2023 ANNUAL REPORT
CONTENTS
Letter to the Shareholders .................................................... 3
Financial Highlights .............................................................. 10
Investor Information .............................................................. 11
Independent Auditor’s Report ........................................... 12
Financial Statements ............................................................ 14
Notes to Consolidated Financial Statements .................. 19
Board of Directors and Officers ........................................ 62
Kish Bank's
Pleasant Valley
Boulevard branch
in Altoona.
Front Cover (Top Row): Cory and Gene Stocker;
Thomas Yoder; Emily and David Miller
Front Cover (Bottom Row): Clark Adelman;
Matt Patterson and Megan Lantz
From Watershed to Bellwether:
Banking That Transforms
In the world of banking and financial services, language is usually precise and analytical. For Kish
Bancorp over the past decade, the use of banking terminology has largely failed to capture the full
magnitude of our progress. While we were, and remain, proud of the extraordinary expansion in
total assets, earnings per share, return on shareholders’ equity, market share gains, and return on
assets we achieved, it remained a struggle with each annual report to capture the true essence of
our accomplishments for the year just passed. Was it just an exceptional moment in time reflecting a
disciplined focus on performance? Or was it a watershed moment, with Kish’s results representing the
culmination of years of investment in our team and infrastructure?
Ultimately, both were true. As we reflect on the
and new metrics for service quality. Metrics that
significant gains and incredible progress of recent
include response times, products developed, team
years, and the watershed period they represent
knowledge, customer satisfaction, digital adoption,
for Kish, it becomes clear that this was indeed a
and financial performance that supports and drives
transformative period in Kish’s history. It is one
innovation.
that marks a critical turning point in the company’s
evolution that will have a profound impact on the
years that follow. Instead of speaking of Kish’s
performance as another outstanding year in a
succession of compelling annual results, we can now
speak of 2023 as the year in which Kish emerged
with a new, robust, and powerful model for the
future of community banking. One in which strong
and industry-leading financial performance remains
a top priority, but also where Kish’s strategic vision
for the future has been transformed. 2023 will stand
as a bellwether year for Kish Bancorp, reflecting a
dramatic and permanent elevation in the capacity
of the company to operate as a community banking
powerhouse going forward. As we enter 2024, we
have reached the point where we can say that Kish is
truly banking transformed.
What are the indicators that 2023 will stand as a
truly bellwether year? The Kish Bank branch of the
future is fully emerging in 2024 in State College,
Altoona, Huntingdon, and Mifflintown. Kish Bank’s
new ATM + Live Banker experience will soon be
rolled out through Advanced ITMs (Interactive Teller
Machines) throughout Kish’s five-county PA market.
This advanced technology will be especially critical
to maintaining service
levels to smaller rural
communities as well
as busy population
centers. Our
new 38,000
square foot
Kish Innovation
Center in
The highlights of our accomplishments and financial
Reedsville now
results for 2023 affirm that the transformation of the
represents the
Kish franchise has been validated not only by the
nerve center for
permanent high levels of traditional performance
this innovative
metrics, but also by Kish’s capacity to break new
approach to
ground in terms of digital delivery, speed to market,
banking in a digital
sustained growth in market share, team capacity,
world infused with
industry leadership, and expanding revenues. We
a commitment to
are doing this through the implementation of new
a deeply personal
digital solutions infused with personal attention
experience.
William P. Hayes
Executive Chairman
Gregory T. Hayes
President and
Chief Executive Officer
2
Table of Contents
Letter to the Shareholders
3
“ We have always worked
to forge relationships with
like-minded businesses that
align with our mission to
enhance our community.
Community involvement
is one of our greatest
passions. Our relationship
with Kish has provided
opportunities to give
back, like their Giv Local
Community Gifting
Program, which will allow
local businesses like ours to
help our communities well
into the future.”
Cory Stocker
VP & Partner, Stocker Chevrolet
Pictured with father Gene Stocker,
President & Owner
Stocker Chevrolet
is in its 63rd year
of business and
third generation
of management
under the Stocker
family. In addition
to maintaining a
family business
environment, taking
great care of their
employees, and
always focusing
on the customer
experience, Cory
Stocker ranks their
support of and from
the community as
one of the keys to
their long-term
success.
None of this would be possible without an overriding
dedication to the banking fundamentals of credit
the acquisition of exceptional new teams in
both markets. Additionally, our commercial
quality, relationship profitability, product development,
lending team in Ohio sustained its robust
customer satisfaction, team development, and sustained
commercial lending production—in particular,
performance for shareholders. That combines with
growing contributions from our non-bank units and our
loans to fund multi-family housing projects
throughout the upper Midwest and eastern
optimism for their futures as well.
seaboard.
So, as we review the extraordinary milestones and
outcomes achieved in 2023, and as you review the
financial results contained in these pages, please
understand that cumulatively they represent a
validation of a vision for the future of Kish that is not
only sustainable but truly industry-leading. It is a picture
of Kish Bancorp that validates 2023 as a bellwether
year. Here are the highlights:
CEO SUCCESSION TO GREG HAYES
During 2023, we celebrated a successful transition
in leadership, with Greg Hayes assuming the role
of President and CEO. In his 17 years with Kish,
his strategic vision and focus on execution have
contributed significantly to the bank’s growth and
success. After 40 years as Kish’s CEO, I assumed
the role of Executive Chairman on July 1, 2023. In
that capacity, my objective has been to remain a
resource to Greg and to our dynamic leadership team
while maintaining a strong focus on performance for
shareholders.
ASSET GROWTH SURPASSES $1.5 BILLION
Kish Bancorp achieved a new milestone in the recent
dramatic expansion of total assets, crossing the $1.5
billion mark in total assets, nearly doubling in just over
five years. This high-water mark reflects the bank’s
priority of successfully pursuing profitable customer
acquisition and market share expansion coupled
with advanced capital, balance sheet, and financial
management strategies.
MARKET EXPANSION
Kish successfully expanded its market footprint into
Blair and Juniata Counties in central Pennsylvania.
Together, this expansion opens markets that represent
the opportunity to access over $4 billion in new
deposits. We have positioned ourselves for success with
NEW STOCK ISSUANCE
The bank issued $8 million in new stock to
local investors to fund sustained growth.
This infusion of capital, which will continue
into 2024, demonstrates both confidence
and optimism regarding Kish Bancorp’s
future. Combined with $11 million in retained
earnings and an improving AOCI valuation,
Kish Bancorp’s capital position expanded by
$20.8 million in 2023, capable of supporting
over $240 million in additional earning
assets, much of which is already in the central
Pennsylvania and northeastern Ohio pipeline.
Notably, 2023 represented the eighth
consecutive year of increased dividends for
Kish shareholders. Kish Bancorp shares are
traded on the OTCQX exchange under the
ticker symbol KISB.
SUSTAINED COMMUNITY INVESTMENT
Augmented by thousands of hours of
volunteerism by Kish team members,
Kish’s financial support of local charities
and nonprofit organizations continued to
expand at a double-digit rate. We have been
especially pleased with the success of our
flagship fundraising effort. For the second
year running, the organization-wide Kish for
the Cure campaign raised $75,000 to provide
financial support for local cancer victims and
their families who are struggling financially as
they fight this horrific disease. Additionally,
we have identified several key new charitable
opportunities in Blair and Juniata Counties.
Kish’s innovative Giv Local merchant services
program has allowed local businesses to
direct a portion of their credit card charges to
local charities of their choosing.
American Eagle Paper Mills serves as
the lifeblood of the town of Tyrone.
The mill operated for nearly 120 years
until it unexpectedly closed in 2001,
devastating local families. AEPM reopened
in 2003 with a vision of producing paper
sustainably with recycled fiber. In 2016,
they turned to Kish to finance a highly
efficient natural gas boiler that was critical
to their mission. The new energy source
has helped position AEPM for future
sustainable growth, and the mill now
employs 190 people, up over 10% from the
startup in 2003.
“ Kish provided the funding for
us to build our new warehouse
and install our gas-fired boiler.
This helped our company grow
and helped keep jobs in Tyrone.
Kish has been a wonderful
partner in our success.”
Clark Adelman
VP of Finance & Administration,
American Eagle Paper Mills
4
Letter to the Shareholders
Letter to the Shareholders
5
SUPPORT FOR EDUCATION
A pillar of Kish’s core values is support for the education and
health of our region’s young people. Emblematic of that
passion has been the broad participation by our team
in the American Bankers Association’s Teach Children
to Save program, which in 2023 reached over 2,500
elementary students across our five-county area.
Kish also supports Juniata College’s Science in
Motion program that travels to high schools across
central PA. Additionally, we dramatically elevated
Kish’s college scholarships to deserving high school
students who need financial support to pursue their
continuing education.
FOSTERING ECONOMIC DEVELOPMENT
Through community development loans,
multi-family housing development loans,
municipality loans, services to small
businesses, and active leadership of
Kish bankers in economic development
organizations across the region, Kish’s focus
is to stimulate economic growth, support job
creation, and improve infrastructure.
CONCLUSION
There is much more I could add in documenting Kish’s bellwether
year in 2023, and I urge you to digest the financial information
in the ensuing pages. However, I want to return to the theme of
Banking That Transforms, which President and CEO Greg Hayes
will address in a discussion of Kish Bank’s recent nominations for
several awards in innovation excellence, including Celent's Model
Bank Award and Banking Tech USA’s Best Community Bank
Modernization Award.
I will close by thanking you for your investment in Kish Bancorp.
As shareholders, you support a bank that has developed as a
regional banking power—one that is transforming how banking
and financial services are delivered. As always, we welcome any
questions you may have regarding your investment.
Sincerely,
William P. Hayes
Executive Chairman
Founded in 2008, Penn State
Construction is a family owned and
operated business in Mifflin County.
The growing company takes pride in
the client experience and has built a
powerful reputation in the industry.
The majority of their work comes from
repeat customers and word of mouth
among satisfied clients. Integrity and
focus on excellence are the foundation
from which success has been built.
“ As a growing business, we
needed a bank that could grow
with us. We were introduced to
Kish and found a professional,
eager team that was interested
in collaborating with us on
our future. The working
relationships we’ve developed
with Kish, and the financial
support they’ve provided, have
accelerated our growth.”
David Miller
President, Penn State Construction
Pictured with wife Emily Miller, Secretary
The "Your Kish, Your Way" Promise
A LETTER FROM GREG HAYES
As a son, a Kish team member, and now as the new
CEO and President of Kish Bank, I have watched
We call it “Your Kish, Your Way.” It is Kish Bank’s
human-enabled digital experience, and it comes with
and engaged with my father, Bill Hayes, as Kish
a promise to our customers that technology will
Bank grew from a two-branch community bank in
never replace personal relationships—it will enhance
the Kishacoquillas Valley with $10 million in total
them. Within every Kish digital tool or service, our
assets to a highly sophisticated regional community
customers can easily reach a Kish representative any
bank, serving five counties and beyond, with
time they want or need, allowing us to accommodate
total assets of $1.5 billion. That growth has come
customers who prefer a fully digital relationship, a
from an unwavering commitment to providing
more traditional experience, and all those in between.
personalized attention with local, knowledgeable,
caring, and responsive financial professionals who
deliver customized financial solutions to people
and businesses that want to build a strong financial
future. Over the past 45 years, Kish has consistently
differentiated itself through relationships and
innovation.
In 2015, we set out to transform Kish Bank’s
community banking approach through the utilization
of innovative technology, and with a commitment
to maintaining, at our core, the most critical element
of our success: our unwavering focus on fulfilling
our clients’ financial needs. Over the past decade,
the banking industry has seen the most rapid period
of technological change ever experienced. Banking
technologies have been amplified by FinTech
companies providing banking services and cloud-
based technology solutions, and challenged by
increased cyber threats and fraud, the evolution of
The result is a community bank that takes great pride
in all aspects of its customer service experience and
its ability to remain connected with clients, while at
the same time understanding that one of the greatest
challenges to remaining relevant is our ability to
innovate human interaction with convenience, speed,
experience, and technology solutions.
While this strategic focus has enabled Kish to
grow tremendously over the past five years, more
importantly, it has created the capacity for us to
succeed long-term. Our vision is to meet every
customer where they are, regardless of their preferred
banking channel or product and where/how they
use it. Our progress has been marked by significant
achievements that include:
• A new, more integrated and feature-rich Digital
Banking solution that has the same omnichannel
look and feel across all devices. Its features
cryptocurrencies, and the pandemic’s impact on how
include instant person-to-person transfer of
people work. And, as we face the massive shift that
funds; the ability to manage debit card alerts
will come with Artificial Intelligence, we know that the
and limits and to turn cards on and off; the
pace of innovation is only going to increase.
aggregation of external bank account and credit
That is why it is more critical than ever that Kish
Bank doubles down on its focus not just on human
relationships and interactions, but those that are
supported by technology innovation. Unlike other
institutions that look to replace human interactions
with technology, Kish is enhancing client access
to our bankers and services with technology and
innovation.
card transactions into one holistic view with
included budgeting tools; credit monitoring and
coaching; and the ability to easily live chat with
our dedicated Client Solutions Center team.
• Expanded hours of support from our Client
Solutions Center (7 a.m. to 7 p.m.) via our
enhanced call center phone system, in addition to
live chat for our website and Digital Banking.
6
Letter to the Shareholders
Letter to the Shareholders
7
• Increased access to our banking team
with the opening of three new branches
(and current construction of a fourth) as
we continue to expand into Juniata and
Blair Counties. Clients can also go online
to easily schedule appointments with our
branch teams through our completely
redesigned website.
• New online account opening and loan
application solutions that allow us to
provide more convenience to our clients
while maintaining the connection to our
bankers.
• Contactless purchase and mobile wallet
capabilities for the Kish Debit Card, which
can now be instantly printed and issued
to clients at any of our financial centers.
• ATM + Live Banker, the key element of
our Branch of the Future model currently
in its live pilot phase. This video-based
ATM capability provides full-service teller
transactions—from check cashing to loan
payments—across expanded hours for
more convenience, all while maintaining
live, local, and caring human engagement.
Equally important to “Your Kish, Your Way”
are the improvements we have made to the
employee experience that enable our team
to better support customers. In the last few
years alone, we have:
• Opened our 38,000-square foot Kish
Innovation Center on our Reedsville
campus, which provides an elevated
focus on team member education
and collaboration through dedicated
innovative space, housing our Client
Solutions Center as well as our new
Employee Solutions Center dedicated to
supporting front-line employees.
• Migrated to a highly secure, cloud-
hosted, virtual desktop environment
and implemented Microsoft 365 office
productivity tools in support of our
team’s work-life integration, giving
our team the capacity to work more
efficiently and provide solutions from
anywhere, at any time.
• Positioned ourselves for the future
by integrating a new core banking
processor, state-of-the-art technology
stack, and network infrastructure that
have been built to provide the highest
levels of information security and data
management, supporting technological
advancements that will enable Kish to
grow with scale and efficiency.
These critical elements of our strategy
represent the ongoing transformation
occurring at Kish. The “Your Kish, Your
Way” promise never stops. It’s an embedded
philosophy and a promise to which we are
committed.
Finally, we recognize that the most
important proof of success will always
come directly from those we serve—those
who share the stories of our team’s focus
on making their lives better. Clients, like
those highlighted in this annual report, who
consistently affirm the importance of our
people and our support to their financial
well-being.
Sincerely,
Gregory T. Hayes
President and Chief Executive Officer
Thomas Yoder, longtime Kish customer and
community leader, is entering his third year as
Mayor of Huntingdon. Tom retired from a lifelong
career as an educator to focus on the revitalization
and economic development of the Huntingdon
Borough. Tom served on the Borough Council for 12
years and understands the kind of leadership and
commitment a community needs to thrive.
“ As the mayor of the Borough of
Huntingdon, community is very
important to me. I want people to
be proud of their town and enjoy
living and working here. I want to
be affiliated with organizations that
make a difference in their communities
and our citizens’ lives. From all my
experiences with Kish, I know they are
here to serve.”
Thomas Yoder
Mayor, Borough of Huntingdon
Matt Patterson is
a franchisee of 21
Jersey Mike’s stores
in Central PA. He and
his wife, Kristie (not
pictured), opened
their first store
in 2012 and have
grown their business
exponentially in the
last 12 years. Matt
attributes part of
their rapid growth
to Kish’s ability to
respond to funding
needs, and the
relationships he
has built with his
banking, insurance,
and benefits teams
at Kish.
“ My Kish team understands
my business and has
my back. I call on them
and they take action
and personal care, as if
they have a stake in my
business. The relationships
I’ve developed with Kish
have helped to propel our
business at a speed that
other banks could not
keep up with. We have
grown from 30 to over
500 employees with Kish
by our side.”
Matt Patterson
Franchisee, Jersey Mike's Subs
Pictured with Megan Lantz, Director of
Operations
8
Letter to the Shareholders
Letter to the Shareholders
9
FOR THE YEAR
Net Income
Net Income Before Taxes
Total Dividends Declared
2023
$ 13,499,712
2022
$ 12,860,301
2021
$ 9,881,340
2020
$ 8,039,287
2019
$ 7,006,914
16,154,155
3,883,501
15,283,348
11,232,900
9,278,885
7,903,452
3,448,214
2,988,353
2,804,384
2,585,444
Grow with Us
Add to Your Investment in Kish Bancorp, Inc. (KISB)
$ 1,542,776
$ 1,295,448
$ 1,232,779
$ 1,106,609
$ 918,309
1,225,317
1,179,069
92,765
7,545
44
0.94%
13.02%
28.77%
103.92%
6.50%
10.70%
0.61%
0.00%
1,013,170
1,037,120
71,972
10,335
225
868,153
1,002,645
77,100
10,560
(9)
1.02%
14.95%
26.81%
97.69%
6.35%
11.57%
1.01%
0.02%
0.85%
14.08%
30.24%
86.59%
7.11%
12.78%
1.20%
0.00%
755,960
877,796
69,962
9,771
(4)
0.79%
12.90%
34.88%
86.12%
7.21%
12.32%
1.28%
0.00%
679,519
710,226
64,352
7,499
(467)
0.79%
11.56%
36.90%
95.68%
7.82%
11.86%
1.09%
(0.07%)
AT YEAR END (IN $000s)
Total Assets
Total Loans (Net)
Total Deposits
Stockholders’ Equity
Allowance for Loan Credit Losses
Net Loan Losses (Recoveries)
RATIO ANALYSIS
Return on Average Assets*
Return on Average Equity*
Dividend Declared/Net Income
Loans/Deposits
Primary Capital/Total Assets
Total Capital/Risk Weighted Assets
Allowance for Credit Losses/Loans
Net Loan Losses to Total Loans (Net)
PER SHARE DATA
Basic Earnings
Fully Diluted Earnings
Dividends Paid
Equity (Book Value)
Equity Plus Allowance for Credit Losses
$ 5.22
$ 5.02
$ 3.88 $ 3.20
$ 2.80
INVESTOR RELATIONS
5.13
1.46
35.28
38.15
4.90
1.31
27.41
31.35
3.76
1.14
29.39
33.42
3.12
1.08
26.93
30.69
2.70
1.00
24.90
27.80
Average Shares Outstanding (#)
2,629,167
2,625,612
2,626,931
2,597,978
2,499,536
Net Income (in millions)
Earnings & Dividends (per share)
Stock Valuation (per share)
The 2023 Annual Report includes information that chronicles the growth of your corporation. That
growth is the result of the Kish team’s execution of carefully developed strategies to grow your
business. Shareholders may purchase additional shares through the open market. KISB is also
listed on the OTCQX exchange and trades with regular frequency through any brokerage account.
Shareholders who hold their shares with our transfer agent, Computershare, may participate in the
Kish Bancorp Dividend Reinvestment Plan. Please contact us if we may be of assistance.
INQUIRIES
MARKET MAKERS
Questions or requests for investment information
Janney Montgomery Scott, LLC
Contact: Eugene Bodo
215-665-6566
1717 Market Street
Philadelphia, PA 19103
Raymond James and Associates, Inc.
Contact: Anthony Lanfranca
312-655-2961
222 South Riverside Plaza, 7th Floor
Chicago, IL 60606
may be directed to:
KISBinfo@kishbank.com
814-325-7252
Contact: Amanda Dutrow
Additional information about Kish Bancorp, including
quarterly and annual financial reports, stock and
dividend information, and news, is available at:
ir.kishbancorp.com and otcmarkets.com/stock/KISB
STOCK LISTING
Kish Bancorp, Inc. stock is traded on the OTCQX
market under the stock ticker symbol "KISB."
COMPANY INFORMATION
Corporate Headquarters:
4255 East Main Street
P.O. Box 917
Belleville, PA 17004
Principal Executive Offices:
2610 Green Tech Drive
State College, PA 16803
* Due to fluctuations in the mark to market valuation for investment securities, these are not included in the totals for average assets and average equity.
10
Financial Highlights
Investor Information
11
Board of Directors and Stockholders
Kish Bancorp, Inc.
OPINION
and appropriate to provide a basis for our audit
material misstatement when it exists. The risk of not
OTHER INFORMATION INCLUDED IN THE
We have audited the accompanying consolidated
financial statements of Kish Bancorp, Inc. and its
subsidiaries (the “Company”), which comprise the
consolidated balance sheet as of December 31, 2023
and 2022; the related consolidated statements of
income, comprehensive income (loss), changes in
stockholders’ equity, and cash flows for the years
then ended; and the related notes to the consolidated
financial statements (collectively, the “financial
statements”).
opinion.
CHANGE IN ACCOUNTING PRINCIPLE
As discussed in Note 1 to the financial statements,
the Company changed its method of accounting for
credit losses effective January 1, 2023, due to the
adoption of Accounting Standards Codification (ASC)
Topic 326, Financial Instruments – Credit Losses. Our
opinion is not modified with respect to this matter.
RESPONSIBILITIES OF MANAGEMENT FOR
In our opinion, the accompanying financial statements
THE FINANCIAL STATEMENTS
present fairly, in all material respects, the financial
position of the Company as of December 31, 2023
and 2022, and the results of its operations and its
cash flows for the years then ended, in accordance
with accounting principles generally accepted in the
United States of America.
We have also audited, in accordance with auditing
standards generally accepted in the United States of
America (GAAS), the Company’s internal control over
financial reporting as of December 31, 2023, based
on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013,
and our report dated March 13, 2024, expressed
an unmodified opinion on the effectiveness of the
Company’s internal control over financial reporting.
Management is responsible for the preparation
and fair presentation of the financial statements in
accordance with accounting principles generally
accepted in the United States of America, and for
the design, implementation, and maintenance of
internal control relevant to the preparation and fair
presentation of financial statements that are free
from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management
is required to evaluate whether there are conditions
or events, considered in the aggregate, that raise
substantial doubt about the Company’s ability to
continue as a going concern for a period of within one
year after the date the financial statements are issued
or available to be issued.
BASIS FOR OPINION
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
We conducted our audits in accordance with GAAS.
OF THE FINANCIAL STATEMENTS
Our responsibilities under those standards are
further described in the “Auditor’s Responsibilities
for the Audit of the Financial Statements” section
of our report. We are required to be independent
of the Company and to meet our other ethical
responsibilities, in accordance with the relevant
ethical requirements relating to our audits. We believe
that the audit evidence we have obtained is sufficient
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
level of assurance but is not absolute assurance and,
therefore, is not a guarantee that an audit conducted
in accordance with GAAS will always detect a
detecting a material misstatement resulting from
fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control. Misstatements are considered
material if there is a substantial likelihood that,
individually or in the aggregate, they would influence
the judgment made by a reasonable user based on
the financial statements.
In performing an audit in accordance with GAAS, we:
• Exercise professional judgment and maintain
professional skepticism throughout the audit.
ANNUAL REPORT
Management is responsible for the other information
included in the annual report. The other information
comprises the Chairman’s Letter to the Stockholders
and Financial Highlights but does not include the
financial statements and our auditor's report thereon.
Our opinion on the financial statements does not
cover the other information, and we do not express
an opinion or any form of assurance thereon.
In connection with our audit of the financial
statements, our responsibility is to read the other
information and consider whether a material
• Identify and assess the risks of material
inconsistency exists between the other information
misstatement of the financial statements, whether
and the financial statements, or whether the other
due to fraud or error, and design and perform
information otherwise appears to be materially
audit procedures responsive to those risks. Such
misstated. If, based on the work performed, we
procedures include examining, on a test basis,
conclude that an uncorrected material misstatement
evidence regarding the amounts and disclosures in
of the other information exists, we are required to
the financial statements.
describe it in our report.
• Obtain an understanding of internal control
relevant to the audit in order to design
audit procedures that are appropriate in the
circumstances.
• Evaluate the appropriateness of accounting
policies used and the reasonableness of significant
accounting estimates made by management, as
well as evaluate the overall presentation of the
financial statements.
• Conclude whether, in our judgment, there are
Cranberry Township, Pennsylvania
March 14, 2024
S.R. Snodgrass, P.C.
2009 Mackenzie Way, Suite 340
Cranberry Township, PA 16066
conditions or events, considered in the aggregate,
724-934-0344
that raise substantial doubt about the Company’s
ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged
with governance regarding, among other matters,
the planned scope and timing of the audit, significant
audit findings, and certain internal control-related
matters that we identified during the audit.
12
Independent Auditor's Report
Independent Auditor's Report
13
KISH BANCORP, INC.
CONSOLIDATED BALANCE SHEET
KISH BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
ASSETS
Cash and due from banks
Interest-bearing deposits with other institutions
Cash and cash equivalents
Certificates of deposit in other financial institutions
Investment securities available for sale, at fair value
Investment securities held to maturity, net of allowance for credit losses
of $112,624 and $0, fair value of $9,972,415 and $10,070,997
Equity securities
Loans held for sale
Loans
Less allowance for credit losses - loans
Net loans
Premises and equipment, net
Goodwill
Regulatory stock
Bank-owned life insurance
Accrued interest and other assets
TOTAL ASSETS
LIABILITIES
Deposits:
Noninterest-bearing
Interest-bearing demand
Savings
Money market
Time
Total deposits
Short-term borrowings
Other borrowings
Accrued interest and other liabilities
TOTAL LIABILITIES
STOCKHOLDERS' EQUITY
Preferred stock, $.50 par value; 500,000 shares authorized,
no shares issued and outstanding
Common stock, $.50 par value; 8,000,000 shares authorized, 2,960,591 and
2,697,500 shares issued; 2,881,086 and 2,639,544 shares outstanding
at December 31, 2023 and 2022, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost (79,505 and 57,956 shares at December 31,
2023 and 2022, respectively)
TOTAL STOCKHOLDERS' EQUITY
December 31,
2023
2022
$
13,288,999 $
16,448,736
29,737,735
11,082,445
9,024,003
20,106,448
$
$
245,000
178,977,804
245,000
155,308,551
10,891,602
2,712,968
663,017
10,763,833
2,858,117
631,414
1,232,861,975
7,544,973
1,225,317,002
1,023,505,114
10,335,231
1,013,169,883
27,397,616
3,560,942
9,772,000
24,302,468
29,197,801
1,542,775,955 $
26,795,671
3,560,942
7,256,300
23,628,587
31,123,166
1,295,447,912
182,035,638 $
111,134,914
104,757,107
378,495,532
402,646,217
1,179,069,408
189,976,622
115,230,051
131,688,405
331,948,502
268,276,138
1,037,119,718
194,541,362
41,418,608
34,981,433
1,450,010,811
100,326,547
52,413,653
33,616,318
1,223,476,236
-
-
1,480,296
10,890,781
96,878,445
(14,000,592 )
1,348,750
2,897,790
85,844,293
(16,140,949 )
(2,483,786 )
92,765,144
(1,978,208 )
71,971,676
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,542,775,955 $
1,295,447,912
See accompanying notes to the consolidated financial statements.
INTEREST AND DIVIDEND INCOME
Interest and fees on loans:
Taxable
Exempt from federal income tax
Interest and dividends on investment securities:
Taxable
Exempt from federal income tax
Interest-bearing deposits with other institutions
Other dividend income
Total interest and dividend income
INTEREST EXPENSE
Deposits
Short-term borrowings
Other borrowings
Total interest expense
NET INTEREST INCOME
Provision for credit losses - loans
Provision for credit losses - investment securities held to maturity
Provision for credit losses - off balance sheet credit exposures
Total provision for credit losses
Year Ended December 31,
2022
2023
$
65,808,264 $
810,709
41,423,419
965,252
5,181,614
203,777
456,243
936,379
73,396,986
21,124,267
887,863
7,757,440
29,769,570
3,654,621
229,151
369,155
552,108
47,193,706
5,072,657
239,630
3,636,717
8,949,004
43,627,416
38,244,702
328,965
2,460
379,620
711,045
-
-
-
-
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
42,916,371
38,244,702
NONINTEREST INCOME
Service fees on deposit accounts
Investment securities gains (losses), net
Equity securities gains (losses), net
Gain on sale of loans
Earnings on bank-owned life insurance
Insurance commissions
Travel agency commissions
Wealth management
Benefit management
Other
Total noninterest income
NONINTEREST EXPENSE
Salaries and employee benefits
Occupancy and equipment
Data processing
Professional fees
Advertising
Federal deposit insurance
Pennsylvania shares tax
Other
Total noninterest expense
Income before income taxes
Income tax expense
NET INCOME
EARNINGS PER SHARE
Basic
Diluted
2,339,661
(158 )
(145,149 )
340,336
646,640
3,060,586
261,836
2,545,185
623,299
1,698,737
11,370,973
22,198,014
3,896,516
4,184,820
783,991
622,786
1,134,670
692,127
4,620,265
38,133,189
16,154,155
2,654,443
2,152,592
440
164,537
1,095,550
1,042,850
2,848,821
219,286
2,485,063
604,037
1,494,717
12,107,893
21,140,174
4,623,738
2,673,625
796,698
460,155
756,961
741,375
3,876,521
35,069,247
15,283,348
2,423,047
$
13,499,712 $
12,860,301
$
$
5.22 $
5.13 $
5.02
4.90
3
4
See accompanying notes to the consolidated financial statements.
14
Financial Statements
Financial Statements
15
KISH BANCORP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
Net income
Other comprehensive income (loss)
Securities available for sale:
Change in unrealized holding gains (losses) on
available for sale securities
Tax effect
Change in unrealized gains (losses) related to cash flow hedges
Tax effect
Reclassification adjustment for net investment
securities losses (gains) realized in net income
Tax effect
Total other comprehensive income (loss)
Year Ended December 31,
2022
2023
12,860,301
13,499,712 $
$
3,940,791
(827,565 )
(1,231,637 )
258,644
158
(33 )
2,140,357
(24,578,671 )
5,161,521
6,138,078
(1,288,996 )
(440 )
92
(14,568,416 )
Total comprehensive income (loss)
$
15,640,069 $
(1,708,115 )
See accompanying notes to the consolidated financial statements.
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16
Financial Statements
Financial Statements
17
5
KISH BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOW
KISH BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Year Ended December 31,
2023
2022
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
$
13,499,712 $
12,860,301
Nature of Operations and Basis of Presentation
Provision for credit losses
Investment securities (gains) losses, net
Equity security (gains) losses
Proceeds from sale of loans held for sale
Origination of loans held for sale
Gain on sales of loans
Depreciation, amortization, and accretion
Deferred income taxes
Increase in accrued interest receivable
Increase in accrued interest payable
Earnings on bank-owned life insurance
Gain on sale of other assets
Non-cash compensation - equity awards
Other, net
Net cash provided by operating activities
INVESTING ACTIVITIES
Bank owned life insurance:
Benefit proceeds
Investment securities available for sale:
Proceeds from repayments and maturities
Purchases
Investment securities held to maturity:
Proceeds from repayments and maturities
Purchases
Increase in loans, net
Purchase of regulatory stock
Redemption of regulatory stock
Purchase of premises and equipment
Proceeds from sale of other assets
Net cash used for investing activities
FINANCING ACTIVITIES
Increase in deposits, net
Increase in short-term borrowings, net
Proceeds from other borrowings
Repayments of other borrowings
Collateral received (repaid) on interest rate derivatives, net
Proceeds from sale of common stock
Purchases of treasury stock
Proceeds from sale of treasury stock
Exercise of stock options
Cash dividends
Net cash provided by financing activities
Increase (Decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest on deposits and borrowings
Income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH CASH FLOW INFORMATION
Right of use assets and lease liabilities
$
$
$
See accompanying notes to the consolidated financial statements.
7
711,045
158
145,149
18,022,375
(17,713,642 )
(340,336 )
1,185,446
(29,206 )
(1,801,696 )
3,829,552
(646,640 )
(573,052 )
672,353
(413,607 )
16,547,611
-
(440 )
(164,537 )
61,468,762
(57,749,556 )
(1,095,550 )
1,661,670
179,626
(1,450,648 )
1,025,784
(1,042,850 )
(482,001 )
746,352
236,415
16,193,328
-
1,048,651
19,429,376
(39,242,073 )
24,949,600
(26,954,481 )
-
(244,963 )
(208,910,301 )
(9,918,200 )
7,402,500
(3,124,810 )
1,929,582
(232,678,889 )
141,949,690
94,214,815
59,282
(8,224,327 )
(2,470,000 )
5,588,912
(1,972,726 )
787,349
(286,929 )
(3,883,501 )
225,762,565
9,631,287
20,106,448
29,737,735 $
1,000,000
(1,500,000 )
(144,785,142 )
(3,691,600 )
2,404,000
(2,977,122 )
727,704
(149,778,390 )
34,474,371
32,892,590
14,051,077
(28,822,044 )
11,500,000
-
(1,262,273 )
901,758
(357,472 )
(3,448,214 )
59,929,793
(73,655,269 )
93,761,717
20,106,448
25,966,419 $
2,650,000
7,964,220
2,185,000
409,650 $
156,379
Kish Bancorp, Inc. (the “Company”) is a diversified financial services organization whose principal
activity is the ownership and management of its subsidiaries, Kish Bank (the “Bank”), Kish Travel
Services, Inc., and the Bank’s subsidiaries, Tri-Valley Properties, LLC, Kish Agency, Inc., and Kish
Equities, LLC. The Company generates commercial and industrial, agricultural, commercial mortgage,
residential real estate, and consumer loans and deposit services to its customers located primarily in central
Pennsylvania and the surrounding areas. The Bank operates under a Pennsylvania Department of Banking
and Securities bank charter and provides full banking services. Deposits are insured by the Federal Deposit
Insurance Corporation (“FDIC”) to the extent provided by law. Kish Agency, Inc. provides insurance
products and services. Kish Travel Services, Inc. is a Pennsylvania business established to provide travel
services to its customers. Kish Equities, LLC is a subsidiary established to hold investments in equity
securities.
The consolidated financial statements include the accounts of Kish Bancorp, Inc. and its subsidiaries, Kish
Bank and Kish Travel Services, Inc., after elimination of all significant intercompany transactions.
The accounting principles followed by the Company and the methods of applying these principles conform
to U.S. generally accepted accounting principles (“GAAP”) and to general practice within the banking
industry. Management is required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of the Consolidated Balance Sheet
date and revenues and expenses for that period. Actual results could differ from those estimates.
Allowance for Credit Losses - Available-for-Sale Securities
The Bank measures expected credit losses on available-for-sale debt securities when the Bank does not
intend to sell, or when it is not 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 available-for-sale
debt securities that do not meet the aforementioned criteria, the Bank evaluates whether the decline in fair
value has resulted from credit losses or other factors. In making this assessment, the Bank 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. If this evaluation
indicates that a credit loss exists, the present value of cash flows expected to be collected from the security
are compared to the amortized cost basis of the security. If the present value of cash flows expected to be
collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is
recorded for the credit loss, equal to the amount that the fair value is less than the amortized cost basis.
Any impairment that has not been recorded through an allowance for credit losses is recognized in other
comprehensive income.
The allowance for credit losses on available-for-sale debt securities is included within Investment securities
available-for-sale on the consolidated balance sheet. Changes in the allowance for credit losses are
recorded within Provision for credit losses on the consolidated statement of income. Losses are charged
against the allowance when the Bank believes the collectability of an available-for-sale security is in
jeopardy or when either of the criteria regarding intent or requirement to sell is met.
Accrued interest receivable on available-for-sale debt securities totaled $1,003,499 at December 31, 2023
and is included within Accrued interest and other assets on the Consolidated Balance Sheet. This amount
is excluded from the estimate of expected credit losses.
8
18
Financial Statements
Notes to Consolidated Financial Statements
19
Available-for-sale debt securities are typically classified as nonaccrual when the contractual payment of
principal or interest has become 90 days past due or management has serious doubts about the further
collectability of principal or interest. When available-for-sale debt securities are placed on nonaccrual
status, unpaid interest credited to income is reversed.
Allowance for Credit Losses - Held-to-Maturity Securities
The Bank measures expected credit losses on its portfolio of held-to-maturity debt securities, which is
comprised of corporate securities. Accrued interest receivable on held-to-maturity debt securities totaled
$106,231 at December 31, 2023 and is included within Accrued interest and other assets on the
Consolidated Balance Sheet. This amount is excluded from the estimate of expected credit losses. Held-
to-maturity debt securities are typically classified as nonaccrual when the contractual payment of principal
or interest has become 90 days past due or management has serious doubts about the further collectability
of principal or interest. When held-to-maturity debt securities are placed on nonaccrual status, unpaid
interest credited to income is reversed.
Investment Securities Prior to Adopting ASU 2016-13
Investment securities are classified at the time of purchase, based on management’s intention and ability,
as securities held to maturity, available for sale, or trading. Debt securities acquired with the intent and
ability to hold to maturity are stated at cost, adjusted for amortization of premium and accretion of discount,
which are computed using the interest method and recognized as adjustments of interest income. Debt
securities which are held principally as a source of liquidity are classified as available for sale. Unrealized
holding gains and losses for available-for-sale securities are reported as a separate component of
stockholders’ equity, net of tax, until realized. Realized security gains and losses are computed using the
specific identification method. Debt securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities and reported at fair value, with unrealized
gains and losses included in current earnings. The Company does not have trading securities as of
December 31, 2023 and 2022. Interest and dividends on investment securities is recognized as income
when earned.
Securities are evaluated at least on a quarterly basis and more frequently when economic or market
conditions warrant such an evaluation to determine whether a decline in their value is other than temporary.
For debt securities, management considers whether the present value of cash flows expected to be collected
are less than the security’s amortized cost basis (the difference defined as the credit loss), the magnitude
and duration of the decline, the reasons underlying the decline and the Company’s intent to sell the security
or whether it is more likely than not that the Company would be required to sell the security before its
anticipated recovery in fair value, to determine whether the loss in value is other than temporary. Once a
decline in value is determined to be other than temporary, if the investor does not intend to sell the security,
and it is more likely than not that it will not be required to sell the security before recovery of the security’s
amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining
difference between fair value and amortized cost (the difference defined as the non-credit portion) is
recognized in other comprehensive income (loss), net of applicable taxes. Otherwise, the entire difference
between fair value and amortized cost is charged to earnings.
Equity Securities
Equity securities are held at fair value. Holding gains and losses are recorded in non-interest income.
Dividends are recognized as income when earned.
Regulatory Stock
Common stock of the Federal Home Loan Bank (“FHLB”) of Pittsburgh represents ownership in an
institution that is wholly owned by other financial institutions. These equity securities are accounted for at
cost and are shown separately on the Consolidated Balance Sheet as regulatory stock.
The Bank is a member of the FHLB and, as such, is required to maintain a minimum investment in stock
of the FHLB that varies with the level of advances outstanding with the FHLB. The stock is bought from
and sold to the FHLB based upon its $100 par value. The stock does not have a readily determinable fair
value and, as such, is classified as restricted stock, carried at cost and evaluated by management. The
stock’s value is determined by the ultimate recoverability of the par value rather than by recognizing
temporary declines. The determination of whether the par value will ultimately be recovered is influenced
by criteria such as the following: (a) the significance of the decline in net assets of the FHLB as compared
with the capital stock amount and the length of time this situation has persisted; (b) commitments by the
FHLB to make payments required by law or regulation and the level of such payments in relation to the
operating performance; (c) the impact of legislative and regulatory changes on the customer base of the
FHLB; and (d) the liquidity position of the FHLB. Management evaluated the stock and concluded that
the stock was not impaired for the periods presented herein.
Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or
payoff generally are reported at their principal amount, net of the allowance for credit losses and deferred
origination fees or costs. Interest on loans is recognized as income when earned on the accrual method.
Generally, the policy has been to stop accruing interest on loans when it is determined that a reasonable
doubt exists as to the collectability of additional interest. Interest previously accrued but deemed
uncollectible is deducted from current interest income. Payments received on nonaccrual loans are
recorded as income or applied against principal according to management’s judgment as to the
collectability of such principal. Nonaccrual loans will generally be put back on accrual status after
demonstrating six consecutive months of no delinquency.
Loan origination fees and certain direct loan origination costs are being deferred and the net amount
amortized is accounted for as an adjustment of the related loan’s yield. Management is amortizing these
amounts over the contractual life of the related loans using the level yield method.
In general, fixed rate, permanent residential mortgage loans originated by the Bank are classified as held
for sale and are carried in the aggregate at the lower of cost or fair value. The Bank sells these loans to
various other financial institutions. Currently, the Bank retains the servicing of those loans sold to the
FHLB and releases the servicing of loans sold to all other institutions.
Allowance for Loan Losses - Prior to Adopting ASU 2016-13
Prior to adoption of ASU 326-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments", the Bank calculated Allowance for Loan Losses using the
incurred loan loss methodology. The following policy relates to reporting for years ended December 31,
2022 and prior.
For years ended December 31, 2022 and prior, the allowance for loan losses was established through
provisions for loan losses charged against income. Loans deemed to be uncollectible were charged against
the allowance for loan losses and subsequent recoveries, if any, were credited to the allowance.
The allowance for loan losses represents the amount that management estimates is adequate to provide for
probable losses inherent in its loan portfolio as of the Consolidated Balance Sheet date. The allowance
method is used in providing for loan losses. Accordingly, all loan losses are charged to the allowance, and
9
10
20
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
21
all recoveries are credited to it. The allowance for loan losses is established through a provision for loan
losses charged to operations. The provision for loan losses is based on management’s periodic evaluation
of individual loans, economic factors, past loan loss experience, changes in the composition and volume
of the portfolio, and other relevant factors. The estimates used in determining the adequacy of the
allowance for loan losses, including the amounts and timing of future cash flows expected on impaired
loans, are particularly susceptible to change in the near term.
Impaired loans are those for which it is probable the Company will not be able to collect all amounts due
according to the contractual terms of the loan agreement. The Company evaluates commercial and
industrial, agricultural, state and political subdivisions, commercial real estate, and all troubled debt
restructuring loans for possible impairment. Consumer and residential real estate loans are also evaluated
if part of a commercial lending relationship. The Company individually evaluates such loans for
impairment and does not aggregate loans by major risk classifications. The definition of “impaired loans”
is not the same as the definition of “nonaccrual loans,” although the two categories overlap. Factors
considered by management in determining impairment include payment status and collateral value. The
amount of impairment for these types of loans is determined by the difference between the present value
of the expected cash flows related to the loan using the original interest rate and its recorded value, or as a
practical expedient in the case of collateralized loans, the difference between the fair value of the collateral
and the recorded amount of the loans. When foreclosure is probable, impairment is measured based on the
fair value of the collateral.
Mortgage loans secured by one-to-four family properties and all consumer loans are large groups of
smaller-balance homogeneous loans and are measured for impairment collectively. Loans that experience
insignificant payment delays, which are defined as 90 days or less, generally are not classified as impaired.
Management determines the significance of payment delays on a case-by-case basis taking into
consideration all circumstances concerning the loan, the creditworthiness and payment history of the
borrower, the length of the payment delay, and the amount of shortfall in relation to the principal and
interest owed.
In addition to the allowance for loan losses, the Company also estimates probable losses related to
unfunded lending commitments, such as letters of credit, financial guarantees, and unfunded loan
commitments. Unfunded lending commitments are subject to individual reviews and are analyzed and
segregated by risk according to the Company’s internal risk rating scale. These risk classifications, in
conjunction with an analysis of historical loss experience, current economic conditions, performance trends
within specific portfolio segments, and any other pertinent information, result in the estimation of the
reserve for unfunded lending commitments. Provision for credit losses related to the loan portfolio and
unfunded lending commitments are reported in the Consolidated Statement of Income.
Allowance for Credit Losses (ACL) - Following Adoption of ASU 2016-13
Disclosures of the allowance for credit losses (ACL) for the year ended December 31, 2023 are presented
in accordance with ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments". Refer to Summary of Significant Accounting Policies, "Adoption
of New Accounting Standards".
The ACL is a valuation reserve established and maintained by charges against income and is deducted
from the amortized cost basis of loans to present the net amount expected to be collected on the
loans. Loans, or portions thereof, are charged off against the ACL when they are deemed
uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and
expected to be charged-off. The ACL is an estimate of expected credit losses, measured over the
contractual life of a loan, that considers our historical loss experience, current conditions and forecasts of
future economic conditions. Determination of an appropriate ACL is inherently subjective and may have
significant changes from period to period.
The methodology for determining the ACL has two main components: evaluation of expected credit losses
for certain groups of homogeneous loans (pooled segments) that share similar risk characteristics and
evaluation of loans that do not share risk characteristics with other loans. The ACL is measured on a pooled
segment basis when similar risk characteristics exist. The Company has identified the following portfolio
segments based on Federal Call Code groupings and measures the ACL using the following methods:
Loan Portfolio - Pooled Segments
Construction, land development and other land loans
Loans secured by farmland
Revolving loans secured by 1-4 family residential properties
Mortgages secured by first liens
Mortgages secured by second liens
Loans secured by multi-family residential properties
Loans secured by nonfarm, nonresidential properties
Agricultural loans
Commercial and industrial loans
Automobile loans
Other consumer loans
Loans to state and municipal subdivisions
Loss Rate
Methodology
Discounted cash flows
Discounted cash flows
Discounted cash flows
Discounted cash flows
Discounted cash flows
Discounted cash flows
Discounted cash flows
Discounted cash flows
Discounted cash flows
Remaining life method
Discounted cash flows
Discounted cash flows
Historical credit loss experience is the basis for the estimation of expected credit losses. The Company
applies historical loss rates to pools of loans with similar risk characteristics. After consideration of the
historic loss calculation, management applies qualitative adjustments to reflect the current conditions and
reasonable and supportable forecasts not already reflected in the historical loss information at the balance
sheet date. Our reasonable and supportable forecast adjustment is based on forecasted national
unemployment rates and application of management judgments. For periods beyond our reasonable and
supportable forecast, we revert to historical loss rates utilizing a straight-line method over a one year
reversion period. The qualitative adjustments for current conditions are based upon changes in lending
policies and practices, experience and ability of lending staff, quality of the bank’s loan review system,
value of underlying collateral, the existence of and changes in concentrations and other external factors.
These modified historical loss rates are multiplied by the outstanding principal balance of each loan to
calculate a required reserve.
The Bank has elected to exclude accrued interest receivable from the measurement of its ACL. When a
loan is placed on non-accrual status, any outstanding accrued interest is reversed against interest income.
The ACL for individually evaluated loans begins with the use of normal credit review procedures to
identify whether a loan no longer shares similar risk characteristics with other pooled loans and therefore,
should be individually assessed. We evaluate all loans that meet the following criteria: 1) when it is
determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when
repayment is expected to be provided substantially through the operation or sale of the collateral, 3) when
it is determined by management that a loan does not share similar risk characteristics with other loans.
Specific reserves are established based on the following three acceptable methods for measuring the ACL:
1) the present value of expected future cash flows discounted at the loan’s original effective interest rate;
2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral
dependent. Our individual loan evaluations consist primarily of the fair value of collateral method because
most of our loans are collateral dependent. Collateral values are discounted to consider disposition costs
when appropriate. A specific reserve is established or a charge-off is taken if the fair value of the loan is
less than the loan balance.
11
12
22
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
23
Premises and Equipment
Earnings Per Share
Land is carried at cost. Premises and equipment are stated at cost, less accumulated depreciation.
Depreciation is computed on the straight-line method over the estimated useful lives of the related assets,
which range from 3 to 7 years for furniture, fixtures, and equipment, and 31 to 39½ years for building
premises. Leasehold improvements are depreciated over shorter of the term of the lease or useful life.
Expenditures for maintenance and repairs are charged against income as incurred. Costs of major additions
and improvements are capitalized.
Goodwill
The Company accounts for goodwill using a two-step process for testing the impairment of goodwill on at
least an annual basis. This approach could cause more volatility in the Company’s reported net income
because impairment losses, if any, could occur irregularly and in varying amounts.
Bank-Owned Life Insurance (“BOLI”)
The Company purchased life insurance policies on certain key employees. BOLI is recorded at its cash
surrender value, or the amount that can be realized.
Real Estate Owned
Real estate acquired by foreclosure is included with other assets on the Consolidated Balance Sheet at the
lower of the recorded investment in the property or its fair value less estimated costs of sale. Prior to
foreclosure, the value of the underlying collateral is written down by a charge to the allowance for loan
losses if necessary. Any subsequent write-downs are charged against operating expenses. Operating
expenses of such properties, net of related income and losses on their disposition, are included in other
noninterest expense.
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
The Bank estimates expected credit losses over the contractual period in which the Bank is exposed to
credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable
by the Bank. The allowance for credit losses on off-balance sheet credit exposures is adjusted through
credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an
estimate of expected credit losses on commitments expected to be funded over its estimated life.
Treasury Stock
Treasury stock is carried at cost. Sales are determined by the first-in, first-out method.
Advertising Costs
Advertising costs are expensed as the costs are incurred.
Income Taxes
The Company and its subsidiaries file a consolidated federal income tax return. Deferred tax assets and
liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred
tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for income taxes.
The Company provides dual presentation of basic and diluted earnings per share. Basic earnings per share
are calculated utilizing net income as reported in the numerator and average shares outstanding in the
denominator. The computation of diluted earnings per share differs in that the dilutive effects of any stock
options and restricted stock awards are adjusted in the denominator. Treasury shares are not deemed
outstanding for earnings per share calculations.
Stock Options
For purposes of computing stock compensation expense, the Company estimated the fair values of stock
options using the Black-Scholes option-pricing model. The model requires the use of subjective
assumptions that can materially affect fair value estimates. The fair value of each option is amortized into
compensation expense on a straight-line basis between the grant date for the option and each vesting date.
The fair value of each stock option granted was estimated using the following weighted-average
assumptions:
Grant
Year
2023
2022
Expected
Dividend
Yield
3.96 %
3.31 %
Risk-Free
Interest Rate
3.50 %
2.56 %
Expected
Volatility
27.59 %
27.32 %
Expected
Life (in Years)
6.0
6.0
The weighted-average fair value of each stock option granted for 2023 and 2022 was $6.78 and $7.25,
respectively.
Mortgage Servicing Rights (“MSRs”)
The Company has agreements for the express purpose of selling loans in the secondary market. The
Company retains servicing rights for certain loans. Originated MSRs are recorded by allocating total costs
incurred between the loan and servicing rights based on their relative fair values. MSRs are amortized in
proportion to the estimated servicing income over the estimated life of the servicing portfolio. The
Company performs an impairment review of the MSRs and recognizes impairment through a valuation
account. MSRs are a component of accrued interest and other assets on the Consolidated Balance Sheet.
Gains and losses on sales of loans are recognized at settlement dates and are determined by the difference
between the sales proceeds and the carrying value of the loans. All sales are made with limited recourse.
For the years ended December 31, 2023 and 2022, the Company recorded gross servicing rights of
$248,594 and $279,743, respectively, with a reserve for impairment of $86,182 and $104,060, respectively.
Transfer of Assets
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered.
Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from
the Company; (2) 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 (3) the Company does not maintain effective
control over the transferred assets through an agreement to repurchase them before their maturity.
Cash Flow Information
The Company has defined cash and cash equivalents as those amounts included in the balance sheet
captions “Cash and due from banks” and “Interest-bearing deposits with other institutions” that have
original maturities of less than 90 days.
13
14
24
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
25
Reclassification of Comparative Amounts
Certain items previously reported have been reclassified to conform to the current year’s format. Such
reclassifications did not affect net income or stockholders’ equity.
Derivatives and Hedging Activities
The Company engages in a number of business activities that are vulnerable to interest rate risk. The
associated variability in cash flows related to interest rate risk may impact the results of operations of the
Company. The Company’s hedging objective is to reduce, to the extent possible, unpredictable cash flows
associated with interest rate risk, via approved hedging strategies, related to business strategies and
business objectives.
All derivatives are recorded on the Consolidated Balance Sheet at fair value. The accounting for changes
in the fair value of derivatives depends on whether the Company has elected to designate a derivative in a
hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the
criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the
exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular
risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a
hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions,
are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of
gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings
effect of the hedged forecasted transactions in a cash flow hedge.
Changes in the fair value of derivatives designated as fair value hedges are recorded in earnings, together
and in the same income statement line item with changes in the fair value of the related hedged item.
Changes in the fair value of derivatives designated as cash flow hedges are recorded in accumulated other
comprehensive income (loss) and are reclassified into the line item in the income statement in which the
hedged item is recorded and in the same period in which the hedged item affects earnings. Hedge
ineffectiveness and gains and losses on the excluded component of a derivative in assessing hedge
effectiveness are recorded in earnings.
Revenue Recognition
The Company’s revenue is comprised of net interest income on financial assets and liabilities, and
noninterest income. Under FASB Accounting Standards Codification (“ASC”) Topic 606, "Revenue from
Contracts with Customers", management determined that net interest income on financial assets and
liabilities and certain components of noninterest income resulting from investment securities gains, loan
servicing, gains on sales of loans, earnings on bank owned life insurance, gains on sales of mortgage loans
and gains on sales of securities available for sale are accounted for under other U.S. GAAP standards and
are not within the scope of ASC Topic 606.
Descriptions of revenue-generating activities reported in our Consolidated Statement of Income that are
within the scope of Topic 606 include:
Insurance and travel agency commissions
• Service fee income on deposit accounts
•
• Trust and investment advisory fees
• Benefit management consulting income
• ATM and debit card transaction fees
• Loan servicing fees
• Wire transfer fees
• Safe deposit box rentals
15
Non-transaction-based fees such as account maintenance fees, monthly statement fees, loan servicing fees
and safe deposit box rentals are considered to be provided to the customer under short-term contracts with
ongoing renewals. Revenue for these non-transaction-based fees is earned on a monthly basis, representing
the period over which the Company satisfies the performance obligations. Transaction-based fees such as
non-sufficient fund charges, stop payment charges and wire fees are recognized at the time the transaction
is executed as the contract duration does not extend beyond the service performed.
The Company earns fees from ATM transactions fees and debit card transaction fees from cardholder
transactions conducted through third party payment network providers which consist of interchange fees
earned from the payment networks as a debit card issuer. These fees are recognized when the transaction
occurs and are settled on a daily or monthly basis.
Revenues from trust and investment advisory services are generally recognized on a monthly basis and are
typically based on a percentage of the customer’s assets under management or based on investment
solutions that are implemented for the customer.
Commission and fee income from insurance, benefit consulting and travel services are recognized as the
performance obligations are satisfied, either over the contract policy period or as sales commissions are
received when the performance obligation period does not extend beyond the sales transaction event.
Adoption of New Accounting Standards
On January 1, 2023, the Company adopted ASU 2016-13, "Financial Instruments – Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments" (ASC 326). This standard replaced the
incurred loss methodology with an expected loss methodology that is referred to as the current expected
credit loss (“CECL”) methodology. CECL requires an estimate of credit losses for the remaining
estimated life of the financial asset using historical experience, current conditions, reasonable and
supportable forecasts and generally applies to financial assets measured at amortized cost, including loan
receivables, held-to-maturity debt securities, and some off-balance sheet credit exposures such as
unfunded commitments to extend credit. Financial assets measured at amortized cost are presented at the
net amount expected to be collected by using an allowance for credit losses.
The Bank adopted the provisions of ASC 326 related to presenting other-than-temporary impairment on
available-for-sale debt securities prior to January 1, 2023 using the prospective transition approach,
though no such charges had been recorded on the securities held by the Bank as of the adoption date.
The Company adopted ASC 326 and all related subsequent amendments thereto effective January 1,
2023 using the modified retrospective approach for all financial assets measured at amortized cost and
off-balance sheet credit exposures. The transition adjustment of the adoption of CECL included a
decrease in the allowance for credit losses on loans of $3.1 million, which is presented as an increase to
net loans outstanding, an increase in the allowance for credit losses on unfunded loan commitments of
$1.2 million, which is recorded within Other Liabilities, and an allowance for credit losses for held to
maturity securities of $110.2 thousand, which is presented as a reduction to held to maturity securities
outstanding. The Company recorded a net increase to retained earnings of $1.4 million as of January 1,
2023 for the cumulative effect of adopting CECL, which reflects the transition adjustments noted above,
net of the applicable deferred tax liabilities recorded. Results for reporting periods beginning after
January 1, 2023 are presented under CECL while prior period amounts continue to be reported in
accordance with the previously applicable accounting standards (incurred loss reporting).
16
26
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
27
immediately upon issuance and must be applied on a prospective basis. It is too early to predict whether a
new rate index replacement and the adoption of the ASU will have a material impact on the Company’s
financial statements.
2. EARNINGS PER SHARE
There are no convertible securities that would affect the numerator in calculating basic and diluted earnings
per share; therefore, net income as presented on the Consolidated Statement of Income will be used as the
numerator. The following table sets forth the composition of the weighted-average common shares
(denominator) used in the basic and diluted earnings per share computation.
Weighted-average common shares issued
Weighted-average treasury stock shares
2023
2022
2,694,597
2,697,500
(59,639 )
(67,350 )
Weighted-average unvested restricted stock awards
(48,956 )
(70,807 )
Basic weighted-average shares outstanding
2,586,002
2,559,343
Dilutive effect of outstanding restricted stock awards
Dilutive effect of outstanding stock options
18,716
24,449
31,181
35,088
Diluted weighted-average shares outstanding
2,629,167
2,625,612
For the year ended December 31, 2023, the Company excluded from the computation of diluted weighted-
average shares the impact of 79,924 options to purchase shares of the Company’s common stock, and
11,580 shares of restricted stock, as the effect would have been anti-dilutive.
For the year ended December 31, 2022, the Company excluded from the computation of diluted weighted-
average shares the impact of 42,059 options to purchase shares of the Company’s common stock, as the
effect would have been anti-dilutive.
The following table illustrates the impact of adopting ASC 326:
ASC 326 Adopted Effective January 1, 2023
Prior to ASC 326
Adoption
Impact of ASC
326 Adoption
As Reported under
ASC 326
$
$
Assets:
Allowance for credit losses on debt
securities held to maturity
Allowance for credit losses on loans
Commercial real estate
Commercial and industrial
Agricultural
State and political subdivisions
Consumer
Residential real estate
Total allowance for credit
losses on loans
Liabilities:
Allowance for credit losses on
off-balance-sheet credit exposures $
$
- $
110,164 $
110,164
6,108,863 $
1,578,840
286,469
106,944
41,680
2,212,435
(2,132,318 ) $
(252,955 )
(56,603 )
(56,672 )
18,710
(594,903 )
3,976,545
1,325,885
229,866
50,272
60,390
1,617,532
10,335,231 $
(3,074,741 ) $
7,260,490
193,261 $
1,169,715 $
1,362,976
Total pretax effect of ASC 326 adoption
Deferred tax impact
Total effect of ASC 326 adoption,
net of deferred tax impact
$
(1,794,862 )
376,921
$
(1,417,941 )
Effective January 1, 2023, the Company adopted ASU 2022-02 "Financial Instruments - Credit Losses
(Topic 326) Troubled Debt Restructurings (TDR) and Vintage Disclosures", which removed the existing
measurement and disclosure requirements for TDR loans and added additional disclosure requirements
related to modifications provided to borrowers experiencing financial difficulty. Prior to adoption a change
in contractual terms of a loan where a borrower was experiencing financial difficulty and received a
concession not available through other sources the loans was required to be disclosed as a TDR, whereas
now a borrower that is experiencing financial difficulty and receives a modification in the form of principal
forgiveness, interest rate reduction, an other-than-insignificant payment delay or a term extension in the
current period needs to be disclosed. The Company may modify loans to borrowers experiencing financial
difficulty as a way of managing risk and mitigating credit loss from the borrower and may make various
types of modifications and may in certain circumstances use a combination of modification types in order
to mitigate future loss. The amount of defined modifications given to borrowers experiencing financial
difficulty is disclosed in Note 5 to the Consolidated Financial Statements.
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", to provide temporary optional expedients and
exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the
financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates
to alternative reference rates, such as the Secured Overnight Financing Rate (SOFR). Entities can elect not
to apply certain modification accounting requirements to contracts affected by what the guidance calls
“reference rate reform” if certain criteria are met. An entity that makes this election would not have to
remeasure the contracts at the modification date or reassess a previous accounting determination. Also,
entities can elect various optional expedients that would allow them to continue applying hedge accounting
for hedging relationships affected by reference rate reform if certain criteria are met and can make a one-
time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected
by reference rate reform. The amendments in this ASU are effective for all entities upon issuance. In
December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform (Topic 848): Deferral of the
Sunset Date of Topic 848", which extends the sunset (or expiration) date of SC Topic 848 to December 31,
2024. This gives reporting entities two additional years to apply the accounting relief provided under ASC
Topic 848 for matters related to reference rate reform. ASC 2022-06 is effective for all reporting entities
17
18
28
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
29
3.
INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses, and fair value of investment securities are as follows:
The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment
category and length of time that the individual securities have been in a continuous unrealized loss position,
at December 31, 2023 and 2022.
Available for Sale:
U.S. treasury securities
U.S. government agency
securities
Obligations of states and
political subdivisions
Corporate securities
Mortgage-backed securities in
government-sponsored entities
Collateralized mortgage
obligations
Gross
2023
Gross
Amortized
Cost
Unrealized
Unrealized
Gains
Losses
Fair
Value
Allowance
for Credit
Losses
$
27,863,700 $
- $
(1,355,955 ) $
26,507,745 $
63,816,922
340
(5,444,033 )
58,373,229
40,926,071
1,506,202
288
-
(6,143,267 )
(68,488 )
34,783,092
1,437,714
34,032,633
10,486
(3,974,921 )
30,068,198
-
-
-
-
-
-
-
Total Available for Sale
$ 200,113,328 $
31,967,800
9,194
20,308 $
(4,169,168 )
27,807,826
(21,155,832 ) $ 178,977,804 $
Held to Maturity:
Corporate Securities
$
11,004,226 $
- $
(1,031,811 ) $
9,972,415 $
(112,624 )
Available for Sale:
U.S. treasury securities
U.S. government agency
securities
Obligations of states and
political subdivisions
Corporate securities
Mortgage-backed securities in
government-sponsored
entities
Collateralized mortgage
obligations
Total Available for Sale
Held to Maturity:
Corporate Securities
Amortized
Cost
2022
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$
20,886,392 $
49,881,118
- $
-
(1,753,897 ) $
19,132,495
(6,873,567 )
43,007,551
41,934,666
6,564,965
3,345
490
(7,661,301 )
(113,026 )
34,276,710
6,452,429
30,857,100
1,976
(4,387,180 )
26,471,896
30,260,783
180,385,024 $
-
5,811 $
(4,293,313 )
(25,082,284 ) $
25,967,470
155,308,551
10,763,833 $
- $
(692,836 ) $
10,070,997
$
$
Less than Twelve Months
Gross
Fair
Value
Unrealized
Losses
Twelve Months or Greater
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
2023
$
6,943,810 $
(18,808 ) $
19,563,935 $
(1,337,147 ) $
26,507,745 $
(1,355,955 )
15,936,186
(110,762 )
41,436,702
(5,333,271 )
57,372,888
(5,444,033 )
-
-
-
-
33,941,003
1,437,714
(6,143,267 )
(68,488 )
33,941,003
1,437,714
(6,143,267 )
(68,488 )
Total Available for Sale
$
6,898,550
(185,293 )
21,900,186
(3,789,628 )
28,798,736
(3,974,921 )
9,072,572
38,851,118 $
(181,985 )
(496,848 ) $
16,168,122
134,447,662 $
(3,987,183 )
(20,658,984 ) $
25,240,694
173,298,780 $
(4,169,168 )
(21,155,832 )
Less than Twelve Months
Gross
Fair
Value
Unrealized
Losses
Twelve Months or Greater
Total
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
2022
$
19,132,495 $
(1,753,897 ) $
- $
- $
19,132,495 $
(1,753,897 )
10,219,323
(554,800 )
32,788,228
(6,318,767 )
43,007,551
(6,873,567 )
18,746,763
4,529,899
(3,690,444 )
(35,071 )
13,765,525
422,045
(3,970,857 )
(77,955 )
32,512,288
4,951,944
(7,661,301 )
(113,026 )
Available for Sale:
U.S. treasury securities
U.S. government agency
securities
Obligations of states and
political subdivisions
Corporate securities
Mortgage-backed securities
in government-sponsored
entities
Collateralized mortgage
obligations
Available for Sale:
U.S. treasury securities
U.S. government agency
securities
Obligations of states and
political subdivisions
Corporate securities
Mortgage-backed securities
in government-sponsored
entities
Collateralized mortgage
obligations
Total Available for Sale
$
5,561,090
(605,497 )
19,490,124
(3,781,683 )
25,051,214
(4,387,180 )
14,034,828
72,224,398 $
(837,805 )
(7,477,514 ) $
11,932,642
78,398,564 $
(3,455,508 )
(17,604,770 ) $
25,967,470
150,622,962 $
(4,293,313 )
(25,082,284 )
Held to Maturity:
Corporate Securities
$
8,502,470 $
(511,364 ) $
1,568,528 $
(181,473 ) $
10,070,998 $
(692,836 )
The Company had 191 investment securities, consisting of 46 U.S. government agency securities, 66
obligations of states and political subdivisions, 19 different corporate securities, 33 mortgage-backed
securities, and 27 collateralized mortgage obligations that were in unrealized loss positions at December
31, 2023. Because the decline in market value is attributable to changes in interest rates and not credit
quality, and because the Company does not intend to sell the investments and it is not more likely than not
that the Company will be required to sell the investments before recovery of their amortized cost basis or
par value, which may be maturity, the Company does not consider those investments to have an allowance
for credit losses recorded against them. As of December 31, 2023, there were no investment securities past
due.
19
20
30
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
31
Credit Quality Indicators
4. LOANS
The held-to-maturity securities portfolio consists of sixteen subordinated corporate notes and one senior
corporate note. All securities are issued by banking financial companies in the United States or United
States territories. The notes consisting primarily of community bank issued debt, are generally unrated.
The Company regularly monitors the corporate banking sector of the market and reviews collectability
including such factors as the financial condition of the issuers as well as general market credit trends in
effect as of the reporting period.
The amortized cost and fair value of debt securities at December 31, 2023, by contractual maturity, are
shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or without call or prepayment
penalties.
Available for Sale
Held to Maturity
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Amortized
Cost
$
11,714,445 $
61,344,421
59,265,264
67,789,198
Fair
Value
11,614,645 $
58,255,669
50,454,023
58,653,467
Amortized
Cost
- $
3,000,000
8,004,226
-
Allowance for credit losses
Total
200,113,328
-
178,977,804
-
$ 200,113,328 $ 178,977,804 $
11,004,226
(112,624 )
10,891,602 $
Fair
Value
-
2,815,640
7,156,775
-
9,972,415
-
9,972,415
Investment securities with a carrying value of $123,767,259 and $70,917,500 at December 31, 2023 and
2022, respectively, were pledged to secure deposits and other purposes as required by law.
The following is a summary of proceeds received, gross gains, and gross losses realized on the sale and
calls of investment securities available for sale for the years ended December 31:
Proceeds from sales
Proceeds from calls
Gross gains
Gross losses
2023
$
- $
718,679
188
346
2022
-
999,560
440
-
Equity Securities
The Company recognized changes in fair value of equity securities in equity securities gains (losses), net.
The following is a summary of unrealized and realized gains and losses recognized in net income on equity
securities during the years ended December 31, 2023 and 2022:
Net gains (losses) recognized in equity securities during the year
Less: Net gains (losses) realized on sale of equity securities during the year
Unrealized gains (losses) recognized in equity securities
2022
2023
$ (145,149 ) $ 164,537
-
$ (145,149 ) $ 164,537
-
Major classifications of loans are summarized as follows at December 31:
Commercial real estate
Commercial and industrial
Agricultural
State and political subdivisions
Consumer
Residential real estate
Less: Allowance for credit losses
Net loans
2023
2022
$
590,694,766 $
144,234,974
28,493,121
31,283,590
5,243,094
432,912,430
1,232,861,975
7,544,973
$ 1,225,317,002 $
489,329,128
132,681,835
28,535,279
24,226,289
5,030,762
343,701,821
1,023,505,114
10,335,231
1,013,169,883
Mortgage loans serviced by the Company for others amounted to $25,907,491 and $29,009,755 at
December 31, 2023 and 2022, respectively.
The Company grants residential, commercial, and consumer loans to customers throughout its trade area,
which is predominantly in greater central Pennsylvania. The Company also has a limited purpose office
located in Hudson, Ohio, focusing primarily on multi-family commercial real estate loans. The office
serves established commercial developers in the Cleveland to Columbus markets, providing loans for
development projects that extend to the Mid-Atlantic and Southeast regions. All loan originations are
subject to credit risk assessment by management following the Company’s lending policies. Although the
Company has a diversified loan portfolio at December 31, 2023 and 2022, a substantial portion of its
debtors’ ability to honor their loan agreements is dependent upon the economic stability of their immediate
geographic areas. The Company had a lending concentration in lessors of residential buildings and
dwellings of 34% and 18% as of December 31, 2023 and 2022, respectively.
Loans to Officers and Directors
In the normal course of business, loans are extended to directors, executive officers, and their associates.
A summary of loan activity for those directors, executive officers, and their associates with loan balances
in excess of $60,000 for the years ended December 31, 2023, and 2022, is as follows:
Balance
2021
Additions
Amounts
Collected
Balance
2022
Additions
Amounts
Collected
Balance
2023
$
7,376,354 $ 2,026,246 $
(2,223,781 ) $
7,178,819 $
1,704,510 $
(5,895,527 ) $
2,987,802
5. ALLOWANCE FOR CREDIT LOSSES - LOANS
Management has an established methodology to determine the adequacy of the allowance for credit losses
(ACL) that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the
ACL, the Company has segmented certain loans in the portfolio by Federal Call Code designations, then
by product type. Loans are segmented into the following pools: commercial real estate loans, commercial
and industrial loans, agricultural loans, state and political subdivision loans, consumer loans, and
residential real estate loans. Following adoption of ACS 326 effective January 1, 2023, the Company
calculates the ACL for pooled loan segments using the Discounted Cash Flow (DCF) method for all pools
other than automobile loans, which is calculated using the Remaining Life method.
21
22
32
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
33
The ACL is a valuation reserve established and maintained by charges against income and is deducted
from the amortized cost basis of loans to present the net amount expected to be collected on the loans.
Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. The ACL
is an estimate of expected credit losses, measured over the contractual life of a loan, that considers our
historical loss experience, current conditions, and forecasts of future economic conditions. Determination
of an appropriate ACL is inherently subjective and may have significant changes from period to period.
Management uses a DCF model to calculate the present value of the expected cash flows for pools of
loans that share similar risk characteristics and compares the results of this calculation to the amortized
cost basis to determine its allowance for credit loss balance. The contractual term used in projecting the
cash flows of a loan is based on the maturity date of a loan, and is adjusted for prepayment or curtailment
assumptions which may shorten that contractual time period. Options to extend are considered by
management in determining the contractual term.
The key inputs to the DCF model are (1) probability of default, (2) loss given default, (3) prepayment and
curtailment rates, (4) reasonable and supportable economic forecasts, (5) forecast reversion period, (6)
expected recovery delays on charged off loans, and (7) discount rate.
Probability of Default ("PD")
In order to incorporate economic factors into forecasting within the DCF model, management elected to
use the Loss Driver method to generate the PD rate inputs. The Loss Driver method analyzes how one or
more economic factors change the default rate using statistical regression analysis. Management selected
to use forecasted National Unemployment Rates as the economic factor having a strong correlation to
historical default rates.
Loss Given Default ("LGD")
Management elected to use the Frye Jacobs parameter for determining the LGD input, which is an
estimation technique that derives an LGD input from segment-specific risk curves that correlates LGD
with PD.
Prepayment and Curtailment Rates
Prepayment Rates: Loan-level transaction data is used to calculate semi-annual prepayment rates. These
semi-annual rates are annualized, and the average of the annualized rates is used in the DCF calculation
for fixed payment or term loans. Rates are calculated for each pool.
Curtailment Rates: Loan-level transaction data is used to calculate annual curtailment rates using available
historical loan-level data. The average of the historical rates is used in the DCF model for interest-only
payment or line-of-credit type loans. Rates are calculated for each pool.
Reasonable and Supportable Forecasts
The forecast data used in the DCF model is obtained via a subscription to a widely recognized and relied-
upon company that publishes various forecast scenarios. Management evaluates the various scenarios to
determine a reasonable and supportable scenario.
Forecast Reversion Period
Management uses forecasts to predict how economic factors will perform and has determined to use a four-
quarter forecast period and a four-quarter straight-line reversion period to historical averages (the mean
reversion period).
Expected Recovery Delays on Charged-off Loans
Management performs an analysis to estimate the delay recovery periods for recoveries of charged off loan
balances.
Discount Rate
The effective interest rate of the underlying loans of the Company serves as the discount rate applied to
the expected periodic cash flows. Management adjusts the effective interest rate used to discount expected
cash flows to incorporate expected prepayments.
Remaining Life Loss Rate Method
The Company utilizes the Remaining Life loss rate method for calculating the allowance for credit losses
for the pooled loan segment of automobile loans. The allowance is determined by calculating the estimated
remaining life of the outstanding loan balances and applying a projected charge-off rate derived from both
internal and peer group historical loss experience for similar loans.
Individual Evaluation
Management evaluates individual instruments for expected credit losses when those instruments
do not share similar risk characteristics with instruments evaluated using a collective (pooled) basis. These
instruments will not be included in the collective analyses. The individual analysis will establish a specific
reserve for instruments in scope.
Prior to adopting ASC 326, historical loss percentages for each pooled loan segment category were
calculated and used as the basis for calculating allowance allocations. The historical loss percentages are
calculated over a five-year period for all portfolio segments. Certain qualitative factor adjustments are then
added to the historical loss percentages to calculate the adjusted factor applied to non-classified loans.
Qualitative factors are reviewed each quarter and adjusted based upon relevant changes within the Bank’s
operating environment.
We consider commercial real estate loans, commercial and industrial loans, agricultural loans, and
consumer loans to be riskier than one-to-four family residential mortgage loans. Commercial real estate
loans entail significant additional credit risks compared to one-to-four family residential mortgage loans,
as they involve large loan balances concentrated with single borrowers or groups of related borrowers. In
addition, the payment experience on loans secured by income-producing properties typically depends on
the successful operation of the related real estate project and/or business operation of the borrower who is
also the primary occupant, and thus may be subject to a greater extent to adverse conditions in the real
estate market and in the general economy. Commercial and industrial loans, along with agricultural loans,
involve a higher risk of default than residential mortgage loans of like duration since their repayment is
generally dependent on the successful operation of the borrower’s business and the sufficiency of
collateral, if any.
Qualitative Factors
For credit loss allowances calculated under both the current ACL model framework and under the previous
Incurred Loss model, the following qualitative factors are used in developing the overall loss rate estimates
applied to the pooled loan segments:
• Changes in lending policies and procedures
• Changes in economic and business conditions
• Changes in nature and volume of the loan portfolio
• Changes in lending staff experience and ability
• Changes in past-due loans, nonaccrual loans, and classified loans
• Changes in credit risk management
• Changes in underlying value of collateral-dependent loans
• Levels of credit concentrations
• Effects of external factors, such as legal and regulatory requirements
23
24
34
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
35
The following tables present, by portfolio segment, the changes in the allowance for loan credit losses and
the recorded investment in loans as of and for the years ended December 31:
Commercial
Real Estate
Commercial
and
Industrial
Agricultural
State and
Political
Subdivisions
Consumer
Residential
Real Estate
Unallocated
Total
2023
Allowance for loan credit
losses:
Beginning balance, prior to adoption
of ASC 326
Impact of adopting ASC 326
Charge-offs
Recoveries
Provision
Ending balance
Ending balance
individually
evaluated for
credit loss
Ending balance
collectively
evaluated for
credit loss
Loans:
Individually evaluated
for credit loss
Collectively evaluated
for credit loss
$
6,108,863 $
(2,132,318 )
-
-
446,856
1,578,840 $
(252,955 )
(39,572 )
-
(136,823 )
286,469 $
(56,603 )
-
-
(23,947 )
106,944 $
(56,672 )
-
-
18,709
41,680 $
18,710
(7,609 )
2,699
4,999
2,212,435 $
(594,903 )
-
-
19,171
- $
-
-
-
-
10,335,231
(3,074,741 )
(47,181 )
2,699
328,965
$
4,423,402 $
1,149,490 $
205,919 $
68,981 $
60,479 $
1,636,703 $
- $
7,544,973
$
1,255 $
19,183 $
21,679 $
- $
- $
101,393 $
- $
143,510
4,422,147
1,130,307
184,240
68,981
60,479
1,535,310
-
7,401,463
$
4,423,402 $
1,149,490 $
205,919 $
68,981 $
60,479 $
1,636,703 $
- $
7,544,973
$
13,064 $
390,373 $
21,679 $
- $
- $
1,331,192
$
1,756,308
590,681,702
143,844,601
28,471,442
31,283,590
5,243,094
431,581,238
1,231,105,667
Ending balance
$ 590,694,766 $ 144,234,974 $ 28,493,121 $ 31,283,590 $
5,243,094 $ 432,912,430
$ 1,232,861,975
Allowance for loan losses:
Beginning balance
Charge-offs
Recoveries
Provision
Ending balance
Ending balance individually
evaluated for impairment
Ending balance collectively
evaluated for impairment
Loans:
Individually evaluated for
impairment
Collectively evaluated for
impairment
Commercial
Real Estate
Commercial
and
Industrial
Agricultural
State and
Political
Subdivisions
Consumer
Residential
Real Estate
Unallocated
Total
2022
$
5,270,205 $
-
-
838,658
1,516,700 $
(335,107 )
125,000
272,247
325,746 $
176,685 $
-
-
(39,277 )
-
-
(69,741 )
46,552 $
(16,990 )
3,629
8,488
1,961,277 $
(1,153 )
-
252,311
1,262,687 $
-
-
(1,262,687 )
10,559,852
(353,250 )
128,629
(0 )
$
$
$
6,108,863 $
1,578,840 $
286,469 $
106,944 $
41,680 $
2,212,435 $
- $
10,335,231
6,479 $
19,801 $
40,344 $
- $
283 $
148,327 $
6,102,384
6,108,863 $
1,559,038
1,578,840 $
246,125
286,469 $
106,944
106,944 $
41,397
41,680 $
2,064,108
2,212,435 $
- $
-
- $
215,234
10,119,997
10,335,231
$
205,972 $
273,127 $
208,702 $
- $
9,317 $
1,564,707
$
2,261,825
489,123,156
132,408,708
28,326,577
24,226,289
5,021,445
342,137,114
1,021,243,289
Ending balance
$ 489,329,128 $ 132,681,835 $ 28,535,279 $ 24,226,289 $
5,030,762 $ 343,701,821
$ 1,023,505,114
Credit Quality Information
The Company’s internal credit risk grading system is based on experience and estimates the capability of
the borrower to repay the contractual obligations under the loan agreements. Pass grade loans are loans
which are protected by the current net worth and paying capacity of the obligor or by the value of the
underlying collateral. Special Mention loans are loans where a potential weakness or risk exists, which
could cause a more serious problem if not corrected. Substandard loans are loans that have a well-defined
weakness based on objective evidence and are characterized by the distinct possibility that the Company
will sustain some loss if the deficiencies are not corrected. Doubtful loans have all the weaknesses inherent
in a substandard asset and these weaknesses make collection or liquidation in full highly questionable and
improbable, based on existing circumstances. Finally, loans classified as Loss are considered uncollectible,
or of such value that continuance as an asset is not warranted.
The following tables represent the outstanding loan balances by credit quality indicators and vintage year
by class of financing receivable and current period charge-offs by year of origination under ASC 326 as
of December 31, 2023:
As of December 31, 2023
Term Loans Amortized Cost Basis by Origination Year
2023
2022
2021
Prior
Revolver
Total
at Amortized
Cost Basis
Total
Commercial real estate
Risk Rating
Pass
Special Mention
Substandard
Doubtful
Total Commercial real estate
Current period gross write offs
Commercial and industrial
Risk Rating
Pass
Special Mention
Substandard
Doubtful
Total Commercial & Industrial
Current period gross write offs
Agriculture
Risk Rating
Pass
Special Mention
Substandard
Doubtful
Total Agriculture
Current period gross write offs
State and political subdivisions
Risk Rating
Pass
Special Mention
Substandard
Doubtful
Total State and political
subdivisions
Current period gross write offs
$ 109,029,405 $ 111,862,871 $ 157,513,271 $ 196,936,447 $
-
-
-
3,012,892
-
-
-
-
-
429,483
3,869,390
-
$ 109,029,405 $ 114,875,763 $ 157,513,271 $ 201,235,320 $
- $
- $
$
- $
- $
-
-
13,064
8,027,943 $ 583,369,937
3,442,375
3,869,390
13,064
8,041,007 $ 590,694,766
-
- $
$
$
$
21,835,352 $
30,798
-
-
21,866,150 $
- $
33,525,894 $
172,140
-
-
33,698,034 $
- $
18,496,738 $
235,289
666,758
-
19,398,785 $
9,982 $
11,789,033 $
266,576
263,898
95,306
12,414,813 $
29,590 $
24,319
241,697
-
56,591,176 $ 142,238,193
729,122
1,172,353
95,306
56,857,192 $ 144,234,974
39,572
- $
$
2,784,201 $
2,178,394 $
6,287,102 $
-
-
-
-
-
-
-
-
-
$
$
2,784,201 $
- $
2,178,394 $
- $
6,287,102 $
- $
14,264,598 $
-
-
21,679
14,286,277 $
- $
2,957,147 $
-
-
-
2,957,147 $
- $
28,471,442
-
-
21,679
28,493,121
-
$
1,279,565 $
8,613,108 $
956,571 $
20,217,301 $
217,045 $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
1,279,565
$
8,613,108
$
956,571
$
20,217,301
$
217,045
$
- $
- $
- $
- $
- $
31,283,590
-
-
-
31,283,590
-
Total by Risk Rating
Pass
Special Mention
Substandard
Doubtful
Total
Total current period gross write offs $
$ 134,928,523 $ 156,180,267 $ 183,253,682 $ 243,207,379 $
30,798
-
-
3,185,032
-
-
235,289
666,758
-
696,059
4,133,288
116,985
$ 134,959,321 $ 159,365,299 $ 184,155,729 $ 248,153,711 $
29,590 $
- $
9,982 $
- $
24,319
241,697
13,064
67,793,311 $ 785,363,162
4,171,497
5,041,743
130,049
68,072,391 $ 794,706,451
39,572
- $
25
26
36
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
37
As of December 31, 2023
Term Loans Amortized Cost Basis by Origination Year
2023
2022
2021
Prior
Revolver
Total
at Amortized
Cost Basis
Total
533,637 $
207,561 $
143,149 $
376,618 $
3,982,129 $
-
533,637 $
- $
-
207,561 $
- $
-
143,149 $
- $
-
-
376,618 $
7,609 $
3,982,129 $
- $
5,243,094
-
5,243,094
7,609
78,756,431 $ 100,654,054 $
65,294,982 $ 148,531,171 $
-
-
56,211
512,174
78,756,431 $ 100,654,054 $
- $
- $
65,351,193 $ 149,043,345 $
- $
- $
79,290,068 $ 100,861,615 $
65,438,131 $ 148,907,789 $
-
-
56,211
512,174
79,290,068 $ 100,861,615 $
- $
- $
65,494,342 $ 149,419,963 $
7,609 $
- $
-
39,107,407 $ 432,344,044
568,386
39,107,407 $ 432,912,430
-
- $
-
43,089,536 $ 437,587,138
568,386
43,089,536 $ 438,155,524
7,609
- $
Consumer
Payment Performance
Performing
Nonperforming
Total Consumer
Current period gross write offs
Residential real estate
Payment Performance
Performing
Nonperforming
Total Residential real estate
Current period gross write offs
$
$
$
$
$
$
Total by Payment Performance
Performing
Nonperforming
Total
$
Total current period gross write offs $
$
The following table presents commercial credit exposures by internally assigned grades for the year ended
December 31, 2022:
Commercial
Real Estate
Commercial
and
Industrial
2022
Agricultural
State and
Political
Subdivisions
Pass
Special Mention
Substandard
Doubtful
Total
$
485,441,953 $ 131,670,430 $
3,872,824
-
14,351
728,203
161,676
121,526
$
489,329,128 $ 132,681,835 $
28,513,600 $
-
-
21,679
28,535,279 $
24,226,289 $
-
-
-
24,226,289 $
Total
669,852,272
4,601,027
161,676
157,556
674,772,531
For consumer and residential real estate loans, the Company evaluates credit quality based on whether the
loan is considered performing or nonperforming. Nonperforming loans are those loans past due 90 days or
more and loans on nonaccrual. The following tables present the balances of consumer and residential real
estate loans by classes of loan portfolio based on payment performance as of December 31, 2022:
Consumer
Residential
Real Estate
Total
Performing
Nonperforming
Total
$
$
5,030,762 $
-
5,030,762 $
343,246,250 $
455,571
343,701,821 $
348,277,012
455,571
348,732,583
Age Analysis of Past Due Loans by Class
The following are tables which show the aging analysis of past due loans as of December 31:
30-59
Days
60-89
Days
Past Due
Past Due
90 Days or
Greater
Past Due
2023
Total
Past Due
Current
Total
Loans
90 Days
and
Accruing
$
Commercial real estate
Commercial and industrial
Agricultural
State and political
subdivisions
Consumer
Residential real estate
Total
$
- $
76,277
95,130
153,786 $
43,205
193,825
- $
-
-
153,786 $
119,482
288,955
590,540,980 $
144,115,492
28,204,166
590,694,766 $
144,234,974
28,493,121
-
-
-
-
7,423
784,805
963,635 $
-
-
285,131
675,947 $
-
-
138,780
138,780 $
-
-
-
7,423
1,208,716
138,780
1,778,362 $ 1,231,083,613 $ 1,232,861,975 $ 138,780
31,283,590
5,243,094
432,912,430
31,283,590
5,235,671
431,703,714
30-59
Days
60-89
Days
Past Due
Past Due
90 Days or
Greater
Past Due
2022
Total
Past Due
Current
Total
Loans
90 Days
and
Accruing
$
Commercial real estate
Commercial and industrial
Agricultural
State and political
subdivisions
Consumer
Residential real estate
Total
$
211,804 $
50,000
-
-
9,289
164,520
435,613 $
- $
- $
208,365
-
29,990
21,679
211,804 $
288,355
21,679
489,117,324 $
132,393,480
28,513,600
489,329,128 $
132,681,835
28,535,279
-
-
-
-
-
218,137
426,502 $
-
-
455,571
507,240 $
-
9,289
838,228
-
-
157,767
1,369,355 $ 1,022,135,759 $ 1,023,505,114 $ 157,767
24,226,289
5,030,762
343,701,821
24,226,289
5,021,473
342,863,593
Consumer mortgage loans held by the Company in the process of foreclosure amounted to $0 and $250,404
as of December 31, 2023 and 2022, respectively.
Impaired Loans - Prior to Adoption of ASC 326, for Year Ended December 31, 2022
Management considers commercial real estate loans, commercial and industrial loans, agricultural loans,
and state and political subdivision loans which are 90 days or more past due to be impaired. After becoming
90 days or more past due, these categories of loans are measured for impairment. Any consumer and
residential real estate loans related to these delinquent loans are also considered to be impaired. Troubled
debt restructurings are measured for impairment at the time of restructuring. These loans are analyzed to
determine if it is probable that all amounts will not be collected according to the contractual terms of the
loan agreement. If management determines that the fair value of the impaired loan is less than the recorded
investment in the loan (net of previous charge-offs, deferred loan fees or costs, and unamortized premium
or discount), impairment is recognized through a provision or through a charge to the allowance for loan
losses.
27
28
38
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
39
The following tables include the recorded investment and unpaid principal balances for impaired loans
with the associated allowance amount as of December 31, 2022:
Recorded
Investment
Unpaid
Principal
Balance
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
With no related allowance
recorded:
Commercial real estate
Commercial and industrial
Agricultural
State and political
subdivisions
Consumer
Residential real estate
With an allowance recorded:
Commercial real estate
Commercial and industrial
Agricultural
State and political
subdivisions
Consumer
Residential real estate
Total:
Commercial real estate
Commercial and industrial
Agricultural
State and political
subdivisions
Consumer
Residential real estate
$
115,207 $
121,526
-
115,207 $
121,526
-
- $
-
-
71,014 $
129,904
-
7,484
-
-
-
-
-
-
-
104,913
-
-
104,913
341,646
341,646
90,765
151,601
208,702
90,765
151,601
208,702
-
9,317
1,459,794
-
9,317
1,459,794
-
-
101,716
-
-
-
-
302,634
7,484
6,479
19,801
40,344
-
283
148,327
157,609
562,859
226,249
-
5,173
1,393,733
5,829
13,304
9,649
-
718
57,052
1,920,179
1,920,179
215,234
2,345,623
86,552
205,972
273,127
208,702
205,972
273,127
208,702
-
9,317
1,564,707
-
9,317
1,564,707
6,479
19,801
40,344
-
283
148,327
228,623
692,763
226,249
-
5,173
1,495,449
13,313
13,304
9,649
-
718
57,052
Total
$
2,261,825 $
2,261,825 $
215,234 $
2,648,257 $
94,036
Nonaccrual Loans
Loans are considered nonaccrual upon reaching 90 days of delinquency even though the Company may
be receiving partial payments of interest and partial repayments of principal on such loans. When a loan
is placed on nonaccrual status, previously accrued but unpaid interest is deducted from interest income.
Interest income that would have been recorded on nonaccrual loans in accordance with their original
terms totaled approximately $63,692 and $61,839 as of December 31, 2023 and 2022, respectively.
The following table includes the loan balances on nonaccrual status as of December 31:
Commercial real estate
Commercial and industrial
Agricultural
Consumer
Residential real estate
Total
2023
2022
$ 13,064 $ 14,351
95,306 121,526
21,679
21,679
-
-
429,606 397,867
$ 559,655 $ 555,423
The following table presents the amortized cost basis of loans on nonaccrual status and loans past due
over 89 days still accruing as of December 31, 2023:
Nonaccrual Loans
With No
Allowance for
Credit Loss
Nonaccrual Loans
With a Related
Allowance for
Credit Loss
Loans Past Due
Over 89 Days
Still Accruing
$
Commercial real estate
Commercial and industrial
Agricultural
State and political subdivisions
Consumer
Residential real estate
Total
$
- $
95,306
-
-
-
92,704
188,010 $
13,064 $
-
21,679
-
-
336,902
371,645 $
-
-
-
-
-
138,780
138,780
Troubled Debt Restructurings - Prior to Adoption of ASC 326
The following discussion provides disclosures previously required by ASC Subtopic 310-40, "Receivables
- Troubled Debt Restructurings by Creditors", related to loans with troubled debt restructuring
modifications during the year ended December 31, 2022.
As of December 31, 2022, the Company’s loan portfolio includes certain loans that have been modified in
a troubled debt restructuring, where economic concessions have been granted to borrowers who have
experienced or are expected to experience financial difficulties. These concessions typically result from
the Company’s loss mitigation activities and could include reductions in the interest rate, payment
extensions, forgiveness of principal, forbearance, or other actions.
When the Company modifies a loan, management evaluates any possible impairment based on the present
value of expected future cash flows, discounted at the contractual interest rate of the original loan
agreement. If management determines that the value of the modified loan is less than the recorded
investment in the loan, impairment is recognized either through a charge-off to the allowance or a specific
reserve. As of December 31, 2022, a specific reserve allocation of $175,363 had been established against
the troubled debt restructurings and no charge-offs for the troubled debt restructurings were required.
There were no loans modified in a troubled debt restructuring from January 1, 2020 through December 31,
2021, that subsequently defaulted (i.e., 90 days or more past due following a modification) during the year
ended December 31, 2022.
Loan modifications considered troubled debt restructurings completed during the year ended December
31, 2022 consist of one residential real estate loan and one unsecured consumer line of credit. The
Company’s outstanding recorded investment in the loans at the time of the restructuring was $314,487 and
$9,823, for the real estate loan and line of credit, respectively. Modifications to the real estate loan include
a lengthened maturity date and reduced monthly payment. The maturity date of the credit line was
extended. The Company’s outstanding recorded investment amount in these loans was not changed by the
TDR modifications.
29
30
40
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
41
Modifications to Borrowers Experiencing Financial Difficulty
7. GOODWILL
Effective January 1, 2023, the Company implemented ASU 2022-02, which eliminated the recognition
and measure of troubled debt restructurings and enhanced the disclosures for loan modifications to
borrowers experiencing financial difficulty.
Occasionally, the Company modifies loans to borrowers in financial distress by providing principal
forgiveness, term extensions, or interest rate reductions. When principal forgiveness is provided, the
amount of forgiveness is charged off against the allowance for credit losses. In some cases the Company
provides multiple types of concessions for a single loan.
The following table presents the amortized cost basis of gross loans held for investment made to borrowers
experiencing financial difficulty that were modified during the year ended December 31, 2023:
Rate
Reduction
and Term
Extension
Weighted
Average
Weighted
Average
Term
Rate
Term Extension
Extension
Reduction
(Years)
$
Commercial real estate
Commercial and industrial
Agricultural
State and political
subdivisions
Consumer
Residential real estate
Total
$
- $
-
21,679
-
-
42,106
63,785 $
-
180,000
-
-
-
5,195
185,195
2.500 %
1.675 %
0.4
8.0
9.2
As of December 31, 2023 a single loan with modifications to a borrow experiencing financial difficulty
with amortized costs basis of $21,679 was classified as nonaccrual. The Bank did not incur any payment
default during the period from loans that were modified in the 12 months before default to borrowers
experiencing financial difficulty.
6.
PREMISES AND EQUIPMENT
Major classifications of premises and equipment are summarized as follows:
Land and land improvements
Buildings and leasehold improvements
Buildings - construction in progress
Furniture, fixtures, and equipment
Less accumulated depreciation
Total
2023
2022
148,950
$ 2,066,803 $ 2,959,350
33,281,636 32,069,851
9,396
11,373,676 9,750,458
46,871,065 44,789,055
19,473,449 17,993,384
$ 27,397,616 $ 26,795,671
Depreciation charged to operations was $1,587,682 in 2023 and $1,464,812 in 2022.
As of December 31, 2023 and 2022, goodwill had a gross carrying amount of $4,174,955, and accumulated
amortization of $614,013 for a net carrying value of $3,560,942. The carrying amount of goodwill was
tested for impairment in the fourth quarter, after the annual forecasting process. There was no impairment
for the years ended December 31, 2023 and 2022.
8. DEPOSITS
The scheduled maturities of time deposits approximate the following:
Year Ending
December 31,
2024
2025
2026
2027
2028
Thereafter
Amount
340,954,721
46,891,108
6,024,612
6,177,621
1,500,178
1,097,977
402,646,217
$
$
The aggregate of all time deposit accounts of $250,000 or more amounted to $128,137,681 and
$76,886,890 as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, there
were no individual depositors with balances in excess of 5% of total deposits.
9.
SHORT-TERM BORROWINGS
Short-term borrowings include overnight repurchase agreements through the FHLB, federal funds
purchased, and repurchase agreements with customers. The outstanding balances and related information
for short-term borrowings are summarized as follows:
Balance at year-end
Average balance outstanding
Maximum month-end balance
Weighted-average rate at year-end
Weighted-average rate during the year
$
2023
194,541,362
153,450,385
194,541,362
2022
$ 100,326,547
83,774,238
105,337,229
5.66 %
1.79 %
4.71 %
2.51 %
The collateral pledged on the repurchase agreements by the remaining contractual maturity of the
repurchase agreements in the Consolidated Balance Sheet as of December 31, 2023 and 2022, is presented
in the following table.
Securities of U.S. Government Agencies, U.S. Treasuries, and
obligations of state and political subdivisions pledged, fair value
Repurchase agreements
Remaining
Contractual Maturity
Overnight and Continuous
December 31, December 31,
2023
2022
$
4,860,607 $
512,349
2,161,670
786,231
31
32
42
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
43
10. OTHER BORROWINGS
The following table sets forth information concerning other borrowings:
Description
Maturity Range
To
From
Weighted-
Average
Interest
Rate
Stated Interest
Rate Range
From
To
At December 31,
2023
2022
Fixed rate
Fixed rate amortizing
Subordinated debt
Junior subordinated debt
01/08/24
07/15/24
08/25/24
03/17/35
08/04/26
07/15/24
03/03/26
11/23/35
2.41 %
1.33
4.18
7.41
2.01 % 2.53 % $
1.33
4.00
7.14
1.33
4.75
7.67
9,966,000 $ 16,821,000
1,475,655
27,930,998
6,186,000
114,532
25,152,076
6,186,000
Maturities of other borrowings at December 31, 2023, are summarized as follows:
$ 41,418,608 $ 52,413,653
Year Ending
December 31,
2024
2025
2026
2027
2028
2029 and after
Amount
5,598,532
3,359,000
1,123,000
-
-
31,338,076
41,418,608
Weighted-
Average Rate
2.41 %
2.50
2.01
-
-
4.81
4.22
$
$
Borrowing capacity consists of credit arrangements with the FHLB. FHLB borrowings are subject to
annual renewal, incur no service charges, and are secured by a blanket security agreement on certain
investment and mortgage-backed securities, outstanding residential mortgages, and the Bank’s investment
in FHLB stock. As of December 31, 2023, the Bank’s maximum borrowing capacity with the FHLB was
approximately $585.1 million.
The Bank may request a Federal Reserve Advance secured by acceptable collateral. The Bank’s maximum
borrowing capacity with the Federal Reserve Bank as of December 31, 2023 is approximately $109.7
million.
The Bank maintains a $10.0 million, $10.0 million, and $5.0 million federal funds line of credit with three
other financial institutions. The Bank maintains a $750,000 Letter of Credit Facility with a financial
institution. The Bank did not have outstanding borrowings related to these lines of credit at December 31,
2023 or 2022.
In 2014, the Company formed a special purpose entity (“Entity”) to issue $3,093,000 of fixed/floating rate
subordinated debt securities with a stated maturity of March 17, 2035. The rate on these securities is
determined quarterly and floats based on three-month CME Term SOFR plus the spread adjustment of
0.26161 percent, plus margin of 2.00 percent. The Entity may redeem them, in whole or in part, at face
value on or after March 17, 2010. The Company borrowed the proceeds from the Entity in the form of a
$3,093,000 note payable, which is included in the other borrowings section of the Company’s Consolidated
Balance Sheet.
In 2015, the Company formed an additional special purpose entity to issue $3,093,000 of fixed/floating
rate subordinated debt securities with a stated maturity of November 23, 2035. These securities had a fixed
rate of 6.11 percent until November 23, 2015, at which time the rate converted to floating, which is
determined quarterly, and floats based on three-month CME Term SOFR plus the spread adjustment of
0.26161 percent, plus margin of 1.50 percent. The Entity may redeem them, in whole or in part, at face
33
value on or after November 23, 2010. The Company borrowed the proceeds from the Entity in the form of
a $3,093,000 note payable, which is included in the other borrowings section of the Company’s
Consolidated Balance Sheet.
In 2020, the Company issued $8,097,000 of fixed rate subordinated capital notes with stated maturities of
June 23, 2030 through April 1, 2031. During 2023, holders of these notes exchanged with the Company
notes at face value totaling $2,830,000 in exchange for the equivalent value in new common stock share
issuances. These securities bear a fixed annual rate of 4.75 percent. The Company may redeem them, in
whole or in part, at face value on or after June 23, 2025. These borrowings are included in the liabilities
section of the Company’s Consolidated Balance Sheet.
In 2021, the Company issued $20,000,000 of fixed rate subordinated capital notes with a stated maturity
of April 7, 2031. The fixed securities bear an annual rate of 4.00 percent. The Company may redeem them,
in whole or in part, at face value on or after April 7, 2026. These borrowings are included in the liabilities
section of the Company’s Consolidated Balance Sheet.
The Company’s minority interests in these entities were recorded at the initial investment amount and are
included in the accrued interest and other assets on the Consolidated Balance Sheet. These entities are not
consolidated as part of the Company’s consolidated financial statements.
11. DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic
conditions. The Company principally manages its exposures to a wide variety of business and operational
risks through management of its core business activities. The Company manages economic risks, including
interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets
and liabilities and through the use of derivative financial instruments. Specifically, the Company enters
into derivative financial instruments to manage exposures that arise from business activities that result in
the receipt or payment of future known and uncertain cash amounts, the value of which are determined by
interest rates. The Company’s derivative financial instruments are used to manage differences in the
amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected
cash payments principally related to certain variable rate borrowings. The Company also has interest rate
derivatives that result from a service provided to certain qualifying customers and, therefore, are not used
to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book
with respect to its derivative instruments in order to minimize its net risk exposure resulting from such
transactions.
The Company has contracted with a third party to engage pay-fixed interest rate swap contracts and the
outstanding as of December 31, 2023, is being utilized to hedge $115.0 million in floating rate debt. At
December 31, 2023 and 2022, the information pertaining to outstanding interest rate swap agreements is
as follows:
2023
2022
Notional amount
Weighted-average pay rate
$
208,235,812
$
3.58 %
147,437,424
3.39 %
Receive rate
Weighted-average maturity in
years
Unrealized gain (loss) relating
to interest rate swaps
1 or 3-Mo.
Fallback Rate (SOFR);
1-Mo. Term SOFR
1 or 3-Mo.
Libor; 1-Mo. Term SOFR
4.0
3,719,694
5.0
4,757,978
34
44
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
45
Cash Flow Hedges of Interest Rate Risk
Derivative Instruments
The Company’s objectives in using interest rate derivatives are to add stability to interest income and
expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company
has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate
swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a
counterparty in exchange for the Company making fixed interest payments. As of December 31, 2023 and
2022, the Company had eleven interest rate swaps with a notional of $115.0 million associated with the
Company’s cash outflows associated with various floating-rate amounts.
For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the
derivative is initially reported in other comprehensive income (outside of earnings), net of tax, and
subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective
portion of changes in the fair value of the derivative is recognized directly in earnings. The Company
assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the
derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The
Company did not recognize any hedge ineffectiveness in earnings during the periods ended December 31,
2023 and 2022. Amounts reported in accumulated other comprehensive income related to derivatives will
be reclassified to interest expense as interest payments are made on the Company’s variable-rate liabilities.
During the next twelve months, the Company estimates that $0 will be reclassified as an increase in interest
expense.
Credit-Risk-Related Contingent Features
The Company has agreements with certain of its derivative counterparties that contain the following
provisions:
•
•
•
If the Company defaults on any of its indebtedness, including default where repayment of the
indebtedness has not been accelerated by the lender, then the Company could also be declared
in default on its derivative obligations;
If the Company fails to maintain its status as a well/adequately capitalized institution, then the
counterparty could terminate the derivative positions, and the Company would be required to
settle its obligations under the agreements;
If the Company fails to maintain a specified minimum leverage ratio, then the Company could
be declared in default on its derivative obligations.
At December 31, 2023, the fair value of derivatives in a net asset position, which includes accrued interest
and any credit valuation adjustments related to these agreements, was $3,719,694. At December 31, 2023,
the Company had no required cash collateral with its derivative counterparties and was holding cash
collateral of certain derivative counterparties in the amount of $9,030,000.
Fair Values of Derivative Instruments on the Balance Sheet
The following table presents the fair values of derivative instruments in the consolidated balance sheet:
December 31, 2023
Interest rate derivatives
December 31, 2022
Interest rate derivatives
Assets
Liabilities
Balance Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
Other assets
$
9,255,978 Other liabilities $
(5,536,284 )
Other assets
$ 11,650,894 Other liabilities $
(6,892,916 )
35
The Company enters into interest rate swaps that allow our commercial loan customers to effectively
convert a variable-rate commercial loan agreement to a fixed-rate loan agreement. Under these agreements,
the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap
agreement, which serves to effectively swap the customer’s variable-rate into a fixed-rate. The Company
then enters into a swap agreement with a third party in order to economically hedge its exposure through
the customer agreement.
Although the Company has determined that the majority of the inputs used to value its derivatives fall
within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives
may use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by
itself and its counterparties. However, at December 31, 2023, the Company has assessed the significance
of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has
determined they are not significant. As a result, the Company has determined that its derivative valuations
in their entirety are classified in Level 2 of the fair value hierarchy.
Notional Amount
December 31,
2023
2022
Cash flow interest
rate swap
Maturing in 2024
Maturing in 2025
$
6,000,000 $ 6,000,000
22,000,000 22,000,000
Maturing in 2026
Maturing in 2027
Maturing in 2028
Maturing in 2030
32,000,000 22,000,000
10,000,000 10,000,000
-
40,000,000
5,000,000 5,000,000
Interest
Rate
Paid
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Interest
Rate
Received
Fair Value
December 31,
2023
2022
3 Mo. SOFR, 0 look back
3 Mo. SOFR, 0 look back
3 Mo. SOFR / Daily Wtd Avg
USA SOFR
3 Mo. SOFR, 0 look back
Daily Wtd Avg USA SOFR
3 Mo. SOFR, 0 look back
$
105,609 $
254,978
863,128 1,352,949
969,351 1,550,817
528,196
707,473
472,589
780,821
891,761
$ 115,000,000 $ 65,000,000
$ 3,719,694 $ 4,757,978
Customer interest
rate swap
Maturing in 2025
Maturing in 2026
$
9,100,000 $ 9,100,000
9,266,000 9,266,000
Maturing in 2027
Maturing in 2029
10,776,388 10,776,388
10,470,000 10,470,000
Maturing in 2030
Maturing in 2031
30,700,424 19,902,036
17,203,000 17,203,000
Maturing in 2032
Maturing in 2035
2,000,000 2,000,000
3,720,000 3,720,000
$ 93,235,812 $ 82,437,424
Third party interest
rate swap
Maturing in 2025
Maturing in 2026
$
9,100,000 $ 9,100,000
9,266,000 9,266,000
Maturing in 2027
Maturing in 2029
10,776,388 10,776,388
10,470,000 10,470,000
Maturing in 2030
Maturing in 2031
30,700,424 19,902,036
17,203,000 17,203,000
Maturing in 2032
Maturing in 2035
2,000,000 2,000,000
3,720,000 3,720,000
$ 93,235,812 $ 82,437,424
1 Mo. SOFR + Margin
1 Mo. SOFR + Margin
1 Mo. SOFR CME Term +
Margin
1 Mo. SOFR + Margin
1 Mo. SOFR CME Term +
Margin
1 Mo. SOFR + Margin
1 Mo. SOFR CME Term +
Margin
1 Mo. SOFR + Margin
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
$
(197,592 ) $
(163,287 )
(291,326 )
(232,956 )
90,879
(744,976 )
45,994
(942,636 )
(1,699,229 ) (2,163,077 )
(2,044,541 ) (2,415,478 )
(135,103 )
(642,434 )
(167,466 )
(725,971 )
$ (5,536,283 ) $ (6,892,916 )
1 Mo. SOFR + Margin
1 Mo. SOFR + Margin
1 Mo. SOFR CME Term +
Margin
1 Mo. SOFR + Margin
1 Mo. SOFR CME Term +
Margin
1 Mo. SOFR + Margin
1 Mo. SOFR CME Term +
Margin
1 Mo. SOFR + Margin
$
197,592 $
163,287
291,326
232,956
(90,879 )
744,976
(45,994 )
942,636
1,699,229 2,163,077
2,044,541 2,415,478
135,103
642,434
167,466
725,971
$ 5,536,283 $ 6,892,916
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
36
46
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
47
12.
INCOME TAXES
The provision for federal income taxes for the years ended December 31, 2023 and 2022 consists of:
Current
Deferred
$
2023
2,683,649 $
(29,206 )
2022
2,243,421
179,626
Total provision
$
2,654,443 $
2,423,047
The tax effects of deductible and taxable temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 are as follows:
2023
2022
Deferred tax assets:
$
Allowance for credit losses
Deferred compensation
Deferred incentive credits
Deferred loan fees
Asset valuation allowances
Employee compensation accruals
Nonaccrual interest receivable
Unrealized loss on available-for-sale securities
Partnerships
Lease liability
Capital loss carryforward
Other
Deferred tax assets
Deferred tax liabilities:
Premises and equipment
Goodwill
Deferred loan fees
Unrealized gain on swaps - balance sheet hedge
Fair value adjustment - equity securities
Right of use asset
Deferred tax liabilities
Net deferred tax assets
1,584,444 $
429,821
176,110
79,627
407,694
243,278
13,375
4,438,460
169,031
947,835
-
691
8,490,366
976,111
431,657
-
716,784
135,715
919,429
3,179,696
2,170,398
431,972
203,917
-
62,437
290,265
12,986
5,266,059
105,907
927,950
978
691
9,473,560
660,323
405,166
35,880
975,427
166,196
904,204
3,147,196
6,326,364
$
5,310,670 $
No valuation allowance was established at December 31, 2023 and 2022, in view of the Company’s ability
to carryback taxes paid in previous years and certain tax strategies, coupled with the anticipated future
taxable income as evidenced by the Company’s earnings potential.
The reconciliation between the federal statutory rate and the Company’s effective consolidated income tax
rate is as follows:
2023
2022
Provision at statutory rate
Tax-exempt interest
Life insurance income
Investment tax credits
Other
Income tax expense and
effective rate
% of
Pretax
Income
% of
Pretax
Income
Amount
$ 3,392,373
(213,359 )
(224,309 )
(329,442 )
29,180
21.0 %
(1.3 )
(1.4 )
(2.0 )
0.1
Amount
$ 3,209,503
(250,825 )
(166,018 )
(329,442 )
(40,171 )
21.0 %
(1.6 )
(1.1 )
(2.2 )
(0.3 )
$ 2,654,443
16.4 %
$ 2,423,047
15.8 %
The Company prescribes a recognition threshold and a measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from
tax positions should be recognized in the financial statements only when it is more likely than not that the
tax position will be sustained upon examination by the appropriate taxing authority that would have full
knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition
threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized
upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition
threshold should be recognized in the first subsequent financial reporting period in which that threshold is
met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition
threshold should be derecognized in the first subsequent financial reporting period in which that threshold
is no longer met.
There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The
Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the
provision for income taxes in the Consolidated Statement of Income. The Company’s federal and state
income tax returns for taxable years through 2017 have been generally closed for purposes of examination
by the Internal Revenue Service and the Pennsylvania Department of Revenue.
13. EMPLOYEE BENEFITS
Savings Plan
The Bank maintains a qualified 401(k) salary reduction and profit sharing plan that covers substantially all
employees. Under the plan, employees make voluntary, pretax contributions to their accounts, and the
Bank contributions to the plan are at the discretion of the Board of Directors. Contributions by the Bank
charged to operations were $572,498 and $531,135 for the years ended December 31, 2023 and 2022,
respectively. The fair value of plan assets includes $3,155,149 and $3,049,640 pertaining to the value of
the Company’s common stock that is held by the plan as of December 31, 2023 and 2022, respectively.
37
38
48
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
49
Deferred Compensation Plan
Stock Option Plan
The Company has nonqualified deferred compensation plans that allow directors and senior executives to
defer fees and salaries. Outstanding balances under these arrangements as of December 31, 2023 and 2022
were $2,046,767 and $2,057,010, respectively, and are reported as “Other liabilities” on the Consolidated
Balance Sheet. Expenses related to these plans were $175,021 and ($228,263) for the years ended
December 31, 2023 and 2022, respectively.
Restricted Stock Plan
The Company maintains a Restricted Stock Plan (the “Plan”). Employees and board members are eligible
to receive awards of restricted stock based upon performance-related requirements. Awards granted under
the Plan are in the form of the Company’s common stock and are subject to certain vesting requirements
including continuous employment or service with the Company. Since inception of the Plan in 1988, the
Company has authorized share pools totaling 480,000 shares of the Company’s common stock to the plan.
The Plan has a remaining available share pool of 177,409 shares and 194,100 shares as of December 31,
2023 and 2022, respectively. The Plan assists the Company in attracting, retaining and motivating
employees and non-employee directors to make substantial contributions to the success of the Company
and to increase the emphasis on the use of equity as a key component of compensation.
Compensation expense recognized related to restricted stock awards was $439,194 and $557,833 for the
years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, unrecognized
compensation cost related to restricted stock awards was $1,288,195, which is expected to be recognized
over a weighted average life of 3.25 years.
The following is a summary of the status of the Company’s outstanding restricted stock awards as of
December 31, 2023 and 2022, and changes therein during the years then ended:
Outstanding at December 31, 2021
Granted
Released from Restrictions
Forfeited
Outstanding at December 31, 2022
Granted
Released from Restrictions
Forfeited
Outstanding at December 31, 2023
Shares of
Restricted
Stock
Outstanding
Weighted-
Average
Grant Date
Fair Value
73,186 $
17,355
(22,089 )
(1,208 )
67,244
22,428
(24,377 )
(5,737 )
59,558 $
28.98
36.35
28.01
30.16
31.18
33.52
30.41
28.31
32.65
The Company has a stock option plan available for granting stock-based compensation awards to
employees and board members. The Company authorized a share pool of 760,000 shares of the Company’s
common stock for granting incentive stock options and non-qualified stock option awards. The stock
option plan has a remaining available share pool of 77,955 and 114,056 shares as of December 31, 2023
and 2022, respectively. The exercise price for the purchase of shares subject to a stock option may not be
less than 100 percent of the fair market value of the shares covered by the option on the date of the grant.
The term of stock options will not exceed ten years from the date of grant. Options granted are primarily
vested evenly over a three-year period from the grant date. Compensation expense recognized related to
stock option awards was $233,159 and $188,518 for the years ended December 31, 2023 and 2022,
respectively. As of December 31, 2023, unrecognized compensation cost related to stock option awards
was $337,465 which is expected to be recognized over a weighted-average life of 1.84 years.
The following table presents share data related to the outstanding option awards:
Incentive Stock Options
Weighted-
Average
Exercise
Price
Non-Qualified Stock Options
Weighted-
Average
Exercise
Price
Options
Outstanding
Outstanding, December 31, 2021
Granted
Exercised
Forfeited/Expired
Outstanding, December 31, 2022
Granted
Exercised
Forfeited/Expired
Options
Outstanding
164,617 $
32,190
(14,788 )
(3,000 )
179,019
31,940
(22,626 )
(7,902 )
27.42
36.00
24.24
30.38
29.17
33.80
25.52
33.35
Outstanding, December 31, 2023
180,431 $
30.27
Exercisable at December 31, 2023
122,343 $
28.51
67,652 $
7,585
(15,820 )
(1,304 )
58,113
12,063
(9,858 )
-
60,318 $
40,846 $
23.34
36.00
19.16
28.89
26.01
33.80
21.27
-
28.34
25.69
39
40
50
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
51
Option awards outstanding and exercisable as of December 31, 2023:
14. COMMITMENTS
Incentive Stock Options
Expiration
Date
Exercise
Price
Share
Awards
Outstanding
Share
Awards
Exercisable
Remaining
Contractual
Life (years)
03/15/24
03/15/24
03/15/24
03/15/24
04/01/24
04/01/25
03/30/26
10/31/26
12/12/26
04/03/27
04/02/28
04/01/29
04/03/30
12/01/30
04/03/31
10/01/31
03/25/32
04/03/33
29.63
31.60
30.05
36.00
18.25
19.48
22.00
22.40
22.38
27.00
29.63
31.60
25.65
30.00
30.05
38.25
36.00
33.80
800
800
533
266
3,222
5,568
6,300
1,000
1,000
7,150
20,700
22,901
22,027
2,900
25,634
1,500
28,090
30,040
180,431
800
800
533
266
3,222
5,568
6,300
1,000
1,000
7,150
20,700
22,901
22,027
2,900
16,824
1,000
9,352
-
122,343
0.21
0.21
0.21
0.21
0.25
1.25
2.25
2.84
2.95
3.26
4.26
5.25
6.26
6.92
7.26
7.76
8.24
9.26
Non-Qualified Stock Options
Expiration
Date
Exercise
Price
Share
Awards
Outstanding
Share
Awards
Exercisable
Remaining
Contractual
Life (years)
04/01/24
04/01/25
03/30/26
10/31/26
12/12/26
04/03/27
04/02/28
04/01/29
04/03/30
10/28/30
04/03/31
03/25/32
04/03/33
18.25
19.48
22.00
22.40
22.38
27.00
29.63
31.60
25.65
28.25
30.05
36.00
33.80
2,222
4,436
7,656
1,000
1,000
8,064
1,260
2,780
4,677
1,000
6,575
7,585
12,063
60,318
2,222
4,436
7,656
1,000
1,000
8,064
1,260
2,780
4,677
1,000
4,229
2,522
-
40,846
0.25
1.25
2.25
2.84
2.95
3.26
4.26
5.25
6.26
6.83
7.26
8.24
9.26
In the normal course of business, there are outstanding commitments and contingent liabilities such as
commitments to extend credit, financial guarantees, and letters of credit that are not reflected in the
accompanying consolidated financial statements. The Company does not anticipate any losses as a result
of these transactions. These instruments involve, to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the Consolidated Balance Sheet.
The contract or notional amounts of those instruments reflect the extent of involvement the Company has
in the particular classes of financial instruments that consisted of the following:
Commitments to extend credit
Standby letters of credit
$ 478,016,671 $ 390,351,246
7,301,502
9,388,062
Total
$ 487,404,733 $ 397,652,748
2023
2022
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily represent future cash
requirements.
Standby letters of credit represent conditional commitments issued by the Company to guarantee the
performance of a customer to a third party. These instruments are issued primarily to support bid or
performance-related contracts. The coverage period for these instruments is typically a one-year period,
with an annual renewal option subject to prior approval by management. Fees earned from the issuance of
these letters are recognized upon expiration of the commitment period. For secured letters of credit, the
collateral is typically Bank deposit instruments or real estate.
Lease Commitments
The Company leases office space and real estate for its bank branches with terms ranging from two years
to eighteen years. The Company’s leases are classified as operating leases. In accordance with ASC 842,
operating lease agreements are required to be recognized on the consolidated balance sheet as a right-of-
use (ROU) asset and a corresponding lease liability. A combined ROU asset balance of $4,378,232 and
$4,305,731 related to these operating leases is included in Accrued Interest and Other Assets on the
Consolidated Balance Sheet as of December 31, 2023 and 2022, respectively. A combined lease liability
of $4,513,498 and $4,418,809 related to these operating leases is included in Accrued Interest and Other
Liabilities on the Consolidated Balance Sheet as of December 31, 2023 and 2022, respectively.
52
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
53
41
42
Maturities of our lease liabilities for all operating leases for each of the next five years and thereafter are
as follows:
16. REGULATORY CAPITAL
$
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: imputed interest
Present value of lease liabilities $
Operating Lease
Payments
488,605
468,014
394,024
392,816
404,307
3,488,569
5,636,335
1,122,837
4,513,498
The calculated amount of the lease liability in the preceding table is impacted by the length of the
lease term and the discount rate used to present value the minimum lease payments. The Company’s
lease agreement includes one or more options to renew at the Company’s discretion. If at lease
inception the Company considers the exercising of a renewal option to be reasonably certain, the
Company will include the extended term in the calculation of the ROU asset and lease liability.
Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this
rate is readily determinable. As most of our leases do not provide an implicit rate, we use the fully
collateralized FHLB borrowing rate, commensurate with the lease terms based on the information
available at the lease commencement date in determining the present value of the lease payments.
Our combined operating leases have a weighted-average discount rate of 3.36% and 3.22%, and a
weighted-average remaining lease term of 13.0 years and 14.1 years as of December 31, 2023 and 2022,
respectively.
Contingent Liabilities
The Company from time to time may be a party in various legal actions from the normal course of business
activities. Management believes the liability, if any, arising from such actions will not have a material
adverse effect on the Company’s financial position.
15. REGULATORY RESTRICTIONS
Loans
Federal law prevents the Company from borrowing from the Bank unless the loans are secured by specific
obligations. Further, such secured loans are limited in amount to 10 percent of the Bank’s common stock
and capital surplus. There were no such borrowings by the Company during 2023 and 2022.
Dividends
The Pennsylvania Banking Code restricts the availability of capital surplus for dividend purposes. At
December 31, 2023, the Bank had a capital surplus of $24,179,048 which was not available for distribution
to the Company as dividends.
Federal regulations require the Company and the Bank to maintain minimum amounts of capital.
Specifically, each is required to maintain certain minimum dollar amounts and ratios of Total Tier I and
Common Equity Tier 1 capital to risk-weighted assets and of Tier I capital to average total assets.
In addition to the capital requirements, the Federal Deposit Insurance Corporation Improvement Act
(“FDICIA”) established five capital categories ranging from “well capitalized” to “critically
undercapitalized.” Should any institution fail to meet the requirements to be considered “adequately
capitalized,” it would become subject to a series of increasingly restrictive regulatory actions.
As of December 31, 2023 and 2022, the FDIC categorized the Company and the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be classified as a well capitalized financial
institution, Total risk-based, Common Equity Tier I, Tier I risk-based, and Tier I leverage capital ratios
must be at least 10 percent, 6.50 percent, 8 percent, and 5 percent, respectively.
The Company’s actual capital ratios are presented in the following table that shows the Company met all
regulatory capital requirements:
Total capital
(to risk-weighted assets)
Actual
For capital adequacy purposes
To be well capitalized
Common Equity Tier I
(to risk-weighted assets)
Actual
For capital adequacy purposes
To be well capitalized
Tier I capital
(to risk-weighted assets)
Actual
For capital adequacy purposes
To be well capitalized
Tier I capital
(to average assets)
Actual
For capital adequacy purposes
To be well capitalized
2023
2022
Amount
Ratio
Amount
Ratio
$ 144,144,790 10.70 % $ 129,819,958 11.57 %
107,771,297
8.00
134,714,121 10.00
89,781,117
8.00
112,226,396 10.00
$ 103,977,598
60,621,354
87,564,178
7.72 % $
4.50
6.50
85,694,466
50,501,878
72,947,157
7.64 %
4.50
6.50
$ 109,977,598
80,828,472
107,771,297
8.16 % $
6.00
8.00
91,694,466
67,335,838
89,781,117
8.17 %
6.00
8.00
$ 109,977,598
60,567,620
75,709,524
7.26 % $
4.00
5.00
91,694,466
52,701,512
65,876,890
6.96 %
4.00
5.00
43
44
54
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
55
The Bank’s actual capital ratios are presented in the following table which shows the Bank met all
regulatory capital requirements:
Total capital
(to risk-weighted assets)
Actual
For capital adequacy purposes
To be well capitalized
Common Equity Tier I
(to risk-weighted assets)
Actual
For capital adequacy purposes
To be well capitalized
Tier I capital
(to risk-weighted assets)
Actual
For capital adequacy purposes
To be well capitalized
Tier I capital
(to average assets)
Actual
For capital adequacy purposes
To be well capitalized
2023
2022
Amount
Ratio
Amount
Ratio
$ 144,144,393 10.61 % $ 120,906,721 10.71 %
108,636,951
8.00
135,796,189 10.00
8.00
90,281,978
112,852,473 10.00
$ 134,744,200
61,108,285
88,267,523
9.92 % $ 110,378,229
50,783,613
4.50
73,354,107
6.50
9.78 %
4.50
6.50
$ 134,744,200
81,477,713
108,636,951
9.92 % $ 110,378,229
67,711,484
6.00
90,281,978
8.00
9.78 %
6.00
8.00
$ 134,744,200
60,507,205
75,634,006
8.91 % $ 110,378,229
52,638,947
4.00
65,798,684
5.00
8.39 %
4.00
5.00
17. FAIR VALUE MEASUREMENTS
The following disclosures show the hierarchical disclosure framework associated with the level of pricing
observations utilized in measuring assets and liabilities at fair value. The three broad levels of pricing
observations are as follows:
Level I:
Level II:
Quoted prices are available in active markets for identical assets or liabilities as of the
reported date.
Pricing inputs are other than the quoted prices in active markets, which are either directly
or indirectly observable as of the reported date. The nature of these assets and liabilities
includes items for which quoted prices are available but traded less frequently and items
that are fair-valued using other financial instruments, the parameters of which can be
directly observed.
Level III:
Valuations derived from valuation techniques in which one or more significant inputs or
significant value drivers are unobservable.
This hierarchy requires the use of observable market data when available.
The following tables present the assets and liabilities reported on the Consolidated Balance Sheet at their
fair value on a recurring basis as of December 31, 2023 and 2022, by level within the fair value hierarchy.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is
significant to the fair value measurement.
Level I
Level II
Level III
Total
December 31, 2023
Investment and equity securities at fair
value:
U.S. treasury securities
U.S. government agency securities
Obligations of states and
political subdivisions
Corporate securities
Mortgage-backed securities in
government-sponsored entities
Collateralized mortgage obligations
Equity securities
$
- $
-
-
-
26,507,745 $
58,373,229
- $ 26,507,745
- 58,373,229
34,783,092
1,437,714
-
-
34,783,092
1,437,714
-
-
2,712,968
30,068,198
27,807,826
-
30,068,198
-
- 27,807,826
2,712,968
-
Total
$ 2,712,968 $
178,977,804 $
- $ 181,690,772
Derivatives at fair value: (1)
Assets
Liabilities
$
$
- $
- $
9,255,978 $
(5,536,284 ) $
- $
- $
9,255,978
(5,536,284 )
Level I
Level II
Level III
Total
December 31, 2022
Investment and equity securities at fair
value:
U.S. treasury securities
U.S. government agency securities
Obligations of states and
political subdivisions
Corporate securities
Mortgage-backed securities in
government-sponsored entities
Collateralized mortgage obligations
Equity securities
$
- $
-
-
-
19,132,495 $
43,007,551
- $ 19,132,495
- 43,007,551
34,276,710
6,452,429
-
-
34,276,710
6,452,429
-
-
2,858,117
26,471,896
25,967,470
-
-
26,471,896
- 25,967,470
2,858,117
-
Total
$ 2,858,117 $
155,308,551 $
- $ 158,166,668
Derivatives at fair value: (1)
Assets
Liabilities
$
$
- $
- $
11,650,894 $
(6,892,916 ) $
- $ 11,650,894
(6,892,916 )
- $
(1) Derivative assets and liabilities at fair value are included in our Consolidated Balance Sheet in Accrued interest and
other assets and Accrued interest and other liabilities, respectively.
Investment Securities
The fair market value of investment securities is equal to the available quoted market price. If no quoted
market price is available, fair value is estimated using the quoted market price for similar securities. Fair
value for certain held to maturity securities were determined utilizing discounted cash flow models, due to
the absence of a current market to provide reliable market quotes for the instruments.
45
46
56
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
57
Collateral Dependent Impaired Loans
The Company has measured impairment on loans generally based on the fair value of the loan’s collateral
on a non-recurring basis. Fair value is generally determined based upon independent third-party appraisals
of the properties. In some cases, management may adjust the appraised value due to the age of the appraisal,
changes in market conditions, or observable deterioration of the property since the appraisal was
completed. Additionally, management makes estimates about expected costs to sell the property which are
also included in the net realizable value. If the fair value of the collateral dependent loan is less than the
carrying amount of the loan, a specific reserve for the loan is made in the allowance for loan losses, or a
charge-off is taken to reduce the loan to the fair value of the collateral (less estimated selling costs) and
the loan is included in the table above as a Level III measurement.
Derivatives
Derivative instruments are recorded at fair value based upon commercially reasonable industry and market
practices for valuing similar financial instruments. Certain inputs to the credit valuation models may be
based on assumptions and best estimates that are not readily observable in the marketplace. Valuations do
not reflect trading costs or counterparty charges that could apply if positions are terminated.
Mortgage Servicing Rights
Mortgage servicing rights are accounted for under the amortization method and are adjusted to the lower
of aggregate cost or estimated fair value on a semi-annual basis or more frequently as deemed appropriate.
Fair value is estimated by projecting and discounting future cash flows. Various assumptions including
future cash flows, market discount rates, expected prepayment rates, servicing costs, and other factors are
used in the valuation of mortgage servicing rights.
The following tables present the assets measured on a nonrecurring basis on the Consolidated Balance
Sheet at their fair value as of December 31, 2023 and 2022, by level within the fair value hierarchy.
Impaired loans that are collateral dependent are written down to fair value through the establishment of
specific reserves. Techniques used to value the collateral that secure the impaired loans include: quoted
market prices for identical assets classified as Level I inputs and observable inputs employed by certified
appraisers for similar assets classified as Level II inputs. In cases where valuation techniques included
inputs that are unobservable and are based on estimates and assumptions developed by management based
on the best information available under each circumstance, the asset valuation is classified as Level III
input. Other real estate owned is measured at fair value, less cost to sell at the date of foreclosure.
Valuations are periodically performed by management and the assets are carried at the lower of carrying
amount, or fair value less cost to sell. The fair value for mortgage servicing rights is estimated by
discounting contractual cash flows and adjusting for prepayment estimates. Discount rates are based upon
rates generally charged for such loans with similar characteristics. Collateral dependent impaired loans as
of December 31, 2023 consists of a single commercial loan, with all inventory and equipment of the
business assigned as loan collateral.
Assets:
Collateral dependent impaired loans
Mortgage servicing rights
Assets:
Impaired loans
Mortgage servicing rights
Level I
Level II
Level III
Total
December 31, 2023
$
- $
-
- $
-
149,934 $
162,412
149,934
162,412
Level I
Level II
Level III
Total
December 31, 2022
- $
-
- $ 2,046,591 $ 2,046,591
175,583
-
175,583
$
47
The following tables provide a listing of significant unobservable inputs used in the fair value measurement
process for items valued utilizing Level III techniques as of December 31, 2023 and 2022.
Valuation
Fair Value Techniques
Unobservable Inputs
Range
December 31, 2023
Collateral dependent
impaired loans
$ 149,934
Property
appraisals
Management discount for
property type and recent
market volatility
15.00% - 100.00% discount
Weighted Average (15.00%)
Mortgage servicing
rights
$ 162,412
Discounted
cash flows
Discount rate
5.85% - 6.44% discount
Weighted Average (6.15%)
Prepayment speeds
1.10% - 1.56% prepayment
factor
Weighted Average (1.26%)
Valuation
Fair Value Techniques
Unobservable Inputs
Range
December 31, 2022
Impaired loans
$ 1,844,464
Impaired loans
$ 202,127
Discounted
cash flows
Property
appraisals
Discount rate
Management discount for
property type and recent
market volatility
4.00% - 10.00% discount
Weighted Average (5.20%)
15.00% - 100.00% discount
Weighted Average (23.13%)
Mortgage servicing
rights
$ 175,683
Discounted
cash flows
Discount rate
5.19% - 5.90% discount
Weighted Average (5.55%)
Prepayment speeds
1.30% - 5.28% prepayment
factor
Weighted Average (1.50%)
48
58
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
59
18. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
19. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The estimated fair values of the Company’s financial instruments not required to be measured or reported
at fair value at December 31, 2023 and 2022 are as follows:
The following table presents the changes in accumulated other comprehensive income (loss) by component
net of tax for the year ended December 31, 2023 and 2022:
Carrying
Value
Fair
Value
2023
Level
I
Level
II
Level
III
Financial assets:
Investment securities
held to maturity
Net loans
Financial liabilities:
Deposits
Other borrowings
Financial assets:
Investment securities
held to maturity
Net loans
Financial liabilities:
Deposits
Other borrowings
10,891,602 $
$
1,225,317,002 1,166,903,286
9,972,415 $
- $
-
9,972,415 $
-
- 1,166,903,286
$ 1,179,069,408 $ 1,195,773,897 $ 776,423,191 $
41,418,608
39,149,549
-
- $ 419,350,706
39,149,549
-
Carrying
Value
Fair
Value
2022
Level
I
Level
II
Level
III
10,763,833 $
$
1,013,169,883
10,070,997 $
953,469,471
- $
-
10,070,997 $
-
-
953,469,471
$ 1,037,119,718 $ 1,031,116,751 $ 734,720,701 $
52,413,653
48,344,590
-
- $ 296,396,050
48,344,590
-
Accumulated other comprehensive
loss, December 31, 2021
Other comprehensive loss before
reclassification
Amounts reclassified from
accumulated other comprehensive loss
Amounts from change to AOCI
related to cash flow hedges
Accumulated other comprehensive
income (loss), December 31, 2022
Other comprehensive income before
reclassification
Amounts reclassified from
accumulated other comprehensive loss
Amounts from change to AOCI
related to cash flow hedges
Accumulated other comprehensive
income (loss), December 31, 2023
Net Unrealized
Gains (Losses)
on Investment
Securities
Cash Flow
Hedges
Total
$
(392,915 ) $
(1,179,618 ) $
(1,572,533 )
(19,417,150 )
-
(19,417,150 )
(348 )
-
(348 )
-
4,849,082
4,849,082
$
(19,810,413 ) $
3,669,464 $
(16,140,949 )
3,113,225
125
-
-
3,113,225
125
-
(972,993 )
(972,993 )
$
(16,697,063 ) $
2,696,471 $
(14,000,592 )
As of December 31, 2023 and 2022, for cash and cash equivalents, certificates of deposits, loans held for
sale, regulatory stock, bank-owned life insurance, accrued interest receivable, short-term borrowings, and
accrued interest payable, the carrying value is a reasonable estimate of fair value.
The following table presents significant amounts reclassified out of each component of accumulated other
comprehensive loss for the year ended December 31, 2023 and 2022:
Amount Reclassified
from Accumulated
Other Comprehensive
Income (Loss)
Affected Line Item
in the Consolidated
Statement of Income where
Net Income is Presented
Unrealized losses on investment
securities, December 31, 2023
Unrealized gains on investment
securities, December 31, 2022
$
$
$
$
(158 ) Investment securities losses, net
33 Income tax benefit
(125 )
440 Investment securities gains, net
(92 ) Income tax expense
348
20. SUBSEQUENT EVENTS
Management has reviewed events occurring through March 14, 2024, the date the financial statements
were issued, and no additional subsequent events occurred requiring accrual or disclosure.
49
50
60
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
61
Board of Directors of Kish Bancorp, Inc.
Kathleen L. Rhine, Michael K. Halloran, William P. Hayes, Angela D. Thompson, Frances V. Vaughn
Front row:
George V. Woskob, Paul H. Silvis, William L. Dancy, Paul G. Howes, Gregory T. Hayes,
James A. Troha, William S. Lake, Eric J. Barron
Back row:
BOARD OF DIRECTORS
OF KISH BANK
William P. Hayes, Chairman
Paul G. Howes, Vice Chairman
Eric J. Barron, Member
William L. Dancy, Member
Michael K. Halloran, Member
Gregory T. Hayes, Member
William S. Lake, Member
Kathleen L. Rhine, Member
Paul H. Silvis, Member
James A. Troha, Member
Angela D. Thompson, Member
Frances V. Vaughn, Member
George V. Woskob, Member
BLAIR COUNTY REGIONAL BOARD
Maryann Joyce Bistline, Member
Elizabeth M. Burke, Member
George C. Ferris, II, Member
James P. Foreman, Member
Robert G. Okonak, Jr., Member
Randolph W. Tarpey, Member
William D. Thompson, III, Member
CENTRE COUNTY REGIONAL BOARD
A. Christian Baum, Member
Adam R. Fernsler, Member
H. Amos Goodall, Jr., Member
Paul G. Howes, Member
Oscar W. Johnston, Member
Michael J. Krentzman, Member
Maureen L. Mulvihill, Member
Kathleen L. Rhine, Member
Paul H. Silvis, Member
George V. Woskob, Member
Brandon M. Zlupko, Member
HUNTINGDON COUNTY
REGIONAL BOARD
Wayne A. Hearn, Member
James J. Lakso, Member
Burgess A. Smith, Member
Delmont R. Sunderland, Member
Angela D. Thompson, Member
Douglas A. Tietjens, Member
James A. Troha, Member
Frances V. Vaughn, Member
JUNIATA COUNTY REGIONAL BOARD
Philip D. Bomberger, Member
Jeffrey N. Brown, Member
Ronald N. Colledge, Member
Vincenzo Evola, Jr., Member
Jorge Flores de Valgaz, Member
Clarissa J. Goodling, Member
Maxwell R. Manbeck, Member
Robert J. Rowles, Member
Anita K. Rudy, Member
MIFFLIN COUNTY REGIONAL BOARD
Susan L. Cannon, Member
William L. Dancy, Member
Michael K. Halloran, Member
Melinda K. Kenepp, Member
William S. Lake, Member
Harvard K. McCardle, Member
Alan J. Metzler, Member
John Pannizzo, Member
James L. Shilling, Jr., Member
Kirk E. Thomas Member
KISH BANK EXECUTIVE LEADERSHIP
William P. Hayes, Executive Chairman
Gregory T. Hayes, President and Chief
Timothy P. Burris, Vice President, Chief
Operating Officer, Kish Agency
Alta Corman-Wolf, Vice President,
Residential Lender
Lucas D. Craig, Vice President,
Financial Advisor
Jason M. Cunningham, Vice President,
Branch Manager
Carolyn L. Donaldson, Vice President,
Community Engagement and
Relationship Development Officer
Harry W. Felty, Vice President,
Commercial Relationship Manager
Beth N. Metz Gilmore, Vice President,
Human Resources Director
Polly A. Gipe, Vice President, BSA
Executive Officer
Officer
Keith A. Crissman, Executive Vice
President, Chief Revenue Officer
Mark J. Cvrkel, Executive Vice
President, Chief Financial Officer
Robert S. McMinn, Executive Vice
Roxanne R. Greising, Vice President,
Credit Administration Director
Jeffrey A. Gum, Vice President,
Managing Director, Kish Benefits
Consulting
President, General Counsel
Allana L. Hartung, Vice President,
Richard A. Sarfert, Executive Vice
President, Chief Credit Officer
Suzanne M. White, Executive Vice
President, Chief Human Resource
Officer
Kimberly A. Bubb, Sr. Vice President,
Systems and Operations Director
Garen M. Jenco, Sr. Vice President,
Client Experience Officer
Thomas Minichiello, III, Sr. Vice
Commercial Relationship Manager
Jeffrey T. Hayes, Vice President,
Financial Advisor
Matthew D. Heaps, Vice President,
Commercial Relationship Manager
Edward M. Henderson, Vice President,
Wealth Advisor and Trust Officer
Ashley L. Henry, Vice President,
Business Process Manager
Crystal L. Himes, Vice President,
President, Retail Banking Director
Residential Lender
Mark E. Yerger, Sr. Vice President,
Terry P. Horner, Vice President,
Chief Information Officer
KISH BANK SENIOR OFFICERS
Robert L. Bilger, Sr. Vice President,
Senior Lending Officer
Allan F. Bills, Sr. Vice President,
Technical Accounting and Balance
Sheet Management
Tina M. Collins, Sr. Vice President,
Accounting and Internal Controls
Director
Wade E. Curry, LUTCF, Sr. Vice
President, Kish Financial Solutions
Director
Kenneth M. Goetz, Sr. Vice President,
Managing Director, Ohio
Kristie R. McKnight, Sr. Vice President,
Middle Market Relationship Manager
Amy M. Muchler, Sr. Vice President,
Audit Manager
Craig E. Muthler, Sr. Vice President,
Middle Market Relationship Manager
Jeffrey D. Wilson, Sr. Vice President,
CEO, Kish Agency
Gary L. Wimer, Sr. Vice President,
Managing Director, Ohio
Larry E. Burger, Vice President,
Business Development Officer
Business Development Officer
Holly A. Johnson, Vice President,
Mortgage Banking Manager
Wade A. Keiffer, Vice President, Credit
Administration Portfolio Manager
Lisa A. Kennedy, Vice President,
Training and Organizational
Development Manager
Jessica L. Kitt, Vice President, Retail
Banking Sales Manager
Marsha K. Kuhns, Vice President,
Residential Lender
John Q. Massie, Vice President,
Commercial Relationship Manager
Seth J. Napikoski, Vice President,
Commercial Relationship Manager
Melissa K. Royer, Vice President,
Technical Advisor
Caleb J. Shertzer, Commercial
Relationship Manager
Cheryl E. Shope, Vice President,
Residential Lender
Wendy S. Strohecker, Vice President,
Bank Operations Manager
N. Robert Sunday, III, Vice President,
Compliance Officer
Lindsey J. Swigart, Vice President,
Branch Administration Manager
62
Board of Directors and Officers
Board of Directors and Officers
63
4255 East Main Street, Belleville, PA 17004 | 1-800-981-5474 | MyKish.com