 was mainly the result of $103,734,000 in new loan originations and an increase of $5,264,000 in utilization of existing real estate lines of credit, which were offset by loan payoffs of $41,336,000, along with regular principal payments and other typical fluctuations in the Real Estate portfolio.
+Added: The Agricultural portfolio increased $268,000 or 39.9% from $671,000 at December 31, 2023 to $939,000 at December 31, 2024.
+Added: The increase in the Agricultural portfolio for the year ended December 31, 2024 was mainly the result of four loans totaling $275,000 that were reclassed from the Commercial and Industrial portfolio to the Agricultural portfolio during the year ended December 31, 2024 and an increase of $15,000 in utilization of existing agricultural lines of credit, offset with regular principal payments and other typical fluctuations in the Agricultural portfolio.
+Added: During the year ended December 31, 2024, there was two new agricultural loans originated with an aggregate balance of $59,000 and one agricultural loan paid off with a balance of $46,000.
+Added: The Commercial and Industrial portfolio increased $196,000 or 0.3% from $66,909,000 at December 31, 2023 to $67,105,000 at December 31, 2024.
+Added: The increase was attributable to $8,363,000 in new loan originations, which were offset by a decrease of $5,484,000 in utilization of existing commercial and industrial lines of credit and loan payoffs of $3,292,000, as well as regular principal payments and other typical amortization in the Commercial and Industrial portfolio.
+Added: The Consumer portfolio increased $635,000 or 10.9% from $5,824,000 at December 31, 2023 to $6,459,000 at
+Added: December 31, 2024.
+Added: The increase is mainly attributable to new loan originations of $3,071,000 and an increase of $10,000 in utilization of existing consumer lines of credit, offset by loan payoffs of $1,078,000 and regular principal payments.
The State and Political Subdivisions portfolio decreased $4,034,000 or 15.4% from $26,181,000 at December 31, 2023 to $22,147,000 at December 31, 2024.
−Removed: The decrease is mainly the result of $2,420,000 in loan payoffs for the year ended December 31, 2023 along with regular principal payments, offset by $731,000 in new loan originations.
+Added: The decrease is mainly the result of regular principal payments on state and political subdivisions loans and a $1,825,000 payoff on one state and political loan, which were offset by an increase in the balance of an existing state and political subdivision line of credit resulting from draws of $950,000 completed during the year ended December 31, 2024.
The Corporation continues to originate and sell certain long-term fixed rate residential mortgage loans, which conform to secondary market requirements, when the market pricing is favorable.
13 unchanged sentences
Commercial and Industrial non-pass grades decreased $193,000 or 29.7% to $457,000 as of December 31, 2024 compared to $650,000 as of December 31, 2023.
−Removed: Consumer non-pass
−Removed: grades increased to $58,000 as of December 31, 2023 compared to $0 at December 31, 2022.
−Removed: There were no Agricultural or State and Political non-pass grades as of December 31, 2023 or December 31, 2022.
−Removed: The increase in Real Estate non-pass grades from December 31, 2022 to December 31, 2023 is mainly the result of the downgrade of a loan to the owner of a hotel and restaurant which carried a balance of $3,661,000 at December 31, 2023.
−Removed: The loan was downgraded to substandard status during the fourth quarter of 2023 due to the protracted timeframe of over two years which has transpired to complete the necessary renovations to the hotel following a fire.
−Removed: The hotel has exhausted all insurance and stimulus funds and now has to finance any deficits in profitability through other revenue streams, savings, or owner contributions.
+Added: Consumer non-pass grades decreased $52,000 or 89.7% to $6,000 as of December 31, 2024 compared to $58,000 as of December 31, 2023.
+Added: There were no Agricultural or State and Political Subdivision non-pass grades as of December 31, 2024 or December 31, 2023.
+Added: The increase in Real Estate non-pass grades from December 31, 2023 to December 31, 2024 is mainly the result of the downgrade of a loan to the owner of a commercial property which carried a balance of $4,529,000 at December 31, 2024.
+Added: The loan was downgraded to substandard status during the fourth quarter of 2024 due to the loss of a large tenant.
The Corporation continues to internally underwrite each of its loans to comply with prescribed policies and approval levels established by its Board of Directors.
37 unchanged sentences
Management considers, based upon its methodology, that the allowance for credit losses is adequate to cover foreseeable future losses.
−Removed: However, there can be no assurance that the allowance for credit losses will be adequate to
−Removed: cover significant losses, if any, that might be incurred in the future.
−Removed: On a quarterly basis, management evaluates the
−Removed: qualitative factors utilized in the calculation of the Company’s allowance for credit losses and various adjustments are made to these factors as deemed necessary at the time of evaluation.
−Removed: Upon adoption of ASU No.
−Removed: 2016-13 in the first
−Removed: quarter of 2023, the qualitative factors used in the allowance calculation were adjusted from five loan pools utilized under previous methodology to fifteen loan segmentation pools aligning with the segmentation of the quarterly call report.
−Removed: There were no material increases or decreases in the qualitative factors arising from the realigning of the
−Removed: qualitative factor pools/segments and no additional qualitative factor adjustments were deemed necessary for the first quarter of 2023.
−Removed: During the second quarter of 2023, qualitative factors related to delinquency trends were increased by four basis points for each of the following loan segmentation pools:
−Removed: (a) revolving, open-end, 1-4 family residential properties (and extended under lines of credit) and (b) secured by multifamily (5 or more) residential properties.
−Removed: these loan segmentation pools are included in the Real Estate component of the loan portfolio.
−Removed: During the third quarter
−Removed: of 2023, various qualitative factor decreases were implemented across multiple loan segmentation pools.
−Removed: trends were decreased by twelve basis points for each of the following loan segmentation pools:
−Removed: (a) construction, land development, and other land loans, (b) residential construction (loans to build homes, both speculative and owner-occupied, and 1-4 family lot loans), (c) agribusiness, farmland, or secured by farmland, (d) loans secured by junior liens,
−Removed: and (e) loans secured by other non-farm, non-residential properties.
−Removed: All of these loan segmentation pools are included in
−Removed: the Real Estate component of the loan portfolio.
−Removed: Additionally, delinquency trends were decreased by eight basis points and volume trends were decreased by twelve basis points across all three loan segmentation pools in the Consumer portfolio, volume trends for Commercial and Industrial loans were decreased by eight basis points, and delinquency trends for Agricultural loans were decreased by eight basis points during the third quarter of 2023.
−Removed: During the fourth quarter of 2023, qualitative factors related to economic trends were decreased by four basis points across all loan segments and qualitative factors related to collateral values were increased by four basis points related to loans to finance agricultural production and other loans for farmers in the Agricultural portfolio, commercial and industrial loans in the Commercial and Industrial portfolio, and automobile loans in the Consumer portfolio.
−Removed: Additionally, qualitative factors related to delinquency trends were decreased by sixteen basis points related to revolving, open-end 1-4 family residential properties in the Real Estate portfolio and automobile loans in the Consumer portfolio and increased by eight basis points related to loans secured by other non-farm, non-residential properties in the Real Estate portfolio and other revolving credit plans in the Consumer portfolio.
−Removed: Qualitative factors related to volume trends were increased by four basis points for each of the following loan segmentation pools:
−Removed: (a) construction, land development, and other land loans, (b) agribusiness, farmland, or secured by farmland, (c) secured by multi-family (5 or more) residential properties, (d) loans secured by owner-occupied non-farm, non-residential properties, and (e) loans secured by other non-farm, non-residential properties.
−Removed: Qualitative factors related to volume trends were decreased by four basis points for each of the following loan segmentation pools:
−Removed: (a) residential construction (loans to build homes, both speculative and owner-occupied, and 1-4 family lot loans), (b) revolving, open-end 1-4 family residential properties, (c) loans secured by first liens, and (d) loans secured by junior liens.
−Removed: All of the loan segmentation pools impacted by qualitative factor adjustments for volume trends are included in the Real Estate component of the loan portfolio.
−Removed: Qualitative factors related to external factors were increased by four basis points for each of the following loan segmentation pools in the Real Estate portfolio:
−Removed: (a) residential construction (loans to build homes, both speculative and owner-occupied, and 1-4 family lot loans), (b) revolving, open-end 1-4 family residential properties, (c) loans secured by first liens, and (d) loans secured by junior liens.
−Removed: Qualitative factors related to external factors were also increased by four basis points for loans to finance agricultural production and other loans to farmers in the Agricultural portfolio, commercial and industrial loans in the Commercial and Industrial portfolio, other revolving credit plans, automobile loans, and other consumer loans in the Consumer portfolio, and obligations (other than securities or leases) of state and political subdivisions in the US in the State and Political Subdivisions portfolio.
+Added: However, there can be no assurance that the allowance for credit losses will be adequate to cover significant losses, if any, that might be incurred in the future.
+Added: On a quarterly basis, management evaluates the qualitative factors utilized in the calculation of the Corporation’s allowance for credit losses and various adjustments are made to these factors as deemed necessary at the time of evaluation.
+Added: During the first quarter of 2024, qualitative factors related to delinquency trends were decreased by eight basis points related to loans (a) secured by first liens, (b) secured by owner-occupied, non-farm, non-residential properties, and (c) other revolving credit plans.
+Added: Qualitative factors related to volume trends were increased by eight basis points related to loans secured by junior liens and decreased by eight basis points related to other revolving credit plans.
+Added: Qualitative factors related to collateral values were also increased by four basis points related to commercial and industrial loans during the first quarter of 2024.
+Added: During the second quarter of 2024, qualitative factors related to delinquency trends were increased by four basis points related to (a) loans secured by first liens and (b) loans secured by owner occupied, non-farm, non-residential properties, as well as increased by sixteen basis points related to (c) loans secured by other non-farm, non-residential properties.
+Added: Qualitative factors related to volume trends were also decreased by four basis points related to (a) other revolving credit plans and (b) automobile loans during the second quarter of 2024.
+Added: During the third quarter of 2024, qualitative factors related to delinquency trends were increased by four basis points related to (a) revolving open-end loans and (b) other revolving credit plans and increased by eight basis points related to (c) automobile loans.
+Added: Qualitative factors related to delinquency trends were decreased by four basis points related to (a) loans secured by multifamily residential properties, (b) loans for agricultural production and other loans to farmers, (c) commercial and industrial loans, and (d) other consumer loans.
+Added: Qualitative factors related to volume trends decreased by four basis points related to (a) loans secured by farmland, (b) loans secured by other non-farm, non-residential properties, (e) other revolving credit plans, and (f) automobile loans.
+Added: During the fourth quarter of 2024, qualitative factors related to delinquency trends were decreased by eight basis points related to (a) construction land development and other land loans, (b) residential construction loans, (c) loans for agribusiness farmland, or secured by farmland, and (d) loans secured by other non-farm, non-residential properties.
+Added: Qualitative factors related to delinquency trends were decreased by four basis points related to (a) revolving open-end loans, (b) loans for agricultural production and other loans to farmers, (c) commercial and industrial loans, (d) other revolving credit plans, (e) automobile loans, and (f) obligation of state and political subdivisions.
+Added: Qualitative factors related to delinquency trends were increased by four basis points related to loan’s secured by multifamily residential properties.
+Added: Qualitative factors related to loan volume trends increased by twelve basis points related to (a) loans for agribusiness, farmland, or secured by farmland, (b) loans secured by other non-farm, non-residential properties, and (c) automobile loans.
+Added: Qualitative factors decreased by eight basis points related to loan volume trends related to (a) other revolving credit plans.
Table 11 contains an analysis of the allowance for credit losses indicating charge-offs and recoveries by year.
1 unchanged sentence
Net charge-offs amounted to $893,000 in 2024 and $13,000 in 2023.
−Removed: Net charge-offs were higher in 2022 than in 2023, mainly due to a charge-off in the amount of $148,000 that was completed during the third quarter of 2022 on a commercial and industrial loan to a residential construction company, as the business ceased operations as a result of financial difficulties.
−Removed: For the year ended December 31, 2023, the provision for credit losses resulted in a credit balance of $217,000, as compared to a credit balance of $264,000 for the year ended December 31, 2022.
−Removed: The net effect of the credit balance of the provision and net charge-offs resulted in the year-end allowance for credit losses of $6,925,000 of which 94.42% was attributed to the Real Estate component, 0.01% was attributed to the Agricultural component, 3.83% was attributed to the Commercial and Industrial component, 1.13% was attributed to the Consumer component, and 0.61% was attributed to the State and Political Subdivisions component (refer to the activity in Note 3 — Loans and Allowance for Credit Losses on page 79.) The Corporation determined that the provision for credit losses made during 2023 was sufficient to maintain the allowance for credit losses at a level necessary for the probable losses inherent in the loan portfolio as of December 31, 2023.
−Removed: Analysis of Allowance for Credit Losses (Post-Adoption of ASU No.
+Added: Net charge-offs were higher in 2024 than in 2023, mainly due to $741,000 in aggregate charge-offs completed on four loans to a plastic processing company focusing on non-post-consumer recycling that were completed during the third quarter of 2024, as the business ceased operations as a result of financial difficulties.
+Added: During the fourth quarter of 2024, a charge-off of $67,000 was also completed on an owner-occupied, non-farm, non-residential loan to a non-profit civic organization, as the non-profit no longer uses the property, along with a charge-off of $41,000 on a loan to an individual borrower secured by 1-4 family residential real estate.
+Added: For the year ended December 31, 2024, the provision for credit losses resulted in a balance of $1,640,000, as compared to a credit balance of $217,000 for the year ended December 31, 2023.
+Added: The net effect of the provision and net charge-offs resulted in the year-end allowance for credit losses of $7,672,000 of which 94.04% was attributed to the Real Estate component, 0.03% was attributed to the Agricultural component, 4.08% was attributed to the Commercial and Industrial component, 1.28% was attributed to the Consumer component, and 0.57% was attributed to the State and Political Subdivisions component (refer to the activity in Note 3 — Loans and Allowance for Credit Losses on page 77.) The Corporation determined that the provision for credit losses made during 2024 was sufficient to maintain the allowance for credit losses at a level necessary for the probable losses inherent in the loan portfolio as of December 31, 2024.
+Added: Analysis of Allowance for Credit Losses
(Dollars in thousands)
8 unchanged sentences
Net charge-offs
−Removed: Credits charged to operations
+Added: Provision (credit) charged to operations
Balance at end of period
1 unchanged sentence
Allowance for credit losses to average loans outstanding during the period
−Removed: Analysis of Allowance for Loan Losses (Pre-Adoption of ASU No.
−Removed: (Dollars in thousands)
−Removed: Years Ended December 31,
−Removed: Beginning balance
−Removed: Commercial and Industrial
−Removed: Commercial Real Estate
−Removed: Residential Real Estate
−Removed: Commercial and Industrial
−Removed: Commercial Real Estate
−Removed: Residential Real Estate
−Removed: Net charge-offs
−Removed: (Credits) additions charged to operations
−Removed: Balance at end of period
−Removed: Ratio of net charge-offs during the period to average loans outstanding during the period
−Removed: Allowance for loan losses to average loans outstanding during the period
It is the policy of management and the Corporation’s Board of Directors to make a provision for both identified and unidentified losses inherent in its loan portfolio.
3 unchanged sentences
A detailed quarterly analysis to determine the adequacy of the Corporation’s allowance for credit losses is reviewed by the Board of Directors.
−Removed: With the Bank’s manageable level of net charge-offs and a decrease to the reserve from the credit balance of the provision, the allowance for credit losses as a percentage of average loans amounted to 0.793% in 2023 and 1.025% in 2022.
−Removed: Table 12 sets forth the allocation of the Bank’s allowance for credit losses by loan category and the percentage of loans in each category to the total allowance for credit losses at the dates indicated.
−Removed: The portion of the allowance for credit losses allocated to each loan category does not represent the total available for future losses that may occur within the loan category, since the total credit loss allowance is a valuation reserve applicable to the entire loan portfolio.
−Removed: Allocation of Allowance for Credit Losses (Post-Adoption of ASU No.
+Added: With the Bank’s manageable level of net charge-offs and recoveries along with additions to the reserve from the provision out of operations, the allowance for credit losses as a percentage of average loans amounted to 0.832% in 2024 and 0.793% in 2023.
+Added: Table 12 sets forth the allocation of the Corporation’s allowance for credit losses by loan category and the percentage of loans in each category to the total allowance for credit losses at the dates indicated.
+Added: The portion of the allowance for credit losses allocated to each loan category does not represent the total available for future losses that
+Added: may occur within the loan category, since the total credit loss allowance is a valuation reserve applicable to the entire loan portfolio.
+Added: Allocation of Allowance for Credit Losses
(Dollars in thousands)
December 31, 2024
+Added: December 31, 2023
Commercial and Industrial
State and Political Subdivisions
−Removed: Allocation of Allowance for Loan Losses (Pre-Adoption of ASU No.
−Removed: (Dollars in thousands)
−Removed: Commercial and Industrial
−Removed: Commercial Real Estate
−Removed: Residential Real Estate
−Removed: *Percentage of allocation in each category to total allocations in the Allowance for Loan Loss Analysis, excluding unallocated.
NON-PERFORMING ASSETS
5 unchanged sentences
Total non-performing assets amounted to $4,970,000 as of December 31, 2024, as compared to $5,681,000 as of December 31, 2023.
−Removed: The economy remains unstable.
−Removed: Consumer spending remains at high levels, allowing the inflation rate to continue to remain higher than desired levels.
−Removed: Business sentiment is downbeat and business investment has slowed.
−Removed: Many economists and influential thinkers believe that the economy is moving forward in spite of certain forecasts and predictors.
−Removed: Inflation was receding earlier in 2023, at 3% as of June 2023;
−Removed: however, it rose to 3.7% as of September 2023 and then dropped slightly to 3.4% as of December 2023.
−Removed: The Federal Reserve’s target rate of inflation is 2%.
−Removed: The war between Ukraine and Russia continues to produce worldwide consternation.
+Added: The economic growth for the fourth quarter of 2024 was higher than expected.
+Added: Consumer spending remains at high levels.
+Added: The inflation rate rose in December to 2.9%, above the Federal Reserve Board’s desired rate of 2.0%.
+Added: Business sentiment saw a slight rise as rates were lowered during the fourth quarter.
+Added: Many economists and influential thinkers still believe that the economy is moving forward in spite of certain forecasts and predictors.
+Added: The concern of a recession, however, has lessened.
+Added: Inflation was receding, although it has seen a slight but steady rise in the last few months.
+Added: This has the Federal Reserve looking very cautiously at their next move.
+Added: This will all depend on which direction the inflation rate trends and the unemployment landscape.
+Added: The war between Ukraine and Russia continues to deeply pierce the landscape of the world.
The heightened conflict with Israel and Palestine has caused much hostility throughout the world.
−Removed: The constant disputing over whether to continue US support of Ukraine and Israel in ongoing efforts has been a strain on the economy.
+Added: The continuing dispute over whether to continue US support of Ukraine and Israel in ongoing efforts has been a strain on the economy.
Values of new and used homes and automobiles have remained high.
+Added: Although there would seem to be a dynamic shift in the automobile industry where inventories are increasing and sales are slowing, this may lead to a reduced profit margin.
Higher interest rates have added to the curtailed borrowing.
2 unchanged sentences
Labor continues to remain costly and unpredictable.
−Removed: The Federal Reserve has noted they will cease rate hikes and has indicated a plan to potentially begin reducing rates in 2024.
−Removed: These forces have had a direct effect on the Corporation’s nonperforming assets.
−Removed: The Corporation is closely monitoring all segments of its loan portfolio because of the current uncertain economic environment.
−Removed: Non-accrual loans totaled $4,616,000 as of December 31, 2023 as compared to
−Removed: $5,051,000 as of December 31, 2022.
+Added: These forces have had a direct effect on the Corporation’s non-performing assets.
+Added: The Corporation is closely monitoring all segments of its loan portfolio because of the current economic environment.
+Added: Non-accrual loans totaled $4,214,000 as of December 31, 2024 as compared to $4,616,000 as of December 31, 2023.
There were no foreclosed assets held for resale as of December 31, 2024 or December 31, 2023.
−Removed: There were five loans past-due 90 days or more and still accruing interest as of December 31, 2023 which carried an aggregate balance of $1,065,000, compared to December 31, 2022 when there were three loans past-due 90 days or more and still accruing interest.
−Removed: The loans past-due 90 days or more and still accruing interest as of December 31, 2023 consisted of four loans secured by commercial real estate and one loan secured by residential real estate, all of which were well secured and in the process of collection.
−Removed: Non-performing assets to total loans was 0.62% for both December 31, 2023 and 2022.
−Removed: Non-performing assets to total assets was 0.40% for both December 31, 2023 and 2022.
−Removed: The allowance for credit losses to total non-performing assets was 140.61% as of December 31, 2023 as compared to 154.39% as of December 31, 2022.
−Removed: Additional detail can be found in Table 13 – Non-Performing Assets and Individually Evaluated Loans (Post-Adoption of ASU No.
−Removed: 2016-13) and Non-Performing Assets and Impaired Loans (Pre-Adoption of ASU No.
−Removed: 2016-13) and the Non-Performing Assets table in Note 3 — Loans and Allowance for Credit Losses.
+Added: There were six loans past-due 90 days or more and still accruing interest as of December 31, 2024 which carried an aggregate balance of $756,000, compared to December 31, 2023 when there were five loans past-due 90 days or more and still accruing interest totaling $1,065,000.
+Added: The loans past-due 90 days or more and still accruing interest as of December 31, 2024 consisted of four loans secured by commercial real estate and two loans secured by residential real estate, all of which were well secured and in the process of collection.
+Added: Non-performing assets to total loans was 0.52% for December 31, 2024 and 0.62% for December 31, 2023.
+Added: Non-performing assets to total assets was 0.35% for December 31, 2024 and 0.40% for December 31, 2023.
+Added: allowance for credit losses to total non-performing assets was 154.37% as of December 31, 2024 as compared to 121.90% as of December 31, 2023.
+Added: Additional detail can be found in Table 13 – Non-Performing Assets and Individually Evaluated and the Non-Performing Assets table in Note 3 — Loans and Allowance for Credit Losses.
Asset quality is a priority and the Corporation retains a full-time loan review officer to closely track and monitor overall loan quality, along with a full-time loan workout department to manage collection and liquidation efforts and engages an annual external loan review.
1 unchanged sentence
Performing substandard loans not designated for individual evaluation amounted to $22,080,000 at December 31, 2024 and $19,418,000 at December 31, 2023.
−Removed: Individually evaluated loans were $4,925,000 at December 31, 2023, compared to impaired loans of $11,207,000 at December 31, 2022.
+Added: Individually evaluated loans were $4,523,000 at December 31, 2024, compared to $4,925,000 at December 31, 2023.
The largest individually evaluated loan relationship at December 31, 2024 consisted of a non-performing loan to a student housing holding company which is secured by commercial real estate.
At December 31, 2024, the loan carried a balance of $1,603,000, net of $1,989,000 that had been charged off to date.
−Removed: The second largest individually evaluated loan relationship at December 31, 2023 consisted of five non-performing loans to a plastic processing company focused on non-post-consumer recycling.
−Removed: Three loans are classified in the Commercial and Industrial portfolio and two loans are secured by commercial real estate.
−Removed: The loans carried an aggregate balance of $975,000 at December 31, 2023.
+Added: The second largest individually evaluated loan relationship at December 31, 2024 consisted two non-performing loans granted to an individual for the purpose of renovating a multi-use property slated to be converted into apartments and a retail storefront.
+Added: Both loans are secured by commercial real estate and carried an aggregate balance of $1,441,000 at December 31, 2024.
The third largest individually evaluated loan relationship at December 31, 2024 consisted of a non-performing loan to the owner of a golf course and catering venue which is secured by commercial real estate.
At December 31, 2024, the loan carried a balance of $582,000.
−Removed: The Corporation estimates the need for individual evaluation of loans based on its analysis of the cash flows or collateral estimated at fair value less cost to sell.
+Added: The Corporation determines the need for individual evaluation of loans based on its analysis of the cash flows or collateral estimated at fair value less cost to sell.
For collateral dependent loans, the estimated appraisal or other qualitative adjustments and cost to sell percentages are determined based on the market area in which the real estate securing the loan is located, among other factors, and therefore, can differ from one loan to another.
Of the $4,523,000 in individually evaluated loans at December 31, 2024, none were located outside the Corporation’s primary market area.
+Added: The outstanding recorded investment of modified loans to borrowers experiencing financial difficulty as of December 31, 2024 amounted to $10,193,000, with $10,019,000 classified in the Real Estate portfolio and $174,000 classified in the Commercial and Industrial portfolio.
+Added: There were no loan modifications completed with respect to borrowers experiencing financial difficulty during the year ended December 31, 2023.
+Added: The loan modifications to borrowers experiencing financial difficulty during the year ended December 31, 2024 consisted of term modifications on two loans which allowed an extension of the maturity date for each respective loan, one payment modification which allowed a period of interest only payments on one loan, and one loan experienced the release of a piece of collateral securing the loan.
+Added: There were no unfunded commitments related to modified loans to borrowers experiencing financial difficulty and all modified loans to borrowers experiencing financial difficulty were in compliance with restructure terms as of December 31, 2024.
+Added: Of the modifications of loans to borrowers experiencing financial difficulty that were completed during the twelve months preceding December 31, 2024, two loans experienced payment defaults during the year ended December 31, 2024.
+Added: One loan carrying a post modification recorded investment of $9,455,000 experienced a payment default during the first quarter of 2024 and a loan carrying a post modification recorded investment of $120,000 experienced a payment default during the fourth quarter of 2024.
+Added: Both loans were paid current as of December 31, 2024.
The Corporation’s non-accrual loan valuation procedure for any loans greater than $250,000 requires an appraisal to be obtained and reviewed annually at year end, unless the Board of Directors waives such requirement for a specific loan, in favor of obtaining a Certificate of Inspection instead, defined as an internal evaluation completed by the Corporation.
3 unchanged sentences
The Corporation actively works with borrowers to resolve credit problems and will continue its close monitoring efforts in 2025.
−Removed: Excluding the assets disclosed in Table 13 – Non-Performing Assets and Individually Evaluated Loans (Post-Adoption of ASU No.
−Removed: 2016-13) and Non-Performing Assets and Impaired Loans (Pre-Adoption of ASU No.
−Removed: 2016-13) and the Non-Performing Assets table in Note 3 — Loans and
−Removed: Allowance for Credit Losses, management is not aware of any information about borrowers’ possible credit problems which cause serious doubt as to their ability to comply with present loan repayment terms.
+Added: Excluding the assets disclosed in Table 13 – Non-Performing Assets and Individually Evaluated Loans and the Non-Performing Assets table in Note 3 — Loans and Allowance for Credit Losses, management is not aware of any information about borrowers’ possible credit problems which cause serious doubt as to their ability to comply with present loan repayment terms.
In addition, regulatory authorities, as an integral part of their examinations, periodically review the allowance for possible loan losses.
They may require additions to allowances based upon their judgments about information available to them at the time of examination.
−Removed: The economic climate remains in a state of flux.
−Removed: The war between Ukraine and Russia moves into its third year and the Israeli conflict in the Gaza strip has intensified and incited worldwide hostilities.
−Removed: Inflationary pressures have eased but the effects of monetary policy adjustments made to affect the change remain.
−Removed: The looming Presidential election and the legal issues that permeate the leading Presidential candidates, commodity prices remaining high even as inflationary pressures have eased, gas prices fluctuating widely from week to week, small businesses closing, larger corporations cutting jobs, unprecedented weather conditions seen around the world, and the fears recession may still be looming have all exacerbated the difficulties in the national and state economy.
+Added: The economic climate remains unstable.
+Added: The war between Ukraine and Russia continues on into its third year and the Israeli conflict in the Gaza strip has intensified and incited worldwide hostilities.
+Added: Inflationary pressures remain elevated and have seen an uptick in the last few months.
+Added: This continues to create much debate and concern regarding the appropriate steps to be taken to overcome the effects of monetary policy adjustments that have been and will be made to affect the change.
+Added: Intense political turmoil, commodity prices remaining high, gas prices fluctuating widely from week to week, small businesses closing, larger corporations cutting jobs, unprecedented weather conditions seen around the world, and the uncertainty of where the Federal Reserve may go from here in regard to rates have exacerbated the difficulties in the national and state economy.
Experts at all levels continue to ascertain the intermediate or long-term effects of such issues.
1 unchanged sentence
Should such metrics increase, additions to the balance of the Corporation’s allowance for credit losses could be required.
−Removed: The extent of the impact of these stressors on the Corporation’s operational and financial performance will depend on certain developments including reactions to inflationary controls enacted, the labor force, the longevity of the wars, the ongoing political landscape, and the looming threat of a recession, and any after-effects of these factors.
+Added: The extent of the impact of these stressors on the Corporation’s operational and financial performance will depend on certain developments including reactions to inflationary controls enacted, the labor force, the longevity of the wars, the ongoing political landscape, and the looming worldwide discord, and any after-effects of these factors.
These factors may not immediately impact the Corporation’s operational and financial performance, as the effects of these factors may lag into the future.
2 unchanged sentences
As of December 31, 2024 and 2023 management is of the opinion that there were no loan concentrations exceeding 10% of total loans.
−Removed: Non-Performing Assets and Individually Evaluated Loans (Post-Adoption of ASU No.
+Added: Non-Performing Assets and Individually Evaluated Loans
(Dollars in thousands)
19 unchanged sentences
Allowance for credit losses to total non-performing assets
−Removed: Non-Performing Assets and Impaired Loans (Pre-Adoption of ASU No.
−Removed: (Dollars in thousands)
−Removed: Non-performing assets
−Removed: Non-accrual loans
−Removed: Foreclosed assets held for resale
−Removed: Loans past-due 90 days or more and still accruing interest
−Removed: Total non-performing assets
−Removed: Impaired loans
−Removed: Non-accrual loans
−Removed: Accruing TDRs
−Removed: Total impaired loans
−Removed: Allocated allowance for credit losses
−Removed: Net investment in impaired loans
−Removed: Impaired loans with a valuation allowance
−Removed: Impaired loans without a valuation allowance
−Removed: Total impaired loans
−Removed: Allocated valuation allowance as a percent of impaired loans
−Removed: Impaired loans to total loans
−Removed: Non-performing assets to total loans
−Removed: Non-performing assets to total assets
−Removed: Allowance for credit losses to impaired loans
−Removed: Allowance for credit losses to total non-performing assets
−Removed: Real estate mortgages comprised 89.1% of the loan portfolio as of December 31, 2023 and 2022, respectively.
+Added: Real estate mortgages comprised 89.8% of the loan portfolio as of December 31, 2024 and 89.1% as of December 31 2023, respectively.
Real estate mortgages consist of both loans secured by residential and commercial real estate.
10 unchanged sentences
The Corporation regularly reviews competing financial institutions’ interest rates, especially when establishing interest rates on certificates of deposit.
−Removed: Deposits decreased by $13,060,000, or 1.3% for the year ending December 31, 2023 as compared to December 31, 2022.
−Removed: The decrease in deposits in 2023 can be attributed to decreases in non-interest bearing demand, interest bearing demand and savings accounts while time deposits increased due to higher rate CD offerings in 2023.
−Removed: The decrease in deposits was mainly the result of a $60,884,000 decrease in municipal deposits offset by an increase of $40,250,000 in brokered CDs, along with other normal fluctuations in deposits during 2023.
+Added: Deposits increased by $65,441,000, or 6.7% for the year ending December 31, 2024 as compared to December 31, 2023.
+Added: The increase in deposits in 2024 can be attributed to increases in non-interest bearing demand accounts, interest bearing demand accounts and time deposits, while savings accounts decreased.
+Added: The decrease in savings deposits in 2024 can be attributed to many customers moving money into higher rate CD offerings.
The following schedule reflects the remaining maturities of time deposits and other time open deposits of $100,000 or more at December 31, 2024.
6 unchanged sentences
Total borrowings were $240,426,000 as of December 31, 2024, compared to $275,468,000 at December 31, 2023.
−Removed: During 2023, long-term borrowings increased to $122,000,000 from $25,000,000.
−Removed: The increase in long-term borrowings in 2023 was the result of increased securities and loans and decreased deposits in 2023.
−Removed: Short-term debt increased from $153,418,000 in 2022 to $153,468,000 as of December 31, 2023.
−Removed: The small increase was the result of the Corporation taking more long-term debt in 2023 to offset increased securities and loans and decreased deposits in 2023.
+Added: During 2024, long-term borrowings decreased to $106,000,000 from $122,000,000.
+Added: The decrease in long-term borrowings in 2024 was mainly the result of increased deposits in 2024.
+Added: Short-term debt decreased from $153,468,000 in 2023 to $134,426,000 as of December 31, 2024.
+Added: The decrease was mainly the result of increased deposits in 2024.
Short-term borrowings are comprised of federal funds purchased, securities sold under agreements to repurchase, Federal Discount Window and short-term borrowings from FHLB.
13 unchanged sentences
Federal Home Loan Bank
−Removed: The rapid increase in interest rates has created a significant earnings challenge for the industry.
−Removed: As liability costs have outpaced asset yield growth, negative earnings is a plausible scenario shown in many models if no action is taken.
−Removed: Due to the stress this puts on the Corporation, an action plan strategy was put into effect in 2023 that includes disciplined loan pricing, interest rate swaps and a leverage of the balance sheet consisting of securities and brokered CD purchases and long-term borrowings.
−Removed: This action plan strategy was the key part of the Corporation’s decision to utilize more targeted long-term borrowings over high-rate short-term borrowings and the decision to take on more brokered CDs in 2023.
+Added: The rapid increase in interest rates throughout 2022 and 2023 created a significant earnings challenge for the industry.
+Added: As liability costs outpaced asset yield growth, negative earnings was a plausible scenario shown in many models if no action was taken.
+Added: Due to the stress this placed on the Corporation, an action plan strategy was put into effect in 2023 that included disciplined loan pricing, fair value and interest rate swaps/hedges and a leverage of the balance sheet consisting of securities and brokered CD purchases and long-term borrowings.
+Added: This action plan strategy
+Added: was the key part of the Corporation’s decision to utilize targeted long-term borrowings over high-rate short-term borrowings and the decision to take on more brokered CDs in 2023.
+Added: As a continuation of this strategy, in 2024, the Corporation purchased additional brokered CDs and entered into an additional hedge agreement against a specified pool of the Bank’s loans.
On December 10, 2020, the Corporation issued $25,000,000 aggregate principal amount of Subordinated Notes due December 31, 2030 (the “2020 Notes”).
3 unchanged sentences
Normal increases in capital are generated by net income, less cash dividends paid out.
−Removed: Also, the net unrealized gains or losses on debt securities available-for-sale and derivatives, net of taxes, referred to as accumulated other comprehensive (loss), may increase or decrease total equity capital.
−Removed: The total net increase in capital was $1,229,000 in 2023 after a decrease of $28,169,000 in 2022.
−Removed: The increase in equity capital in 2023 was due to the issuance of new shares through the Corporation’s Dividend Reinvestment Program (“DRIP”) amounting to $1,768,000 offset by a decrease of $452,000 in retained earnings.
−Removed: There was a one-time cumulative effect adjustment that increased retained earnings by $768,000 upon the adoption of ASU No.
+Added: Also, the net unrealized gains or losses on debt securities available-for-sale and derivatives, net of taxes, referred to as accumulated other comprehensive (loss) income, may increase or decrease total equity capital.
+Added: The total net decrease in capital was $14,833,000 in 2024 after an increase of $1,229,000 in 2023.
+Added: The decrease in equity capital in 2024 was due to the impairment of Goodwill amounting to $19,133,000 offset by issuance of new shares through the Corporation’s Dividend Reinvestment Program (“DRIP”) amounting to $1,264,000 and an improvement in accumulated other comprehensive (loss) income amounting to $4,015,000.
The Corporation had 231,611 shares of common stock as of December 31, 2024 and December 31, 2023, at a cost of $5,709,000, as treasury stock, authorized and issued but not outstanding.
32 unchanged sentences
● Payments received on loans and mortgage-backed and asset-backed securities;
−Removed: ● Overnight correspondent bank borrowings on various credit lines, notes, etc., with various levels of capacity;
+Added: ● Correspondent bank borrowings on various overnight credit lines, notes, etc., with various levels of capacity;
● Securities sold under agreements to repurchase;
11 unchanged sentences
Net cash flows provided by operating activities were $8,168,000 and $5,905,000 as of December 31, 2024 and December 31, 2023, respectively.
−Removed: Net income amounted to $5,560,000 for the year ended December 31, 2023 and $14,024,000 for the year ended December 31, 2022.
−Removed: The (credit) provision for credit losses resulted in a credit balance of $217,000 for the year ended December 31, 2023 and a credit balance of $264,000 for the year ended December 31, 2022.
+Added: Net loss amounted to $13,203,000 for the year ended December 31, 2024 compared to net income of $5,560,000 for the year ended December 31, 2023.
+Added: The provision for credit losses resulted in a balance of $1,640,000 for the year ended December 31, 2024 compared to a credit balance of $217,000 for the year ended December 31, 2023.
+Added: Goodwill impairment amounted to $19,133,000 at December 31, 2024 and $0 at December 31, 2023.
During the years ended December 31, 2024 and 2023, net premium amortization on securities amounted to $273,000 and $1,519,000, respectively.
−Removed: Net gains on sales of mortgage loans were $65,000 for the year ended December 31, 2023, compared to net losses of $7,000 for the year ended December 31, 2022.
+Added: Net gains on sales of mortgage loans were $80,000 for the year ended December
+Added: 31, 2024, compared to $65,000 for the year ended December 31, 2023.
Originations of mortgage loans originated for resale exceeded proceeds (including gains) from sales of mortgage loans originated for resale by $446,000 and $77,000 for the years ended December 31, 2024 and 2023, respectively.
−Removed: Net securities losses were $118,000 for the year ended December 31, 2023, compared to $846,000 for the year ended December 31, 2022.
−Removed: Accrued interest payable increased by $2,260,000 during the year ended December 31, 2023 and $312,000 during the year ended December 31, 2022.
−Removed: Other assets decreased by $661,000 and increased by $342,000 during the years ended December 31, 2023 and 2022, respectively.
−Removed: Other liabilities decreased by $5,429,000 during the year ended December 31, 2023, compared to an increase of $429,000 during the year ended December 31, 2022.
+Added: Net securities gains were $105,000 for the year ended December 31, 2024, compared to net securities losses of $118,000 for the year ended December 31, 2023.
+Added: Accrued interest receivable decreased by $208,000 during the year ended December 31, 2024 and increased by $810,000 during the year ended December 31, 2023.
+Added: Accrued interest payable decreased by $671,000 during the year ended December 31, 2024 and increased by $2,260,000 during the year ended December 31, 2023.
+Added: Other assets increased by $812,000 during the year ended December 31, 2024 and decreased by $661,000 during the year ended December 31, 2023.
+Added: Other liabilities decreased by $20,000 and $5,429,000 during the years ended December 31, 2024 and 2023, respectively.
+Added: Amortization of investment in low-income housing partnerships amounted to $819,000 for the year ended December 31, 2024, compared to $231,000 for the year ended December 31, 2023.
Investing activities used cash of $33,158,000 and $76,833,000 during the years ended December 31, 2024 and 2023, respectively.
−Removed: Net activity in the available-for-sale securities portfolio (including proceeds from sale, maturities, and redemptions, net against purchases) used cash of $16,533,000 during the year ended December 31, 2023 and provided cash of $19,295,000 during the year ended December 31, 2022.
−Removed: Net change in restricted investment in bank stocks used cash of $3,749,000 during the year ended December 31, 2023 and $5,217,000 during the year ended December 31, 2022.
+Added: Net activity in the available-for-sale securities portfolio (including proceeds from sale, maturities, and redemptions, net against purchases) provided cash of $4,419,000 during the year ended December 31, 2024 and used cash of $16,533,000 during the year ended December 31, 2023.
+Added: Net change in restricted investment in bank stocks provided cash of $1,901,000 during the year ended December 31, 2024 and used cash of $3,749,000 during the year ended December 31, 2023.
Net cash used to originate loans amounted to $37,740,000 and $52,480,000 during the years ended December 31, 2024 and 2023, respectively.
2 unchanged sentences
Financing activities provided cash of $25,231,000 and $77,203,000 during the years ended December 31, 2024 and 2023, respectively.
−Removed: Deposits decreased by $13,060,000 during the year ended December 31, 2023 and $84,470,000 during the year ended December 31, 2022.
−Removed: Short-term borrowings increased by $50,000 during the year ended December 31, 2023 and increased by $126,041,000 during the year ended December 31, 2022.
+Added: Deposits increased by $65,441,000 during the year ended December 31, 2024 and decreased by $13,060,000 during the year ended December 31, 2023.
+Added: Short-term borrowings decreased by $19,042,000 during the year ended December 31, 2024 and increased by $50,000 during the year ended December 31, 2023.
Proceeds from long-term borrowings amounted to $4,000,000 for the year ended December 31, 2024, compared to $100,000,000 for the year ended December 31, 2023.
7 unchanged sentences
Other than the trends of continued competitive pressures and volatile interest rates, there are no known demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, liquidity increasing or decreasing in any material way.
−Removed: Given our financial
−Removed: strength, we expect to be able to maintain adequate liquidity as we manage through the current environment, utilizing current funding options and possibly utilizing new options.
+Added: Given our financial strength, we expect to be able to maintain adequate liquidity as we manage through the current environment, utilizing current funding options and possibly utilizing new options.
Table 16 represents scheduled maturities of the Corporation’s contractual obligations by time remaining until maturity as of December 31, 2024.
27 unchanged sentences
Several techniques are used for measuring interest rate sensitivity.
−Removed: Interest rate risk arises from the mismatches in the repricing of assets and liabilities within a
−Removed: given time period, referred to as a rate sensitivity gap.
+Added: Interest rate risk arises from the mismatches in the repricing of assets and liabilities within a given time period, referred to as a rate sensitivity gap.
If more assets than liabilities mature or reprice within the time frame, the Corporation is asset sensitive.
31 unchanged sentences
The earnings simulation model projects net interest income would decrease 2.58%, 4.82% and 6.69% in the 100, 200 and 300 basis point increasing rate scenarios presented.
−Removed: In addition, the earnings simulation model projects net interest income would increase 0.62%, 2.97% and 4.99% in the 100, 200 and 300 basis point decreasing rate scenarios presented, respectively.
+Added: In addition, the earnings simulation model projects net interest income would increase 0.77% in the 100 basis point decreasing rate scenario presented and decrease 1.44% and 3.26% in the 200 and 300 basis point decreasing rate scenarios presented, respectively.
All of these forecasts are within the Corporation’s one year policy guidelines.
12 unchanged sentences
Table 18 — Effect of Change in Interest Rates
+Added: December 31, 2024:
Projected Change
22 unchanged sentences
Net interest income
−Removed: Provision (credit) for credit losses
+Added: Provision for credit losses
Non-interest income
Non-interest expense
−Removed: Income before income tax expense
−Removed: Income tax expense
−Removed: Basic and diluted earnings per share
+Added: (Loss) Income before income tax (benefit) expense
+Added: Income tax (benefit) expense
+Added: Net (loss) income
+Added: Basic and diluted (losses) earnings per share
(Dollars in thousands, except per share data)
3 unchanged sentences
Net interest income
−Removed: Provision (credit) for loan losses
+Added: Provision (credit) for credit losses
Non-interest income
29 unchanged sentences
Additionally, a goodwill impairment evaluation is performed on an interim basis when events or circumstances indicate impairment potentially exists.
+Added: Based on an interim goodwill impairment test completed during the first quarter of 2024 for which a decrease in the Corporation’s stock price was a triggering event, it was determined, more likely than not, that the fair value of the Corporation’s goodwill was less than it’s carrying value.
+Added: Based on the results of the impairment test, the Corporation recorded a full goodwill impairment charge of $19,133,000 effective March 31, 2024.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.