PENNSYLVANIA
|
|
23-2265045
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
Common Stock, Par value $1.0 per share
|
CZFS
|
The Nasdaq Stock Market, LLC
|
||
Title of Each Class
|
Trading
Symbol (s)
|
|
Name of Each Exchange
on Which Registered
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
PAGE
|
||
Part I
|
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements (unaudited):
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
Notes to Consolidated Financial Statements |
6-38
|
Item 2.
|
39-63
|
|
Item 3.
|
64
|
|
Item 4.
|
64
|
|
Part II
|
OTHER INFORMATION
|
|
Item 1.
|
64
|
|
Item 1A.
|
64-65
|
|
Item 2.
|
66
|
|
Item 3.
|
66
|
|
Item 4.
|
66
|
|
Item 5.
|
66
|
|
Item 6.
|
66
|
|
|
Signatures |
67
|
(in thousands except share data)
|
September 30,
2023
|
December 31,
2022
|
||||||
ASSETS:
|
||||||||
Cash and due from banks:
|
||||||||
Noninterest-bearing
|
$
|
25,267
|
$
|
24,814
|
||||
Interest-bearing
|
18,069
|
1,397
|
||||||
Total cash and cash equivalents
|
43,336
|
26,211
|
||||||
Interest bearing time deposits with other banks
|
4,566
|
6,055
|
||||||
Equity securities
|
1,858
|
2,208
|
||||||
Available-for-sale securities
|
417,807
|
439,506
|
||||||
Loans held for sale
|
14,155
|
725
|
||||||
|
||||||||
Loans (net
of allowance for credit losses - loans: 2023 $21,455 and 2022, $18,552)
|
2,224,941
|
1,706,447
|
||||||
|
||||||||
Premises and equipment
|
21,421
|
17,619
|
||||||
Accrued interest receivable
|
10,327
|
7,332
|
||||||
Goodwill
|
84,758
|
31,376
|
||||||
Bank owned life insurance
|
49,586
|
39,355
|
||||||
Other intangibles
|
3,866
|
1,272
|
||||||
Fair value of derivative instruments |
18,144 | 16,599 | ||||||
Deferred tax asset |
21,384 | 12,886 | ||||||
Other assets
|
43,067
|
25,802
|
||||||
TOTAL ASSETS
|
$
|
2,959,216
|
$
|
2,333,393
|
||||
|
||||||||
LIABILITIES:
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
$
|
542,144
|
$
|
396,260
|
||||
Interest-bearing
|
1,792,991
|
1,447,948
|
||||||
Total deposits
|
2,335,135
|
1,844,208
|
||||||
Borrowed funds
|
316,151
|
257,278
|
||||||
Accrued interest payable
|
2,726
|
1,232
|
||||||
Fair value of derivative instruments - liability |
10,694 | 9,726 | ||||||
Other liabilities
|
31,824
|
20,802
|
||||||
TOTAL LIABILITIES
|
2,696,530
|
2,133,246
|
||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Preferred Stock | ||||||||
$1.00
par value; authorized 3,000,000 shares at September 30, 2023 and December 31, 2022; none issued in 2023 or 2022
|
-
|
-
|
||||||
Common Stock | ||||||||
$1.00 par value; authorized 25,000,000 shares at September 30, 2023 and
December 31, 2022; issued 5,160,754
at September 30, 2023
and 4,427,687 at December 31, 2022
|
5,161
|
4,428
|
||||||
Additional paid-in capital
|
143,302
|
80,911
|
||||||
Retained earnings
|
167,740
|
164,922
|
||||||
Accumulated other comprehensive loss
|
(36,643
|
)
|
(33,141
|
)
|
||||
Treasury stock, at cost: 454,643
shares at September 30, 2023
and 456,478 shares at December 31, 2022
|
(16,874
|
)
|
(16,973
|
)
|
||||
TOTAL STOCKHOLDERS’ EQUITY
|
262,686
|
200,147
|
||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
2,959,216
|
$
|
2,333,393
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
(in thousands, except share and per share data)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
INTEREST INCOME:
|
||||||||||||||||
Interest and fees on loans
|
$
|
33,772
|
$
|
19,396
|
$
|
80,438
|
$
|
52,436
|
||||||||
Interest-bearing deposits with banks
|
264
|
61
|
462
|
333
|
||||||||||||
Investment securities:
|
||||||||||||||||
Taxable
|
1,734
|
1,514
|
4,973
|
4,050
|
||||||||||||
Nontaxable
|
540
|
630
|
1,729
|
1,830
|
||||||||||||
Dividends
|
379
|
182
|
1,004
|
356
|
||||||||||||
TOTAL INTEREST INCOME
|
36,689
|
21,783
|
88,606
|
59,005
|
||||||||||||
INTEREST EXPENSE:
|
||||||||||||||||
Deposits
|
10,100
|
1,838
|
19,519
|
4,469
|
||||||||||||
Borrowed funds
|
4,185
|
1,099
|
10,682
|
1,699
|
||||||||||||
TOTAL INTEREST EXPENSE
|
14,285
|
2,937
|
30,201
|
6,168
|
||||||||||||
NET INTEREST INCOME
|
22,404
|
18,846
|
58,405
|
52,837
|
||||||||||||
Provision for credit losses
|
475
|
725
|
737
|
1,425
|
||||||||||||
Provision for credit losses - acquisition day 1 non-PCD |
- | - | 4,591 | - | ||||||||||||
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
|
21,929
|
18,121
|
53,077
|
51,412
|
||||||||||||
NON-INTEREST INCOME:
|
||||||||||||||||
Service charges
|
1,692
|
1,509
|
4,196
|
4,081
|
||||||||||||
Trust
|
172
|
187
|
583
|
620
|
||||||||||||
Brokerage and insurance
|
473
|
446
|
1,429
|
1,428
|
||||||||||||
Gains on loans sold
|
460
|
95
|
674
|
241
|
||||||||||||
Equity security gains (losses), net
|
69
|
(19
|
)
|
(223
|
)
|
(198
|
)
|
|||||||||
Available for sale security gains (losses), net
|
-
|
(6
|
)
|
(51
|
)
|
(6
|
)
|
|||||||||
Earnings on bank owned life insurance
|
489
|
216
|
941
|
635
|
||||||||||||
Other
|
307
|
264
|
567
|
626
|
||||||||||||
TOTAL NON-INTEREST INCOME
|
3,662
|
2,692
|
8,116
|
7,427
|
||||||||||||
NON-INTEREST EXPENSES:
|
||||||||||||||||
Salaries and employee benefits
|
10,005
|
6,933
|
25,598
|
20,964
|
||||||||||||
Occupancy
|
1,221
|
779
|
2,870
|
2,327
|
||||||||||||
Furniture and equipment
|
255
|
122
|
568
|
416
|
||||||||||||
Professional fees
|
506
|
588
|
1,274
|
1,321
|
||||||||||||
FDIC insurance
|
375
|
160
|
1,000
|
440
|
||||||||||||
Pennsylvania shares tax
|
297
|
339
|
893
|
1,017
|
||||||||||||
Amortization of intangibles
|
157
|
40
|
219
|
120
|
||||||||||||
Merger and acquisition |
623 | - | 9,269 |
- |
||||||||||||
Software expenses
|
551
|
370
|
1,274
|
1,069
|
||||||||||||
ORE expenses (income)
|
111
|
122
|
126
|
(125
|
)
|
|||||||||||
Other
|
2,343
|
2,161
|
5,811
|
5,496
|
||||||||||||
TOTAL NON-INTEREST EXPENSES
|
16,444
|
11,614
|
48,902
|
33,045
|
||||||||||||
Income before provision for income taxes
|
9,147
|
9,199
|
12,291
|
25,794
|
||||||||||||
Provision for income taxes
|
1,599
|
1,655
|
2,020
|
4,609
|
||||||||||||
NET INCOME
|
$
|
7,548
|
$
|
7,544
|
$
|
10,271
|
$
|
21,185
|
||||||||
PER COMMON SHARE DATA:
|
||||||||||||||||
Net Income - Basic
|
$
|
1.61
|
$
|
1.88
|
$
|
2.40
|
$
|
5.28
|
||||||||
Net Income - Diluted
|
$
|
1.61
|
$
|
1.88
|
$
|
2.40
|
$
|
5.28
|
||||||||
Cash Dividends Paid
|
$
|
0.490
|
$
|
0.475
|
$
|
1.451
|
$
|
1.407
|
||||||||
Number of shares used in computation - basic
|
4,699,952
|
4,006,794
|
4,275,259
|
4,009,855
|
||||||||||||
Number of shares used in computation - diluted
|
4,699,952
|
4,007,028
|
4,275,259
|
4,009,857
|
Three Months Ended
September 30,
|
Nine Months Ended,
September 30,
|
|||||||||||||||
(in thousands)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net income
|
$
|
7,548
|
$
|
7,544
|
$
|
10,271
|
$
|
21,185
|
||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Change in unrealized gains (losses) on available for sale securities
|
(7,627
|
)
|
(13,578
|
)
|
(4,645
|
)
|
(50,581
|
)
|
||||||||
Income tax effect
|
1,602
|
2,851
|
976
|
10,622
|
||||||||||||
Change in unrecognized pension cost
|
7
|
24
|
21
|
72
|
||||||||||||
Income tax effect
|
(1
|
)
|
(5
|
)
|
(4
|
)
|
(15
|
)
|
||||||||
Change in unrealized loss on interest rate swaps
|
450
|
1,781
|
140
|
5,314
|
||||||||||||
Income tax effect
|
(94
|
)
|
(374
|
)
|
(29
|
)
|
(1,117
|
)
|
||||||||
Less: Reclassification adjustment for investment security gains included in net income |
- | 6 | 51 | 6 | ||||||||||||
Income tax effect |
- | (1 | ) | (12 | ) | (1 | ) | |||||||||
Other comprehensive income (loss), net of tax
|
(5,663
|
)
|
(9,296
|
)
|
(3,502
|
)
|
(35,700
|
)
|
||||||||
Comprehensive income (loss)
|
$
|
1,885
|
$
|
(1,752
|
)
|
$
|
6,769
|
$
|
(14,515
|
)
|
|
Common Stock
|
Additional
Paid-in
|
Retained |
Accumulated
Other
Comprehensive
|
Treasury | |||||||||||||||||||||||
(in thousands, except share data)
|
Shares
|
Amount
|
Capital
|
Earnings
|
Income (Loss)
|
Stock
|
Total
|
|||||||||||||||||||||
Balance, June 30, 2023
|
5,160,754
|
5,161
|
143,351
|
162,499
|
(30,980
|
)
|
(16,803
|
)
|
263,228
|
|||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
7,548
|
7,548
|
||||||||||||||||||||||||||
Net other comprehensive income (loss)
|
(5,663
|
)
|
(5,663
|
)
|
||||||||||||||||||||||||
Purchase of treasury stock (2,772 shares)
|
(264 | ) | (264 | ) | ||||||||||||||||||||||||
Restricted stock, executive and Board of Director awards (2,167 shares) | (86 | ) | 168 | 82 | ||||||||||||||||||||||||
Restricted stock vesting |
34 |
- | 34 | |||||||||||||||||||||||||
Sale of treasury stock to employees (410 shares) | - | 28 | 28 | |||||||||||||||||||||||||
Forfeited restricted stock (52 shares) |
3 | (3 | ) | - | ||||||||||||||||||||||||
Cash dividends, $0.490 per share
|
(2,307
|
)
|
(2,307
|
)
|
||||||||||||||||||||||||
Balance, September 30, 2023
|
5,160,754
|
$
|
5,161
|
$
|
143,302
|
$
|
167,740
|
$
|
(36,643
|
)
|
$
|
(16,874
|
)
|
$
|
262,686
|
|||||||||||||
Balance, December 31, 2022
|
4,427,687
|
$
|
4,428
|
$
|
80,911
|
$
|
164,922
|
$
|
(33,141
|
)
|
$
|
(16,973
|
)
|
$
|
200,147
|
|||||||||||||
|
||||||||||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
10,271
|
10,271
|
||||||||||||||||||||||||||
Net other comprehensive income (loss)
|
(3,502
|
)
|
(3,502
|
)
|
||||||||||||||||||||||||
Stock dividend | 39,209 | 39 | 2,982 | (3,021 | ) | - | ||||||||||||||||||||||
Issuance of Common stock | 693,858 | 694 | 59,443 | 60,137 | ||||||||||||||||||||||||
Purchase of treasury stock (2,772 shares) | (264 | ) | (264 | ) | ||||||||||||||||||||||||
Restricted stock, executive and Board of Director awards (2,242 shares)
|
(231
|
)
|
348
|
117 |
||||||||||||||||||||||||
Restricted stock vesting
|
184
|
184
|
||||||||||||||||||||||||||
Sale of treasury stock to employees (410 shares) | - | 28 | 28 | |||||||||||||||||||||||||
Forfeited restricted stock (213 shares)
|
13
|
(13
|
)
|
-
|
||||||||||||||||||||||||
Change in Accounting policy for allowance for credit losses | 1,766 | - | 1,766 | |||||||||||||||||||||||||
Cash dividends, $1.451 per share
|
(6,198
|
)
|
(6,198
|
)
|
||||||||||||||||||||||||
Balance, September 30, 2023
|
5,160,754
|
$
|
5,161
|
$
|
143,302
|
$
|
167,740
|
$
|
(36,643
|
)
|
$
|
(16,874
|
)
|
$
|
262,686
|
|||||||||||||
Balance, June 30, 2022
|
4,427,687
|
4,428
|
80,892
|
153,315
|
(26,559
|
)
|
(17,044
|
)
|
195,032
|
|||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
7,544
|
7,544
|
||||||||||||||||||||||||||
Net other comprehensive income (loss)
|
(9,296
|
)
|
(9,296
|
)
|
||||||||||||||||||||||||
Purchase of treasury stock (18,584 shares)
|
-
|
-
|
||||||||||||||||||||||||||
Restricted stock, executive and Board of Director awards (769 shares)
|
(52
|
)
|
52
|
-
|
||||||||||||||||||||||||
Restricted stock vesting
|
16 | 16 | ||||||||||||||||||||||||||
Sale of treasury stock to employees (540
shares) |
5 | 35 | 40 | |||||||||||||||||||||||||
Forfeited restricted stock (120 shares) | 8 | (8 | ) | - | ||||||||||||||||||||||||
Cash dividends, $0.475
per share
|
(1,906
|
)
|
(1,906
|
)
|
||||||||||||||||||||||||
Balance, September 30,
2022
|
4,427,687
|
$
|
4,428
|
$
|
80,869
|
$
|
158,953
|
$
|
(35,855
|
)
|
$
|
(16,965
|
)
|
$
|
191,430
|
|||||||||||||
Balance, December 31,
2021
|
4,388,901
|
$
|
4,389
|
$
|
78,395
|
$
|
146,010
|
$
|
(155
|
)
|
$
|
(16,147
|
)
|
$
|
212,492
|
|||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
21,185
|
21,185
|
||||||||||||||||||||||||||
Net other comprehensive income (loss)
|
(35,700
|
)
|
(35,700
|
)
|
||||||||||||||||||||||||
Stock dividend | 38,786 | 39 | 2,521 | (2,560 | ) | - | ||||||||||||||||||||||
Purchase of treasury stock (18,697
shares)
|
(1,279
|
)
|
(1,279
|
)
|
||||||||||||||||||||||||
Restricted stock, executive and Board of Director awards (5,392 shares)
|
(221
|
)
|
365
|
144
|
||||||||||||||||||||||||
Restricted stock vesting
|
158
|
158
|
||||||||||||||||||||||||||
Sale of treasury stock to employees (1,600 shares) | 6 | 106 | 112 | |||||||||||||||||||||||||
Forfeited restricted stock (159 shares) | 10 | (10 | ) | - | ||||||||||||||||||||||||
Cash dividends, $1.407
per share
|
(5,682
|
)
|
(5,682
|
)
|
||||||||||||||||||||||||
Balance, September 30,
2022
|
4,427,687
|
$
|
4,428
|
$
|
80,869
|
$
|
158,953
|
$
|
(35,855
|
)
|
$
|
(16,965
|
)
|
$
|
191,430
|
Nine Months Ended
September 30,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
10,271
|
$
|
21,185
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Provision for credit losses
|
5,328
|
1,425
|
||||||
Depreciation and amortization
|
1,022
|
773
|
||||||
Amortization and accretion of loans and other assets
|
(2,392
|
)
|
(1,386
|
)
|
||||
Amortization and accretion of investment securities
|
1,197
|
1,467
|
||||||
Deferred income taxes
|
355
|
86
|
||||||
Investment securities losses, net
|
274
|
204
|
||||||
Earnings on bank owned life insurance
|
(941
|
)
|
(635
|
)
|
||||
Vesting of restricted stock |
184 | 158 | ||||||
Originations of loans held for sale
|
(53,510
|
)
|
(9,447
|
)
|
||||
Proceeds from sales of loans held for sale
|
51,428
|
12,864
|
||||||
Realized gains on loans sold
|
(674
|
)
|
(241
|
)
|
||||
Increase in accrued interest receivable
|
(769
|
)
|
(1,309
|
)
|
||||
Gain on sale of foreclosed assets held for sale
|
(98 | ) | (481 | ) | ||||
Increase in accrued interest payable
|
609
|
211
|
||||||
Other, net
|
(1,955
|
)
|
(536
|
)
|
||||
Net cash provided by operating activities
|
10,329
|
24,338
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Available-for-sale securities:
|
||||||||
Proceeds from sales |
86,504 | 4,492 | ||||||
Proceeds from maturity and principal repayments
|
18,847
|
28,553
|
||||||
Purchase of securities
|
(10,246
|
)
|
(117,913
|
)
|
||||
Purchase of equity securities
|
- | (218 | ) | |||||
Proceeds from sale of equity securities
|
127 | 33 | ||||||
Purchase of interest bearing time deposits with other banks
|
-
|
(3,720
|
)
|
|||||
Proceeds from sale of interest bearing time deposits with other banks | - | 2,733 | ||||||
Proceeds from life insurance | 1,097 | - | ||||||
Proceeds from matured interest bearing time deposits with other banks
|
1,489 | 5,954 | ||||||
Proceeds from redemption of regulatory stock
|
19,936
|
3,811
|
||||||
Purchase of regulatory stock
|
(22,105
|
)
|
(12,081
|
)
|
||||
Net increase in loans
|
(42,162
|
)
|
(295,059
|
)
|
||||
Purchase of premises and equipment
|
(2,308
|
)
|
(1,150
|
)
|
||||
Investments in low income housing partnerships
|
(616 | ) | (949 | ) | ||||
Proceeds from sale of foreclosed assets held for sale
|
314
|
845
|
||||||
Acquisition, net of cash paid |
4,905 | - | ||||||
Net cash provided by (used in) investing activities
|
55,782
|
(384,669
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net (decrease) increase in deposits
|
(42,438
|
)
|
32,559
|
|||||
Proceeds from long-term borrowings |
20,000 | - | ||||||
Repayments of long-term borrowings
|
-
|
(4,725
|
)
|
|||||
Net (decrease) increase in short-term borrowed funds
|
(20,115
|
)
|
189,661
|
|||||
Purchase of treasury stock
|
(264
|
)
|
(1,279
|
)
|
||||
Sale of treasury stock to employees | 28 | 112 | ||||||
Dividends paid
|
(6,197
|
)
|
(5,682
|
)
|
||||
Net cash (used in) provided by financing activities
|
(48,986
|
)
|
210,646
|
|||||
Net increase (decrease) in cash and cash equivalents
|
17,125
|
(149,685
|
)
|
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
26,211
|
172,833
|
||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
43,336
|
$
|
23,148
|
||||
Supplemental Disclosures of Cash Flow Information:
|
||||||||
Interest paid
|
$
|
28,707
|
$
|
5,957
|
||||
Income taxes paid
|
$
|
4,600
|
$
|
4,600
|
||||
Loans transferred to foreclosed property
|
$
|
147
|
$
|
61
|
||||
Right of use asset and liability
|
$
|
5
|
$
|
1,518
|
||||
Stock Dividend | $ | 3,021 | $ | 2,560 | ||||
CECL adjustment
|
$ | 3,300 | $ | - |
Acquisition of
|
HV Bancorp, Inc.
|
|||
Non-cash assets acquired
|
||||
Available-for-sale securities
|
$
|
79,248
|
||
Interest bearing time deposits with other banks
|
-
|
|||
Loans held for sale
|
10,750
|
|||
Loans
|
475,338
|
|||
Premises and equipment
|
2,310
|
|||
Accrued interest receivable
|
2,226
|
|||
Bank owned life insurance
|
10,387
|
|||
Intangibles
|
2,972
|
|||
Deferred tax asset
|
8,392
|
|||
Other assets
|
18,213
|
|||
Goodwill
|
53,382
|
|||
663,218 | ||||
Liabilities assumed
|
||||
Noninterest-bearing deposits
|
197,549
|
|||
Interest-bearing deposits
|
335,815
|
|||
Accrued interest payable
|
885
|
|||
Borrowed funds
|
58,647
|
|||
Other liabilities
|
11,674
|
|||
604,570
|
||||
Net non-cash assets acquired
|
58,648
|
|||
Cash and cash equivalents acquired
|
$
|
18,017
|
January 1, 2023
|
||||||||||||
Pre-adoption
|
Adoption Impact
|
As Reported
|
||||||||||
Assets
|
||||||||||||
Allowance for credit losses - loans
|
||||||||||||
Real estate loans:
|
||||||||||||
Residential
|
$
|
1,056
|
$
|
79
|
$
|
1,135
|
||||||
Commercial
|
10,120
|
(3,070
|
)
|
7,050
|
||||||||
Agricultural
|
4,589
|
(1,145
|
)
|
3,444
|
||||||||
Construction
|
801
|
(103
|
)
|
698
|
||||||||
Consumer
|
135
|
1,040
|
1,175
|
|||||||||
Other commercial loans
|
1,040
|
(328
|
)
|
712
|
||||||||
Other agricultural loans
|
489
|
(219
|
)
|
270
|
||||||||
State and political subdivision loans
|
322
|
(280
|
)
|
42
|
||||||||
Unallocated
|
-
|
726
|
726
|
|||||||||
Total
|
$
|
18,552
|
$
|
(3,300
|
)
|
$
|
15,252
|
|||||
Liabilities
|
||||||||||||
Allowance for Credit Losses - Off-Balance Sheet credit Exposure
|
$
|
165
|
$
|
1,064
|
$
|
1,229
|
(In Thousands, Except Per Share Data)
|
||||||||
Purchase Price Consideration in Common Stock
|
||||||||
Citizens Financial Services, Inc. shares issued
|
693,858
|
|||||||
Value assigned to Citizens Financial Services, Inc. common share
|
$
|
86.67
|
||||||
Purchase price assigned to HVBC common shares exchanged for Citizens Financial Services, Inc.
|
$
|
60,137
|
||||||
Purchase Price Consideration - Cash for Common Stock
|
||||||||
Purchase price assigned to HVBC’s common shares exchanged for cash
|
13,112
|
|||||||
Purchase Price Related to Cash Payout of Stock Options
|
3,416
|
|||||||
Total Purchase Price
|
76,665
|
|||||||
Net Assets Acquired:
|
||||||||
HVBC shareholders’ equity
|
$
|
40,630
|
||||||
Adjustments to reflect assets acquired at fair value:
|
||||||||
Investments
|
31
|
|||||||
Loans
|
||||||||
Interest rate
|
(24,097
|
)
|
||||||
General credit
|
(1,834
|
)
|
||||||
Credit - PCD Loans
|
(2,042
|
)
|
||||||
Core deposit intangible
|
2,770
|
|||||||
Owned premises
|
67
|
|||||||
Other assets
|
(193
|
)
|
||||||
Deferred tax assets
|
3,737
|
|||||||
Adjustments to reflect liabilities acquired at fair value:
|
||||||||
Time deposits
|
586
|
|||||||
Borrowings
|
3,017
|
|||||||
Other liabilities
|
611
|
|||||||
23,283
|
||||||||
Goodwill resulting from merger
|
$
|
53,382
|
(In Thousands, Except Per Share Data)
|
||||||||
Total purchase price
|
76,665
|
|||||||
Fair value of assets acquired
|
||||||||
Cash and due from banks
|
18,017
|
|||||||
Investment securities
|
79,248
|
|||||||
Loans held for sale
|
10,750
|
|||||||
Loans
|
475,338
|
|||||||
Premises and equipment
|
2,310
|
|||||||
Intangible assets
|
2,972
|
|||||||
Bank owned life insurance
|
10,387
|
|||||||
Interest receivable
|
2,226
|
|||||||
Deferred taxes
|
8,392
|
|||||||
Other assets
|
18,213
|
|||||||
Total assets acquired
|
627,853
|
|||||||
Fair value of liabilities assumed
|
||||||||
Deposits
|
533,364
|
|||||||
Borrowings
|
58,647
|
|||||||
Accrued interest payable
|
885
|
|||||||
Other liabilities
|
11,674
|
|||||||
Total liabilities assumed
|
604,570
|
|||||||
Total fair value of identifiable net assets
|
23,283
|
|||||||
Goodwill resulting from merger
|
53,382
|
|
•
|
Cash and due from banks - The estimated fair
value was determined to approximate the carrying amount of these assets.
|
|
•
|
Investment securities - The estimated fair
value of the investment portfolio was based on quoted market prices, dealer quotes, and pricing obtained from independent pricing services.
|
|
•
|
Loans - The estimated fair value of loans were
based on a discounted cash flow methodology applied on a pooled basis for nonpurchased credit-deteriorated (“non-PCD”) loans, accruing purchased credit-deteriorated loans and on an individual basis for nonaccruing purchased
credit-deteriorated (“PCD”) loans. The valuation considered underlying characteristics including loan type, term, rate, payment schedule and credit rating. The discounted cash flow methodology involved assumptions and judgements as to
credit risk, expected lifetime losses, environmental factors, collateral values, discount rates, expected payments and expected prepayments.
|
|
•
|
Premises and equipment - The estimated fair
value of land and buildings were determined by independent market-based appraisals.
|
|
•
|
Core deposit intangible - The core deposit
intangible was valued utilizing a discounting cash flow method approach, which recognizes the cost savings represented by the expense of maintaining the core deposit base (net of deposit fee income) versus the cost of an alternative
funding source. The valuation incorporates assumptions related to account retention, discount rates, deposit interest rates, deposit maintenance costs and alternative funding rates.
|
|
•
|
Time deposits - The estimated fair value of
time deposits was determined using a discounted cash flow approach incorporating a discount rate equal to current market interest rates offered on time deposits with similar terms and maturities.
|
|
•
|
Borrowings - The estimated fair value of
short-term borrowings was determined to approximate stated value. The estimated fair value of long-term borrowings from the FHLB were determined using a discounted cash flow approach incorporating a discount rate equal to current market
interest rates offered on borrowings with similar terms and maturities. Subordinated debentures were valued using a discounted cash flow approach incorporating a discount rate that incorporated similar terms, maturity and credit rating.
|
|
Unpaid
principal
balance
|
PCD Allowance for
Credit Loss at
Acquisition
|
(Discount)
Premium on
Acquired Loans
|
Fair Value of
PCD Loans at
Acquisition
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
2,398
|
$
|
(108
|
)
|
$
|
-
|
$
|
2,290
|
|||||||
Home Equity
|
34
|
-
|
(4
|
)
|
30
|
|||||||||||
Commercial
|
4,774
|
(39
|
)
|
(507
|
)
|
4,228
|
||||||||||
Construction
|
4,278
|
(37
|
)
|
(293
|
)
|
3,948
|
||||||||||
Consumer
|
1,343
|
(677
|
)
|
(271
|
)
|
395
|
||||||||||
Other commercial loans
|
5,214
|
(828
|
)
|
(48
|
)
|
4,338
|
||||||||||
|
$
|
18,041
|
$
|
(1,689
|
)
|
$
|
(1,123
|
)
|
$
|
15,229
|
|
Unpaid principal
balance
|
(Discount)Premium on
Acquired Loans
|
Fair Value of Non-PCD
Loans at Acquisition
|
Day 1 Provision for Credit
Losses- Non-PCD Loans
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
155,799
|
$
|
(17,506
|
)
|
$
|
138,293
|
$
|
1,015
|
|||||||
Home Equity
|
2,165
|
(55
|
)
|
2,110
|
15
|
|||||||||||
Commercial
|
203,638
|
(9,226
|
)
|
194,412
|
1,968
|
|||||||||||
Construction
|
76,703
|
(1,420
|
)
|
75,283
|
747
|
|||||||||||
Consumer
|
2,794
|
(222
|
)
|
2,572
|
159
|
|||||||||||
Other commercial loans
|
47,753
|
(314
|
)
|
47,439
|
687
|
|||||||||||
|
$
|
488,852
|
$
|
(28,743
|
)
|
$
|
460,109
|
$
|
4,591
|
|
Actual from Acquisition Date
Through September 30, 2023
|
Unaudited Pro Forma for
|
||||||||||||||||||
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||||||||
|
September 30,
|
September 30,
|
||||||||||||||||||
(In Thousands, Except Per Share Data)
|
2023
|
2022
|
2023
|
2022
|
||||||||||||||||
Net interest income
|
$
|
8,046
|
$
|
21,775
|
$
|
25,369
|
$
|
68,025
|
$
|
70,329
|
||||||||||
Non-interest income
|
600
|
3,797
|
4,372
|
10,502
|
14,638
|
|||||||||||||||
Net income
|
3,140
|
7,061
|
9,070
|
8,008
|
22,652
|
|||||||||||||||
Pro forma earnings per share:
|
||||||||||||||||||||
Basic
|
$
|
1.31
|
$
|
1.93
|
1.61
|
$
|
4.82
|
|||||||||||||
Diluted
|
$
|
1.31
|
$
|
1.93
|
$
|
1.61
|
$
|
4.82
|
• |
Service charges on deposit accounts – The Company has contracts with its deposit customers where fees are charged if certain parameters are not met. These agreements can be cancelled
at any time by either the Company or the deposit customer. Revenue from these transactions is recognized on a monthly basis as the Company has an unconditional right to the fee consideration. The Company also has transaction fees related to
specific transactions or activities resulting from a customer request or activity that include overdraft fees, online banking fees, interchange fees, ATM fees and other transaction fees. All of these fees are attributable to specific
performance obligations of the Company where the revenue is recognized at a defined point in time upon the completion of the requested service/transaction.
|
• |
Trust fees – Typical contracts for trust services are based on a fixed percentage of the assets earned ratably over a defined period and billed on a monthly basis. Fees charged to
customers’ accounts are recognized as revenue over the period during which the Company fulfills its performance obligation under the contract (i.e., holding client asset in a managed fiduciary trust account). For these accounts, the
performance obligation of the Company is typically satisfied by holding and managing the customer’s assets over time. Other fees related to specific customer requests are attributable to specific performance obligations of the Company where
the revenue is recognized at a defined point in time, upon completion of the requested service/transaction.
|
• |
Gains and losses on sale of other real estate owned – Gains and losses are recognized at the completion of the property sale when the buyer obtains control of the real estate and all
of the performance obligations of the Company have been satisfied. Evidence of the buyer obtaining control of the asset include transfer of the property title, physical possession of the asset, and the buyer obtaining control of the risks and
rewards related to the asset. In situations where the Company agrees to provide financing to facilitate the sale, additional analysis is performed to ensure that the contract for sale identifies the buyer and seller, the asset to be
transferred, payment terms, and that the contract has a true commercial substance and that collection of amounts due from the buyer are reasonable. In situations where financing terms are not reflective of current market terms, the
transaction price is discounted impacting the gain/loss and the carrying value of the asset.
|
• |
Brokerage and insurance – Fees includes commissions from the sales of investments and insurance products recognized on a trade date basis as the performance obligation is satisfied
at the point in time in which the trade is processed. Additional fees are based on a percentage of the market value of customer accounts and billed on a monthly or quarterly basis. The Company’s performance obligation under the contracts with
certain customers is generally satisfied through the passage of time as the Company monitors and manages the assets in the customer’s portfolio and is not dependent on certain return or performance level of the customer’s portfolio. Fees for
these services are billed monthly and are recorded as revenue at the end of the month for which the wealth management service has been performed. Other performance obligations (such as the delivery of account statements to customers) are
generally considered immaterial to the overall transaction price.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
Revenue stream
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Service charges on deposit accounts
|
||||||||||||||||
Overdraft fees
|
$
|
408
|
|
374
|
$
|
1,138
|
$
|
993
|
||||||||
Statement fees
|
47
|
51
|
153
|
158
|
||||||||||||
Interchange revenue
|
1,008
|
953
|
2,469
|
2,495
|
||||||||||||
ATM income
|
35
|
39
|
107
|
194
|
||||||||||||
Other service charges
|
194
|
92
|
329
|
241
|
||||||||||||
Total Service Charges
|
1,692
|
1,509
|
4,196
|
4,081
|
||||||||||||
Trust
|
172
|
187
|
583
|
620
|
||||||||||||
Brokerage and insurance
|
473
|
446
|
1,429
|
1,428
|
||||||||||||
Other
|
260
|
125
|
494
|
387
|
||||||||||||
Total
|
$
|
2,597
|
$
|
2,267
|
$
|
6,702
|
$
|
6,516
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net income applicable to common stock
|
$
|
7,548,000
|
|
$
|
7,544,000
|
$
|
10,271,000
|
$
|
21,185,000
|
|||||||
Basic earnings per share computation
|
||||||||||||||||
Weighted average common shares outstanding
|
4,699,952
|
4,006,794
|
4,275,259
|
4,009,855
|
||||||||||||
Earnings per share - basic
|
$
|
1.61
|
$
|
1.88
|
$
|
2.40
|
$
|
5.28
|
||||||||
Diluted earnings per share computation
|
||||||||||||||||
Weighted average common shares outstanding for basic earnings per share
|
4,699,952
|
4,006,794
|
4,275,259
|
4,009,855
|
||||||||||||
Add: Dilutive effects of restricted stock
|
-
|
234
|
-
|
2
|
||||||||||||
Weighted average common shares outstanding for dilutive earnings per share
|
4,699,952
|
4,007,028
|
4,275,259
|
4,009,857
|
||||||||||||
Earnings per share - diluted
|
$
|
1.61
|
$
|
1.88
|
$
|
2.40
|
$
|
5.28
|
September 30, 2023
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses |
Fair
Value
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
U.S. agency securities
|
$
|
71,567
|
$
|
-
|
$
|
(7,920
|
)
|
$
|
63,647
|
|||||||
U.S. treasury securities
|
160,426
|
-
|
(12,995
|
)
|
147,431
|
|||||||||||
Obligations of state and political subdivisions
|
108,569
|
5
|
(12,552
|
)
|
96,022
|
|||||||||||
Corporate obligations
|
13,381
|
229
|
(1,490
|
)
|
12,120
|
|||||||||||
Mortgage-backed securities in government sponsored entities
|
115,945
|
9
|
(17,367
|
)
|
98,587
|
|||||||||||
Total available-for-sale securities
|
$
|
469,888
|
$
|
243
|
$
|
(52,324
|
)
|
$
|
417,807
|
December 31, 2022
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||
U.S. agency securities
|
$
|
78,556
|
$
|
-
|
$
|
(7,879
|
)
|
$
|
70,677
|
|||||||
U.S. treasury securities
|
162,236
|
-
|
(13,666
|
)
|
148,570
|
|||||||||||
Obligations of state and political subdivisions
|
120,562 | 35 | (10,297 | ) | 110,300 | |||||||||||
Corporate obligations
|
10,335
|
-
|
(952
|
)
|
9,383
|
|||||||||||
Mortgage-backed securities in government sponsored entities
|
115,304 | 15 | (14,743 | ) | 100,576 | |||||||||||
Total available-for-sale securities
|
$
|
486,993
|
$
|
50
|
$
|
(47,537
|
)
|
$
|
439,506
|
September 30, 2023
|
Less than Twelve Months
|
Twelve Months or Greater
|
Total
|
|||||||||||||||||||||
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
|||||||||||||||||||
U.S. agency securities
|
$
|
-
|
$
|
-
|
$
|
61,646
|
$
|
(7,920
|
)
|
$
|
61,646
|
$
|
(7,920
|
)
|
||||||||||
U.S. treasury securities
|
-
|
-
|
147,431
|
(12,995
|
)
|
147,431
|
(12,995
|
)
|
||||||||||||||||
Obligations of state and political subdivisions
|
4,731
|
(130
|
)
|
89,094
|
(12,422
|
)
|
93,825
|
(12,552
|
)
|
|||||||||||||||
Corporate obligations
|
1,458
|
(289
|
)
|
8,102
|
(1,201
|
)
|
9,560
|
(1,490
|
)
|
|||||||||||||||
Mortgage-backed securities in government sponsored entities
|
9,207
|
(293
|
)
|
86,820
|
(17,074
|
)
|
96,027
|
(17,367
|
)
|
|||||||||||||||
Total securities
|
$
|
15,396
|
$
|
(712
|
)
|
$
|
393,093
|
$
|
(51,612
|
)
|
$
|
408,489
|
$
|
(52,324
|
)
|
December 31,
2022
|
||||||||||||||||||||||||
U.S. agency securities
|
$
|
39,729
|
$
|
(1,892
|
)
|
$
|
30,948
|
$
|
(5,987
|
)
|
$
|
70,677
|
$
|
(7,879
|
)
|
|||||||||
U.S. treasury securities | 32,673 | (1,337 | ) | 115,897 | (12,329 | ) | 148,570 | (13,666 | ) | |||||||||||||||
Obligations of states and political subdivisions
|
66,725
|
(4,887
|
)
|
35,782
|
(5,410
|
)
|
102,507
|
(10,297
|
)
|
|||||||||||||||
Corporate obligations | 2,165 | (165 | ) | 6,218 | (787 | ) | 8,383 | (952 | ) | |||||||||||||||
Mortgage-backed securities in government sponsored entities
|
40,270
|
(3,367
|
)
|
57,319
|
(11,376
|
)
|
97,589
|
(14,743
|
)
|
|||||||||||||||
Total securities
|
$
|
181,562
|
$
|
(11,648
|
)
|
$
|
246,164
|
$
|
(35,889
|
)
|
$
|
427,726
|
$
|
(47,537
|
)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Gross gains on available for sale securities
|
$
|
-
|
$
|
-
|
$
|
38
|
$
|
-
|
||||||||
Gross losses on available for sale securities
|
-
|
(6
|
)
|
(89
|
)
|
(6
|
)
|
|||||||||
Net gains
|
$
|
-
|
$
|
(6
|
)
|
$
|
(51
|
)
|
$
|
(6
|
)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
Equity securities
|
2023
|
2022
|
2023
|
2022
|
||||||||||||
Net gains (losses) recognized in equity securities during the period
|
$
|
69
|
$
|
(19
|
)
|
$
|
(223
|
)
|
$
|
(198
|
)
|
|||||
Less: Net gains realized on the sale of equity securities during the period
|
9
|
4
|
14
|
4
|
||||||||||||
Net unrealized gains (losses)
|
$
|
60
|
$
|
(23
|
)
|
$
|
(237
|
)
|
$
|
(202
|
)
|
Amortized
Cost
|
Fair Value
|
|||||||
Available-for-sale debt securities:
|
||||||||
Due in one year or less
|
$
|
44,257
|
$
|
43,316
|
||||
Due after one year through five years
|
170,521
|
155,161
|
||||||
Due after five years through ten years
|
98,835
|
86,730
|
||||||
Due after ten years
|
156,275
|
132,600
|
||||||
Total
|
$
|
469,888
|
$
|
417,807
|
|
September 30,
2023
|
December 31, 2022 | ||||||
Real estate loans:
|
||||||||
Residential
|
$
|
356,381
|
$
|
210,213
|
||||
Commercial
|
1,081,123
|
876,569
|
||||||
Agricultural
|
314,164
|
313,614
|
||||||
Construction
|
175,320
|
80,691
|
||||||
Consumer
|
115,753
|
86,650
|
||||||
Other commercial loans
|
120,347
|
63,222
|
||||||
Other agricultural loans
|
26,648
|
34,832
|
||||||
State and political subdivision loans
|
56,660
|
59,208
|
||||||
Total
|
2,246,396
|
1,724,999
|
||||||
Allowance for credit losses - loans
|
21,455
|
18,552
|
||||||
Net loans
|
$
|
2,224,941
|
$
|
1,706,447
|
September 30, 2023
|
||||
Allowance for Credit Losses - Loans
|
$
|
21,455
|
||
Allowance for Credit Losses - Off-Balance Sheet credit Exposure
|
1,265
|
|||
Total allowance for credit losses
|
$
|
22,720
|
Allowance for Credit
Losses - Loans
|
Allowance for Credit Losses - Off-
Balance Sheet credit Exposure
|
Total
|
||||||||||
Balance at June 30, 2023
|
$
|
21,652
|
$
|
1,391
|
$
|
23,043
|
||||||
Loans charge-off
|
(808
|
)
|
-
|
(808
|
)
|
|||||||
Recoveries of loans previously charged-off
|
10
|
-
|
10
|
|||||||||
Net loans charged-off
|
(798
|
)
|
-
|
(798
|
)
|
|||||||
Provision for credit losses
|
601
|
(126
|
)
|
475
|
||||||||
Balance at September 30, 2023
|
$
|
21,455
|
$
|
1,265
|
$
|
22,720
|
Allowance for Credit
Losses -Loans
|
Allowance for Credit Losses - Off-
Balance Sheet credit Exposure
|
Total |
||||||||||
Balance at December 31, 2022
|
$
|
18,552
|
$
|
165
|
$
|
18,717
|
||||||
Impact of adopting CECL
|
(3,300
|
)
|
1,064
|
(2,236
|
)
|
|||||||
Allowance for credit loss on PCD acquired loans
|
1,689
|
-
|
1,689
|
|||||||||
Loans charge-off
|
(819
|
)
|
-
|
(819
|
)
|
|||||||
Recoveries of loans previously charged-off
|
41
|
-
|
41
|
|||||||||
Net loans charged-off
|
(778
|
)
|
-
|
(778
|
)
|
|||||||
Provision for credit losses - acquisition day 1 non-PCD
|
4,591
|
-
|
4,591
|
|||||||||
Provision for credit losses
|
701
|
36
|
737
|
|||||||||
Balance at September 30, 2023
|
$
|
21,455
|
$
|
1,265
|
$
|
22,720
|
|
For the three months ended September 30, 2023
|
|||||||||||||||||||
|
Balance at
June 30, 2023
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
September 30, 2023
|
|||||||||||||||
Real estate loans:
|
||||||||||||||||||||
Residential
|
$
|
2,675
|
$
|
-
|
$
|
-
|
$
|
(110
|
)
|
$
|
2,565
|
|||||||||
Commercial
|
9,274
|
-
|
2
|
(91
|
)
|
9,185
|
||||||||||||||
Agricultural
|
3,579
|
-
|
-
|
(104
|
)
|
3,475
|
||||||||||||||
Construction
|
1,667
|
-
|
-
|
166
|
1,833
|
|||||||||||||||
Consumer
|
1,259
|
(45
|
)
|
3
|
503
|
1,720
|
||||||||||||||
Other commercial loans
|
2,477
|
(763
|
)
|
5
|
353
|
2,072
|
||||||||||||||
Other agricultural loans
|
268
|
-
|
-
|
(39
|
)
|
229
|
||||||||||||||
State and political subdivision loans
|
52
|
-
|
-
|
(4
|
)
|
48
|
||||||||||||||
Unallocated
|
401
|
-
|
-
|
(73
|
)
|
328
|
||||||||||||||
Total
|
$
|
21,652
|
$
|
(808
|
)
|
$
|
10
|
$
|
601
|
$
|
21,455
|
|
For the nine months ended
September 30, 2023
|
|||||||||||||||||||||||||||
Balance at
December 31, 2022
|
Impact of
adopting
CECL
|
Allowance for
credit loss on
PCD acquired
loans
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
September 30, 2023
|
||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||
Residential
|
$
|
1,056
|
$
|
79
|
$ | 108 |
$
|
(1
|
)
|
$
|
-
|
$
|
1,323
|
$
|
2,565
|
|||||||||||||
Commercial
|
10,120
|
(3,070
|
)
|
39 |
-
|
2
|
2,094
|
9,185
|
||||||||||||||||||||
Agricultural
|
4,589
|
(1,145
|
)
|
37 |
-
|
-
|
(6
|
)
|
3,475
|
|||||||||||||||||||
Construction
|
801
|
(103
|
)
|
-
|
-
|
1,135
|
1,833
|
|||||||||||||||||||||
Consumer
|
135
|
1,040
|
677 |
(55
|
)
|
30
|
(107
|
)
|
1,720
|
|||||||||||||||||||
Other commercial loans
|
1,040
|
(328
|
)
|
828 |
(763
|
)
|
9
|
1,286
|
2,072
|
|||||||||||||||||||
Other agricultural loans
|
489
|
(219
|
)
|
- |
-
|
-
|
(41
|
)
|
229
|
|||||||||||||||||||
State and political subdivision loans
|
322 | (280 | ) | - | - | - | 6 | 48 | ||||||||||||||||||||
Unallocated
|
-
|
726
|
- |
-
|
-
|
(398
|
)
|
328
|
||||||||||||||||||||
Total
|
$
|
18,552
|
$
|
(3,300
|
)
|
$ | 1,689 |
$
|
(819
|
)
|
$
|
41
|
$
|
5,292
|
$ | 21,455 |
|
|
Allowance for Credit Losses - Loans
|
|
|
Loans
|
|
||||||||||||||||||
September 30, 2023
|
Collectively evaluated
|
Individually evaluated
|
Total Allowance
for Credit
Losses - Loans
|
Collectively evaluated
|
Individually evaluated
|
Total
Loans
|
||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Residential
|
$
|
2,484
|
$
|
81
|
$
|
2,565
|
$
|
355,129
|
$
|
1,252
|
$
|
356,381
|
||||||||||||
Commercial
|
9,030
|
155
|
9,185
|
1,078,360
|
2,763
|
1,081,123
|
||||||||||||||||||
Agricultural
|
3,456
|
19
|
3,475
|
310,507
|
3,657
|
314,164
|
||||||||||||||||||
Construction
|
1,547
|
286
|
1,833
|
172,963
|
2,357
|
175,320
|
||||||||||||||||||
Consumer
|
1,316
|
404
|
1,720
|
114,613
|
1,140
|
115,753
|
||||||||||||||||||
Other commercial loans
|
1,697
|
375
|
2,072
|
118,419
|
1,928
|
120,347
|
||||||||||||||||||
Other agricultural loans
|
229
|
-
|
229
|
26,349
|
299
|
26,648
|
||||||||||||||||||
State and political subdivision loans
|
48
|
-
|
48
|
56,660
|
-
|
56,660
|
||||||||||||||||||
Unallocated
|
328
|
-
|
328
|
-
|
-
|
-
|
||||||||||||||||||
Total
|
$
|
20,135
|
$
|
1,320
|
$
|
21,455
|
$
|
2,233,000
|
$
|
13,396
|
$
|
2,246,396
|
|
December 31, 2022
|
|||
Allowance for loan Losses
|
$
|
18,552
|
||
Reserve for unfunded commitments
|
165
|
|||
Total allowance for credit losses
|
$
|
18,717
|
|
Allowance for
Credit Losses - Loans
|
Reserve for
unfunded
commitments
|
Total
|
|||||||||
Balance at June 30, 2022 | $ | 17,570 | $ | 165 | $ | 17,735 | ||||||
Loans charge-off | (13 | ) | - | (13 | ) | |||||||
Recoveries of loans previously charged-off | 9 | - | 9 | |||||||||
Net loans charged-off | (4 | ) | - | (4 | ) | |||||||
Provision for credit losses | 725 | - | 725 | |||||||||
Balance at September 30, 2022 | $ | 18,291 | $ | 165 | $ | 18,456 | ||||||
Balance at December 31, 2021
|
$
|
17,304
|
$
|
165
|
$
|
17,469
|
||||||
Loans charge-off
|
(464
|
)
|
-
|
(464
|
)
|
|||||||
Recoveries of loans previously charged-off
|
26
|
-
|
26
|
|||||||||
Net loans charged-off
|
(438
|
)
|
-
|
(438
|
)
|
|||||||
Provision for credit losses
|
1,425
|
-
|
1,425
|
|||||||||
Balance at September 30, 2022
|
$
|
18,291
|
$
|
165
|
$
|
18,456
|
|
For the three months ended September 30, 2022
|
|||||||||||||||||||
|
Balance at
June 30, 2022
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
September 30, 2022
|
|||||||||||||||
Real estate loans:
|
||||||||||||||||||||
Residential
|
$
|
1,015
|
$
|
-
|
$
|
-
|
$
|
(10
|
)
|
$
|
1,005
|
|||||||||
Commercial
|
9,216
|
-
|
-
|
721
|
9,937
|
|||||||||||||||
Agricultural
|
4,484
|
-
|
-
|
54
|
4,538
|
|||||||||||||||
Construction
|
563
|
-
|
-
|
115
|
678
|
|||||||||||||||
Consumer
|
464
|
(13
|
)
|
5
|
(224
|
)
|
232
|
|||||||||||||
Other commercial loans
|
1,173
|
-
|
4
|
(784
|
)
|
393
|
||||||||||||||
Other agricultural loans
|
446
|
-
|
-
|
913
|
1,359
|
|||||||||||||||
State and political subdivision loans
|
323
|
-
|
-
|
2
|
325
|
|||||||||||||||
Unallocated
|
(114
|
)
|
-
|
-
|
(62
|
)
|
(176
|
)
|
||||||||||||
Total
|
$
|
17,570
|
$
|
(13
|
)
|
$
|
9
|
$
|
725
|
$
|
18,291
|
|
For the nine months ended September 30, 2022
|
|||||||||||||||||||
|
Balance at
December 31, 2021
|
Charge-offs
|
Recoveries
|
Provision
|
Balance at
September 30, 2022
|
|||||||||||||||
Real estate loans:
|
||||||||||||||||||||
Residential
|
$
|
1,147
|
$
|
-
|
$
|
-
|
$
|
(142
|
)
|
$
|
1,005
|
|||||||||
Commercial
|
8,099
|
-
|
-
|
1,838
|
9,937
|
|||||||||||||||
Agricultural
|
4,729
|
-
|
-
|
(191
|
)
|
4,538
|
||||||||||||||
Construction
|
434
|
-
|
-
|
244
|
678
|
|||||||||||||||
Consumer
|
262
|
(30
|
)
|
15
|
(15
|
)
|
232
|
|||||||||||||
Other commercial loans
|
1,023
|
(434
|
)
|
11
|
(207
|
)
|
393
|
|||||||||||||
Other agricultural loans
|
558
|
-
|
-
|
801
|
1,359
|
|||||||||||||||
State and political subdivision loans
|
281
|
-
|
-
|
44
|
325
|
|||||||||||||||
Unallocated
|
771
|
-
|
-
|
(947
|
)
|
(176
|
)
|
|||||||||||||
Total
|
$
|
17,304
|
$
|
(464
|
)
|
$
|
26
|
$
|
1,425
|
$
|
18,291
|
|
Allowance for loan losses
|
Loans
|
||||||||||||||||||||||||||
|
Collectively evaluated for impairment
|
Individually evaluated for impairment
|
Total allowance for loan losses
|
Collectively evaluated for impairment
|
Individually evaluated for impairment
|
Loans acquired with deteriorated credit quality
|
Total Loans
|
|||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||
Residential
|
$
|
4
|
$
|
1,052
|
$
|
1,056
|
$
|
209,869
|
$
|
335
|
$
|
9
|
$
|
210,213
|
||||||||||||||
Commercial
|
57
|
10,063
|
10,120
|
869,038
|
5,675
|
1,856
|
876,569
|
|||||||||||||||||||||
Agricultural
|
24
|
4,565
|
4,589
|
306,793
|
5,380
|
1,441
|
313,614
|
|||||||||||||||||||||
Construction
|
-
|
801
|
801
|
80,691
|
-
|
-
|
80,691
|
|||||||||||||||||||||
Consumer
|
4
|
131
|
135
|
86,646
|
4
|
-
|
86,650
|
|||||||||||||||||||||
Other commercial loans
|
13
|
1,027
|
1,040
|
63,120
|
102
|
-
|
63,222
|
|||||||||||||||||||||
Other agricultural loans
|
-
|
489
|
489
|
34,359
|
473
|
-
|
34,832
|
|||||||||||||||||||||
State and political subdivision loans
|
-
|
322
|
322
|
59,208
|
-
|
-
|
59,208
|
|||||||||||||||||||||
Total
|
$
|
102
|
$
|
18,450
|
$
|
18,552
|
$
|
1,709,724
|
$
|
11,969
|
$
|
3,306
|
$
|
1,724,999
|
September 30, 2023
|
December 31, 2022 |
|||||||||||||||||||||||||||
Nonaccrual With a
related allowance
|
Nonaccrual Without
a related allowance
|
90 days or greater
past due and
accruing
|
Total non-performing
loans
|
Nonaccrual |
90 days or greater past
due and accruing
|
Total non-performing
loans
|
||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||
Mortgages
|
$
|
318
|
$
|
2,517
|
$
|
-
|
$
|
2,835
|
$ | 562 | $ | - | $ | 562 | ||||||||||||||
Home Equity
|
-
|
121
|
-
|
121
|
29 | - | 29 | |||||||||||||||||||||
Commercial
|
260
|
1,337
|
-
|
1,597
|
2,778 | - | 2,778 | |||||||||||||||||||||
Agricultural
|
182
|
2,803
|
-
|
2,985
|
3,222 | - | 3,222 | |||||||||||||||||||||
Construction
|
2,357
|
-
|
-
|
2,357
|
- | - | - | |||||||||||||||||||||
Consumer
|
1,007
|
10
|
8
|
1,025
|
- | 7 | 7 | |||||||||||||||||||||
Other commercial loans
|
526
|
1,402
|
-
|
1,928
|
62 | - | 62 | |||||||||||||||||||||
Other agricultural loans |
- |
299 |
- |
299 |
285 |
- |
285 |
|||||||||||||||||||||
$
|
4,650
|
$
|
8,489
|
$
|
8
|
$
|
13,147
|
$ | 6,938 | $ | 7 | $
|
6,945 |
September 30, 2023 |
Real Estate
|
Other
|
None
|
Total
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
2,835
|
$
|
-
|
$
|
-
|
$
|
2,835
|
||||||||
Home Equity
|
121
|
-
|
-
|
121
|
||||||||||||
Commercial
|
1,597
|
-
|
-
|
1,597
|
||||||||||||
Agricultural
|
2,985
|
-
|
-
|
2,985
|
||||||||||||
Construction
|
2,357
|
-
|
-
|
2,357
|
||||||||||||
Consumer
|
-
|
-
|
1,017
|
1,017
|
||||||||||||
Other commercial loans
|
-
|
1,928
|
-
|
1,928
|
||||||||||||
Other agricultural loans
|
-
|
299
|
-
|
299
|
||||||||||||
$
|
9,895
|
$
|
2,227
|
$ |
1,017
|
$
|
13,139
|
|
||||||||||||||||
December 31, 2022
|
|
|
|
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
562
|
$
|
-
|
$
|
-
|
$
|
562
|
||||||||
Home Equity
|
29
|
-
|
-
|
29
|
||||||||||||
Commercial
|
2,778
|
-
|
-
|
2,778
|
||||||||||||
Agricultural
|
3,222
|
-
|
-
|
3,222
|
||||||||||||
Construction
|
-
|
-
|
-
|
-
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Other commercial loans
|
-
|
62
|
-
|
62
|
||||||||||||
Other agricultural loans
|
-
|
285
|
-
|
285
|
||||||||||||
$
|
6,591
|
$
|
347
|
$
|
-
|
$
|
6,938
|
|
• |
Pass (Grades 1-6) – These loans are to customers with credit quality ranging from an acceptable to very high quality and are protected by the current net worth and paying capacity of the obligor or by
the value of the underlying collateral.
|
|
• |
Special Mention (Grade 7) –
This loan grade is in accordance with regulatory guidance and includes loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.
|
|
• |
Substandard (Grade 8) – This
loan grade is in accordance with regulatory guidance and includes loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies
are not corrected.
|
|
• |
Doubtful (Grade 9) – This loan
grade is in accordance with regulatory guidance and includes loans that have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based
on existing circumstances.
|
|
• |
Loss (Grade 10) – This loan
grade is in accordance with regulatory guidance and includes loans that are considered uncollectible, or of such value that continuance as an asset is not warranted.
|
Revolving
|
Revolving
|
|||||||||||||||||||||||||||||||||||
Loans
|
Loans
|
|||||||||||||||||||||||||||||||||||
Amortized
|
Converted
|
|||||||||||||||||||||||||||||||||||
September 30, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
to Term
|
Total
|
|||||||||||||||||||||||||||
Commercial real estate
|
||||||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
65,893
|
$
|
333,600
|
$
|
215,198
|
$
|
123,779
|
$
|
82,640
|
$
|
195,576
|
$
|
29,476
|
$
|
1,166
|
$
|
1,047,328
|
||||||||||||||||||
Special Mention
|
-
|
8,824
|
3,412
|
1,563
|
7,659
|
9,391
|
123
|
-
|
30,972
|
|||||||||||||||||||||||||||
Substandard
|
-
|
233
|
6
|
-
|
161
|
1,686
|
729
|
8
|
2,823
|
|||||||||||||||||||||||||||
Doubtful
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Total
|
$
|
65,893
|
$
|
342,657
|
$
|
218,616
|
$
|
125,342
|
$
|
90,460
|
$
|
206,653
|
$
|
30,328
|
$
|
1,174
|
$
|
1,081,123
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||||
Agricultural real estate
|
||||||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
16,361
|
$
|
54,306
|
$
|
29,828
|
$
|
32,559
|
$
|
26,760
|
$
|
123,598
|
$
|
12,926
|
$
|
1,689
|
$
|
298,027
|
||||||||||||||||||
Special Mention
|
149
|
1,915
|
1,211
|
-
|
-
|
6,702
|
94
|
-
|
10,071
|
|||||||||||||||||||||||||||
Substandard
|
-
|
-
|
-
|
-
|
103
|
5,645
|
75
|
243
|
6,066
|
|||||||||||||||||||||||||||
Doubtful
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Total
|
$
|
16,510
|
$
|
56,221
|
$
|
31,039
|
$
|
32,559
|
$
|
26,863
|
$
|
135,945
|
$
|
13,095
|
$
|
1,932
|
$
|
314,164
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||||
Construction
|
-
|
|||||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
37,135
|
$
|
92,252
|
$
|
35,486
|
$
|
-
|
$
|
-
|
$
|
385
|
$
|
-
|
$
|
-
|
$
|
165,258
|
||||||||||||||||||
Special Mention
|
2,130
|
1,165
|
4,410
|
-
|
-
|
-
|
-
|
-
|
7,705
|
|||||||||||||||||||||||||||
Substandard
|
-
|
-
|
2,357
|
-
|
-
|
-
|
-
|
-
|
2,357
|
|||||||||||||||||||||||||||
Doubtful
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Total
|
$
|
39,265
|
$
|
93,417
|
$
|
42,253
|
$
|
-
|
$
|
-
|
$
|
385
|
$
|
-
|
$
|
-
|
$
|
175,320
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||||
Other commercial loans
|
-
|
|||||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
5,227
|
$
|
12,057
|
$
|
9,234
|
$
|
5,487
|
$
|
5,291
|
$
|
4,213
|
$
|
71,633
|
$
|
99
|
$
|
113,241
|
||||||||||||||||||
Special Mention
|
-
|
81
|
1,555
|
216
|
286
|
22
|
1,214
|
1,708
|
5,082
|
|||||||||||||||||||||||||||
Substandard
|
-
|
100
|
-
|
-
|
186
|
1,202
|
294
|
-
|
1,782
|
|||||||||||||||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
218
|
24
|
242
|
|||||||||||||||||||||||||||
Total
|
$
|
5,227
|
$
|
12,238
|
$
|
10,789
|
$
|
5,703
|
$
|
5,763
|
$
|
5,437
|
$
|
73,359
|
$
|
1,831
|
$
|
120,347
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
763
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
763
|
||||||||||||||||||
Other agricultural loans
|
-
|
|||||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
3,464
|
$
|
1,645
|
$
|
7,005
|
$
|
1,154
|
$
|
666
|
$
|
521
|
$
|
10,554
|
$
|
-
|
$
|
25,009
|
||||||||||||||||||
Special Mention
|
-
|
491
|
223
|
45
|
8
|
42
|
500
|
-
|
1,309
|
|||||||||||||||||||||||||||
Substandard
|
-
|
-
|
-
|
-
|
6
|
265
|
25
|
34
|
330
|
|||||||||||||||||||||||||||
Doubtful
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Total
|
$
|
3,464
|
$
|
2,136
|
$
|
7,228
|
$
|
1,199
|
$
|
680
|
$
|
828
|
$
|
11,079
|
$
|
34
|
$
|
26,648
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||||
State and political subdivision loans
|
-
|
|||||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
1,426
|
$
|
14,207
|
$
|
10,984
|
$
|
4,363
|
$
|
2
|
$
|
25,678
|
$
|
-
|
$
|
-
|
$
|
56,660
|
||||||||||||||||||
Special Mention
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Substandard
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Doubtful
|
- | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
Total
|
$
|
1,426
|
$
|
14,207
|
$
|
10,984
|
$
|
4,363
|
$
|
2
|
$
|
25,678
|
$
|
-
|
$
|
-
|
$
|
56,660
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||||
Total
|
-
|
|||||||||||||||||||||||||||||||||||
Risk Rating
|
||||||||||||||||||||||||||||||||||||
Pass
|
$
|
129,506
|
$
|
508,067
|
$
|
307,735
|
$
|
167,342
|
$
|
115,359
|
$
|
349,971
|
$
|
124,589
|
$
|
2,954
|
$
|
1,705,523
|
||||||||||||||||||
Special Mention
|
2,279
|
12,476
|
10,811
|
1,824
|
7,953
|
16,157
|
1,931
|
1,708
|
55,139
|
|||||||||||||||||||||||||||
Substandard
|
-
|
333
|
2,363
|
-
|
456
|
8,798
|
1,123
|
285
|
13,358
|
|||||||||||||||||||||||||||
Doubtful
|
-
|
-
|
-
|
-
|
-
|
-
|
218
|
24
|
242
|
|||||||||||||||||||||||||||
Total
|
$
|
131,785
|
$
|
520,876
|
$
|
320,909
|
$
|
169,166
|
$
|
123,768
|
$
|
374,926
|
$
|
127,861
|
$
|
4,971
|
$
|
1,774,262
|
December 31, 2022
|
Pass
|
Special Mention
|
Substandard
|
Doubtful
|
Loss
|
Ending Balance
|
||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||
Commercial
|
$
|
842,912
|
$
|
28,047
|
$
|
5,610
|
$
|
-
|
$
|
-
|
$
|
876,569
|
||||||||||||
Agricultural
|
295,443
|
11,960
|
6,211
|
-
|
-
|
313,614
|
||||||||||||||||||
Construction
|
75,703
|
2,642
|
2,346
|
-
|
-
|
80,691
|
||||||||||||||||||
Other commercial loans
|
59,902
|
2,953
|
337
|
30
|
-
|
63,222
|
||||||||||||||||||
Other agricultural loans
|
32,708
|
1,307
|
817
|
-
|
-
|
34,832
|
||||||||||||||||||
State and political |
||||||||||||||||||||||||
subdivision loans
|
59,208
|
-
|
-
|
-
|
-
|
59,208 |
||||||||||||||||||
Total
|
$
|
1,365,876
|
$
|
46,909
|
$
|
15,321
|
$
|
30
|
$
|
-
|
$
|
1,428,136
|
Revolving
|
Revolving
|
|||||||||||||||||||||||||||||||||||
Loans
|
Loans
|
|||||||||||||||||||||||||||||||||||
Amortized
|
Converted
|
|||||||||||||||||||||||||||||||||||
September 30, 2023
|
2023
|
2022
|
2021
|
2020
|
2019
|
Prior
|
Cost Basis
|
to Term
|
Total
|
|||||||||||||||||||||||||||
Residential real estate
|
||||||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
15,478
|
$
|
89,640
|
$
|
48,451
|
$
|
30,300
|
$
|
19,086
|
$
|
101,162
|
$
|
-
|
$
|
-
|
$
|
304,117
|
||||||||||||||||||
Nonperforming
|
-
|
406
|
771
|
399
|
-
|
1,259
|
-
|
-
|
2,835
|
|||||||||||||||||||||||||||
Total
|
$
|
15,478
|
$
|
90,046
|
$
|
49,222
|
$
|
30,699
|
$
|
19,086
|
$
|
102,421
|
$
|
-
|
$
|
-
|
$
|
306,952
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1
|
$
|
-
|
$
|
-
|
$
|
1
|
||||||||||||||||||
Home equity
|
-
|
|||||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
3,188
|
$
|
3,105
|
$
|
1,980
|
$
|
2,142
|
$
|
2,593
|
$
|
8,412
|
$
|
27,613
|
$
|
275
|
$
|
49,308
|
||||||||||||||||||
Nonperforming
|
-
|
-
|
-
|
-
|
-
|
53
|
68
|
-
|
121
|
|||||||||||||||||||||||||||
Total
|
$
|
3,188
|
$
|
3,105
|
$
|
1,980
|
$
|
2,142
|
$
|
2,593
|
$
|
8,465
|
$
|
27,681
|
$
|
275
|
$
|
49,429
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||||||||
Consumer
|
-
|
|||||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
1,742
|
$
|
1,115
|
$
|
598
|
$
|
509
|
$
|
570
|
$
|
3,024
|
$
|
107,168
|
$
|
2
|
$
|
114,728
|
||||||||||||||||||
Nonperforming
|
-
|
18
|
-
|
-
|
-
|
1,007
|
-
|
-
|
1,025
|
|||||||||||||||||||||||||||
Total
|
$
|
1,742
|
$
|
1,133
|
$
|
598
|
$
|
509
|
$
|
570
|
$
|
4,031
|
$
|
107,168
|
$
|
2
|
$
|
115,753
|
||||||||||||||||||
Current period gross charge-offs
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1
|
$
|
38
|
$
|
16
|
$
|
-
|
$
|
55
|
||||||||||||||||||
Total
|
-
|
|||||||||||||||||||||||||||||||||||
Payment Performance
|
||||||||||||||||||||||||||||||||||||
Performing
|
$
|
20,408
|
$
|
93,860
|
$
|
51,029
|
$
|
32,951
|
$
|
22,249
|
$
|
112,593
|
$
|
134,781
|
$
|
277
|
$
|
468,148
|
||||||||||||||||||
Nonperforming
|
-
|
424
|
771
|
399
|
-
|
2,324
|
68
|
-
|
3,986
|
|||||||||||||||||||||||||||
Total
|
$
|
20,408
|
$
|
94,284
|
$
|
51,800
|
$
|
33,350
|
$
|
22,249
|
$
|
114,917
|
$
|
134,849
|
$
|
277
|
$
|
472,134
|
December 31, 2022
|
Performing
|
Non-performing
|
PCI
|
Total
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
161,998
|
$
|
562
|
$
|
9
|
$
|
162,569
|
||||||||
Home Equity
|
47,615
|
29
|
-
|
47,644
|
||||||||||||
Consumer
|
86,643
|
7
|
-
|
86,650
|
||||||||||||
Total
|
$
|
296,256
|
$
|
598
|
$
|
9
|
$
|
296,863
|
September 30, 2023
|
30-59 Days
Past Due
|
60-89 Days
Past Due
|
90 Days
Or Greater
|
Total Past
Due
|
Current
|
Total
Loans
Receivables
|
90 Days or
Greater and
Accruing
|
|||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||
Mortgages
|
$
|
836
|
$
|
282
|
$
|
2,335
|
$
|
3,453
|
$
|
303,499
|
$
|
306,952
|
$
|
-
|
||||||||||||||
Home Equity
|
130
|
77
|
100
|
307
|
49,122
|
49,429
|
-
|
|||||||||||||||||||||
Commercial
|
1,797
|
514
|
1,003
|
3,314
|
1,077,809
|
1,081,123
|
-
|
|||||||||||||||||||||
Agricultural
|
299
|
-
|
1,367
|
1,666
|
312,498
|
314,164
|
-
|
|||||||||||||||||||||
Construction
|
677
|
-
|
2,357
|
3,034
|
172,286
|
175,320
|
-
|
|||||||||||||||||||||
Consumer
|
647
|
124
|
1,025
|
1,796
|
113,957
|
115,753
|
8
|
|||||||||||||||||||||
Other commercial loans
|
633
|
59
|
-
|
692
|
119,655
|
120,347
|
-
|
|||||||||||||||||||||
Other agricultural loans
|
-
|
224
|
-
|
224
|
26,424
|
26,648
|
-
|
|||||||||||||||||||||
State and political subdivision loans
|
-
|
-
|
-
|
-
|
56,660
|
56,660
|
-
|
|||||||||||||||||||||
Total
|
$
|
5,019
|
$
|
1,280
|
$
|
8,187
|
$
|
14,486
|
$
|
2,231,910
|
$
|
2,246,396
|
$
|
8
|
||||||||||||||
Loans considered non-accrual
|
$
|
241
|
$
|
98
|
$
|
8,179
|
$
|
8,518
|
$
|
4,621
|
$
|
13,139
|
||||||||||||||||
Loans still accruing
|
4,778
|
1,182
|
8
|
5,968
|
2,227,289
|
2,233,257
|
||||||||||||||||||||||
Total
|
$
|
5,019
|
$
|
1,280
|
$
|
8,187
|
$
|
14,486
|
$
|
2,231,910
|
$
|
2,246,396
|
December 31, 2022
|
30-59 Days
Past Due
|
60-89 Days
Past Due
|
90 Days
Or Greater
|
Total Past
Due
|
Current
|
PCI
|
Total
Loan
Receivables
|
90 Days or
Greater and
Accruing
|
||||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||||||
Mortgages
|
$
|
356
|
$
|
132
|
$
|
229
|
$
|
717
|
$
|
161,843
|
$
|
9
|
$
|
162,569
|
$
|
-
|
||||||||||||||||
Home Equity
|
48
|
9
|
29
|
86
|
47,558
|
-
|
47,644
|
-
|
||||||||||||||||||||||||
Commercial
|
1,065
|
115
|
1,788
|
2,968
|
871,745
|
1,856
|
876,569
|
-
|
||||||||||||||||||||||||
Agricultural
|
-
|
-
|
1,368
|
1,368
|
310,805
|
1,441
|
313,614
|
-
|
||||||||||||||||||||||||
Construction
|
-
|
-
|
-
|
-
|
80,691
|
-
|
80,691
|
-
|
||||||||||||||||||||||||
Consumer
|
147
|
-
|
7
|
154
|
86,496
|
-
|
86,650
|
7
|
||||||||||||||||||||||||
Other commercial loans
|
1,660
|
35
|
32
|
1,727
|
61,495
|
-
|
63,222
|
-
|
||||||||||||||||||||||||
Other agricultural loans
|
-
|
-
|
-
|
-
|
34,832
|
-
|
34,832
|
-
|
||||||||||||||||||||||||
State and political subdivision loans
|
-
|
-
|
-
|
-
|
59,208
|
-
|
59,208
|
-
|
||||||||||||||||||||||||
Total
|
$
|
3,276
|
$
|
291
|
$
|
3,453
|
$
|
7,020
|
$
|
1,714,673
|
$
|
3,306
|
$
|
1,724,999
|
$
|
7
|
||||||||||||||||
Loans considered non-accrual
|
$
|
46
|
$
|
76
|
$
|
3,446
|
$
|
3,568
|
$
|
3,370
|
$
|
-
|
$
|
6,938
|
||||||||||||||||||
Loans still accruing
|
3,230
|
215
|
7
|
3,452
|
1,711,303
|
3,306
|
1,718,061
|
|||||||||||||||||||||||||
Total
|
$
|
3,276
|
$
|
291
|
$
|
3,453
|
$
|
7,020
|
$
|
1,714,673
|
$
|
3,306
|
$
|
1,724,999
|
|
Three months ended September 30, 2023
|
|||||||||||
|
Number of loans
|
Amortized Cost Basis
|
% of Total Class of
Financing Receivable
|
|||||||||
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
||||||||||||
Real estate loans:
|
||||||||||||
Commercial
|
1
|
$
|
42
|
0.00
|
%
|
|||||||
Agricultural
|
2
|
673
|
0.21
|
%
|
||||||||
Other commercial loans
|
5 | 1,378 | 1.15 | % | ||||||||
Total
|
8
|
$
|
2,093
|
Nine months ended September 30, 2023
|
||||||||||||
|
Number of loans
|
Amortized Cost Basis
|
% of Total Class of
Financing Receivable
|
|||||||||
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
||||||||||||
Real estate loans:
|
||||||||||||
Mortgages
|
1
|
$
|
129
|
0.04
|
%
|
|||||||
Commercial
|
7
|
1,969
|
0.18
|
%
|
||||||||
Agricultural
|
3 | 728 | 0.23 | % | ||||||||
Other commercial loans
|
5
|
1,378
|
1.15
|
%
|
||||||||
Total
|
16
|
$
|
4,204
|
|||||||||
|
||||||||||||
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
||||||||||||
Real estate loans:
|
||||||||||||
Commercial
|
1
|
$
|
86
|
0.01
|
%
|
|||||||
Total
|
1
|
$
|
86
|
Three months ended September 30, 2023
|
|||||
Term Extension
|
|||||
Loan Type
|
Number of loans
|
Financial Effect
|
|||
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
|
||||
Real estate loans:
|
|
||||
Commercial
|
1
|
Extended the weighted average loan maturity 6
months
|
|||
Agricultural
|
2
|
Extended the weighted average loan maturity 3
months
|
|||
Consumer |
5 | Extended the loan maturity 10 months |
|||
Total
|
8
|
|
Nine months ended September 30, 2023
|
|||||
Term Extension
|
|||||
Loan Type
|
Number of loans
|
Financial Effect
|
|||
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
|
||||
Real estate loans:
|
|
||||
Mortgages
|
1
|
Extended the loan maturity 4
months
|
|||
Commercial
|
7
|
Extended the weighted average loan maturity 22
months
|
|||
Agricultural
|
3 |
Extended the weighted average loan maturity 5
months
|
|||
Other commercial loans
|
5
|
Extended the loan maturity 10
months
|
|||
Total
|
16
|
|
|||
|
|
||||
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
|
||||
Real estate loans:
|
|
||||
Commercial
|
1
|
Extended the loan maturity 6
months
|
|||
Total
|
1
|
|
September 30, 2023 | ||||||||||||||||
|
30-89 Days
|
90 Days
|
||||||||||||||
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
Current
|
Past Due
|
Or Greater
|
Total
|
||||||||||||
Real estate loans:
|
||||||||||||||||
Mortgages
|
$
|
129
|
$
|
-
|
$
|
-
|
$
|
129
|
||||||||
Commercial
|
1,969
|
-
|
-
|
1,969
|
||||||||||||
Agricultural
|
728 | - | - | 728 | ||||||||||||
Total
|
$
|
4,204
|
$
|
-
|
$
|
-
|
$
|
4,204
|
||||||||
|
||||||||||||||||
Non-Accruing Modified Loans to Borrowers Experiencing Financial Difficulty
|
||||||||||||||||
Real estate loans:
|
||||||||||||||||
Commercial
|
$
|
86
|
$ |
-
|
$ |
-
|
$
|
86
|
||||||||
Total
|
$
|
86
|
$
|
-
|
$
|
-
|
$
|
86
|
September 30, 2023
|
December 31, 2022
|
|||||||||||||||||||||||
Gross
carrying
value
|
Accumulated
amortization
|
Net
carrying
value
|
Gross
carrying
value
|
Accumulated
amortization
|
Net
carrying
value
|
|||||||||||||||||||
Amortized intangible assets (1):
|
||||||||||||||||||||||||
MSRs
|
$
|
2,607
|
$
|
(1,590
|
)
|
$
|
1,017
|
$
|
2,336
|
$
|
(1,362
|
)
|
$
|
974
|
||||||||||
Core deposit intangibles
|
4,713
|
(1,864
|
)
|
2,849
|
1,943
|
(1,645
|
)
|
298
|
||||||||||||||||
Total amortized intangible assets
|
$
|
7,320
|
$
|
(3,454
|
)
|
$
|
3,866
|
$
|
4,279
|
$
|
(3,007
|
)
|
$
|
1,272
|
||||||||||
Unamortized intangible assets:
|
||||||||||||||||||||||||
Goodwill
|
$
|
84,758
|
$
|
31,376
|
MSRs
|
Core deposit intangibles
|
Total
|
||||||||||
Three months ended September 30, 2023 (actual)
|
$
|
80
|
$
|
157
|
$
|
237
|
||||||
Nine
months ended September 30, 2023
(actual)
|
228
|
219
|
447
|
|||||||||
Three months ended September 30, 2022 (actual)
|
74
|
40
|
114
|
|||||||||
Nine
months ended September 30, 2022
(actual)
|
234
|
120
|
354
|
|||||||||
Estimate for year ending December 31,
|
||||||||||||
Remaining 2023
|
76
|
154
|
230
|
|||||||||
2024
|
277
|
564
|
841
|
|||||||||
2025
|
226
|
478
|
704
|
|||||||||
2026
|
174
|
395
|
569
|
|||||||||
2027
|
118
|
339
|
457
|
|||||||||
Thereafter
|
146
|
919
|
1,065
|
|||||||||
Total
|
$ | 1,017 |
$
|
2,849
|
$ | 3,866 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
Affected line item on the Consolidated
Statement of Income (Loss)
|
|||||||||||||
Service cost
|
$
|
75
|
$
|
89
|
$
|
230
|
$
|
267
|
Salary and Employee Benefits
|
||||||||
Interest cost
|
104
|
69
|
324
|
207
|
Other Expenses
|
||||||||||||
Expected return on plan assets
|
(183
|
)
|
(234
|
)
|
(577
|
)
|
(701
|
)
|
Other Expenses
|
||||||||
Partial Settlement | - | 144 | - | 144 | Other Expenses | ||||||||||||
Net amortization and deferral
|
17
|
24
|
31
|
72
|
Other Expenses
|
||||||||||||
Net periodic benefit cost
|
$
|
13
|
$
|
92
|
$
|
8
|
$
|
(11
|
)
|
Three months
|
Nine months
|
|||||||||||||||
Unvested
Shares
|
Weighted
Average
Market Price
|
Unvested
Shares
|
Weighted
Average
Market Price
|
|||||||||||||
Outstanding, beginning of period
|
6,254
|
$
|
71.61
|
6,622
|
$
|
63.63
|
||||||||||
Granted
|
367
|
81.58
|
2,609
|
83.13
|
||||||||||||
Forfeited
|
(52
|
)
|
(63.09
|
)
|
(213
|
)
|
(63.12
|
)
|
||||||||
Vested
|
(499
|
)
|
(67.37
|
)
|
(2,948
|
)
|
(62.39
|
)
|
||||||||
Outstanding, end of period
|
6,070
|
$
|
72.63
|
6,070
|
$
|
72.63
|
Three months ended September 30, 2023
|
||||||||||||||||
Unrealized gain (loss)
on available for sale
securities (a)
|
Defined Benefit
Pension Items (a)
|
Unrealized gain
on interest rate
swap (a)
|
Total
|
|||||||||||||
Balance as of June 30, 2023
|
$
|
(35,119
|
)
|
$
|
(1,045
|
)
|
$
|
5,184
|
$
|
(30,980
|
)
|
|||||
Other comprehensive income (loss) before reclassifications (net of tax)
|
(6,025
|
)
|
-
|
823
|
(5,202
|
)
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) (net of tax)
|
-
|
6
|
(467
|
)
|
(461
|
)
|
||||||||||
Net current period other comprehensive income (loss)
|
(6,025
|
)
|
6
|
356
|
(5,663
|
)
|
||||||||||
Balance as of September 30,
2023
|
$
|
(41,144
|
)
|
$
|
(1,039
|
)
|
$
|
5,540
|
$
|
(36,643
|
)
|
Nine months ended September 30, 2023
|
||||||||||||||||
Unrealized gain (loss)
on available for sale
securities (a)
|
Defined Benefit
Pension Items (a)
|
Unrealized gain
on interest rate
swap (a)
|
Total
|
|||||||||||||
Balance as of December 31, 2022
|
$
|
(37,514
|
)
|
$
|
(1,056
|
)
|
$
|
5,429
|
$
|
(33,141
|
)
|
|||||
Other comprehensive income (loss) before reclassifications (net of tax)
|
(3,669
|
)
|
-
|
1,352
|
(2,317
|
)
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) (net of tax)
|
39
|
17
|
(1,241
|
)
|
(1,185
|
)
|
||||||||||
Net current period other comprehensive income (loss)
|
(3,630
|
)
|
17
|
111
|
(3,502
|
)
|
||||||||||
Balance as of September 30,
2023
|
$
|
(41,144
|
)
|
$
|
(1,039
|
)
|
$
|
5,540
|
$
|
(36,643
|
)
|
|
Three months ended September 30, 2022
|
|||||||||||||||
Unrealized gain (loss)
on available for sale
securities (a)
|
Defined Benefit
Pension Items (a)
|
Unrealized gain
on interest rate
swap (a)
|
Total
|
|||||||||||||
Balance as of June 30, 2022
|
$
|
(28,928
|
)
|
$
|
(1,930
|
)
|
$
|
4,299
|
$
|
(26,559
|
)
|
|||||
Other comprehensive income (loss) before reclassifications (net of tax)
|
(10,727
|
)
|
-
|
1,444
|
(9,283
|
)
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) (net of tax)
|
5
|
19
|
(37
|
)
|
(13
|
)
|
||||||||||
Net current period other comprehensive income (loss)
|
(10,722
|
)
|
19
|
1,407
|
(9,296
|
)
|
||||||||||
Balance as of September 30, 2022
|
$
|
(39,650
|
)
|
$
|
(1,911
|
)
|
$
|
5,706
|
$
|
(35,855
|
)
|
Nine months ended September 30, 2022
|
||||||||||||||||
Unrealized gain (loss)
on available for sale
securities (a)
|
Defined Benefit
Pension Items (a)
|
Unrealized gain
on interest rate
swap (a)
|
Total
|
|||||||||||||
Balance as of December 31, 2021
|
$
|
304
|
$
|
(1,968
|
)
|
$
|
1,509
|
$
|
(155
|
)
|
||||||
Other comprehensive income (loss) before reclassifications (net of tax)
|
(39,959
|
)
|
-
|
4,185
|
(35,774
|
)
|
||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) (net of tax)
|
5
|
57
|
12
|
74
|
||||||||||||
Net current period other comprehensive income (loss)
|
(39,954
|
)
|
57
|
4,197
|
(35,700
|
)
|
||||||||||
Balance as of September 30,
2022
|
$
|
(39,650
|
)
|
$
|
(1,911
|
)
|
$
|
5,706
|
$
|
(35,855
|
)
|
Details about accumulated other comprehensive income (loss)
|
Amount reclassified from
accumulated comprehensive
income (loss) (a)
|
Affected line item in the Consolidated Statement of Income
|
|||||||
|
Three Months Ended September 30,
|
|
|||||||
|
2023
|
2022
|
|
||||||
Unrealized gains and losses on available for sale securities
|
|
||||||||
$
|
-
|
$
|
(6
|
)
|
Available for sale securities gains, net
|
||||
-
|
1
|
Provision for income taxes
|
|||||||
$
|
-
|
$
|
(5
|
)
|
Net of tax
|
||||
Defined benefit pension items
|
|||||||||
|
$
|
(7
|
)
|
$
|
(24
|
)
|
Other expenses
|
||
|
1
|
5
|
Provision for income taxes
|
||||||
|
$
|
(6
|
)
|
$
|
(19
|
)
|
Net of tax
|
||
Unrealized gain (loss) on interest rate swap |
$ | 591 | $ | 47 |
Interest expense
|
||||
(124 | ) | (10 | ) |
Provision for income taxes
|
|||||
$ | 467 | $ | 37 |
Net of tax
|
|||||
Total reclassifications
|
$
|
461
|
$
|
13
|
|
Nine Months Ended September 30,
|
|||||||||
|
2023
|
2022
|
|
||||||
Unrealized gains and losses on available for sale securities
|
|
||||||||
$
|
(51
|
)
|
$
|
(6
|
)
|
Available for sale securities gains, net
|
|||
12
|
1
|
Provision for income taxes
|
|||||||
$
|
(39
|
)
|
$
|
(5
|
)
|
Net of tax
|
|||
Defined benefit pension items
|
|||||||||
|
$
|
(21
|
)
|
$
|
(72
|
)
|
Other expenses
|
||
|
4
|
15
|
Provision for income taxes
|
||||||
|
$
|
(17
|
)
|
$
|
(57
|
)
|
Net of tax
|
||
Unrealized gain (loss) on interest rate swap | $ | 1,571 | $ | (15 | ) |
Interest expense
|
|||
(330 | ) | 3 |
Provision for income taxes
|
||||||
$ | 1,241 | $ | (12 | ) |
Net of tax
|
||||
Total reclassifications
|
$
|
1,185
|
$
|
(74
|
)
|
|
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 quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these
assets and liabilities include 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: |
Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using
management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
|
September 30,
2023
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Fair value measurements on a recurring basis:
|
||||||||||||||||
Assets
|
||||||||||||||||
Equity securities
|
$
|
1,858
|
$
|
-
|
$
|
-
|
$
|
1,858
|
||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Agency securities
|
-
|
63,647
|
-
|
63,647
|
||||||||||||
U.S. Treasury securities
|
147,431
|
-
|
-
|
147,431
|
||||||||||||
Obligations of state and political subdivisions
|
-
|
96,022
|
-
|
96,022
|
||||||||||||
Corporate obligations
|
-
|
12,120
|
-
|
12,120
|
||||||||||||
Mortgage-backed securities in government sponsored entities
|
-
|
98,587
|
-
|
98,587
|
||||||||||||
Loans held for sale |
- | 14,155 | - | 14,155 | ||||||||||||
Other Assets |
||||||||||||||||
Derivative instruments
|
-
|
17,707
|
437
|
18,144
|
||||||||||||
Liabilities
|
||||||||||||||||
Derivative instruments
|
-
|
(10,694
|
)
|
-
|
(10,694
|
)
|
December 31, 2022
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Fair value measurements on a recurring basis:
|
||||||||||||||||
Assets:
|
||||||||||||||||
Equity securities
|
$
|
2,208
|
$
|
-
|
$
|
-
|
$
|
2,208
|
||||||||
Available for sale securities:
|
||||||||||||||||
U.S. Agency securities
|
-
|
70,677
|
-
|
70,677
|
||||||||||||
U.S. Treasuries securities
|
148,570
|
-
|
-
|
148,570
|
||||||||||||
Obligations of state and political subdivisions
|
-
|
110,300
|
-
|
110,300
|
||||||||||||
Corporate obligations
|
-
|
9,383
|
-
|
9,383
|
||||||||||||
Mortgage-backed securities in government sponsored entities
|
-
|
100,576
|
-
|
100,576
|
||||||||||||
Derivative instruments
|
-
|
16,599
|
-
|
16,599
|
||||||||||||
Liabilities:
|
||||||||||||||||
Derivative instruments
|
-
|
(9,726
|
)
|
-
|
(9,726
|
)
|
|
IRLC-
Asset
|
|||
Balance: June 30, 2023
|
$
|
529
|
||
Total unrealized losses:
|
||||
Included in other comprehensive loss
|
-
|
|||
Total losses included in earnings and held at reporting date
|
(92
|
)
|
||
Purchases, sales and settlements
|
-
|
|||
Transfers in and/or out of Level 3
|
-
|
|||
Ending Balance: September 30, 2023
|
$
|
437
|
||
Change in unrealized (losses) for the period included in earnings (or changes in net assets) for assets held as of September 30, 2023
|
$
|
(92
|
)
|
IRLC-
Asset
|
||||
Beginning Balance: June 16, 2023 | $ | 657 | ||
Total unrealized losses: | ||||
Included in other comprehensive loss
|
- | |||
Total losses included in earnings and held at reporting date | (220 | ) | ||
Purchases, sales and settlements | - | |||
Transfers in and/or out of Level 3 | - | |||
Ending Balance: September 30, 2023 | $ |
437 | ||
Change in unrealized (losses) for the period included in earnings (or changes in net assets) for assets held as of September 30, 2023 | $ |
(220 | ) |
Quantitative Information about Level 3 Fair Value Measurements at September 30, 2023 | |||||||||||||||
Fair Value
|
Valuation
Technique |
Significant
Unobservable Input |
Range
|
Weighted Average
|
|||||||||||
Measured at Fair Value on a Recurring Basis:
|
|||||||||||||||
Net derivative asset and liability:
|
|||||||||||||||
IRLC
|
$
|
437
|
Discounted cash flows
|
Pull-through rates
|
75.39%-99.64
|
%
|
90.40
|
%
|
September 30, 2023
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Individually analyzed loans held for investment
|
$
|
-
|
$
|
-
|
$
|
3,980
|
$
|
3,980
|
||||||||
Other real estate owned
|
-
|
-
|
97
|
97
|
||||||||||||
December 31, 2022
|
Level I
|
Level II
|
Level III
|
Total
|
||||||||||||
Individually analyzed loans held for investment
|
$
|
-
|
$
|
-
|
$
|
496
|
$
|
496
|
||||||||
Other real estate owned
|
-
|
-
|
297
|
297
|
• |
Individually analyzed loans held for investment -
The Company has measured impairment on impaired loans generally based on the fair value of the loan’s collateral. 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 - loans 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. If the fair value of the collateral exceeds the carrying amount of the loan, then the loan
is not included in the table above as it is not currently being carried at its fair value. The fair values above excluded estimated selling costs of $393,000 and $50,000 at September 30, 2023 and December 31, 2022, respectively.
|
• |
Other Real Estate Owned (OREO) – OREO is carried at
the lower of cost or fair value, less estimated costs to sell, which is measured at the date of foreclosure. If the fair value of the collateral exceeds the carrying amount of the loan, no charge-off or adjustment is necessary, the loan is
not considered to be carried at fair value, and is therefore not included in the table above. If the fair value of the collateral is less than the carrying amount of the loan, management will charge the loan down to its estimated realizable
value. The fair value of OREO is based on the appraised value of the property, which is generally unadjusted by management and is based on comparable sales for similar properties in the same geographic region as the subject property, and is
included in the above table as a Level II measurement. 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. In these cases, the loans are categorized in the above table as a Level III measurement since these adjustments are considered to be unobservable inputs. Income and expenses from operations and further declines in the fair
value of the collateral subsequent to foreclosure are included in net expenses from OREO.
|
September 30, 2023
|
Fair
Value
|
Valuation Technique(s)
|
Unobservable input
|
Range
|
Weighted average
|
||||||||||
Individually analyzed loans held for investment
|
$
|
3,980
|
Appraised Collateral Values
|
Discount for time since appraisal
|
0-100
|
%
|
26.55
|
%
|
|||||||
|
Selling costs
|
8%-10
|
%
|
9.89
|
%
|
||||||||||
|
Holding period
|
0 - 12 months
|
6.70 months
|
||||||||||||
|
|
||||||||||||||
Other real estate owned
|
97
|
Appraised Collateral Values
|
Discount for time since appraisal
|
32
|
%
|
32.00
|
%
|
December 31, 2022
|
Fair
Value
|
Valuation Technique(s)
|
Unobservable input
|
Range
|
Weighted
average
|
||||||||||
Individually analyzed loans held for investment
|
496
|
Appraised Collateral Values
|
Discount for time since appraisal
|
0-100
|
%
|
25.16
|
%
|
||||||||
|
Selling costs
|
8%-10
|
%
|
8.41
|
%
|
||||||||||
|
Holding period
|
6 - 12 months
|
11.51 months
|
||||||||||||
|
|
||||||||||||||
Other real estate owned
|
297
|
Appraised Collateral Values
|
Discount for time since appraisal
|
20-84
|
%
|
39.84
|
%
|
September 30, 2023
|
Carrying
Amount
|
Fair Value
|
Level I
|
Level II
|
Level III
|
|||||||||||||||
Financial assets:
|
||||||||||||||||||||
Interest bearing time deposits with other banks
|
$
|
4,566
|
$
|
4,566
|
$
|
-
|
$
|
-
|
$
|
4,566
|
||||||||||
Net loans
|
2,224,941
|
2,145,060
|
-
|
-
|
2,080,817
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
2,335,135
|
2,324,624
|
1,958,842
|
-
|
365,782
|
|||||||||||||||
Borrowed funds
|
316,151
|
298,617
|
-
|
-
|
298,617
|
|||||||||||||||
|
||||||||||||||||||||
December 31, 2022 |
|
|
|
|
|
|||||||||||||||
Financial assets:
|
||||||||||||||||||||
Interest bearing time deposits with other banks
|
$
|
6,055
|
$
|
6,055
|
$
|
-
|
$
|
-
|
$
|
6,055
|
||||||||||
Loans held for sale
|
725
|
725
|
-
|
-
|
725
|
|||||||||||||||
Net loans
|
1,706,447
|
1,662,514
|
-
|
-
|
1,662,514
|
|||||||||||||||
Financial liabilities:
|
||||||||||||||||||||
Deposits
|
1,844,208
|
1,832,037
|
1,566,517
|
-
|
265,520
|
|||||||||||||||
Borrowed funds
|
257,278
|
246,288
|
-
|
-
|
246,288
|
|
• |
Interest rates could change more rapidly or more significantly than we expect.
|
|
• |
The economy could change significantly in an unexpected way, which would cause the demand for new loans and the ability of borrowers to repay outstanding loans to change in ways that our models do not anticipate.
|
|
• |
The financial markets could suffer a significant disruption, which may have a negative effect on our financial condition and that of our borrowers, and on our ability to raise money by issuing new securities.
|
|
• |
It could take us longer than we anticipate to implement strategic initiatives, including expansions, designed to increase revenues or manage expenses, or we may be unable to implement those initiatives at all.
|
|
• |
Acquisitions and dispositions of assets could affect us in ways that management has not anticipated.
|
|
• |
We may become subject to new legal obligations or the resolution of litigation may have a negative effect on our financial condition or operating results.
|
|
• |
We may become subject to new and unanticipated accounting, tax, regulatory or compliance practices or requirements. Failure to comply with any one or more of these requirements could have an adverse effect on our operations.
|
|
• |
We could experience greater loan delinquencies than anticipated, adversely affecting our earnings and financial condition.
|
|
• |
We could experience greater losses than expected due to the ever increasing volume of information theft and fraudulent scams impacting our customers and the banking industry.
|
|
• |
We could lose the services of some or all of our key personnel, which would negatively impact our business because of their business development skills, financial expertise, lending experience, technical expertise and market area
knowledge.
|
|
• |
The agricultural economy is subject to extreme swings in both the costs of resources and the prices received from the sale of products as a result of forces of nature like weather and various viruses, government regulations,
international trade agreements and consumer tastes, which could negatively impact certain of our customers.
|
|
• |
Loan concentrations in certain industries could negatively impact our results, if financial results or economic conditions deteriorate.
|
|
• |
Companies providing support services related to the exploration and drilling of the natural gas reserves in our market area may be affected by federal, state and local laws and regulations such as restrictions on production,
permitting, changes in taxes and environmental protection, which could negatively impact our customers and, as a result, negatively impact our loan and deposit volume and loan quality. Additionally, the activities the companies providing
support services related to the exploration and drilling of the natural gas reserves may be dependent on the market price of natural gas. As a result, decreases in the market price of natural gas could also negatively impact these
companies, our customers.
|
Analysis of Average Balances and Interest Rates
|
||||||||||||||||||||||||
Nine Months Ended
|
||||||||||||||||||||||||
September 30, 2023
|
September 30, 2022
|
|||||||||||||||||||||||
Average
|
|
Average
|
Average
|
|
Average
|
|||||||||||||||||||
Balance (1)
|
Interest | Rate | Balance (1) | Interest |
Rate | |||||||||||||||||||
(dollars in thousands)
|
|
$ |
$ |
|
%
|
|
$ | $ |
|
%
|
||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Short-term investments:
|
||||||||||||||||||||||||
Interest-bearing deposits at banks
|
21,772
|
333
|
2.04
|
65,727
|
150
|
0.31
|
||||||||||||||||||
Total short-term investments
|
21,772
|
333
|
2.04
|
65,727
|
150
|
0.31
|
||||||||||||||||||
Interest bearing time deposits at banks
|
5,540
|
129
|
3.11
|
9,126
|
183
|
2.70
|
||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||||
Taxable
|
385,246
|
5,977
|
2.07
|
368,702
|
4,406
|
1.59
|
||||||||||||||||||
Tax-exempt (3)
|
114,307
|
2,188
|
2.55
|
120,107
|
2,316
|
2.57
|
||||||||||||||||||
Total investment securities
|
499,553
|
8,165
|
2.18
|
488,809
|
6,722
|
1.83
|
||||||||||||||||||
Loans (2)(3)(4):
|
||||||||||||||||||||||||
Residential mortgage loans
|
268,562
|
10,797
|
5.38
|
202,856
|
7,128
|
4.70
|
||||||||||||||||||
Construction
|
114,386
|
5,831
|
6.82
|
69,437
|
2,213
|
4.26
|
||||||||||||||||||
Commercial Loans
|
1,039,006
|
45,079
|
5.80
|
829,366
|
28,808
|
4.64
|
||||||||||||||||||
Agricultural Loans
|
344,079
|
12,759
|
4.96
|
347,771
|
11,342
|
4.36
|
||||||||||||||||||
Loans to state & political subdivisions
|
60,183
|
1,736
|
3.86
|
54,836
|
1,327
|
3.24
|
||||||||||||||||||
Other loans
|
82,405
|
4,579
|
7.43
|
47,732
|
1,868
|
5.23
|
||||||||||||||||||
Loans, net of discount
|
1,908,621
|
80,781
|
5.66
|
1,551,998
|
52,686
|
4.54
|
||||||||||||||||||
Total interest-earning assets
|
2,435,486
|
89,408
|
4.91
|
2,115,660
|
59,741
|
3.78
|
||||||||||||||||||
Cash and due from banks
|
8,709
|
6,652
|
||||||||||||||||||||||
Bank premises and equipment
|
19,340
|
17,199
|
||||||||||||||||||||||
Other assets
|
126,075
|
82,726
|
||||||||||||||||||||||
Total non-interest earning assets
|
154,124
|
106,577
|
||||||||||||||||||||||
Total assets
|
2,589,610
|
2,222,237
|
||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
NOW accounts
|
616,103
|
8,052
|
1.75
|
520,882
|
1,392
|
0.36
|
||||||||||||||||||
Savings accounts
|
320,227
|
897
|
0.37
|
323,667
|
260
|
0.11
|
||||||||||||||||||
Money market accounts
|
352,055
|
5,802
|
2.20
|
347,422
|
1,037
|
0.40
|
||||||||||||||||||
Certificates of deposit
|
303,825
|
4,768
|
2.10
|
305,878
|
1,780
|
0.78
|
||||||||||||||||||
Total interest-bearing deposits
|
1,592,210
|
19,519
|
1.64
|
1,497,849
|
4,469
|
0.40
|
||||||||||||||||||
Other borrowed funds
|
318,180
|
10,682
|
4.49
|
112,582
|
1,699
|
2.02
|
||||||||||||||||||
Total interest-bearing liabilities
|
1,910,390
|
30,201
|
2.11
|
1,610,431
|
6,168
|
0.51
|
||||||||||||||||||
Demand deposits
|
380,638
|
370,785
|
||||||||||||||||||||||
Other liabilities
|
35,566
|
19,785
|
||||||||||||||||||||||
Total non-interest-bearing liabilities
|
416,204
|
390,570
|
||||||||||||||||||||||
Stockholders’ equity
|
263,016
|
221,236
|
||||||||||||||||||||||
Total liabilities & stockholders’ equity
|
2,589,610
|
2,222,237
|
||||||||||||||||||||||
Net interest income
|
59,207
|
53,573
|
||||||||||||||||||||||
Net interest spread (5)
|
2.80
|
%
|
3.27
|
%
|
||||||||||||||||||||
Net interest income as a percentage of average interest-earning assets
|
3.25
|
%
|
3.39
|
%
|
||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities
|
127
|
%
|
131
|
%
|
(1)
|
Averages are based on daily averages.
|
(2)
|
Includes loan origination and commitment fees.
|
(3)
|
Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using
a statutory federal income tax rate of 21%.
|
(4)
|
Income on non-accrual loans is accounted for on a cash basis, and the loan balances are included in interest-earning assets.
|
(5)
|
Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
|
Analysis of Average Balances and Interest Rates
|
||||||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||||||
September 30, 2023
|
September 30, 2022
|
|||||||||||||||||||||||
Average
|
Average
|
Average
|
Average
|
|||||||||||||||||||||
Balance (1)
|
Interest
|
Rate
|
Balance (1)
|
Interest
|
Rate
|
|||||||||||||||||||
(dollars in thousands)
|
$ |
|
$ |
|
%
|
$ |
|
$ |
|
%
|
||||||||||||||
ASSETS
|
||||||||||||||||||||||||
Short-term investments:
|
||||||||||||||||||||||||
Interest-bearing deposits at banks
|
24,096
|
225
|
3.70
|
14,255
|
12
|
0.33
|
||||||||||||||||||
Total short-term investments
|
24,096
|
225
|
3.70
|
14,255
|
12
|
0.33
|
||||||||||||||||||
Interest bearing time deposits at banks
|
4,579
|
39
|
3.38
|
6,640
|
49
|
2.93
|
||||||||||||||||||
Investment securities:
|
||||||||||||||||||||||||
Taxable
|
386,806
|
2,113
|
2.19
|
391,774
|
1,696
|
1.73
|
||||||||||||||||||
Tax-exempt (3)
|
108,959
|
683
|
2.51
|
123,046
|
797
|
2.59
|
||||||||||||||||||
Total investment securities
|
495,765
|
2,796
|
2.26
|
514,820
|
2,493
|
1.94
|
||||||||||||||||||
Loans (2)(3)(4):
|
||||||||||||||||||||||||
Residential mortgage loans
|
357,388
|
4,925
|
5.47
|
204,352
|
2,416
|
4.69
|
||||||||||||||||||
Construction
|
166,204
|
3,339
|
7.97
|
76,934
|
885
|
4.56
|
||||||||||||||||||
Commercial Loans
|
1,196,675
|
18,983
|
6.29
|
900,297
|
10,732
|
4.73
|
||||||||||||||||||
Agricultural Loans
|
342,499
|
4,285
|
4.96
|
346,380
|
3,887
|
4.45
|
||||||||||||||||||
Loans to state & political subdivisions
|
60,820
|
611
|
3.99
|
59,454
|
502
|
3.35
|
||||||||||||||||||
Other loans
|
88,710
|
1,750
|
7.83
|
81,499
|
1,074
|
5.23
|
||||||||||||||||||
Loans, net of discount
|
2,212,296
|
33,893
|
6.08
|
1,668,916
|
19,496
|
4.63
|
||||||||||||||||||
Total interest-earning assets
|
2,736,736
|
36,953
|
5.36
|
2,204,631
|
22,050
|
3.96
|
||||||||||||||||||
Cash and due from banks
|
10,696
|
6,755
|
||||||||||||||||||||||
Bank premises and equipment
|
21,401
|
17,437
|
||||||||||||||||||||||
Other assets
|
190,431
|
82,012
|
||||||||||||||||||||||
Total non-interest earning assets
|
222,528
|
106,204
|
||||||||||||||||||||||
Total assets
|
2,959,264
|
2,310,835
|
||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
NOW accounts
|
789,513
|
4,468
|
2.25
|
530,234
|
675
|
0.51
|
||||||||||||||||||
Savings accounts
|
326,452
|
426
|
0.52
|
328,056
|
106
|
0.13
|
||||||||||||||||||
Money market accounts
|
403,628
|
2,682
|
2.64
|
347,460
|
515
|
0.59
|
||||||||||||||||||
Certificates of deposit
|
347,783
|
2,524
|
2.88
|
288,926
|
542
|
0.74
|
||||||||||||||||||
Total interest-bearing deposits
|
1,867,376
|
10,100
|
2.15
|
1,494,676
|
1,838
|
0.49
|
||||||||||||||||||
Other borrowed funds
|
347,326
|
4,185
|
4.78
|
189,174
|
1,099
|
2.30
|
||||||||||||||||||
Total interest-bearing liabilities
|
2,214,702
|
14,285
|
2.56
|
1,683,850
|
2,937
|
0.69
|
||||||||||||||||||
Demand deposits
|
408,531
|
380,110
|
||||||||||||||||||||||
Other liabilities
|
37,118
|
20,618
|
||||||||||||||||||||||
Total non-interest-bearing liabilities
|
445,649
|
400,728
|
||||||||||||||||||||||
Stockholders’ equity
|
298,913
|
226,257
|
||||||||||||||||||||||
Total liabilities & stockholders’ equity
|
2,959,264
|
2,310,835
|
||||||||||||||||||||||
Net interest income
|
22,668
|
19,113
|
||||||||||||||||||||||
Net interest spread (5)
|
2.80
|
%
|
3.27
|
%
|
||||||||||||||||||||
Net interest income as a percentage of average interest-earning assets
|
3.29
|
%
|
3.44
|
%
|
||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities
|
124
|
%
|
131
|
%
|
(1) |
Averages are based on daily averages.
|
(2)
|
Includes loan origination and commitment fees.
|
(3)
|
Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21%.
|
(4)
|
Income on non-accrual loans is accounted for on a cash basis, and the loan balances are included in interest-earning assets.
|
(5)
|
Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.
|
For the Three Months
|
For the Nine Months
|
|||||||||||||||
Ended September 30,
|
Ended September 30,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Interest and dividend income from investment securities
and interest bearing deposits at banks (non-tax adjusted)
|
$
|
2,917
|
$
|
2,387
|
$
|
8,168
|
$
|
6,569
|
||||||||
Tax equivalent adjustment
|
143
|
167
|
459
|
486
|
||||||||||||
Interest and dividend income from investment securities
and interest bearing deposits at banks (tax equivalent basis)
|
$
|
3,060
|
$
|
2,554
|
$
|
8,627
|
$
|
7,055
|
||||||||
|
||||||||||||||||
Interest and fees on loans (non-tax adjusted)
|
$
|
33,772
|
$
|
19,396
|
$
|
80,438
|
$
|
52,436
|
||||||||
Tax equivalent adjustment
|
121
|
100
|
343
|
250
|
||||||||||||
Interest and fees on loans (tax equivalent basis)
|
$
|
33,893
|
$
|
19,496
|
$
|
80,781
|
$
|
52,686
|
||||||||
Total interest income
|
$
|
36,689
|
$
|
21,783
|
$
|
88,606
|
$
|
59,005
|
||||||||
Total interest expense
|
14,285
|
2,937
|
30,201
|
6,168
|
||||||||||||
Net interest income
|
22,404
|
18,846
|
58,405
|
52,837
|
||||||||||||
Total tax equivalent adjustment
|
264
|
267
|
802
|
736
|
||||||||||||
Net interest income (tax equivalent basis)
|
$
|
22,668
|
$
|
19,113
|
$
|
59,207
|
$
|
53,573
|
Three months ended September 30, 2023 vs 2022 (1)
|
Nine months ended September 30, 2023 vs 2022 (1)
|
|||||||||||||||||||||||
Change in
|
Change
|
Total
|
Change in
|
Change
|
Total
|
|||||||||||||||||||
Volume
|
in Rate
|
Change
|
Volume
|
in Rate
|
Change
|
|||||||||||||||||||
Interest Income:
|
||||||||||||||||||||||||
Short-term investments:
|
||||||||||||||||||||||||
Interest-bearing deposits at banks
|
$
|
14
|
$
|
199
|
$
|
213
|
$
|
(25
|
)
|
$
|
208
|
$
|
183
|
|||||||||||
Interest bearing time deposits at banks
|
(20
|
)
|
10
|
(10
|
)
|
(90
|
)
|
36
|
(54
|
)
|
||||||||||||||
Investment securities:
|
||||||||||||||||||||||||
Taxable
|
(22
|
)
|
439
|
417
|
205
|
1,366
|
1,571
|
|||||||||||||||||
Tax-exempt
|
(89
|
)
|
(25
|
)
|
(114
|
)
|
(111
|
)
|
(17
|
)
|
(128
|
)
|
||||||||||||
Total investments
|
(111
|
)
|
414
|
303
|
94
|
1,349
|
1,443
|
|||||||||||||||||
Loans:
|
||||||||||||||||||||||||
Residential mortgage loans
|
2,055
|
454
|
2,509
|
2,539
|
1,130
|
3,669
|
||||||||||||||||||
Construction
|
1,493
|
961
|
2,454
|
1,878
|
1,740
|
3,618
|
||||||||||||||||||
Commercial Loans
|
4,116
|
4,135
|
8,251
|
8,195
|
8,076
|
16,271
|
||||||||||||||||||
Agricultural Loans
|
(43
|
)
|
441
|
398
|
(119
|
)
|
1,536
|
1,417
|
||||||||||||||||
Loans to state & political subdivisions
|
12
|
97
|
109
|
138
|
271
|
409
|
||||||||||||||||||
Other loans
|
102
|
574
|
676
|
1,718
|
993
|
2,711
|
||||||||||||||||||
Total loans, net of discount
|
7,735
|
6,662
|
14,397
|
14,349
|
13,746
|
28,095
|
||||||||||||||||||
Total Interest Income
|
7,618
|
7,285
|
14,903
|
14,328
|
15,339
|
29,667
|
||||||||||||||||||
Interest Expense:
|
||||||||||||||||||||||||
Interest-bearing deposits:
|
||||||||||||||||||||||||
NOW accounts
|
471
|
3,322
|
3,793
|
298
|
6,362
|
6,660
|
||||||||||||||||||
Savings accounts
|
(1
|
)
|
321
|
320
|
(3
|
)
|
640
|
637
|
||||||||||||||||
Money Market accounts
|
96
|
2,071
|
2,167
|
13
|
4,752
|
4,765
|
||||||||||||||||||
Certificates of deposit
|
131
|
1,851
|
1,982
|
(12
|
)
|
3,000
|
2,988
|
|||||||||||||||||
Total interest-bearing deposits
|
697
|
7,565
|
8,262
|
296
|
14,754
|
15,050
|
||||||||||||||||||
Other borrowed funds
|
1,351
|
1,735
|
3,086
|
5,377
|
3,606
|
8,983
|
||||||||||||||||||
Total interest expense
|
2,048
|
9,300
|
11,348
|
5,673
|
18,360
|
24,033
|
||||||||||||||||||
Net interest income
|
$
|
5,570
|
$
|
(2,015
|
)
|
$
|
3,555
|
$
|
8,655
|
$
|
(3,021
|
)
|
$
|
5,634
|
(1)
|
The portion of the total change attributable to both volume and rate changes, which can not be separated, has been allocated proportionally to the change due to volume and the change due to rate prior to allocation.
|
|
• |
The average balance of taxable securities increased $16.5 million, which resulted in an increase in investment income of $205,000. The yield on taxable securities increased 48 basis points from 1.59% to 2.07% as a result of lower
yielding securities maturing in the second half of 2022 and first nine months of 2023. This resulted in an increase in investment income of $1,366,000. For a discussion of the Company’s current investment strategy, see the “Financial
Condition – Investments”.
|
|
• |
Interest income on residential mortgage loans increased $3,669,000. The change due to rate was an increase of $1,130,000 as the average yield on residential mortgages increased from 4.70% to 5.38% as a result of the higher rate
environment during the second half of 2022 and all of 2023. The average balance of residential mortgage loans increased $65.7 million primarily due to the HVBC acquisition and additional organic growth. This resulted in an increase of
$2,539,000 on total interest income due to volume.
|
|
• |
The average balance of construction loans increased $44.9 million as a result of projects in our Delaware market and the HVBC acquisition. This resulted in an increase of $1,878,000 on total interest income due to volume. The change
due to rate was an increase of $1,740,000 as the average yield on construction loans increased from 4.26% to 6.82% as a result of the higher rate environment during the second half of 2022 and all of 2023.
|
|
• |
The average balance of commercial loans increased $209.6 million from a year ago. The growth was primarily attributable to growth in the Delaware market and the HVCB acquisition. This had a positive impact of $8,195,000 on total
interest income due to volume. The yield increased 1.16% to 5.80% as a result of the higher rate environment during the second half of 2022 and all of 2023, which increased loan interest income $8,076,000.
|
|
• |
Interest income on agricultural loans increased $1,417,000 from 2022 to 2023. The yield increased 60 basis points to 4.96% as a result of the higher rate environment during the second half of 2022 and all of 2023, which increased loan
interest income $1,536,000. The decrease in the average balance of agricultural loans of $3.7 million resulted in a decrease in interest income due to volume of $119,000.
|
|
• |
The average yield of state and political subdivision loans increased 62 basis points to 3.86% due to the higher rate environment resulting in an increase in income of $271,000. The average balance of state and political subdivision
loans increased $5.3 million resulting in an increase in loan interest income of $138,000.
|
|
• |
The average balance of other loans increased $34.7 million as a result of outstanding student loans. This resulted in an increase of $1,718,000 on total interest income due to volume. The average yield of other loans increased 220
basis points to 7.43% due to the higher rate environment resulting in an increase in income of $993,000.
|
|
• |
The average balance of interest bearing deposits increased $95.2 million from September 30, 2022 to September 30, 2023. The increase was due to the HVBC acquisition. The effect of these
volume changes was an increase in interest expense of $296,000. The average rate paid on interest bearing deposits was 1.64% for the first nine months of 2023 and 0.40% for the comparable period in 2022. This resulted in an increase in
interest expense of $14,754,000. The increase was due to the Federal Reserve increasing interest rates during 2022 and 2023.
|
|
• |
The average balance of other borrowed funds increased $205.6 million to fund loan growth experienced in 2022 and 2023. This resulted in an increase in interest expense of $5,377,000. There was an increase in the average rate paid on
other borrowed funds from 2.02% to 4.49% due to the interest rate increases by the Federal Reserve that increased borrowings costs resulting in an increase in interest expense of $3,606,000.
|
|
• |
Interest income on residential mortgage loans increased $2,509,000. The change due to rate was an increase of $454,000 as the average yield on residential mortgages increased from 4.69% to 5.47% as a result of the higher rate
environment during the second half of 2022 and all of 2023. The average balance of residential mortgage loans increased $153.0 million primarily as a result of the HVBC acquisition. This resulted in an increase of $2,055,000 on total
interest income due to volume.
|
|
• |
The average balance of construction loans increased $89.3 million primarily as a result of the HVBC acquisition. This resulted in an increase of $1,493,000 on total interest income due to volume. The change due to rate was an increase
of $961,000 as the average yield on construction loans increased from 4.56% to 7.97% as a result of the higher rate.
|
|
• |
The average balance of commercial loans increased $296.4 million from a year ago. The growth was primarily attributable to growth in the Delaware market and the HVBC acquisition. This had a positive impact of $4,116,000 on total
interest income due to volume. The yield increased 156 basis points to 6.29% due to the higher rate environment experienced during the second half of 2022 and all of 2023, which increased loan interest income $4,135,000.
|
|
• |
The average yield of agricultural loans increased 51 basis points to 4.96% due to the higher rate environment resulting in an increase in income of $441,000.
|
|
• |
The average balance of other loans increased $7.2 million as a result of outstanding student loans. This resulted in an increase of $102,000 on total interest income due to volume. The average yield on other loans increased 260 basis
points to 7.50% due to the rate earned on the student loans, resulting in an increase in interest income of $574,000.
|
|
• |
The average balance of interest bearing deposits increased $372.7 million from September 30, 2022 to September 30, 2023 primarily due to the HVBC acquisition, which was offset by customer funds
transferred to higher-yielding investment alternatives as well as a reduction in municipal deposits to fund projects in various municipalities. The effect of these volume changes was an increase in interest expense of $697,000.
The average rate paid on interest bearing deposits was 2.15% for the three months ended September 30, 2023 and 0.49% for the comparable period in 2022. This resulted in an increase in interest expense of $7,565,000. The increase was due
to the Federal Reserve increasing interest rates during 2022 and 2023.
|
|
• |
The average balance of other borrowed funds increased $158.2 million to fund loan growth experienced in 2022 and borrowings acquired as part of the HVBC acquisition. This resulted in an increase in interest expense of $1,351,000. There
was an increase in the average rate paid on other borrowed funds from 2.30% to 4.78% due to the interest rate increases by the Federal Reserve that increased borrowings costs resulting in an increase in interest expense of $1,735,000.
|
Nine months ended September 30,
|
Change
|
|||||||||||||||
2023
|
2022
|
Amount
|
%
|
|||||||||||||
Service charges
|
$
|
4,196
|
$
|
4,081
|
$
|
115
|
2.8
|
|||||||||
Trust
|
583
|
620
|
(37
|
)
|
(6.0
|
)
|
||||||||||
Brokerage and insurance
|
1,429
|
1,428
|
1
|
0.1
|
||||||||||||
Gains on loans sold
|
674
|
241
|
433
|
179.7
|
||||||||||||
Equity security (losses), net
|
(223
|
)
|
(198
|
)
|
(25
|
)
|
12.6
|
|||||||||
Available for sale security (losses), net
|
(51
|
)
|
(6
|
)
|
(45
|
)
|
750.0
|
|||||||||
Earnings on bank owned life insurance
|
941
|
635
|
306
|
48.2
|
||||||||||||
Other
|
567
|
626
|
(59
|
)
|
(9.4
|
)
|
||||||||||
Total
|
$
|
8,116
|
$
|
7,427
|
$
|
689
|
9.3
|
Three months ended September 30,
|
Change
|
|||||||||||||||
2023
|
2022
|
Amount
|
%
|
|||||||||||||
Service charges
|
$
|
1,692
|
$
|
1,509
|
$
|
183
|
12.1
|
|||||||||
Trust
|
172
|
187
|
(15
|
)
|
(8.0
|
)
|
||||||||||
Brokerage and insurance
|
473
|
446
|
27
|
6.1
|
||||||||||||
Gains on loans sold
|
460
|
95
|
365
|
384.2
|
||||||||||||
Equity security gains (losses0, net
|
69
|
(19
|
)
|
88
|
(463.2
|
)
|
||||||||||
Available for sale security gains (losses), net
|
-
|
(6
|
)
|
6
|
(100.0
|
)
|
||||||||||
Earnings on bank owned life insurance
|
489
|
216
|
273
|
126.4
|
||||||||||||
Other
|
307
|
264
|
43
|
16.3
|
||||||||||||
Total
|
$
|
3,662
|
$
|
2,692
|
$
|
970
|
36.0
|
Nine months ended September 30,
|
Change
|
|||||||||||||||
2023
|
2022
|
Amount
|
%
|
|||||||||||||
Salaries and employee benefits
|
$
|
25,733
|
$
|
20,964
|
$
|
4,769
|
22.7
|
|||||||||
Occupancy
|
2,870
|
2,327
|
543
|
23.3
|
||||||||||||
Furniture and equipment
|
568
|
416
|
152
|
36.5
|
||||||||||||
Professional fees
|
1,274
|
1,321
|
(47
|
)
|
(3.6
|
)
|
||||||||||
FDIC insurance
|
1,000
|
440
|
560
|
127.3
|
||||||||||||
Pennsylvania shares tax
|
893
|
1,017
|
(124
|
)
|
(12.2
|
)
|
||||||||||
Amortization of intangibles
|
219
|
120
|
99
|
82.5
|
||||||||||||
Merger and acquisition
|
9,269
|
-
|
9,269
|
NA
|
||||||||||||
Software expenses
|
1,274
|
1,069
|
205
|
19.2
|
||||||||||||
ORE expenses (income)
|
126
|
(125
|
)
|
251
|
(200.8
|
)
|
||||||||||
Other
|
5,811
|
5,496
|
315
|
5.7
|
||||||||||||
Total
|
$
|
49,037
|
$
|
33,045
|
$
|
15,992
|
48.4
|
Three months ended September 30,
|
Change
|
|||||||||||||||
2023
|
2022
|
Amount
|
%
|
|||||||||||||
Salaries and employee benefits
|
$
|
10,140
|
$
|
6,933
|
$
|
3,207
|
46.3
|
|||||||||
Occupancy
|
1,221
|
779
|
442
|
56.7
|
||||||||||||
Furniture and equipment
|
255
|
122
|
133
|
109.0
|
||||||||||||
Professional fees
|
506
|
588
|
(82
|
)
|
(13.9
|
)
|
||||||||||
FDIC insurance
|
375
|
160
|
215
|
134.4
|
||||||||||||
Pennsylvania shares tax
|
297
|
339
|
(42
|
)
|
(12.4
|
)
|
||||||||||
Amortization of intangibles
|
157
|
40
|
117
|
292.5
|
||||||||||||
Merger and acquisition
|
623
|
-
|
623
|
NA
|
||||||||||||
Software expenses
|
551
|
370
|
181
|
48.9
|
||||||||||||
ORE expenses
|
111
|
122
|
(11
|
)
|
(9.0
|
)
|
||||||||||
Other
|
2,343
|
2,161
|
182
|
8.4
|
||||||||||||
Total
|
$
|
16,579
|
$
|
11,614
|
$
|
4,965
|
42.8
|
September 30, 2023
|
December 31, 2022
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Debt securities:
|
||||||||||||||||
U. S. Agency securities
|
$
|
63,647
|
15.2
|
$
|
70,677
|
16.0
|
||||||||||
U. S. Treasury notes
|
147,431
|
35.1
|
148,570
|
33.6
|
||||||||||||
Obligations of state & political subdivisions
|
96,022
|
22.9
|
110,300
|
25.0
|
||||||||||||
Corporate obligations
|
12,120
|
2.9
|
9,383
|
2.1
|
||||||||||||
Mortgage-backed securities in government sponsored entities
|
98,587
|
23.5
|
100,576
|
22.8
|
||||||||||||
Equity securities
|
1,858
|
0.4
|
2,208
|
0.5
|
||||||||||||
Total
|
$
|
419,665
|
100.0
|
$
|
441,714
|
100.0
|
September 30, 2023/
|
||||||||
December 31, 2022
|
||||||||
Change
|
||||||||
Amount
|
%
|
|||||||
Debt securities:
|
||||||||
U. S. Agency securities
|
$
|
(7,030
|
)
|
(9.9
|
)
|
|||
U. S. Treasury notes
|
(1,139
|
)
|
(0.8
|
)
|
||||
Obligations of state & political subdivisions
|
(14,278
|
)
|
(12.9
|
)
|
||||
Corporate obligations
|
2,737
|
29.2
|
||||||
Mortgage-backed securities in government sponsored entities
|
(1,989
|
)
|
(2.0
|
)
|
||||
Equity securities
|
(350
|
)
|
(15.9
|
)
|
||||
Total
|
$
|
(22,049
|
)
|
(5.0
|
)
|
September 30,
2023
|
December 31,
2022
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Real estate:
|
||||||||||||||||
Residential
|
$
|
356,381
|
15.9
|
$
|
210,213
|
12.2
|
||||||||||
Commercial
|
1,081,123
|
48.1
|
876,569
|
50.8
|
||||||||||||
Agricultural
|
314,164
|
14.0
|
313,614
|
18.2
|
||||||||||||
Construction
|
175,320
|
7.8
|
80,691
|
4.7
|
||||||||||||
Consumer
|
115,753
|
5.2
|
86,650
|
5.0
|
||||||||||||
Other commercial loans
|
120,347
|
5.4
|
63,222
|
3.7
|
||||||||||||
Other agricultural loans
|
26,648
|
1.2
|
34,832
|
2.0
|
||||||||||||
State & political subdivision loans
|
56,660
|
2.4
|
59,208
|
3.4
|
||||||||||||
Total loans
|
2,246,396
|
100.0
|
1,724,999
|
100.0
|
||||||||||||
Less allowance for loan losses
|
21,455
|
18,552
|
||||||||||||||
Net loans
|
$
|
2,224,941
|
$
|
1,706,447
|
September 30, 2023/
|
||||||||
December 31, 2022
|
||||||||
|
Change
|
|||||||
Amount
|
%
|
|||||||
Real estate:
|
||||||||
Residential
|
$
|
146,168
|
69.5
|
|||||
Commercial
|
204,554
|
23.3
|
||||||
Agricultural
|
550
|
0.2
|
||||||
Construction
|
94,629
|
117.3
|
||||||
Consumer
|
29,103
|
33.6
|
||||||
Other commercial loans
|
57,125
|
90.4
|
||||||
Other agricultural loans
|
(8,184
|
)
|
(23.5
|
)
|
||||
State & political subdivision loans
|
(2,548
|
)
|
(4.3
|
)
|
||||
Total loans
|
$
|
521,397
|
30.2
|
September 30,
|
December 31
|
|||||||||||||||
2023
|
2022
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Real estate loans:
|
||||||||||||||||
Residential
|
$
|
2,565
|
15.9
|
$
|
1,056
|
12.2
|
||||||||||
Commercial
|
9,185
|
48.1
|
10,120
|
50.8
|
||||||||||||
Agricultural
|
3,475
|
14.0
|
4,589
|
18.2
|
||||||||||||
Construction
|
1,833
|
7.8
|
801
|
4.7
|
||||||||||||
Consumer
|
1,720
|
5.2
|
135
|
5.0
|
||||||||||||
Other commercial loans
|
2,072
|
5.4
|
1,040
|
3.7
|
||||||||||||
Other agricultural loans
|
229
|
1.2
|
489
|
2.0
|
||||||||||||
State & political subdivision loans
|
48
|
2.4
|
322
|
3.4
|
||||||||||||
Unallocated
|
328
|
N/A
|
-
|
N/A
|
||||||||||||
Total allowance for loan losses
|
$
|
21,455
|
100.0
|
$
|
18,552
|
100.0
|
September 30, 2023
|
Credit Loss Expense (Benefit)
|
Net (charge-offs) Recoveries
|
Average Loans
|
Ratio of net (charge-offs) recoveries to Average loans
|
Allowance to total loans
|
Non-accrual loans as a percent of loans
|
Allowance to total non-accrual loans
|
|||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||||||
Residential
|
$
|
1,323
|
$
|
(1
|
)
|
$
|
268,562
|
0.00
|
%
|
0.72
|
%
|
0.83
|
%
|
86.77
|
%
|
|||||||||||||
Commercial
|
2,094
|
2
|
954,043
|
0.00
|
%
|
0.85
|
%
|
0.15
|
%
|
575.14
|
%
|
|||||||||||||||||
Agricultural
|
(6
|
)
|
-
|
312,436
|
0.00
|
%
|
1.11
|
%
|
0.95
|
%
|
116.42
|
%
|
||||||||||||||||
Construction
|
1,135
|
-
|
114,386
|
0.00
|
%
|
1.05
|
%
|
1.34
|
%
|
77.77
|
%
|
|||||||||||||||||
Consumer
|
(107
|
)
|
(25
|
)
|
82,405
|
(0.03
|
%)
|
1.49
|
%
|
0.88
|
%
|
169.12
|
%
|
|||||||||||||||
Other commercial loans
|
1,286
|
(754
|
)
|
84,963
|
(0.89
|
%)
|
1.72
|
%
|
1.60
|
%
|
107.47
|
%
|
||||||||||||||||
Other agricultural loans
|
(41
|
)
|
-
|
31,643
|
0.00
|
%
|
0.86
|
%
|
1.12
|
%
|
76.59
|
%
|
||||||||||||||||
State & political subdivision loans
|
6
|
-
|
60,183
|
0.00
|
%
|
0.08
|
%
|
0.00
|
%
|
NA
|
||||||||||||||||||
Unallocated
|
(398
|
)
|
-
|
-
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
Total
|
$
|
5,292
|
$
|
(778
|
)
|
$
|
1,908,621
|
(0.04
|
%)
|
0.96
|
%
|
0.58
|
%
|
163.29
|
%
|
December 31, 2022
|
||||||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||||||
Residential
|
$
|
(91
|
)
|
$
|
-
|
$
|
204,063
|
0.00
|
%
|
0.50
|
%
|
0.28
|
%
|
178.68
|
%
|
|||||||||||||
Commercial
|
2,018
|
3
|
782,016
|
0.00
|
%
|
1.15
|
%
|
0.32
|
%
|
364.29
|
%
|
|||||||||||||||||
Agricultural
|
(140
|
)
|
-
|
312,999
|
0.00
|
%
|
1.46
|
%
|
1.03
|
%
|
142.43
|
%
|
||||||||||||||||
Construction
|
367
|
-
|
73,214
|
0.00
|
%
|
0.99
|
%
|
0.00
|
%
|
NA
|
||||||||||||||||||
Consumer
|
(111
|
)
|
(16
|
)
|
58,715
|
(0.03
|
%)
|
0.16
|
%
|
0.00
|
%
|
NA
|
||||||||||||||||
Other commercial loans
|
439
|
(422
|
)
|
72,444
|
(0.58
|
%)
|
1.64
|
%
|
0.10
|
%
|
1,677.42
|
%
|
||||||||||||||||
Other agricultural loans
|
(69
|
)
|
-
|
34,421
|
0.00
|
%
|
1.40
|
%
|
0.82
|
%
|
171.58
|
%
|
||||||||||||||||
State & political subdivision loans
|
41
|
-
|
56,004
|
0.00
|
%
|
0.54
|
%
|
0.00
|
%
|
NA
|
||||||||||||||||||
Unallocated
|
(771
|
)
|
-
|
-
|
NA
|
NA
|
NA
|
NA
|
||||||||||||||||||||
Total
|
$
|
1,683
|
$
|
(435
|
)
|
$
|
1,593,876
|
(0.03
|
%)
|
1.08
|
%
|
0.40
|
%
|
267.40
|
%
|
September 30,
|
December 31,
|
|||||||
(dollars in thousands)
|
2023
|
2022
|
||||||
Non-performing loans:
|
||||||||
Non-accruing loans
|
$
|
13,139
|
$
|
6,938
|
||||
Accrual loans - 90 days or more past due
|
8
|
7
|
||||||
Total non-performing loans
|
13,147
|
6,945
|
||||||
Foreclosed assets held for sale
|
474
|
543
|
||||||
Total non-performing assets
|
$
|
13,621
|
$
|
7,488
|
September 30, 2023
|
December 31, 2022
|
|||||||||||||||||||||||||||||||
Non-Performing Loans
|
Non-Performing Loans
|
|||||||||||||||||||||||||||||||
30 - 89 Days
|
30 - 89 Days
|
|||||||||||||||||||||||||||||||
Past Due
|
90 Days Past
|
Non-
|
Total Non-
|
Past Due
|
90 Days Past
|
Non-
|
Total Non-
|
|||||||||||||||||||||||||
(in thousands)
|
Accruing
|
Due Accruing
|
accrual
|
Performing
|
Accruing
|
Due Accruing
|
accrual
|
Performing
|
||||||||||||||||||||||||
Real estate:
|
||||||||||||||||||||||||||||||||
Residential
|
$
|
1,203
|
$
|
-
|
$
|
2,956
|
$
|
2,956
|
$
|
469
|
$
|
-
|
$
|
591
|
$
|
591
|
||||||||||||||||
Commercial
|
2,311
|
-
|
1,597
|
1,597
|
1,018
|
-
|
2,778
|
2,778
|
||||||||||||||||||||||||
Agricultural
|
299
|
-
|
2,985
|
2,985
|
-
|
-
|
3,222
|
3,222
|
||||||||||||||||||||||||
Construction
|
677
|
-
|
2,357
|
2,357
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Consumer
|
771
|
8
|
1,017
|
1,025
|
147
|
7
|
-
|
7
|
||||||||||||||||||||||||
Other commercial loans
|
224
|
-
|
1,928
|
1,928
|
1,695
|
-
|
62
|
62
|
||||||||||||||||||||||||
Other agricultural loans
|
475
|
-
|
299
|
299
|
-
|
-
|
285
|
285
|
||||||||||||||||||||||||
Total nonperforming loans
|
$
|
5,960
|
$
|
8
|
$
|
13,139
|
$
|
13,147
|
$
|
3,329
|
$
|
7
|
$
|
6,938
|
$
|
6,945
|
Change in Non-Performing Loans
|
||||||||
September 30, 2023 /December 31, 2022
|
||||||||
(in thousands)
|
Amount
|
%
|
||||||
Real estate:
|
||||||||
Residential
|
$
|
2,365
|
400.2
|
|||||
Commercial
|
(1,181
|
)
|
(42.5
|
)
|
||||
Agricultural
|
(237
|
)
|
(7.4
|
)
|
||||
Construction
|
2,357
|
NA
|
||||||
Consumer
|
1,018
|
14,542.9
|
||||||
Other commercial loans
|
1,866
|
3,009.7
|
||||||
Other agricultural loans
|
14
|
4.9
|
||||||
Total nonperforming loans
|
$
|
6,202
|
89.3
|
|
• |
A commercial loan relationship with $617,000 outstanding, and additional letters of credit of $1.2 million available, secured by undeveloped land, stone quarries and equipment, was on non-accrual status as of September 30, 2023. The
Company services the natural gas industry, as well as local municipalities. As a result, the reduced exploration for natural gas in north central Pennsylvania has significantly impacted the cash flows of the customer, who provides
excavation services and stone for pad construction related to these activities. During 2020, the Company had the underlying equipment collateral appraised and in the first quarter of 2022, the Company had the quarry appraised. The
appraisals indicated a decrease in collateral values compared to the appraisal ordered for the loan origination, however, the loan was still considered well secured on a loan to value basis at September 30, 2023. In 2022 and 2023, the
customer liquidated some excess equipment and the funds have been utilized to pay down a portion of the loans. Management determined that no specific reserve was required as of September 30, 2023.
|
|
• |
An agricultural loan customer with a total loan relationship of $1.7 million, secured by real estate, equipment and cattle, was on non-accrual status as of September 30, 2023. The customer declared bankruptcy during the fourth quarter
of 2018 and developed a workout plan that was approved by the bankruptcy court in the fourth quarter of 2019 and resulted in monthly payments resuming in late 2019 that continue into 2023. Included within these loans to this customer are
loans which are subject to Farm Service Agency guarantees in excess of $700,000. Depressed milk prices and the pandemic have created cash flow difficulties for this customer. Absent a sizable and sustained increase in milk prices, which
is not assured, we will need to rely upon the collateral for repayment of interest and principal. During 2023, the Company had the underlying collateral appraised. Management determined that no specific reserve was required as of
September 30, 2023.
|
|
• |
An agricultural loan customer with a total loan relationship of $1.2 million, secured by real estate was on non-accrual status as of September 30, 2023. The customer filed bankruptcy in the first quarter of 2023. The COVID-19 pandemic
escalated the cash flow difficulties this customer was experiencing. We expect that we will need to rely upon the collateral for repayment of interest and principal. During 2023, the Company had the underlying collateral appraised.
Management reviewed the collateral and determined that no specific reserve was required as of September 30, 2023.
|
|
• |
A commercial loan customer with a total loan relationship of $1.4 million, secured by airplanes and camera equipment was on non-accrual status as of September 30, 2023. The customer is in the process of selling its business, which has
taken longer than expected causing cashflow difficulties. A forbearance agreement was agreed to by the Customer that calls for $180,000 of payments in the fourth quarter of 2023 and a pay-off of the entire relationship during the fourth
quarter of 2023 as well. Management reviewed the collateral and determined that no specific reserve was required as of September 30, 2023.
|
|
• |
A construction loan customer with a total loan relationship of $2.4 million, secured by partially developed real estate, was on non-accrual status as of September 30, 2023. The customer has experienced delays in developing the real
estate for resale resulting in financing difficulties. Management reviewed the collateral and determined that a specific reserve of $286,000 was required as of September 30, 2023.
|
|
• |
Five loan relationships comprise 54.7% of the non-performing loan balance, which required a specific reserve of $286,000 as of September 30, 2023.
|
|
• |
The Company has a history of low charge-offs, which were 0.05% of average loans on an annualized basis for 2023, including the acquired loan charged off that was reserved for as of the acquisition
date and 0.3% for 2022.
|
September 30,
|
December 31,
|
|||||||||||||||
2023
|
2022
|
|||||||||||||||
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Non-interest-bearing deposits
|
$
|
542,144
|
23.2
|
$
|
396,260
|
21.5
|
||||||||||
NOW accounts
|
671,020
|
28.7
|
512,502
|
27.8
|
||||||||||||
Savings deposits
|
319,045
|
13.7
|
321,917
|
17.5
|
||||||||||||
Money market deposit accounts
|
426,633
|
18.3
|
335,838
|
18.2
|
||||||||||||
Certificates of deposit
|
376,293
|
16.1
|
277,691
|
15.0
|
||||||||||||
Total
|
$
|
2,335,135
|
100.0
|
$
|
1,844,208
|
100.0
|
September 30, 2023/
December 31, 2022 Change
|
||||||||
Amount
|
%
|
|||||||
Non-interest-bearing deposits
|
$
|
145,884
|
36.8
|
|||||
NOW accounts
|
158,518
|
30.9
|
||||||
Savings deposits
|
(2,872
|
)
|
(0.9
|
)
|
||||
Money market deposit accounts
|
90,795
|
27.0
|
||||||
Certificates of deposit
|
98,602
|
35.5
|
||||||
Total
|
$
|
490,927
|
26.6
|
Actual
|
For Capital Adequacy Purposes
|
To Be Well Capitalized Under
Prompt Corrective Action Provisions
|
||||||||||||||||||||||
December 31, 2022
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
Total Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
238,966
|
12.87
|
%
|
$
|
148,567
|
8.00
|
%
|
$
|
185,709
|
10.00
|
%
|
||||||||||||
Bank
|
$
|
222,714
|
12.01
|
%
|
$
|
148,348
|
8.00
|
%
|
$
|
185,435
|
10.00
|
%
|
Tier 1 Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
210,250
|
11.32
|
%
|
$
|
111,425
|
6.00
|
%
|
$
|
148,567
|
8.00
|
%
|
||||||||||||
Bank
|
$
|
203,998
|
11.00
|
%
|
$
|
111,261
|
6.00
|
%
|
$
|
148,348
|
8.00
|
%
|
Common Equity Tier 1 Capital (to Risk Weighted Assets):
|
||||||||||||||||||||||||
Company
|
$
|
202,750
|
10.92
|
%
|
$
|
83,569
|
4.50
|
%
|
$
|
120,711
|
6.50
|
%
|
||||||||||||
Bank
|
$
|
203,998
|
11.00
|
%
|
$
|
83,446
|
4.50
|
%
|
$
|
120,533
|
6.50
|
%
|
Tier 1 Capital (to Average Assets):
|
||||||||||||||||||||||||
Company
|
$
|
210,250
|
9.03
|
%
|
$
|
93,161
|
4.00
|
%
|
$
|
116,451
|
5.00
|
%
|
||||||||||||
Bank
|
$
|
203,998
|
8.77
|
%
|
$
|
93,075
|
4.00
|
%
|
$
|
116,344
|
5.00
|
%
|
September 30, 2023
|
December 31, 2022
|
|||||||
Commitments to extend credit
|
$
|
505,950
|
$
|
437,449
|
||||
Standby letters of credit
|
19,011
|
15,972
|
||||||
$
|
524,961
|
$
|
453,421
|
|||||
Allowance for Credit Losses - Off-Balance Sheet credit Exposure
|
$
|
1,265
|
$
|
165
|
Change In
|
% Change In
|
|||||||||||
Prospective One-Year
|
Prospective
|
Prospective
|
||||||||||
Changes in Rates
|
Net Interest Income
|
Net Interest Income
|
Net Interest Income
|
|||||||||
-400 Shock
|
$
|
93,737
|
$
|
5,834
|
6.64
|
|||||||
-300 Shock
|
91,035
|
3,132
|
3.56
|
|||||||||
-200 Shock
|
90,235
|
2,332
|
2.65
|
|||||||||
-100 Shock
|
89,458
|
1,555
|
1.77
|
|||||||||
Base
|
87,903
|
-
|
-
|
|||||||||
+100 Shock
|
85,903
|
(2,000
|
)
|
(2.28
|
)
|
|||||||
+200 Shock
|
83,456
|
(4,447
|
)
|
(5.06
|
)
|
|||||||
+300 Shock
|
81,507
|
(6,396
|
)
|
(7.28
|
)
|
|||||||
+400 Shock
|
79,545
|
(8,358
|
)
|
(9.51
|
)
|
Item 2 –
|
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
|
Period
|
Total Number of Shares
(or units Purchased)
|
Average Price Paid
per Share (or Unit)
|
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans of Programs
|
Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under the
Plans or Programs (1)
|
||||||||||||
7/1/23 to 7/31/23
|
-
|
$
|
0.00
|
-
|
116,389
|
|||||||||||
8/1/23 to 8/31/23
|
2,772
|
$
|
86.67
|
-
|
116,389
|
|||||||||||
9/1/23 to 9/30/23
|
-
|
$
|
0.00
|
-
|
116,389
|
|||||||||||
Total
|
2,772
|
$
|
86.67
|
-
|
116,389
|
(1) |
On April 21, 2020, the Company announced that the Board of Directors authorized the Company to repurchase up to an additional 150,000 shares at an aggregate purchase price not to exceed $12.0 million over a
period of 36 months. The repurchases will be conducted through open-market purchases or privately negotiated transactions and will be made from time to time depending on market conditions and other factors. No time limit was placed on
the duration of the share repurchase program. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes.
|
(a)
|
The following documents are filed as a part of this report:
|
Restated Articles of Incorporation of Citizens Financial Services, Inc. (1)
|
|
Articles of Amendment of Restated Articles of Incorporation of Citizens Financial Services, Inc. (2)
|
|
Bylaws of Citizens Financial Services, Inc. (3)
|
|
Amendment No. 1 to Amended and Restated Bylaws of Citizens Financial Services, Inc. (4)
|
|
Form of Common Stock Certificate. (5)
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
|
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
|
|
101
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2023, formatted in XBRL (Extensible Business Reporting Language): (i) The Consolidated Balance Sheet
(unaudited), (ii) the Consolidated Statement of Income (unaudited), (iii) the Consolidated Statement of Comprehensive Income (unaudited), (iv) the Consolidated Statement of Changes in Stockholders’ Equity, (v) the Consolidated Statement
of Cash Flows (unaudited) and (vi) related notes (unaudited).
|
104
|
Cover Page Interactive Data File (embedded within the Inline XBRL document)
|
Citizens Financial Services, Inc.
|
|
(Registrant)
|
November 8, 2023
|
/s/ Randall E. Black
|
|
By:
|
Randall E. Black | |
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
November 8, 2023
|
/s/ Stephen J. Guillaume
|
|
By:
|
Stephen J. Guillaume | |
Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
Date: November 8, 2023 | By: |
/s/ Randall E. Black |
By:
|
Randall E. Black | |
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
Date: November 8, 2023
|
By:
|
/s/ Stephen J. Guillaume |
By:
|
Stephen J. Guillaume | |
Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
|
1. |
The Report fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and
|
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered in the Report.
|
By:
|
/s/ Randall E. Black
|
|
By:
|
Randall E. Black |
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date: November 8, 2023
|
|
By:
|
/s/ Stephen J. Guillaume
|
|
By:
|
Stephen J. Guillaume |
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
Date: November 8, 2023
|
|