2024
ANNUAL
REPORT
THRIVING
Letter to the Shareholders
3
2
Table of Contents
2
THRIVING
Front Cover - Main Photo: Jeff Long and Chris Cook, McCrory Apartments/Center City Market
Front Cover - Inset Photos: Vance Varner and Melinda Kenepp, Mifflin County School District;
Zachary and Philip Bomberger, Juniata Concrete; John Gilliland, Investment Real Estate, LLC;
Marc Dagata and Dan Lutz, Metal Integrity
CONTENTS
Letter to the Shareholders
3
Financial Highlights
11
Independent Auditor’s Report
12
Financial Statements
14
Notes to Consolidated Financial Statements
19
Board of Directors and Officers
60
As we close the books on 2024, we are pleased
to register another year of robust growth and
strong financial results. Further, we do so with
immense pride in the exceptional performance of
Kish Bancorp over the years and great optimism
for the future as we enter 2025 and celebrate our
125th year since our founding. Our theme for this
year’s annual report, “Thriving,” encapsulates the
essence of our journey and the vibrant future we
envision for Kish while highlighting success stories
of our customers’ growing businesses. For not
only does 2024 represent another record level of
success for almost every business unit of the Kish
organization, it also enables us to turn to 2025
with heightened energy and enthusiasm for what
lies ahead.
Celebrating 125 Years of Community Banking
As we celebrate a significant milestone in 2025—
the 125th anniversary of Kish Bank—we reflect on
our rich history and the journey that has brought
us to where we are today. Our legacy is built
on a foundation of trust, service, and a deep
commitment to our clients and communities.
In March of 1900, a small group of founders,
including A. Reed Hayes, Sr. (ancestor of Bill and
Greg Hayes), came together to capitalize The
Belleville Depository Bank with $50,000. This
bank eventually evolved into The Farmers National
Bank of Belleville in 1912, which later merged
with The Belleville National and thus became The
Kishacoquillas Valley National Bank (KVNB) in 1935.
Over the years, Kish survived the economic
tribulations of World Wars, the Great Depression,
numerous banking crises—including the savings
and loan crisis of the 1980s and the subsequent
real estate bubble bursting that precipitated over
1,000 bank failures nationwide—and the Great
Recession of 2008. Through these challenges, we
remained steadfastly focused on our customers
and on sustained financial performance, becoming
the only remaining commercial bank still
headquartered in Mifflin County by the year 2000.
Today, what began as a small-town bank in
Belleville with a single office and less than 12
employees has grown into a complex financial
institution with nearly 300 team members, offering
banking, wealth management, insurance, benefits
consulting, and travel services across 19 locations
in six counties and numerous communities
throughout Central Pennsylvania and Northeast
Ohio. What began as a $50,000 capital investment
now represents more than $106 million in market
capitalization. While Kish shares are actively
trading on the OTC exchange, we are proud that
our long-term sustained success has benefitted
so many local investors. Our successful growth
is a testament to our unwavering commitment to
serving our clients, communities, employees, and
shareholders as we meet evolving financial needs.
Dear Shareholders,
Gregory T. Hayes
President and CEO
William P. Hayes
Executive Chairman
Letter to the Shareholders
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4
Letter to the Shareholders
4
Thriving Together
At Kish, our success is deeply intertwined with
the prosperity of our communities and customers.
Over the past year, we witnessed inspiring stories
of growth and collaboration that exemplify our
commitment to fostering thriving communities and
serving our clients with insight, dedication, and
care.
The new sports complex at Mifflin County High
School is a testament to the power of community
collaboration. As administrators Vance Varner
and Melinda Kenepp shared, this project has quite
literally leveled the playing field for Mifflin County
students, providing them with state-of-the-art
facilities and opportunities to excel in a setting
in which they can take great pride. With over
700 employees and countless volunteers, Mifflin
County School District (MCSD) is an economic
cornerstone of our headquarters county. Kish Bank
committed financially to this visionary project
because we believe it will dramatically elevate the
competitiveness for attracting families and talent
to our great community and will help increase the
readiness of the next generation of Mifflin County
students for success. Hosting athletic events on
MCSD’s new Kish Bank field will not only instill
pride and unity within our community but will also
be a boon to our local economy for decades to
come.
In Blair County, Chris Cook and Jeff Long’s
journey with the historic McCrory Department
Store building in downtown Altoona is a story
of optimistic resilience. Kish Bank recognized
the potential of this project and partnered with
Chris and Jeff to bring it to fruition. The Center
City Market, with its seven retail vendors and
luxury apartments, is set to revitalize a depressed
urban area by creating jobs, adding housing,
and stimulating the local economy. This project
THRIVING
“A thriving school district is grounded
in the culture of and pride for the
community and serves as an active
community partner in developing
the next generation. My favorite part
of being the superintendent is that
I get to hand out diplomas to the
graduating seniors each year, where
I measure success one handshake
at a time because I know as those
students walk away, they are walking
toward their future, prepared to meet
life’s challenges and find success in
whatever comes next for them.”
Vance Varner
Superintendent, Mifflin County School District
“13 banks turned me down because
all they saw was risk. Kish saw
potential. Now, we're opening
seven businesses where there
was nothing, adding housing,
and bringing back excitement to
the downtown Altoona area. I'm
invested in making downtown
Altoona a destination again.”
Chris Cook
Owner, McCrory Apartments/Center City Market
Mifflin County School District | Vance Varner, Superintendent,
and Melinda Kenepp, Chief Financial Officer
Letter to the Shareholders
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6
Letter to the Shareholders
6
is a shining example of how Kish Bank supports
innovative ventures that contribute to clients'
success while enhancing the vibrancy of our
communities.
In Juniata County, under the third-generation
leadership of brothers Philip and Zachary
Bomberger of the Groninger family, Juniata
Concrete has grown and thrived by staying true to
its core values of reliability, responsiveness, and
empathy-driven service. Kish Bank’s support has
been instrumental in enabling Juniata Concrete to
innovate and meet changing industry demands.
Because of the company’s financial success,
Juniata Concrete has also been able to elevate its
commitment to supporting local agriculture and
4-H, a core focus shared by Kish.
In Centre County, Marc Dagata and Dan Lutz
of Metal Integrity define thriving as building
a resilient business that achieves business
goals while exceeding customer expectations,
supporting employees, and contributing to
the community. By prioritizing local talent and
sourcing materials regionally, Metal Integrity
not only fosters a strong workforce but also
strengthens the local supply chain. Kish Bank,
Kish Insurance, and Kish Benefits Consulting
have all been valuable partners in providing the
secure financial footing needed for the company’s
growth. This partnership highlights our unwavering
commitment to fulfilling our clients’ full range of
financial needs as they grow and evolve.
Huntingdon County native John Gilliland founded
Investment Real Estate Group of Companies
(IREGC) in 1998 and built his first self-storage
unit, Moove In Self Storage, the same year. Now
operating out of York, PA, IREGC has grown
to become a national leader in the self-storage
industry with more than 100 employees and 80
facilities under the Moove In Self Storage brand,
THRIVING
“While the original vision was
to supply concrete for our
own construction projects, our
continued success comes from
broadening our focus to serve
contractors throughout the
area while staying true to our
core values. By leveraging our
relationship with Kish Bank,
we've made significant capital
improvements, enabling us to
consistently deliver high-quality
products for our customers.”
Philip Bomberger
Vice President, Juniata Concrete
“Our growth stems from delivering
consistent value to our customers,
fostering a supportive environment
for employees, and contributing
meaningfully to our industry and
community. Guided by our core
values of integrity, excellence, and
partnership, we are committed to
sustainable growth and continuous
improvement.”
Marc Dagata
President, Metal Integrity
Metal Integrity | Marc Dagata, President, and Dan Lutz, Vice President
Philip Bomberger, Vice President; Zachary Bomberger, President;
Jonah Kile, Asst. Manager; Joel Auker, General Manager
Letter to the Shareholders
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8
Letter to the Shareholders
8
THRIVING
including locations in Huntingdon and Lewistown.
Kish Bank serves as a trusted banking partner
to John, who credits his company’s growth
to adhering to core values—many which Kish
shares—including doing the right thing, working
hard and smart, having fun and celebrating
success, and being positive, compassionate, and
authentic. To John, thriving means being able to
give back to others and his community, whether
it’s through developing team members, IREGC’s
many philanthropic initiatives, or the Gilliland
Family Foundation, which John and his wife
Denise formed as a commitment to becoming civic
leaders in their community. Further demonstrating
a commitment to building a thriving community,
IREGC established its new headquarters in a LEED
Platinum-certified historic building in downtown
York, bringing jobs, along with the company’s
dynamic energy and culture, to the area.
For Kish, thriving means growing together. By
investing in people, empowering businesses,
and strengthening communities, we ensure
shared success for ourselves, our customers, our
shareholders, and our region for years to come.
2024 Financial Highlights
Our financial performance in 2024 was robust,
with total assets reaching $1.7 billion, up 9.7%,
and net income surpassing $14.5 million, up 7.6%
from 2023. With sustained growth and strong
financial performance, the board once again
raised the annual dividend, our 11th dividend
increase in the last 12 years. Sustained financial
success has enabled continued key additions to
our staff to support growth, and has maintained
our investment in innovation, ensuring that we
will remain at the forefront of community banking
for years to come. Further highlights for 2024
included total loans outstanding increasing to
$1.4 billion, an increase of $190 million, or 15.5%.
Total deposits reached $1.3 billion, an increase of
10.1%, or $119.0 million. Total stockholders’ equity
ended at $106.1 million, an increase of 14.4% from
year-end 2023, providing a solid foundation for
future growth. Kish Bank continues to maintain
capital levels in excess of the requirements to be
categorized as “well-capitalized,” with a Tier 1
leverage ratio of 9.02% at December 31, 2024.
The allowance for credit losses was raised to $8.9
million from $7.5 million the prior year, reflecting
growth in the portfolio and ensuring adequate
coverage for potential loan defaults.
Interest and dividend income contributed $91.9
million to revenue in 2024, an increase of 25.2%.
After deducting interest expense of $42.8 million,
net interest income before the provision for credit
losses increased $5.4 million, or 12.4% year over
year, indicating a strong and well-balanced net
interest margin. The healthy net interest margin
is an affirmation of effective balance sheet
management strategies that include timely capital
expansion to support sustained growth in earning
assets. For non-interest income, service fees on
deposit accounts generated $2.5 million, insurance
commissions contributed $3.1 million, and wealth
“Our success is built on unparalleled
expertise and service in the self-
storage industry, driven by a team
of outstanding professionals in an
extraordinary culture. We foster a
collaborative environment where
every voice matters and encourage
continuous improvement to stay
industry leaders. By practicing our
31 fundamentals daily, we strive
to be better than the day before,
ensuring sustained growth and
excellence.”
John Gilliland
CEO, Investment Real Estate, LLC
Investment Real Estate, LLC | John Gilliland, CEO
11
10
Letter to the Shareholders
10
management services brought in $3.3 million. On
the expense side, salaries and employee benefits
were the largest expense at $25.5 million, followed
by data processing costs amounting to $4.8
million, and occupancy and equipment expenses
totaling $4.1 million.
Key ratios for the year include a Return on Assets
of 0.89%, indicating efficient use of assets to
generate earnings, and a Return on Equity of
12.23%, reflecting strong profitability relative to
shareholders’ equity. Earnings Per Share (EPS) for
2024 was $5.13, falling just short of 2023’s $5.22,
reflecting an almost complete recovery of the
EPS dilution created by the $10 million issuance
of new shares earlier in the year and in 2023.
As mentioned previously, the Bancorp declared
dividends of $1.50 per share, up from $1.46
the previous year, our 10th consecutive year of
dividend increases. We were pleased to be listed
among America’s top-performing community
banks based on return on shareholders’ equity for
our 16th of the last 17 years by American Banker
Magazine, ranking 38th in the nation and third in
Pennsylvania.
Our 2024 financial highlights underscore
Kish’s sustained high performance relative to
peers, positively focused strategic growth,
and commitment to delivering value to our
shareholders and customers.
Looking Ahead
As we progress into our 125th year and celebrate
our extensive history, we are correspondingly
excited about the future. We are confident that
our sustained focus on the client and the values
of service, performance, trust, and community
will continue to differentiate Kish and deliver for
our shareholders and constituents as we navigate
through new opportunities and challenges in the
years ahead. We are committed to making the
lives of those we serve better, believing that our
best days are ahead of us.
Thank you for your unwavering support and
loyalty. Together, may we all continue to thrive.
Sincerely,
William P. Hayes
Executive Chairman
Gregory T. Hayes
President and CEO
FOR THE YEAR
2024
2023
2022
2021
2020
Net Income
$ 14,519,653
$ 13,499,712
$ 12,860,301
$ 9,881,340
$ 8,039,287
Net Income Before Taxes
17,519,438
16,154,155
15,283,348
11,232,900
9,278,885
Total Dividends Declared
4,418,651
3,883,501
3,448,214
2,988,353
2,804,384
AT YEAR END (IN $000s)
Total Assets
$ 1,692,550
$ 1,542,776
$ 1,295,448
$ 1,232,779
$ 1,106,609
Total Loans (Net)
1,415,093
1,225,317
1,013,170
868,153
755,960
Total Deposits
1,298,070
1,179,069
1,037,120
1,002,645
877,796
Stockholders’ Equity
106,111
92,765
71,972
77,100
69,962
Loan Loss Reserve
8,906
7,545
10,335
10,560
9,771
Net Loan Losses (Recoveries)
(268)
44
225
(9)
(4)
RATIO ANALYSIS
Return on Average Assets*
0.89%
0.94%
1.02%
0.85%
0.79%
Return on Average Equity*
12.23%
13.02%
14.95%
14.08%
12.90%
Dividend Declared/Net Income
30.43%
28.77%
26.81%
30.24%
34.88%
Loans/Deposits
109.02%
103.92%
97.69%
86.59%
86.12%
Primary Capital/Total Assets
6.80%
6.50%
6.35%
7.11%
7.21%
Total Capital/Risk Weighted Assets
10.45%
10.70%
11.57%
12.78%
12.32%
Loan Loss Reserve/Loans
0.63%
0.61%
1.01%
1.20%
1.28%
Net Loan Losses to Total Loans (Net)
-0.02%
0.00%
0.02%
0.00%
0.00%
PER SHARE DATA
Basic Earnings
$ 5.13
$ 5.22
$ 5.02
$ 3.88
$ 3.20
Fully Diluted Earnings
5.09
5.13
4.90
3.76
3.12
Dividends Paid
1.50
1.46
1.31
1.14
1.08
Equity (Book Value)
37.17
35.28
27.41
29.39
26.93
Equity Plus Loan Loss Reserve
40.29
38.15
31.35
33.42
30.69
Average Shares Outstanding (#)
2,854,860
2,629,167
2,625,612
2,626,931
2,597,978
Net Income (in millions)
Earnings & Dividends (per share)
Stock Valuation (per share)
* 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.
Add to Your Investment in KISB
The 2024 Annual Report 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 direct investment inquiries to:
KISBinfo@kishbank.com
814-325-7252
Contact: Amanda Dutrow
For more information, please visit:
ir.kishbancorp.com
otcmarkets.com/stock/KISB
Financial Highlights
Independent Auditor's Report
13
12
Independent Auditor's Report
12
Opinion
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, 2024 and 2023; the related consolidated
statements of income, comprehensive income,
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”).
In our opinion, the accompanying financial
statements present fairly, in all material respects,
the financial position of the Company as of
December 31, 2024 and 2023, 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, 2024, 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 14, 2025, expressed an unmodified
opinion on the effectiveness of the Company’s
internal control over financial reporting.
Basis for Opinion
We conducted our audits in accordance
with GAAS. 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 and appropriate to
provide a basis for our audit opinion.
Responsibilities of Management for the Financial
Statements
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.
Auditor's Responsibilities for the Audit of the
Financial Statements
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 material misstatement when
it exists. The risk of not 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.
• Identify and assess the risks of material
misstatement of the financial statements,
whether due to fraud or error, and design and
perform audit procedures responsive to those
risks. Such procedures include examining, on a
test basis, evidence regarding the amounts and
disclosures in the financial statements.
• 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 conditions or events, considered in the
aggregate, 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.
Other Information Included In the 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
inconsistency exists between the other information
and the financial statements, or whether the other
information otherwise appears to be materially
misstated. If, based on the work performed,
we conclude that an uncorrected material
misstatement of the other information exists, we
are required to describe it in our report.
Cranberry Township, Pennsylvania
March 14, 2025
S.R. Snodgrass, P.C.
2009 Mackenzie Way, Suite 340
Cranberry Township, PA 16066
724-934-0344
Board of Directors and Stockholders
Kish Bancorp, Inc.
14
Financial Statements
14
15
Financial Statements
KISH BANCORP, INC.
CONSOLIDATED BALANCE SHEET
December 31,
2024
2023
ASSETS
Cash and due from banks
$
13,920,179
$
13,288,999
Interest-bearing deposits with other institutions
3,296,613
16,448,736
Cash and cash equivalents
17,216,792
29,737,735
Certificates of deposit in other financial institutions
-
245,000
Investment securities available for sale, at fair value
151,328,639
178,977,804
Investment securities held to maturity, net of allowance for credit losses
of $97,263 and $112,624, fair value of $8,919,613 and $9,972,415
9,406,130
10,891,602
Equity securities
2,377,617
2,712,968
Loans held for sale
786,018
663,017
Loans
1,423,999,716
1,232,861,975
Less allowance for credit losses - loans
8,906,373
7,544,973
Net loans
1,415,093,343
1,225,317,002
Premises and equipment, net
27,533,874
27,397,616
Goodwill
3,512,466
3,560,942
Regulatory stock
8,330,300
9,772,000
Bank-owned life insurance
25,031,443
24,302,468
Accrued interest and other assets
31,933,143
29,197,801
TOTAL ASSETS
$
1,692,549,765
$
1,542,775,955
LIABILITIES
Deposits:
Noninterest-bearing
$
171,360,555
$
182,035,638
Interest-bearing demand
113,314,856
111,134,914
Savings
95,947,365
104,757,107
Money market
420,736,024
378,495,532
Time
496,710,899
402,646,217
Total deposits
1,298,069,699
1,179,069,408
Short-term borrowings
206,000,000
194,541,362
Other borrowings
46,635,215
41,418,608
Accrued interest and other liabilities
35,733,732
34,981,433
TOTAL LIABILITIES
1,586,438,646
1,450,010,811
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, 3,022,127 and
2,960,591 shares issued; 2,969,519 and 2,881,086 shares outstanding
at December 31, 2024 and 2023, respectively
1,511,064
1,480,296
Additional paid-in capital
12,839,892
10,890,781
Retained earnings
106,979,447
96,878,445
Accumulated other comprehensive loss
(13,623,380)
(14,000,592)
Treasury stock, at cost (52,608 and 79,505 shares at December 31,
2024 and 2023, respectively)
(1,595,904)
(2,483,786)
TOTAL STOCKHOLDERS' EQUITY
106,111,119
92,765,144
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,692,549,765
$
1,542,775,955
See accompanying notes to the consolidated financial statements.
KISH BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
Year Ended December 31,
2024
2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans:
Taxable
$
84,569,964
$
65,808,264
Exempt from federal income tax
1,059,610
810,709
Interest and dividends on investment securities:
Taxable
4,780,538
5,181,614
Exempt from federal income tax
228,673
203,777
Interest-bearing deposits with other institutions
311,505
456,243
Other dividend income
917,826
936,379
Total interest and dividend income
91,868,116
73,396,986
INTEREST EXPENSE
Deposits
33,375,999
21,124,267
Short-term borrowings
2,134,724
887,863
Other borrowings
7,323,334
7,757,440
Total interest expense
42,834,057
29,769,570
NET INTEREST INCOME
49,034,059
43,627,416
Provision for credit losses - loans
1,093,468
328,965
Provision for (release of) credit losses - investment securities held to maturity
(15,360)
2,460
Provision for credit losses - off balance sheet credit exposures
24,931
379,620
Total provision for credit losses
1,103,039
711,045
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
47,931,020
42,916,371
NONINTEREST INCOME
Service fees on deposit accounts
2,528,312
2,339,661
Investment securities losses
-
(158)
Equity securities gains (losses), net
314,157
(145,149)
Gain on sale of loans
447,237
340,336
Earnings on bank-owned life insurance
720,975
646,640
Insurance commissions
3,098,811
3,060,586
Travel agency commissions
185,083
261,836
Wealth management
3,320,628
2,545,185
Benefit management
640,110
623,299
Other
1,264,371
1,698,737
Total noninterest income
12,519,684
11,370,973
NONINTEREST EXPENSE
Salaries and employee benefits
25,517,826
22,198,014
Occupancy and equipment
4,112,584
3,896,516
Data processing
4,787,159
4,184,820
Professional fees
767,439
783,991
Advertising
464,283
622,786
Federal deposit insurance
1,294,849
1,134,670
Pennsylvania shares tax
729,829
692,127
Other
5,257,297
4,620,265
Total noninterest expense
42,931,266
38,133,189
Income before income taxes
17,519,438
16,154,155
Income tax expense
2,999,785
2,654,443
NET INCOME
$
14,519,653
$
13,499,712
EARNINGS PER SHARE
Basic
$
5.13
$
5.22
Diluted
$
5.09
$
5.13
See accompanying notes to the consolidated financial statements.
16
Financial Statements
16
17
Financial Statements
KISH BANCORP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year Ended December 31,
2024
2023
Net income
$
14,519,653 $
13,499,712
Other comprehensive income
Securities available for sale:
Change in unrealized holding gains on
available for sale securities
755,666
3,940,792
Tax effect
(158,690 )
(827,566 )
Change in unrealized losses related to cash flow hedges
(278,182 )
(1,231,637 )
Tax effect
58,418
258,644
Reclassification adjustment for net investment
securities losses realized in net income
-
158
Tax effect
-
(33 )
Impairment losses included in net income
-
-
Tax effect
-
-
Total other comprehensive income
377,212
2,140,357
Total comprehensive income
$
14,896,865 $
15,640,069
See accompanying notes to the consolidated financial statements.
KISH BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Accumulated
Additional
Other
Total
Common
Paid-in
Retained
Comprehensive
Treasury
Stockholders'
Stock
Capital
Earnings
Loss
Stock
Equity
Balance, December 31, 2022
$ 1,348,750 $
2,897,790 $
85,844,293 $
(16,140,949 ) $ (1,978,208 ) $
71,971,676
Cumulative effect of change in accounting principle (Note 1)
net of deferred tax effect of $376,921
1,417,941
1,417,941
Net income
13,499,712
13,499,712
Other comprehensive income
2,140,357
2,140,357
Stock option compensation expense
233,159
233,159
Purchase of shares by restricted stock plan (22,428 shares)
(804,558 )
804,558
-
Exercise of stock options (32,484 shares)
(286,929 )
203,502
(83,427 )
Forfeiture of shares by restricted stock plan (5,737 shares)
162,441
(162,441 )
-
Amortization of restricted stock plan shares
439,194
439,194
Cash dividends ($1.46 per share)
(3,883,501 )
(3,883,501 )
Sale of new issue common stock (174,653 shares)
87,327
5,501,585
5,588,912
Subordinated debt redeemed for new issue common stock (88,439 shares)
44,219
2,785,781
2,830,000
Purchase of treasury stock (62,722 shares)
(1,972,726 )
(1,972,726 )
Sale of treasury stock (24,482 shares)
(37,682 )
621,529
583,847
Balance, December 31, 2023
1,480,296 10,890,781
96,878,445
(14,000,592 ) (2,483,786 )
92,765,144
Net income
14,519,653
14,519,653
Other comprehensive income
377,212
377,212
Stock option compensation expense
255,101
255,101
Purchase of shares by restricted stock plan (22,470 shares)
(732,620 )
732,620
-
Exercise of stock options (1,804 shares)
(90,053 )
51,486
(38,567 )
Forfeiture of shares by restricted stock plan (725 shares)
23,247
(23,247 )
-
Amortization of restricted stock plan shares
570,097
570,097
Cash dividends ($1.50 per share)
(4,418,651 )
(4,418,651 )
Sale of new issue common stock (50,598 shares)
25,299
1,593,837
1,619,136
Subordinated debt redeemed for new issue common stock (10,938 shares)
5,469
344,547
350,016
Purchase of treasury stock (20,707 shares)
(636,383 )
(636,383 )
Sale of treasury stock (24,059 shares)
(15,045 )
763,406
748,361
Balance, December 31, 2024
$ 1,511,064 $ 12,839,892 $ 106,979,447 $
(13,623,380 ) $ (1,595,904 ) $ 106,111,119
See accompanying notes to the consolidated financial statements.
18
Financial Statements
18
19
Notes to Consolidated Financial Statements
KISH BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
2024
2023
OPERATING ACTIVITIES
Net income
$
14,519,653 $
13,499,712
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses
1,103,039
711,045
Investment securities losses
-
158
Equity security (gains) losses, net
(314,157 )
145,149
Proceeds from sale of loans held for sale
23,929,079
18,022,375
Origination of loans held for sale
(23,604,843 )
(17,713,642 )
Gain on sales of loans
(447,237 )
(340,336 )
Depreciation, amortization, and accretion
2,245,874
1,185,446
Deferred income taxes
(369,964 )
(29,206 )
Increase in accrued interest receivable
(330,042 )
(1,801,696 )
Increase in accrued interest payable
67,601
3,829,552
Earnings on bank-owned life insurance
(720,975 )
(646,640 )
Loss (gain) on sale of other assets
22,883
(573,052 )
Impairment loss on other assets
48,476
-
Non-cash compensation - equity awards
825,198
672,353
Other, net
(1,947,919 )
(413,607 )
Net cash provided by operating activities
15,026,666
16,547,611
INVESTING ACTIVITIES
Maturities of certificates of deposit
245,000
-
Purchases of bank owned life insurance:
(8,000 )
-
Investment securities available for sale:
Proceeds from repayments and maturities
31,176,269
19,429,376
Purchases
(824,622 )
(39,242,073 )
Investment securities held to maturity:
Proceeds from repayments and maturities
1,000,000
-
Purchases
(1,500,000 )
(244,963 )
Proceeds from sale of equity securities
649,500
-
Increase in loans, net
(191,301,080 )
(208,910,301 )
Purchase of regulatory stock
(4,617,700 )
(9,918,200 )
Redemption of regulatory stock
6,059,400
7,402,500
Purchase of premises and equipment
(1,864,669 )
(3,124,810 )
Proceeds from sale of other assets
1,500
1,929,582
Net cash used for investing activities
(160,984,402 )
(232,678,889 )
FINANCING ACTIVITIES
Increase in deposits, net
119,000,291
141,949,690
Increase in short-term borrowings, net
11,458,638
94,214,815
Proceeds from other borrowings
11,112,500
59,282
Repayments of other borrowings
(5,598,532 )
(8,224,327 )
Collateral received (repaid) on interest rate derivatives, net
190,000
(2,470,000 )
Proceeds from sale of common stock
1,619,136
5,588,912
Purchases of treasury stock
(636,383 )
(1,972,726 )
Proceeds from sale of treasury stock
799,847
787,349
Exercise of stock options
(90,053 )
(286,929 )
Cash dividends
(4,418,651 )
(3,883,501 )
Net cash provided by financing activities
133,436,793
225,762,565
(Decrease) Increase in cash and cash equivalents
(12,520,943 )
9,631,287
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
29,737,735
20,106,448
CASH AND CASH EQUIVALENTS AT END OF YEAR
$
17,216,792 $
29,737,735
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest on deposits and borrowings
$
42,793,600 $
25,966,419
Income taxes
3,100,000
2,650,000
SUPPLEMENTAL DISCLOSURE OF NON-CASH CASH FLOW INFORMATION
Right of use assets and lease liabilities
$
- $
409,650
See accompanying notes to the consolidated financial statements.
KISH BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Presentation
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 $723,738 and $1,003,499 at
December 31, 2024 and 2023, respectively, 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.
20
Notes to Consolidated Financial Statements
20
21
Notes to Consolidated Financial Statements
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 Credit Losses (ACL) - Loans
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:
Loss Rate
Loan Portfolio - Pooled Segments
Methodology
Construction, land development and other land loans
Discounted cash flows
Loans secured by farmland
Discounted cash flows
Revolving loans secured by 1-4 family residential properties
Discounted cash flows
Mortgages secured by first liens
Discounted cash flows
Mortgages secured by second liens
Discounted cash flows
Loans secured by multi-family residential properties
Discounted cash flows
Loans secured by nonfarm, nonresidential properties
Discounted cash flows
Agricultural loans
Discounted cash flows
Commercial and industrial loans
Discounted cash flows
Automobile loans
Remaining life method
Other consumer loans
Discounted cash flows
Loans to state and municipal subdivisions
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.
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
$96,751 and $106,231 at December 31, 2024 and 2023, respectively, 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.
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.
22
Notes to Consolidated Financial Statements
22
23
Notes to Consolidated Financial Statements
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.
Earnings Per Share
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:
Expected
Grant
Dividend
Risk-Free
Expected
Expected
Year
Yield
Interest Rate
Volatility
Life (in Years)
2024
4.79 %
4.35 %
28.46 %
6.0
2023
3.96 %
3.50 %
27.59 %
6.0
The weighted-average fair value of each stock option granted for 2024 and 2023 was $6.02 and $6.78,
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, 2024 and 2023, the Company recorded gross servicing rights of
$218,085 and $248,594, respectively, with a reserve for impairment of $75,704 and $86,182, respectively.
Accrued interest receivable excluded from the measurement of the ACL for loans totaled $5,380,994 and
$4,755,493 at December 31, 2024 and 2023, respectively.
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.
Premises and Equipment
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 credit
losses - loans, 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.
24
Notes to Consolidated Financial Statements
24
25
Notes to Consolidated Financial Statements
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:
•
Service fee income on deposit accounts
•
Insurance and travel agency commissions
•
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
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 - Segment Reporting
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures, which requires public entities to disclose information about their
reportable segments’ and provide additional information about a segment’s significant expenses on an
interim and annual basis. An operating segment is defined as a component of an enterprise that engages in
business activities that generates revenue and incurs expense, and the operating results of which are
reviewed by the chief operating decision maker in the determination of resource allocation and
performance. The Company’s primary revenue sources are community bank lending and deposit services.
The Company also offers wealth management, trust services, insurance products and operates a small travel
agency. While the chief operating decision maker uses financial information related to these segments to
analyze business performance and allocate resources, the service lines other than bank lending and deposit
services do not meet the quantitative threshold under GAAP to be considered reportable segments.
Accordingly, all of the operations of the Company are aggregated and reported as a single operating
segment. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated
financial statements.
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.
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
26
Notes to Consolidated Financial Statements
26
27
Notes to Consolidated Financial Statements
3.
INVESTMENT SECURITIES
The amortized cost, gross unrealized gains and losses, and fair value of investment securities are as follows
as of December 31:
2024
Gross
Gross
Allowance
Amortized
Unrealized
Unrealized
Fair
for Credit
Cost
Gains
Losses
Value
Losses
Available for Sale:
U.S. treasury securities
$
20,913,886 $
- $
(1,059,266 ) $
19,854,620 $
-
U.S. government agency
securities
48,307,998
-
(4,679,709 )
43,628,289
-
Obligations of states and
political subdivisions
41,478,620
-
(6,176,307 )
35,302,313
-
Corporate securities
499,994
-
(34,560 )
465,434
-
Mortgage-backed securities in
government-sponsored entities
30,368,225
-
(4,321,116 )
26,047,109
-
Collateralized mortgage
obligations
30,139,774
47,706
(4,156,606 )
26,030,874
-
Total Available for Sale
$ 171,708,497 $
47,706 $
(20,427,564 ) $ 151,328,639 $
-
Held to Maturity:
Corporate Securities
$
9,503,393 $
- $
(583,780 ) $
8,919,613 $
(97,263 )
2023
Gross
Gross
Allowance
Amortized
Unrealized
Unrealized
Fair
for Credit
Cost
Gains
Losses
Value
Losses
Available for Sale:
U.S. treasury securities
$
27,863,700 $
- $
(1,355,955 ) $
26,507,745 $
-
U.S. government agency
securities
63,816,922
340
(5,444,033 )
58,373,229
-
Obligations of states and
political subdivisions
40,926,071
288
(6,143,267 )
34,783,092
-
Corporate securities
1,506,202
-
(68,488 )
1,437,714
-
Mortgage-backed securities in
government-sponsored
entities
34,032,633
10,486
(3,974,921 )
30,068,198
-
Collateralized mortgage
obligations
31,967,800
9,194
(4,169,168 )
27,807,826
-
Total Available for Sale
$ 200,113,328 $
20,308 $ (21,155,832 ) $ 178,977,804 $
-
Held to Maturity:
Corporate Securities
$
11,004,226 $
- $
(1,031,811 ) $
9,972,415 $
(112,624 )
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.
2024
2023
Weighted-average common shares issued
2,948,946
2,694,597
Weighted-average treasury stock shares
(63,349)
(59,639)
Weighted-average unvested restricted stock awards
(57,325)
(48,956)
Basic weighted-average shares outstanding
2,828,272
2,586,002
Dilutive effect of outstanding restricted stock awards
8,945
18,716
Dilutive effect of outstanding stock options
17,643
24,449
Diluted weighted-average shares outstanding
2,854,860
2,629,167
For the year ended December 31, 2024, the Company excluded from the computation of diluted weighted-
average shares the impact of 143,220 options to purchase shares of the Company’s common stock, and
200 shares of restricted stock, as the effect would have been anti-dilutive.
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.
28
Notes to Consolidated Financial Statements
28
29
Notes to Consolidated Financial Statements
Credit Quality Indicators
The held-to-maturity securities portfolio consists of thirteen 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, 2024, 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
Amortized
Fair
Amortized
Fair
Cost
Value
Cost
Value
Due in one year or less
$
11,521,961 $
11,307,610 $
- $
-
Due after one year through five years
52,916,254
49,256,721
2,000,000
1,865,140
Due after five years through ten years
48,089,861
40,210,176
7,503,393
7,054,473
Due after ten years
59,180,421
50,554,132
-
-
171,708,497
151,328,639
9,503,393
8,919,613
Allowance for credit losses
-
-
(97,263 )
-
Total
$ 171,708,497 $ 151,328,639 $
9,406,130 $
8,919,613
Investment securities with a carrying value of $133,628,794 and $123,767,259 at December 31, 2024 and
2023, 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:
2024
2023
Proceeds from sales
$
- $
-
Proceeds from calls
-
718,679
Gross gains
-
188
Gross losses
-
(346)
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, 2024 and 2023:
2024
2023
Net gains (losses) recognized in equity securities during the year
$ 314,157
$ (145,149)
Less: Gains realized on sale of equity securities during the year
388,271
-
Unrealized losses recognized in equity securities
$ (74,114) $ (145,149)
The following tables show the Company’s gross unrealized losses for which a credit loss has not been
recorded 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:
2024
Less than Twelve Months
Twelve Months or Greater
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Value
Losses
Available for Sale:
U.S. treasury securities
$
- $
- $
19,854,620
$
(1,059,266 )
$
19,854,620
$
(1,059,266 )
U.S. government agency
securities
4,868,290
(12,037 )
38,759,999
(4,667,672 )
43,628,289
(4,679,709 )
Obligations of states and
political subdivisions
1,926,634
(59,407 )
33,375,676
(6,116,900 )
35,302,310
(6,176,307 )
Corporate securities
-
-
465,434
(34,560 )
465,434
(34,560 )
Mortgage-backed securities
in government-sponsored
entities
1,091,127
(15,426 )
24,955,982
(4,305,690 )
26,047,109
(4,321,116 )
Collateralized mortgage
obligations
4,550,716
(61,430 )
18,459,314
(4,095,176 )
23,010,030
(4,156,606 )
Total Available for Sale
$
12,436,767 $
(148,300 ) $
135,871,025
$
(20,279,264 )
$
148,307,792
$
(20,427,564 )
2023
Less than Twelve Months
Twelve Months or Greater
Total
Gross
Gross
Gross
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
Value
Losses
Value
Losses
Value
Losses
Available for Sale:
U.S. treasury securities
$
6,943,810 $
(18,808 ) $
19,563,935
$
(1,337,147 )
$
26,507,745
$
(1,355,955 )
U.S. government agency
securities
15,936,186
(110,762 )
41,436,702
(5,333,271 )
57,372,888
(5,444,033 )
Obligations of states and
political subdivisions
-
-
33,941,003
(6,143,267 )
33,941,003
(6,143,267 )
Corporate securities
-
-
1,437,714
(68,488 )
1,437,714
(68,488 )
Mortgage-backed securities
in government-sponsored
entities
6,898,550
(185,293 )
21,900,186
(3,789,628 )
28,798,736
(3,974,921 )
Collateralized mortgage
obligations
9,072,572
(181,985 )
16,168,122
(3,987,183 )
25,240,694
(4,169,168 )
Total Available for Sale
$
38,851,118 $
(496,848 ) $
134,447,662
$
(20,658,984 )
$
173,298,780
$
(21,155,832 )
The Company had 188 investment securities, consisting of 29 U.S. government agency securities, 69
obligations of states and political subdivisions, 15 corporate securities, 34 mortgage-backed securities, and
26 collateralized mortgage obligations that were in unrealized loss positions at December 31, 2024.
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, 2024, there were no investment securities past due.
30
Notes to Consolidated Financial Statements
30
31
Notes to Consolidated Financial Statements
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.
4.
LOANS
Major classifications of loans are summarized as follows at December 31:
2024
2023
Commercial real estate
$
736,533,516 $
590,694,766
Commercial and industrial
158,755,579
144,234,974
Agricultural
29,504,923
28,493,121
State and political subdivisions
27,360,053
31,283,590
Consumer
5,069,049
5,243,094
Residential real estate
466,776,596
432,912,430
1,423,999,716
1,232,861,975
Less: Allowance for credit losses
8,906,373
7,544,973
Net loans
$
1,415,093,343 $
1,225,317,002
Mortgage loans serviced by the Company for others amounted to $22,934,527 and $25,907,491 at
December 31, 2024 and 2023, 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, 2024 and 2023, 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 35% and 34% as of December 31, 2024 and 2023, 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, 2024, and 2023, is as follows:
Balance
Amounts
Balance
Amounts
Balance
2022
Additions
Collected
2023
Additions
Collected
2024
$
7,178,819 $ 1,704,510 $
(5,895,527) $
2,987,802
$
2,931,971 $
(3,206,726 ) $
2,713,047
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.
32
Notes to Consolidated Financial Statements
32
33
Notes to Consolidated Financial Statements
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:
2024
Commercial
State and
Commercial
and
Political
Residential
Real Estate
Industrial
Agricultural
Subdivisions
Consumer
Real Estate
Total
Allowance for loan credit losses:
Beginning balance
$
4,423,402 $
1,149,490 $
205,919 $
68,981 $
60,479 $
1,636,703 $
7,544,973
Charge-offs
-
(22,201 )
-
-
(12,946 )
(20,154 )
(55,301 )
Recoveries
285,097
37,652
-
-
486
-
323,234
Provision
1,050,009
131,102
(2,687 )
(5,264 )
7,259
(86,951 )
1,093,468
Ending balance
$
5,758,508 $
1,296,042 $
203,232 $
63,716 $
55,278 $
1,529,597 $
8,906,373
Ending balance
individually
evaluated for
credit loss
$
1,034 $
- $
21,179 $
- $
- $
9,070 $
31,283
-
Ending balance
collectively
evaluated for
credit loss
5,757,474
1,296,042
182,053
63,716
55,278
1,520,527
8,875,090
$
5,758,508 $
1,296,042 $
203,232 $
63,716 $
55,278 $
1,529,597 $
8,906,373
Loans:
Individually evaluated
for credit loss
$
10,688 $
125,844 $
21,179 $
- $
- $
1,002,213 $
1,159,924
Collectively evaluated
for credit loss
736,522,828
158,629,735
29,483,744
27,360,053
5,069,049
465,774,383
1,422,839,792
Ending balance
$
736,533,516 $
158,755,579 $
29,504,923 $
27,360,053 $
5,069,049 $
466,776,596 $ 1,423,999,716
2023
Commercial
State and
Commercial
and
Political
Residential
Real Estate
Industrial
Agricultural
Subdivisions
Consumer
Real Estate
Total
Allowance for loan credit losses:
Beginning balance
$
6,108,863 $
1,578,840 $
286,469 $
106,944 $
41,680 $
2,212,435 $
10,335,231
Impact of adopting ASC 326
(2,132,318 )
(252,955 )
(56,603 )
(56,672 )
18,710
(594,903 )
(3,074,741 )
Charge-offs
-
(39,572 )
-
-
(7,609 )
-
(47,181 )
Recoveries
-
-
-
-
2,699
-
2,699
Provision
446,857
(136,823 )
(23,947 )
18,709
4,999
19,171
328,965
Ending balance
$
4,423,402 $
1,149,490 $
205,919 $
68,981 $
60,479 $
1,636,703 $
7,544,973
Ending balance individually
evaluated for impairment
$
1,255 $
19,183 $
21,679 $
- $
- $
101,393 $
143,510
Ending balance collectively
evaluated for impairment
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
Loans:
Individually evaluated for
impairment
$
13,064 $
390,373 $
21,679 $
- $
- $
1,331,192 $
1,756,308
Collectively evaluated for
impairment
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
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
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.
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
•
Overall model risk considerations
34
Notes to Consolidated Financial Statements
34
35
Notes to Consolidated Financial Statements
As of December 31, 2024
Term Loans Amortized Cost Basis by Origination Year
Revolver
Total
at
Amortized
2024
2023
2022
2021
Prior
Cost Basis
Total
Consumer
Payment Performance
Performing
$
506,069 $
229,679 $
96,236 $
54,698 $
290,184 $ 3,892,184 $
5,069,049
Nonperforming
-
-
-
-
-
-
-
Total Consumer
$
506,069 $
229,679 $
96,236 $
54,698 $
290,184 $ 3,892,184 $
5,069,049
Current period gross write offs
$
- $
- $
4,367 $
- $
8,579 $
- $
12,946
Residential real estate
Payment Performance
Performing
$ 87,214,643 $ 71,110,985 $ 74,440,920 $ 59,651,435 $ 132,466,113 $ 41,264,205 $ 466,148,301
Nonperforming
-
-
-
-
589,921
38,374
628,296
Total Residential real estate
$ 87,214,643 $ 71,110,985 $ 74,440,920 $ 59,651,435 $ 133,056,034 $ 41,302,579 $ 466,776,596
Current period gross write offs
$
- $
- $
- $
- $
20,154 $
- $
20,154
Total by Payment Performance
Performing
$ 87,720,711 $ 71,340,663 $ 74,537,156 $ 59,706,133 $ 132,756,297 $ 45,156,389 $ 471,217,349
Nonperforming
-
-
-
-
589,921
38,374
628,296
Total
$ 87,720,711 $ 71,340,663 $ 74,537,156 $ 59,706,133 $ 133,346,218 $ 45,194,763 $ 471,845,645
Total current period gross write offs $
- $
- $
4,367 $
- $
28,733 $
- $
33,100
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 loan and current period charge-offs by year of origination under ASC 326 as of December 31,
2024 and 2023:
As of December 31, 2024
Term Loans Amortized Cost Basis by Origination Year
Revolver
Total
at
Amortized
2024
2023
2022
2021
Prior
Cost Basis
Total
Commercial real estate
Risk Rating
Pass
$ 96,357,912 $ 180,277,283 $ 136,064,898 $ 115,597,736 $ 170,539,320 $ 8,152,733 $ 706,989,882
Special Mention
136,658
53,865
8,561,106
10,111,677
5,701,058
-
24,564,364
Substandard
-
-
274,410
-
4,694,172
-
4,968,582
Doubtful
-
-
-
-
10,688
-
10,688
Total Commercial real estate
$ 96,494,570 $ 180,331,148 $ 144,900,414 $ 125,709,413 $ 180,945,237 $ 8,152,733 $ 736,533,516
Current period gross write offs
$
- $
- $
- $
- $
- $
- $
-
Commercial and industrial
Risk Rating
Pass
$ 34,956,135 $ 18,821,978 $ 27,671,185 $ 11,736,838 $
7,772,062 $ 51,856,380 $ 152,814,578
Special Mention
-
111,228
-
49,440
190,938
43,497
395,103
Substandard
338,104
-
16,650
2,072,251
478,643
2,579,283
5,484,932
Doubtful
-
-
-
-
60,966
-
60,966
Total Commercial & Industrial
$ 35,294,239 $ 18,933,206 $ 27,687,835 $ 13,858,529 $
8,502,609 $ 54,479,161 $ 158,755,579
Current period gross write offs
$
- $
- $
- $
- $
22,201 $
- $
22,201
Agriculture
Risk Rating
Pass
$
4,702,366 $
2,319,280 $
1,836,781 $
5,869,818 $ 11,505,353 $ 3,055,789 $ 29,289,386
Special Mention
-
-
-
-
137,550
-
137,550
Substandard
-
-
-
-
56,808
-
56,808
Doubtful
-
-
-
-
21,179
-
21,179
Total Agriculture
$
4,702,366 $
2,319,280 $
1,836,781 $
5,869,818 $ 11,720,890 $ 3,055,789 $ 29,504,923
Current period gross write offs
$
- $
- $
- $
- $
- $
- $
-
State and political subdivisions
Risk Rating
Pass
$
149,767 $
1,497,378 $
7,859,671 $
850,231 $ 17,003,006 $
- $ 27,360,053
Special Mention
-
-
-
-
-
-
-
Substandard
-
-
-
-
-
-
-
Doubtful
-
-
-
-
-
-
-
Total State and political
subdivisions
$
149,767 $
1,497,378 $
7,859,671 $
850,231 $ 17,003,006 $
- $ 27,360,053
Current period gross write offs
$
- $
- $
- $
- $
- $
- $
-
Total by Risk Rating
Pass
$ 136,166,180 $ 202,915,919 $ 173,432,534 $ 134,054,623 $ 206,819,741 $ 63,064,902 $ 916,453,899
Special Mention
136,658
165,093
8,561,106
10,161,117
6,029,546
43,497
25,097,017
Substandard
338,104
-
291,061
2,072,251
5,229,622
2,579,283
10,510,321
Doubtful
-
-
-
-
92,832
-
92,832
Total
$ 136,640,942 $ 203,081,012 $ 182,284,701 $ 146,287,991 $ 218,171,742 $ 65,687,683 $ 952,154,069
Total current period gross write offs $
- $
- $
- $
- $
22,201 $
- $
22,201
36
Notes to Consolidated Financial Statements
36
37
Notes to Consolidated Financial Statements
As of December 31, 2023
Term Loans Amortized Costs Basis by Origination Year
Revolver
Total
at Amortized
2023
2022
2021
Prior
Cost Basis
Total
Consumer
Payment Performance
Performing
$
533,637 $
207,561 $
143,149 $
376,618 $
3,982,129 $
5,243,094
Nonperforming
-
-
-
-
-
-
Total Consumer
$
533,637 $
207,561 $
143,149 $
376,618 $
3,892,184 $
5,243,094
Current period gross write offs
$
- $
- $
- $
7,609 $
- $
7,609
Residential real estate
Payment Performance
Performing
$
78,756,431 $ 100,654,054 $
65,294,982 $ 148,531,171 $
39,107,407 $ 432,344,045
Nonperforming
-
-
56,211
512,174
-
568,385
Total Residential real estate
$
78,756,431 $ 100,654,054 $
65,351,193 $ 149,043,345 $
41,302,579 $ 432,912,430
Current period gross write offs
$
- $
- $
- $
- $
- $
-
Total by Payment Performance
Performing
$
79,290,068 $ 100,861,615 $
65,438,131 $ 148,907,789 $
43,089,536 $ 437,587,139
Nonperforming
-
-
56,211
512,174
-
568,385
Total
$
79,290,068 $ 100,861,615 $
65,494,342 $ 149,419,963 $
43,089,536 $ 438,155,524
Total current period gross write offs $
- $
- $
- $
7,609 $
- $
7,609
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:
2024
30-59
60-89
90 Days or
90 Days
Days
Days
Greater
Total
Total
and
Past Due
Past Due
Past Due
Past Due
Current
Loans
Accruing
Commercial real estate
$
4,108
$
144,069
$
-
$
148,177 $
736,385,339 $
736,533,516 $
-
Commercial and industrial
296,193
-
-
296,193
158,459,386
158,755,579
-
Agricultural
234,358
-
-
234,358
29,270,565
29,504,923
-
State and political
subdivisions
-
-
-
-
27,360,053
27,360,053
-
Consumer
-
-
-
-
5,069,049
5,069,049
-
Residential real estate
809,990
456,605
200,517
1,467,112
465,309,484
466,776,596
200,517
Total
$
1,344,649
$
600,674
$
200,517
$
2,145,840 $ 1,421,853,876 $ 1,423,999,716 $ 200,517
2023
30-59
60-89
90 Days or
90 Days
Days
Days
Greater
Total
Total
and
Past Due
Past Due
Past Due
Past Due
Current
Loans
Accruing
Commercial real estate
$
-
$
153,786
$
-
$
153,786 $
590,540,980 $
590,694,766 $
-
Commercial and industrial
76,277
43,205
-
119,482
144,115,492
144,234,974
-
Agricultural
95,130
193,825
-
288,955
28,204,166
28,493,121
-
State and political
subdivisions
-
-
-
-
31,283,590
31,283,590
-
Consumer
7,423
-
-
7,423
5,235,671
5,243,094
-
Residential real estate
784,805
285,131
138,780
1,208,716
431,703,714
432,912,430
138,780
Total
$
963,635
$
675,947
$
138,780
$
1,778,362 $ 1,231,083,613 $ 1,232,861,975 $ 138,780
Consumer mortgage loans held by the Company in the process of foreclosure amounted to $41,908 and $0
as of December 31, 2024 and 2023, respectively.
As of December 31, 2023
Term Loans Amortized Costs Basis by Origination Year
Revolver
Total
at Amortized
2023
2022
2021
Prior
Cost Basis
Total
Commercial real estate
Risk Rating
Pass
$ 109,029,405 $ 111,862,871 $ 157,513,271 $ 196,936,447 $
8,027,943 $ 583,369,937
Special Mention
-
3,012,892
-
429,483
-
3,442,375
Substandard
-
-
-
3,869,390
-
3,869,390
Doubtful
-
-
-
-
13,064
13,064
Total Commercial real estate
$ 109,029,405 $ 114,875,763 $ 157,513,271 $ 201,235,320 $
8,041,007 $ 590,694,766
Current period gross write offs
$
- $
- $
- $
- $
- $
-
Commercial and industrial
Risk Rating
Pass
$
21,835,352 $
33,525,894 $
18,496,738 $
11,789,033 $
56,591,176 $ 142,238,193
Special Mention
30,798
172,140
235,289
266,576
24,319
729,122
Substandard
-
-
666,758
263,898
241,697
1,172,353
Doubtful
-
-
-
95,306
-
95,306
Total Commercial & Industrial
$
21,866,150 $
33,698,034 $
19,398,785 $
12,414,813 $
56,857,192 $ 144,234,974
Current period gross write offs
$
- $
- $
9,982 $
29,590 $
- $
39,572
Agriculture
Risk Rating
Pass
$
2,784,201 $
2,178,394 $
6,287,102 $
14,264,598 $
2,957,147 $
28,471,442
Special Mention
-
-
-
-
-
-
Substandard
-
-
-
-
-
-
Doubtful
-
-
-
21,679
-
21,679
Total Agriculture
$
2,784,201 $
2,178,394 $
6,287,102 $
14,286,277 $
2,957,147 $
28,493,121
Current period gross write offs
$
- $
- $
- $
- $
- $
-
State and political subdivisions
Risk Rating
Pass
$
1,279,565 $
8,613,108 $
956,571 $
20,217,301 $
217,045 $
31,283,590
Special Mention
-
-
-
-
-
-
Substandard
-
-
-
-
-
-
Doubtful
-
-
-
-
-
-
Total State and political
subdivisions
$
1,279,565 $
8,613,108 $
956,571 $
20,217,301 $
217,045 $
31,283,590
Current period gross write offs
$
- $
- $
- $
- $
- $
-
Total by Risk Rating
Pass
$ 134,928,523 $ 156,180,267 $ 183,253,682 $ 243,207,379 $
67,793,311 $ 785,363,162
Special Mention
30,798
3,185,032
235,289
696,059
24,319
4,171,497
Substandard
-
-
666,758
4,133,288
241,697
5,041,743
Doubtful
-
-
-
116,985
13,064
130,049
Total
$ 134,959,321 $ 159,365,299 $ 184,155,729 $ 248,153,711 $
68,072,391 $ 794,706,451
Total current period gross write offs $
- $
- $
9,982 $
29,590 $
- $
39,572
38
Notes to Consolidated Financial Statements
38
39
Notes to Consolidated Financial Statements
Modifications to Borrowers Experiencing Financial Difficulty
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 as of December 31, 2024 and 2023, of gross loans
held for investment made to borrowers experiencing financial difficulty that were modified during
the years ended December 31, 2024 and 2023:
2024
Rate
Reduction to
Weighted
Weighted
Reduction
Available Credit
Average
Average
and Term
and Collateral
Rate
Term Extension
Extension
Modifications
Reduction
(Years)
Agricultural
21,179
-
2.500 %
7.0
Residential real estate
574,434
-
5.0
Total
$
595,613 $
-
2023
Rate
Weighted
Weighted
Reduction
Average
Average
and Term
Term
Rate
Term Extension
Extension
Extension
Reduction
(Years)
Commercial and industrial
$
- $
180,000
0.4
Agricultural
21,679
-
2.500 %
8.0
Residential real estate
42,106
5,195
1.675 %
9.2
Total
$
63,785 $
185,195
A single loan with modifications to a borrow experiencing financial difficulty with amortized costs basis
of $21,179 and $21,679 as of December 31, 2024 and 2023, respectively, 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:
2024
2023
Land and land improvements
$ 2,066,803 $
2,066,803
Buildings and leasehold improvements
33,517,990 33,281,636
Buildings - construction in progress
874,892
148,950
Furniture, fixtures, and equipment
12,237,549 11,373,676
48,697,234 46,871,065
Less accumulated depreciation
21,163,360 19,473,449
Total
$ 27,533,874 $ 27,397,616
Depreciation charged to operations was $1,704,028 in 2024 and $1,587,682 in 2023.
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 $80,227 and $63,692 as of December 31, 2024 and 2023, respectively.
The following table includes the loan balances on nonaccrual status as of December 31:
2024
2023
Commercial real estate
$
10,688 $
13,064
Commercial and industrial
60,966
95,306
Agricultural
21,179
21,679
State and political subdivisions
-
-
Consumer
-
-
Residential real estate
427,778
429,606
Total
$ 520,611 $ 559,655
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:
2024
Nonaccrual Loans
Nonaccrual Loans
With No
With a Related
Loans Past Due
Allowance for
Allowance for
Over 89 Days
Credit Loss
Credit Loss
Still Accruing
Commercial real estate
$
- $
10,688 $
-
Commercial and industrial
60,966
-
-
Agricultural
-
21,179
-
State and political subdivisions
-
-
-
Consumer
-
-
-
Residential real estate
203,428
224,350
200,517
Total
$
264,394 $
256,217 $
200,517
2023
Nonaccrual Loans
Nonaccrual Loans
With No
With a Related
Loans Past Due
Allowance for
Allowance for
Over 89 Days
Credit Loss
Credit Loss
Still Accruing
Commercial real estate
$
- $
13,064 $
-
Commercial and industrial
95,306
-
-
Agricultural
-
21,679
-
State and political subdivisions
-
-
-
Consumer
-
-
-
Residential real estate
92,704
336,902
138,780
Total
$
188,010 $
371,645 $
138,780
40
Notes to Consolidated Financial Statements
40
41
Notes to Consolidated Financial Statements
10.
OTHER BORROWINGS
The following table sets forth information concerning other borrowings:
Weighted-
Average
Stated Interest
Maturity Range
Interest
Rate Range
At December 31,
Description
From
To
Rate
From
To
2024
2023
Fixed rate
01/06/25
08/04/26
2.38 %
2.01 %
2.59 % $
4,482,000 $
9,966,000
Fixed rate amortizing
07/15/24
07/15/24
1.33
1.33
1.33
-
114,532
Adjustable rate term debt
12/01/29
11/01/39
6.93
6.93
6.93
9,814,063
-
Fixed rate senior debt
06/27/27
08/26/29
6.10
6.00
6.25
500,000
-
Subordinated debt
09/16/29
04/16/34
4.25
4.00
7.25
25,653,153 25,152,076
Junior subordinated debt
03/17/35
11/23/35
6.45
6.28
6.61
6,186,000
6,186,000
$
46,635,215 $ 41,418,608
Maturities of other borrowings at December 31, 2024, are summarized as follows:
Year Ending
Weighted-
December 31,
Amount
Average Rate
2025
$
3,359,000
2.50 %
2026
1,123,000
2.01
2027
300,000
6.00
2028
-
-
2029
283,333
6.45
2030 and after
41,569,882
5.20
$
46,635,215
4.94
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, 2024, the Bank’s maximum borrowing capacity with the FHLB was
approximately $665.5 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, 2024 is approximately $166.7
million.
The Bank maintains a $10.0 million and $5.0 million federal funds line of credit with two 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, 2024 or 2023.
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.
7.
GOODWILL
As of December 31, 2024, goodwill had a gross carrying amount of $4,126,479 and accumulated
amortization of $614,013 for a net carrying value of $3,512,466. As of December 31, 2023, 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 following
the annual forecasting process. Impairment charges to goodwill were $48,476 and $0 for years ended
December 31, 2024 and 2023, respectively.
8.
DEPOSITS
The scheduled maturities of time deposits approximate the following:
Year Ending
December 31,
Amount
2025
$
392,356,698
2026
76,966,567
2027
5,566,872
2028
17,889,520
2029
3,236,755
Thereafter
694,487
$
496,710,899
The aggregate of all time deposit accounts of $250,000 or more amounted to $171,763,345 and
$128,137,681 as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, 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:
2024
2023
Balance at year-end
$
206,000,000
$ 194,541,362
Average balance outstanding
186,661,613
153,450,385
Maximum month-end balance
220,582,938
194,541,362
Weighted-average rate at year-end
4.47 %
5.23%
Weighted-average rate during the year
4.93 %
5.84%
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, 2024 and 2023, is presented
in the following table.
Remaining
Contractual Maturity
Overnight and Continuous
December 31, December 31,
2024
2023
Securities of U.S. Government Agencies, U.S. Treasuries, and
obligations of state and political subdivisions pledged, fair value
$
1,123,424
$
4,860,607
Collateralized Deposits
438,883
512,349
42
Notes to Consolidated Financial Statements
42
43
Notes to 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, 2024, is being utilized to hedge $158.0 million in floating rate debt. At
December 31, 2024 and 2023, the information pertaining to outstanding interest rate swap agreements is
as follows:
2024
2023
Notional amount
$
245,845,967
$
208,235,812
Weighted-average pay rate
3.64 %
3.58 %
Receive rate
1 or 3-Mo.
Fallback Rate (SOFR);
1-Mo. Term SOFR
1 or 3-Mo.
Fallback Rate (SOFR);
1-Mo. Term SOFR
Weighted-average maturity in
years
3.0
4.0
Unrealized gain (loss) relating
to interest rate swaps
3,382,438
3,719,694
Cash Flow Hedges of Interest Rate Risk
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, 2024 and
2023, the Company had fourteen and eleven interest rate swaps with a notional of $158.0 million and
$115.0 million, respectively, 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,
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
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.
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.
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. Holders of these notes exchanged with the Company notes at face
value totaling $350,000 and $2,830,000 during 2024 and 2023, respectively, 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.
In 2024, the Company issued $800,000 of fixed rate subordinated capital notes with ten year maturities
from date of issuance. The notes bear an annual fixed rate of 7.25 percent for the first five years. Following
the fifth year, the notes bear a floating rate of 3-month SOFR plus 1.95 percent. The Company may redeem
them, in whole or in part, at face value on or after the fifth anniversary of the issuance date. These
borrowings are included in the liabilities section of the Company’s Consolidated Balance Sheet.
In 2024, the Company issued $$300,000 of fixed rate senior notes with three year maturities from the date
of issuance. The three-year notes bear an annual fixed rate of 6.00 percent. In 2024 the Company also
issued $200,000 of fixed rate senior notes with five-year maturities from the date of issuance. The five-
year notes bear an annual fixed rate of 6.25 percent. These borrowings are included in the liabilities section
of the Company’s Consolidated Balance Sheet.
In 2024, the Company entered into a $10,000,000 adjustable-rate fifteen year term loan. The note requires
monthly interest-only payments for the first five years, at the stated rate of Term SOFR plus 2.40 percent.
Beginning November 1, 2029 through November 1, 2039, the note requires monthly principal payments
of $83,333 plus interest. The Company's wholly owned investment in the stock of Kish Bank has been
pledged as collateral for this borrowing. Additionally, the lender provided the Company with a $3,000,000
revolving line of credit available through November 1, 2027. Monthly interest payable on credit line
borrowings is calculated at Term SOFR plus 2.40 percent on the daily outstanding balance. The terms of
the note contain covenants including delivery of timely financial reports to the lender quarterly and
annually, and a requirement that reported annual net income of the Company is maintained at a level not
less than $10,000,000, and that the Company’s ratio of total capital to risk-weighted assets does not fall
below 10.0 percent.
44
Notes to Consolidated Financial Statements
44
45
Notes to Consolidated Financial Statements
Notional Amount
Interest
Interest
Fair Value
December 31,
Rate
Rate
December 31,
2024
2023
Paid
Received
2024
2023
Cash flow interest
rate swap
Maturing in 2024
$
- $
6,000,000
Fixed
3 Mo. SOFR, 0 look back
$
- $
105,609
Maturing in 2025
22,000,000
22,000,000
Fixed
3 Mo. SOFR, 0 look back
202,930
863,128
Maturing in 2026
44,000,000
32,000,000
Fixed
3 Mo. SOFR / Daily Wtd Avg
USA SOFR
718,098
969,351
Maturing in 2027
35,000,000
10,000,000
Fixed
3 Mo. SOFR, 0 look back
430,547
528,196
Maturing in 2028
40,000,000
40,000,000
Fixed
Daily Wtd Avg USA SOFR
860,971
472,589
Maturing in 2029
12,000,000
-
Fixed
Daily Wtd Avg USA SOFR
358,529
-
Maturing in 2030
5,000,000
5,000,000
Fixed
3 Mo. SOFR, 0 look back
811,363
780,821
$ 158,000,000 $ 115,000,000
$ 3,382,438 $ 3,719,694
Customer interest
rate swap
Maturing in 2025
$
9,100,000 $
9,100,000
1 Mo. SOFR + Margin
Fixed
$
(41,293 ) $
(197,592 )
Maturing in 2026
9,266,000
9,266,000
1 Mo. SOFR + Margin
Fixed
(118,888 )
(163,287 )
Maturing in 2027
10,776,388
10,776,388
1 Mo. SOFR CME Term +
Margin
Fixed
(23,167 )
90,879
Maturing in 2029
5,520,000
10,470,000
1 Mo. SOFR + Margin
Fixed
(486,028 )
(744,976 )
Maturing in 2030
30,700,424
30,700,424
1 Mo. SOFR CME Term +
Margin
Fixed
(2,058,929 ) (1,699,229 )
Maturing in 2031
16,763,155
17,203,000
1 Mo. SOFR + Margin
Fixed
(2,171,212 ) (2,044,541 )
Maturing in 2032
2,000,000
2,000,000
1 Mo. SOFR CME Term +
Margin
Fixed
(155,087 )
(135,103 )
Maturing in 2035
3,720,000
3,720,000
1 Mo. SOFR + Margin
Fixed
(671,569 )
(642,434 )
$
87,845,967 $
93,235,812
$ (5,726,173 ) $ (5,536,283 )
Third party interest
rate swap
Maturing in 2025
$
9,100,000 $
9,100,000
Fixed
1 Mo. SOFR + Margin
$
41,293 $
197,592
Maturing in 2026
9,266,000
9,266,000
Fixed
1 Mo. SOFR + Margin
118,888
163,287
Maturing in 2027
10,776,388
10,776,388
Fixed
1 Mo. SOFR CME Term +
Margin
23,167
(90,879 )
Maturing in 2029
5,520,000
10,470,000
Fixed
1 Mo. SOFR + Margin
486,028
744,976
Maturing in 2030
30,700,424
30,700,424
Fixed
1 Mo. SOFR CME Term +
Margin
2,058,929 1,699,229
Maturing in 2031
16,763,155
17,203,000
Fixed
1 Mo. SOFR + Margin
2,171,212 2,044,541
Maturing in 2032
2,000,000
2,000,000
Fixed
1 Mo. SOFR CME Term +
Margin
155,087
135,103
Maturing in 2035
3,720,000
3,720,000
Fixed
1 Mo. SOFR + Margin
671,569
642,434
$
87,845,967 $
93,235,812
$ 5,726,173 $ 5,536,283
The Bank does on occasion enter into risk participation agreements (RPA’s) to share credit risk exposure
for participating loans where swaps are involved. The participant has no obligations under the RPA unless
the borrower defaults on the swap transaction and the swap is a liability to the borrower. The credit risk
exposure relative to the customer swap liability is limited as in the event of default the SWAP liability is
settled first from proceeds of the collateral. The fair value of the RPAs is not significant.
12.
INCOME TAXES
The provision for federal income taxes for the years ended December 31, 2024 and 2023 consists of:
2024
2023
Current
$
3,369,749 $
2,683,649
Deferred
(369,964 )
(29,206)
Total provision
$
2,999,785 $
2,654,443
2024 and 2023. 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, 2024, the fair value of derivatives in a net asset position, which includes accrued interest
and any credit valuation adjustments related to these agreements, was $3,382,438. At December 31, 2024,
the Company had no required cash collateral with its derivative counterparties and was holding cash
collateral of certain derivative counterparties in the amount of $9,220,000.
Fair Values of Derivative Instruments on the Balance Sheet
The following table presents the fair values of derivative instruments in the consolidated balance sheet:
Assets
Liabilities
Balance Sheet
Fair
Balance Sheet
Fair
Location
Value
Location
Value
December 31, 2024
Interest rate derivatives
Other assets
$
9,108,612
Other liabilities
$
(5,726,174)
December 31, 2023
Interest rate derivatives
Other assets
$
9,255,978
Other liabilities
$
(5,536,284)
Derivative Instruments
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.
46
Notes to Consolidated Financial Statements
46
47
Notes to Consolidated Financial Statements
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 2020 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 $627,407 and $572,498 for the years ended December 31, 2024 and 2023,
respectively. The fair value of plan assets includes $3,601,007 and $3,155,149 pertaining to the value of
the Company’s common stock that is held by the plan as of December 31, 2024 and 2023, respectively.
Deferred Compensation Plan
The Company has non-qualified deferred compensation plans that allow directors and senior executives to
defer fees and salaries. Contributions in these plans are invested in mutual funds selected by the plan, with
investment direction determined by the participant. The Bank maintains an investment in the same mutual
funds, as reported in “Other assets” on the Consolidated Balance Sheet. Related fair value fluctuations and
related change to the participants accrued balance are included in noninterest income and noninterest
expense. Outstanding balances under these arrangements as of December 31, 2024 and 2023 were
$2,476,462 and $2,046,767, respectively, and are reported as “Other liabilities” on the Consolidated
Balance Sheet. Expenses related to these plans were $406,014 and $175,021 for the years ended December
31, 2024 and 2023, respectively. Balances of the investments held by the Bank as of December 31, 2024
and 2023 were $2,489,497 and $0, respectively. Income related to these investments were $161,852 and
$0 for the years ended December 31, 2024 and 2023, 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 155,664 shares and 177,409 shares as of December 31,
2024 and 2023, 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.
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, 2024 and 2023 are as follows:
2024
2023
Deferred tax assets:
Allowance for credit losses - loans
$
1,870,338 $
1,584,444
Deferred compensation
520,057
429,821
Deferred incentive credits
148,303
176,110
Deferred loan fees
175,210
79,627
Asset valuation allowances
407,504
407,694
Employee compensation accruals
235,435
243,278
Nonaccrual interest receivable
16,847
13,375
Unrealized loss on available-for-sale securities
4,279,770
4,438,460
Partnerships
206,883
169,031
Lease liability
876,086
947,835
Other
691
691
Deferred tax assets
8,737,124
8,490,366
Deferred tax liabilities:
Premises and equipment
1,065,535
976,111
Goodwill
447,969
431,657
Intangible asset - naming rights
2,800
-
Unrealized gain on swaps - balance sheet hedge
658,365
716,784
Fair value adjustment - equity securities
154,140
135,715
Right of use asset
844,791
919,429
Deferred tax liabilities
3,173,600
3,179,696
Net deferred tax assets
$
5,563,524 $
5,310,670
No valuation allowance was established at December 31, 2024 and 2023, in view of the Company’s ability
to carry back 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:
2024
2023
% of
% of
Pretax
Pretax
Amount Income
Amount Income
Provision at statutory rate
$ 3,679,082
21.0 %
$ 3,392,373
21.0 %
Tax-exempt interest
(272,845)
(1.6)
(213,359)
(1.3)
Life insurance income
(150,287)
(0.9)
(224,309)
(1.4)
Investment tax credits
(329,442)
(1.9)
(329,442)
(2.0)
Other
73,277
0.4
29,180
0.2
Income tax expense and
effective rate
$ 2,999,785
17.0 %
$ 2,654,443
16.5 %
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
48
Notes to Consolidated Financial Statements
48
49
Notes to Consolidated Financial Statements
The following table presents share data related to the outstanding option awards:
Incentive Stock Options Non-Qualified Stock Options
Options
Outstanding
Weighted-
Average
Exercise
Price
Options
Outstanding
Weighted-
Average
Exercise
Price
Outstanding, December 31, 2022
179,019 $
29.17
58,113 $
26.01
Granted
31,940
33.80
12,063
33.80
Exercised
(22,626)
25.52
(9,858)
21.27
Forfeited/Expired
(7,902)
33.35
-
-
Outstanding, December 31, 2023
180,431
30.27
60,318
28.34
Granted
7,400
30.50
38,610
30.50
Exercised
(8,855)
25.52
(3,622)
19.28
Forfeited/Expired
(4,334)
34.38
(3,732)
29.79
Outstanding, December 31, 2024
174,642 $
30.42
91,574 $
29.55
Exercisable at December 31, 2024
139,593 $
29.60
45,471 $
27.76
Compensation expense recognized related to restricted stock awards was $570,097 and $439,194 for the
years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, unrecognized
compensation cost related to restricted stock awards was $1,380,186, which is expected to be recognized
over a weighted average life of 3.14 years. The following is a summary of the status of the Company’s
outstanding restricted stock awards as of December 31, 2024 and 2023, and changes therein during the
years then ended:
Shares of
Weighted-
Restricted
Average
Stock
Grant Date
Outstanding
Fair Value
Outstanding at December 31, 2022
67,244 $
31.18
Granted
22,428
33.52
Released from Restrictions
(24,377)
30.41
Forfeited
(5,737)
28.31
Outstanding at December 31, 2023
59,558
32.65
Granted
22,470
30.50
Released from Restrictions
(25,238)
31.86
Forfeited
(725)
32.06
Outstanding at December 31, 2024
56,065 $
32.15
Stock Option Plan
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 40,011 and 77,955 shares as of December 31, 2024
and 2023, 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 $255,101 and $233,159 for the years ended December 31, 2024 and 2023,
respectively. As of December 31, 2024, unrecognized compensation cost related to stock option awards
was $327,821 which is expected to be recognized over a weighted-average life of 1.80 years.
50
Notes to Consolidated Financial Statements
50
51
Notes to Consolidated Financial Statements
14.
COMMITMENTS
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. These instruments involve, to varying degrees, elements
of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheet.
Commitments to extend credit are considered off-balance-sheet credit exposure, for which an allowance
for credit loss exposures is maintained.
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:
2024
2023
Commitments to extend credit
$ 521,375,372 $ 478,016,671
Standby letters of credit
8,554,204
9,388,062
Total
$ 529,929,576 $ 487,404,733
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.
The Bank estimates expected credit losses for commitments to extend credit 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. The ACL for off-balance sheet credit exposures was $1,767,526 and $1,742,595 at
December 31, 2024 and 2023, respectively, and is included in Accrued interest and other liabilities in the
Consolidated Balance Sheet.
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. An ROU asset related to these operating leases is
included in Accrued Interest and Other Assets on the Consolidated Balance Sheet as of December 31, 2024
and 2023. A lease liability related to these operating leases is included in Accrued Interest and Other
Liabilities on the Consolidated Balance Sheet as of December 31, 2024 and 2023.
Option awards outstanding and exercisable as of December 31, 2024:
Incentive Stock Options
Share
Share
Remaining
Expiration
Exercise
Awards
Awards
Contractual
Date
Price
Outstanding
Exercisable
Life (years)
04/01/25
19.48
5,568
5,568
0.25
04/01/26
22.00
6,300
6,300
1.25
10/31/26
22.40
1,000
1,000
1.83
12/12/26
22.38
1,000
1,000
1.95
04/03/27
27.00
7,150
7,150
2.25
04/02/28
29.63
20,400
20,400
3.25
04/01/29
31.60
21,834
21,834
4.25
04/03/30
25.65
20,893
20,893
5.26
12/01/30
30.00
2,900
2,900
5.92
04/03/31
30.05
24,167
24,167
6.26
10/01/31
38.25
1,500
1,500
6.75
03/25/32
36.00
26,190
17,450
7.24
04/03/33
33.80
28,340
9,431
8.26
04/03/34
30.50
7,400
-
9.26
174,642
139,593
Non-Qualified Stock Options
Share
Share
Remaining
Expiration
Exercise
Awards
Awards
Contractual
Date
Price
Outstanding
Exercisable
Life (years)
04/01/25
19.48
3,636
3,636
0.25
04/01/26
22.00
6,556
6,556
1.25
10/31/26
22.40
1,000
1,000
1.83
12/12/26
22.38
1,000
1,000
1.95
04/03/27
27.00
7,914
7,914
2.25
04/02/28
29.63
1,260
1,260
3.25
04/01/29
31.60
2,780
2,780
4.25
04/03/30
25.65
4,677
4,677
5.26
10/28/30
28.25
1,000
1,000
5.83
04/03/31
30.05
6,575
6,575
6.26
03/25/32
36.00
7,408
5,053
7.24
04/03/33
33.80
11,563
4,020
8.26
04/03/34
30.50
36,205
-
9.26
91,574
45,471
52
Notes to Consolidated Financial Statements
52
53
Notes to Consolidated Financial Statements
16.
REGULATORY CAPITAL
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, 2024 and 2023, 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:
2024
2023
Amount
Ratio
Amount
Ratio
Total capital
(to risk-weighted assets)
Actual
$
158,738,823
10.45 % $
144,144,790
10.70 %
For capital adequacy purposes
121,502,406
8.00
107,771,297
8.00
To be well capitalized
151,878,007
10.00
134,714,121
10.00
Common Equity Tier I
(to risk-weighted assets)
Actual
$
116,750,661
7.69 % $
103,977,598
7.72 %
For capital adequacy purposes
68,345,103
4.50
60,621,354
4.50
To be well capitalized
98,720,705
6.50
87,564,178
6.50
Tier I capital
(to risk-weighted assets)
Actual
$
122,750,661
8.08 % $
109,977,598
8.16 %
For capital adequacy purposes
91,126,804
6.00
80,828,472
6.00
To be well capitalized
121,502,406
8.00
107,771,297
8.00
Tier I capital
(to average assets)
Actual
$
122,750,661
7.29 % $
109,977,598
7.26 %
For capital adequacy purposes
67,354,656
4.00
60,567,620
4.00
To be well capitalized
84,193,321
5.00
75,709,524
5.00
Maturities of our lease liabilities for all operating leases for each of the next five years and thereafter are
as follows:
Operating Lease
Payments
2025
$
498,014
2026
439,924
2027
440,093
2028
453,003
2029
466,000
Thereafter
4,982,864
Total lease payments
7,279,898
Less: imputed interest
2,069,204
Present value of lease liabilities $
5,210,694
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 3.64% and 3.36%, and a
weighted-average remaining lease term of 15.8 years and 13.0 years as of December 31, 2024 and 2023,
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 2024 and 2023.
Dividends
The Pennsylvania Banking Code restricts the availability of capital surplus for dividend purposes. At
December 31, 2024, the Bank had a capital surplus of $28,168,216 which was not available for distribution
to the Company as dividends.
54
Notes to Consolidated Financial Statements
54
55
Notes to Consolidated Financial Statements
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, 2024 and 2023, 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.
December 31, 2024
Level I
Level II
Level III
Total
Investment and equity securities at fair
value:
U.S. treasury securities
$
-
$
19,854,620 $
- $
19,854,620
U.S. government agency securities
-
43,628,289
-
43,628,289
Obligations of states and
political subdivisions
-
35,302,313
-
35,302,313
Corporate securities
-
465,434
-
465,434
Mortgage-backed securities in
government-sponsored entities
-
26,047,109
-
26,047,109
Collateralized mortgage obligations
-
26,030,874
-
26,030,874
Equity securities
2,377,617
-
-
2,377,617
Total
$ 2,377,617
$
151,328,639 $
- $ 153,706,256
Derivatives at fair value: (1)
Assets
$
-
$
9,108,612 $
- $
9,108,612
Liabilities
$
-
$
(5,726,174 ) $
- $
(5,726,174)
December 31, 2023
Level I
Level II
Level III
Total
Investment and equity securities at fair
value:
U.S. treasury securities
$
-
$
26,507,745 $
- $
26,507,745
U.S. government agency securities
-
58,373,229
-
58,373,229
Obligations of states and
political subdivisions
-
34,783,092
-
34,783,092
Corporate securities
-
1,437,714
-
1,437,714
Mortgage-backed securities in
government-sponsored entities
-
30,068,198
-
30,068,198
Collateralized mortgage obligations
-
27,807,826
-
27,807,826
Equity securities
2,712,968
-
-
2,712,968
Total
$ 2,712,968
$
178,977,804 $
- $ 181,690,772
Derivatives at fair value: (1)
Assets
$
-
$
9,255,978 $
- $
9,255,978
Liabilities
$
-
$
(5,536,284 ) $
- $
(5,536,284)
(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.
The Bank’s actual capital ratios are presented in the following table which shows the Bank met all
regulatory capital requirements:
2024
2023
Amount
Ratio
Amount
Ratio
Total capital
(to risk-weighted assets)
Actual
$
162,447,545
10.63 % $
144,144,393
10.61 %
For capital adequacy purposes
122,294,121
8.00
108,636,951
8.00
To be well capitalized
152,867,651
10.00
135,796,189
10.00
Common Equity Tier I
(to risk-weighted assets)
Actual
$
151,676,383
9.92 % $
134,744,200
9.92 %
For capital adequacy purposes
68,790,443
4.50
61,108,285
4.50
To be well capitalized
99,363,973
6.50
88,267,523
6.50
Tier I capital
(to risk-weighted assets)
Actual
$
151,676,383
9.92 % $
134,744,200
9.92 %
For capital adequacy purposes
91,720,591
6.00
81,477,713
6.00
To be well capitalized
122,294,121
8.00
108,636,951
8.00
Tier I capital
(to average assets)
Actual
$
151,676,383
9.02 % $
134,744,200
8.91 %
For capital adequacy purposes
67,284,379
4.00
60,507,205
4.00
To be well capitalized
84,105,474
5.00
75,634,006
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:
Quoted prices are available in active markets for identical assets or liabilities as of the
reported date.
Level II:
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.
56
Notes to Consolidated Financial Statements
56
57
Notes to Consolidated Financial Statements
December 31, 2023
Level I
Level II Level III
Total
Assets:
Collateral dependent individually
evaluated loans
$
- $
- $
149,934 $
149,934
Mortgage servicing rights
-
-
162,412
162,412
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, 2024 and 2023.
December 31, 2024
Valuation
Fair Value Techniques
Unobservable Inputs
Range
Collateral dependent
individually
evaluated loans
$
187,858
Property
appraisals
Management discount for
property type and recent
market volatility
15.00% - 100.00% discount
Weighted Average (15.00%)
Mortgage servicing
rights
$
142,382
Discounted
cash flows
Discount rate
4.18% - 4.25% discount
Weighted Average (4.22%)
Prepayment speeds
1.02% - 1.44% prepayment
factor
Weighted Average (1.12%)
December 31, 2023
Valuation
Fair Value Techniques
Unobservable Inputs
Range
Collateral dependent
individually
evaluated 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%)
Collateral Dependent Individually Evaluated 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 credit 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, 2024 and 2023, by level within the fair value hierarchy.
Individually evaluated 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 individually
evaluated 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 individually evaluated loans as of December 31, 2024 consists of a single commercial loan with
all inventory and equipment of the business assigned as loan collateral, and a single home equity credit
line collateralized by real estate.
December 31, 2024
Level I
Level II Level III
Total
Assets:
Collateral dependent individually
evaluated loans
$
- $
- $
187,858
$
187,858
Mortgage servicing rights
-
-
142,382
142,382
58
Notes to Consolidated Financial Statements
58
59
Notes to Consolidated Financial Statements
19.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table presents the changes in accumulated other comprehensive income (loss) by component
net of tax for the year ended December 31, 2024 and 2023:
Net Unrealized
Gains (Losses)
on Investment
Securities
Cash Flow
Hedges
Total
Accumulated other comprehensive
loss, December 31, 2022
$
(19,810,413) $
3,669,464 $
(16,140,949)
Other comprehensive loss before
reclassification
3,113,225
-
3,113,225
Amounts reclassified from
accumulated other comprehensive loss
125
-
125
Amounts from change to AOCI
related to cash flow hedges
-
(972,993 )
(972,993)
Accumulated other comprehensive
income (loss), December 31, 2023
$
(16,697,063) $
2,696,471 $
(14,000,592)
Other comprehensive income before
reclassification
596,976
-
596,976
Amounts reclassified from
accumulated other comprehensive loss
-
-
-
Amounts from change to AOCI
related to cash flow hedges
-
(219,764 )
(219,764)
Accumulated other comprehensive
income (loss), December 31, 2024
$
(16,100,087) $
2,476,707 $
(13,623,380)
The following table presents significant amounts reclassified out of each component of accumulated other
comprehensive loss for the year ended December 31, 2024 and 2023:
Amount Reclassified
Affected Line Item
from Accumulated
in the Consolidated
Other Comprehensive
Statement of Income where
Income (Loss)
Net Income is Presented
$
- Investment securities gains, net
- Income tax benefit
Unrealized gains on investment
securities, December 31, 2024
$
-
$
(158 ) Investment securities losses, net
33 Income tax expense
Unrealized losses on investment
securities, December 31, 2023
$
(125 )
20.
SUBSEQUENT EVENTS
Management has reviewed events occurring through March 14, 2025, the date the financial statements
were issued, and no additional subsequent events occurred requiring accrual or disclosure.
18.
FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company’s financial instruments not required to be measured or reported
at fair value at December 31, 2024 and 2023 are as follows:
2024
Carrying
Fair
Level
Level
Level
Value
Value
I
II
III
Financial assets:
Investment securities
held to maturity
$
9,406,130 $
8,919,613 $
- $
8,919,613 $
-
Net loans
1,415,093,343 1,360,584,451
-
-
1,360,584,451
Financial liabilities:
Deposits
$ 1,298,069,699 $ 1,295,472,170 $
801,358,800 $
- $
494,113,370
Other borrowings
46,635,215
44,331,091
-
-
44,331,091
2023
Carrying
Fair
Level
Level
Level
Value
Value
I
II
III
Financial assets:
Investment securities
held to maturity
$
10,891,602 $
9,972,415 $
- $
9,972,415 $
-
Net loans
1,225,317,002 1,166,903,286
-
- 1,166,903,286
Financial liabilities:
Deposits
$1,179,069,408 $ 1,195,773,897 $ 776,423,191 $
- $
419,350,706
Other borrowings
41,418,608
39,149,549
-
-
39,149,549
As of December 31, 2024 and 2023, 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.
Board of Directors and Officers
61
60
Board of Directors and Officers
60
The Board of Directors of Kish Bancorp, Inc.
Back row: James A. Troha, Michael K. Halloran, George V. Woskob, Gregory T. Hayes, Paul G. Howes,
Eric J. Barron, William L. Dancy, Paul H. Silvis
Front row: Frances V. Vaughn, William P. Hayes, Kathleen L. Rhine
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
Kathleen L. Rhine, Member
Paul H. Silvis, Member
James A. Troha, 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
Sandra S. Kleckner, Member
James J. Lakso, Member
Delmont R. Sunderland, 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
Executive Officer
Keith A. Crissman, Executive Vice
President, Chief Revenue Officer
Mark J. Cvrkel, Executive Vice President,
Chief Financial Officer
Robert S. McMinn, Executive Vice
President, General Counsel
Richard A. Sarfert, Executive Vice
President, Chief Credit 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 President,
Retail Banking Director
Mark E. Yerger, Sr. Vice President, Chief
Information Officer
Beth N. Metz Gilmore, Vice President,
Human Resources Director
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 Lending
Group
Eunice P. Harris, Sr. Vice President,
Products and Services Director
Kristie R. McKnight, Sr. Vice President,
Commercial Banking Market Leader
Amy M. Muchler, Sr. Vice President, Audit
Manager
Jeffrey D. Wilson, Sr. Vice President, CEO,
Kish Agency
Gary L. Wimer, Sr. Vice President,
Managing Director, Ohio Lending
Group
Christina L. Bagrosky, Vice President,
Senior Business Systems Analyst
Larry E. Burger, Vice President, Business
Development Officer
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 Banking Market Leader
Polly A. Gipe, Vice President, BSA Officer
Stevi L. Glick, Vice President, Project
Management Office and Business
Analysis Manager
Shane A. Graham, Vice President, Branch
Manager
Roxanne R. Greising, Vice President,
Credit Administration Director
Jeffrey A. Gum, Vice President, Managing
Director, Kish Benefits Consulting
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, Senior
Business Systems Analyst
Crystal L. Himes, Vice President,
Residential Lender
Holly A. Johnson, Vice President,
Mortgage Banking Manager
Lisa A. Kennedy, Vice President, Training
and Organizational Development
Manager
Jessica L. Kitt, Vice President, Retail
Banking Sales Manager
Patrick S. Krispin, Vice President, Data
and Analytics Manager
Marsha K. Kuhns, Vice President,
Residential Lender
John Q. Massie, Vice President,
Commercial Relationship Manager
Seth J. Napikoski, Vice President,
Commercial Relationship Manager
Caleb J. Shertzer, Vice President,
Commercial Banking Market Leader
Cheryl E. Shope, Vice President,
Residential Lender
Wendy S. Strohecker, Vice President,
Operations Manager
N. Robert Sunday, III, Vice President,
Compliance Officer
Lindsey J. Swigart, Vice President, Bank
Support Manager
THRIVING
4255 East Main Street, Belleville, PA 17004
1-800-981-5474 | MyKish.com