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What changed in CB Financial Services, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CB Financial Services, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+212 added−230 removedSource: 10-K (2025-03-19) vs 10-K (2024-03-13)

Top changes in CB Financial Services, Inc.'s 2024 10-K

212 paragraphs added · 230 removed · 183 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

60 edited+4 added−5 removed194 unchanged
Biggest changeWe believe that we have a competitive advantage in the markets we serve because of our knowledge of the local marketplace and our long-standing history of providing superior, relationship-based customer service. We will continue to grow and create value for our stockholders. Our employees will be treated fairly and given opportunities for personal growth.
Biggest changeBusiness Strategy We intend to operate as a well-capitalized and profitable community bank dedicated to providing exceptional personal service to our customers. We believe that we have a competitive advantage in the markets we serve because of our knowledge of the local marketplace and our long-standing history of providing superior, relationship-based customer service.
Our FDIC-insured deposit market share in the counties we serve, excluding Allegheny County, which is the second most populous county in Pennsylvania, but where the Bank's has limited presence with one branch, was 5.15% out of 31 bank and thrift institutions. Such data does not reflect deposits held by credit unions.
Our FDIC-insured deposit market share in the counties we serve, excluding Allegheny County, which is the second most populous county in Pennsylvania, but where the Bank's has limited presence with one branch, was 5.50% out of 31 bank and thrift institutions. Such data does not reflect deposits held by credit unions.
During the year ended December 31, 2023, we had no debt securities that were deemed to be impaired. We also invest in equity securities, which consist primarily of mutual funds and a portfolio of bank stocks. This portfolio is valued at fair value with changes in market price recognized through noninterest income.
During the year ended December 31, 2024, we had no debt securities that were deemed to be impaired. We also invest in equity securities, which consist primarily of mutual funds and a portfolio of bank stocks. This portfolio is valued at fair value with changes in market price recognized through noninterest income.
We promote the health and wellness of our employees by strongly encouraging work-life balance, offering flexible work schedules, keeping the employee portion of health care premiums to a minimum and sponsoring various wellness programs. Market Area The Company’s southwestern Pennsylvania market area consists of Allegheny, Fayette, Greene, Washington and Westmoreland Counties.
We promote the health and wellness of our employees by strongly encouraging work-life balance, offering flexible work schedules, keeping the employee portion of health care premiums to a minimum and sponsoring various wellness programs. Market Area The Company’s primary market area consists of Allegheny, Fayette, Greene, Washington and Westmoreland Counties in southwestern Pennsylvania.
In assessing 14 an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary. At December 31, 2023, the Bank’s capital exceeded all applicable requirements.
In assessing 14 an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary. At December 31, 2024, the Bank’s capital exceeded all applicable requirements.
For its 2023 and 2022 fiscal year, the Company’s maximum federal income tax rate was 21%. State Taxation. The Bank is subject to the Pennsylvania Bank and Trust Company Shares Tax (“Shares Tax”) rate of 0.95%. The tax is imposed on the Bank’s adjusted equity.
For its 2024 and 2023 fiscal year, the Company’s maximum federal income tax rate was 21%. State Taxation. The Bank is subject to the Pennsylvania Bank and Trust Company Shares Tax (“Shares Tax”) rate of 0.95%. The tax is imposed on the Bank’s adjusted equity.
At December 31, 2023, the Bank met the criteria for being considered “well capitalized.” In addition, the final capital rule adopted in July 2013 revises the prompt corrective action categories to incorporate the revised minimum capital requirements of that rule. Enforcement.
At December 31, 2024, the Bank met the criteria for being considered “well capitalized.” In addition, the final capital rule adopted in July 2013 revises the prompt corrective action categories to incorporate the revised minimum capital requirements of that rule. Enforcement.
Our commercial real estate loans generally have adjustable interest rates with terms of up to 15 years and amortization periods up to 25 years. The adjustable rate loans are typically fixed for the first five years and adjust every five years thereafter.
Our commercial real estate loans generally have adjustable interest rates with terms of up to 15 years and amortization periods up to 30 years. The adjustable rate loans are typically fixed for the first five years and adjust every five years thereafter.
The Bank also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million. At December 31, 2023, we did not have any outstanding balances under any of these borrowing relationships.
The Bank also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million. At December 31, 2024, we did not have any outstanding balances under any of these borrowing relationships.
The Bank operates 10 offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania and three offices in Marshall and Ohio Counties in West Virginia. The Bank also has a loan production office in Allegheny County, a loan production office and a corporate center in Washington County and an operations center in Greene County, Pennsylvania.
The Bank operates nine offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania and three offices in Marshall and Ohio Counties in West Virginia. The Bank also has a loan production office in Allegheny County, a loan production office and a corporate center in Washington County and an operations center in Greene County, Pennsylvania.
As of December 31, 2023, the Bank was in compliance with this requirement. The Bank also is able to borrow from the FHLB of Pittsburgh, which provides an additional source of liquidity for the Bank. Federal Reserve System.
As of December 31, 2024, the Bank was in compliance with this requirement. The Bank also is able to borrow from the FHLB of Pittsburgh, which provides an additional source of liquidity for the Bank. Federal Reserve System.
Bureau of Labor Statistics (Second Quarter 2023) The market area has been impacted by the energy industry through the extraction of untapped natural gas reserves in the Marcellus Shale and Utica Shale Formation. The Utica Shale formation lies beneath most of Ohio, West Virginia, Pennsylvania and New York, as well as Kentucky, Maryland, Tennessee, Virginia and a part of Canada.
Bureau of Labor Statistics (Second Quarter 2024) The market area has been impacted by the energy industry through the extraction of untapped natural gas reserves in the Marcellus Shale and Utica Shale Formations. The Utica Shale formation lies beneath most of Ohio, West Virginia, Pennsylvania and New York, as well as Kentucky, Maryland, Tennessee, Virginia and a part of Canada.
At December 31, 2023, we held available-for-sale municipal bonds with a fair value of $3.4 million compared to $13.3 million at December 31, 2022. 100% of our municipal bonds are issued by local municipalities or school districts located in Pennsylvania. Municipal bonds may be general obligation of the issuer or secured by specific revenues.
At December 31, 2024, we held available-for-sale municipal bonds with a fair value of $3.3 million compared to $3.4 million at December 31, 2023. 100% of our municipal bonds are issued by local municipalities or school districts located in Pennsylvania. Municipal bonds may be general obligation of the issuer or secured by specific revenues.
The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a capital conservation buffer consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.
The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a capital conservation buffer consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. Loans-to-One Borrower.
Our home equity loans and lines of credit are generally secured by the borrower’s principal residence. The maximum amount of a home equity loan or line of credit is generally 85% of the appraised value of a borrower’s real estate collateral less the amount of any prior mortgages or related liabilities.
Our home equity loans and lines of credit are generally secured by a junior lien on the borrower’s principal residence. The maximum amount of a home equity loan or line of credit is generally 85% of the appraised value of a borrower’s real estate collateral less the amount of any prior mortgages or related liabilities.
The first $36.1 million of otherwise reservable balances (subject to adjustments by the Federal Reserve Board) are exempted from the reserve requirements. The Bank complies with the foregoing requirements. However, effective March 26, 2020, the FRB reduced reserve requirement ratios on all net transaction accounts to 0%, eliminating reserve requirements for all depository institutions, in response to the COVID-19 pandemic.
The first $37.8 million of otherwise reservable balances (subject to adjustments by the Federal Reserve Board) are exempted from the reserve requirements. The Bank complies with the foregoing requirements. However, effective March 26, 2020, the FRB reduced reserve requirement ratios on all net transaction accounts to 0%, eliminating reserve requirements for all depository institutions, in response to the COVID-19 pandemic.
At December 31, 2023, $111.3 million, or 10.0% of our total loan portfolio, consisted of commercial and industrial loans. 9 Commercial and industrial loans generally have terms of maturity from five to seven years with adjustable interest rates tied to the prime rate, SOFR or the weekly average of the FHLB of Pittsburgh three- to ten-year fixed rates.
At December 31, 2024, $112.0 million, or 10.3% of our total loan portfolio, consisted of commercial and industrial loans. 9 Commercial and industrial loans generally have terms of maturity from five to seven years with adjustable interest rates tied to the prime rate, SOFR or the weekly average of the FHLB of Pittsburgh three- to ten-year fixed rates.
The success of our business is highly dependent on our employees, who provide value to our clients and communities through their dedication to helping clients achieve the American dream of home ownership and financial security. Demographics. As of December 31, 2023, we employed 159 full-time and 3 part-time employees in Pennsylvania and West Virginia.
The success of our business is highly dependent on our employees, who provide value to our clients and communities through their dedication to helping clients achieve the American dream of home ownership and financial security. Demographics. As of December 31, 2024, we employed 159 full-time and 2 part-time employees in Pennsylvania and West Virginia.
Census Bureau (State - July 2023; County - July 2022) (2) Based on the latest data published by the U.S. Bureau of Labor Statistics (December 2023) (3) Based on the latest data published by the U.S.
Census Bureau (State - July 2024; County - July 2023) (2) Based on the latest data published by the U.S. Bureau of Labor Statistics (December 2024) (3) Based on the latest data published by the U.S.
The Company and Exchange Underwriters are subject to the Pennsylvania Corporate Net Income Tax, otherwise known as “CNI tax.” The CNI tax rate in 2023 was 8.99% and in 2022 was 9.99%. The tax is imposed on income or loss from the federal income tax return on a separate-company basis for the Company and Exchange Underwriters.
The Company and Exchange Underwriters are subject to the Pennsylvania Corporate Net Income Tax, otherwise known as “CNI tax.” The CNI tax rate in 2024 was 8.49% and in 2023 was 8.99%. The tax is imposed on income or loss from the federal income tax return on a separate-company basis for the Company and Exchange Underwriters.
Short-term borrowings may also consist of federal funds purchased. At December 31, 2023, the Bank maintained a Borrower-In-Custody of Collateral line of credit agreement with the FRB for $103.8 million that requires monthly certification of collateral, is subject to annual renewal, incurs no service charge and is secured by commercial and consumer indirect auto loans.
Short-term borrowings may also consist of federal funds purchased. At December 31, 2024, the Bank maintained a Borrower-In-Custody of Collateral line of credit agreement with the FRB for $84.0 million that requires monthly certification of collateral, is subject to annual renewal, incurs no service charge and is secured by commercial and consumer indirect auto loans.
Our deposit sources are primarily concentrated in the communities surrounding our branch offices. As of June 30, 2023, our FDIC-insured deposit market share in the counties we serve was 0.60% out of 48 bank and thrift institutions.
Our deposit sources are primarily concentrated in the communities surrounding our branch offices. As of June 30, 2024, our FDIC-insured deposit market share in the counties we serve was 0.65% out of 48 bank and thrift institutions.
Our one- to four-family residential mortgage loans are generally conforming loans, underwritten according to secondary market guidelines. We generally originate mortgage loans in amounts up to the maximum conforming loan limits established by the Federal Housing Finance Agency, which, for 2023, is typically $726,200 for single-family homes, except in certain high-cost areas in the United States.
Our one- to four-family residential mortgage loans are generally conforming loans, underwritten according to secondary market guidelines. We generally originate mortgage loans in amounts up to the maximum conforming loan limits established by the Federal Housing Finance Agency, which, for 2024, is typically $766,500 for single-family homes, except in certain high-cost areas in the United States.
The origination of fixed-rate mortgage loans versus adjustable-rate mortgage loans is monitored on an ongoing basis and is affected significantly by the level of market interest rates, customer preference, our interest rate risk position and our competitors’ loan products. Adjustable-rate mortgage loans secured by one- to four-family residential real estate totaled $56.1 million at December 31, 2023.
The origination of fixed-rate mortgage loans versus adjustable-rate mortgage loans is monitored on an ongoing basis and is affected significantly by the level of market interest rates, customer preference, our interest rate risk position and our competitors’ loan products. Adjustable-rate mortgage loans secured by one- to four-family residential real estate totaled $54.7 million at December 31, 2024.
We may originate loans to consumers with a credit score below 660. This may be defined as subprime loans, however there are typically mitigating circumstances that according to FDIC guidance and our opinion would not designate such loans as “subprime.” Home Equity Loans. At December 31, 2023, home equity loans totaled $57.5 million.
We may originate loans to consumers with a credit score below 660. This may be defined as subprime loans, however there are typically mitigating circumstances that according to FDIC guidance and our opinion would not designate such loans as “subprime.” Home Equity Loans. At December 31, 2024, home equity loans totaled $71.3 million.
One of our primary lending activities is the origination of fixed-rate, one- to four-family, owner-occupied, residential mortgage loans with terms up to 30 years secured by property located in our market area. At December 31, 2023, one- to four-family mortgage loans totaled $278.2 million.
One of our primary lending activities is the origination of fixed-rate, one- to four-family, owner-occupied, residential mortgage loans with terms up to 30 years secured by property located in our market area. At December 31, 2024, one- to four-family mortgage loans totaled $267.6 million.
None of these employees are represented by a collective bargaining agreement. During 2023, we hired 49 employees and our voluntary turnover rate was 19%. Diversity and Inclusion. We strive toward having a powerful and diverse team of employees, knowing we are better together with our combined wisdom and intellect.
None of these employees are represented by a collective bargaining agreement. During 2024, we hired 27 employees and our voluntary turnover rate was 13%. Diversity and Inclusion. We strive toward having a powerful and diverse team of employees, knowing we are better together with our combined wisdom and intellect.
The regulations generally provide that reserves be maintained against aggregate transaction accounts as follows for 2024: a 3% reserve ratio is assessed on net transaction accounts up to and including $644.0 million; a 10% reserve ratio is applied above $644.0 million.
The regulations generally provide that reserves be maintained against aggregate transaction accounts as follows for 2025: a 3% reserve ratio is assessed on net transaction accounts up to and including $645.8 million; a 10% reserve ratio is applied above $645.8 million.
These securities, which consist of MBS’s issued by Ginnie Mae, Fannie Mae and Freddie Mac, had an amortized cost of $178.0 million and $143.3 million at December 31, 2023 and 2022, respectively, and a fair value of $159.7 million and $121.1 million at December 31, 2023 and 2022, respectively. At December 31, 2023, all MBS’s had fixed rates of interest.
These securities, which consist of MBS’s issued by Ginnie Mae, Fannie Mae and Freddie Mac, had an amortized cost of $164.7 million and $178.0 million at December 31, 2024 and 2023, respectively, and a fair value of $145.3 million and $159.7 million at December 31, 2024 and 2023, respectively. At December 31, 2024, all MBS’s had fixed rates of interest.
Fixed-rate one- to four-family residential mortgage loans with terms of 15 years or more are originated for resale to the secondary market. During the year ended December 31, 2023, we originated $2.4 million of fixed-rate residential mortgage loans, respectively, which were subsequently sold in the secondary mortgage market.
Fixed-rate one- to four-family residential mortgage loans with terms of 15 years or more are originated for resale to the secondary market. During the year ended December 31, 2024, we originated $5.8 million of fixed-rate residential mortgage loans which were subsequently sold in the secondary mortgage market.
U.S. Government Agency Securities. At December 31, 2023, we held U.S. Government and agency securities with a fair value of $3.9 million compared to $44.6 million at December 31, 2022. At December 31, 2023, these securities had an average expected life of 8.0 years.
U.S. Government Agency Securities. At December 31, 2024, we held U.S. Government and agency securities with a fair value of $3.9 million compared to $3.9 million at December 31, 2023. At December 31, 2024, these securities had an average expected life of 7.0 years.
At December 31, 2023, the principal balance and unamortized debt issuance costs for the 2031 Note were $15.0 million and $322,000, respectively. Subsidiary Activities Community Bank is the only subsidiary of the Company. The Bank wholly-owns Exchange Underwriters, Inc., a former full-service, independent insurance agency.
At December 31, 2024, the principal balance and unamortized debt issuance costs for the 2031 Note were $15.0 million and $282,000, respectively. Subsidiary Activities Community Bank is the only subsidiary of the Company. The Bank's sole and wholly-owned subsidiary is Exchange Underwriters, Inc., a former full-service, independent insurance agency.
Home equity loans in a junior lien position totaled $4.8 million at December 31, 2023 and entail greater risks than one- to four-family residential mortgage loans or home equity loans secured by first lien mortgages.
Home equity loans in a junior lien position totaled $17.9 million at December 31, 2024 and entail greater risks than one- to four-family residential mortgage loans or home equity loans secured by first lien mortgages.
Our principal lending activity has been the origination in our local market area of residential one- to four-family, commercial real estate, construction, commercial and industrial, and consumer loans. At December 31, 2023, our total loans receivable, which excludes the allowance for credit losses, increased $60.5 million, or 5.8%, to $1.11 billion compared to $1.05 billion at December 31, 2022.
Our principal lending activity has been the origination in our local market area of residential one- to four-family, commercial real estate, construction, commercial and industrial, and consumer loans. At December 31, 2024, our total loans receivable, which excludes the allowance for credit losses, decreased $17.8 million, or 1.6%, to $1.09 billion compared to $1.11 billion at December 31, 2023.
We will be closely involved in improving our communities. Our business strategies emphasize building on core strengths and are discussed below. • Create a sales and service culture to build full relationships with our customers and utilize technology investments to enhance speed of process to improve our customer experience.
Our business strategies emphasize building on core strengths and are discussed below. • Create a sales and service culture to build full relationships with our customers and utilize technology investments to enhance speed of process to improve our customer experience.
We generate loans through our marketing efforts, existing customers and 7 referrals, real estate brokers, builders and local businesses. At December 31, 2023, $347.8 million, or 31.3%, of our total loan portfolio was invested in residential loans. One- to Four-Family Mortgage Loans .
We generate loans through our marketing efforts, existing customers and 7 referrals, real estate brokers, builders and local businesses. At December 31, 2024, $338.0 million, or 30.9%, of our total loan portfolio was invested in residential loans. One- to Four-Family Mortgage Loans .
We originate consumer loans that primarily consist of indirect auto loans and, to a lesser extent, secured and unsecured loans and lines of credit. As of December 31, 2023, consumer loans totaled $111.6 million, or 10.1%, of our total loan portfolio, of which $103.9 million were indirect auto loans. Consumer loans are generally offered on a fixed-rate basis.
We originate consumer loans that primarily consist of indirect auto loans and, to a lesser extent, secured and unsecured loans and lines of credit. As of December 31, 2024, consumer loans totaled $70.5 million, or 6.5%, of our total loan portfolio, of which $62.5 million were indirect auto loans. Consumer loans are generally offered on a fixed-rate basis.
We originate commercial real estate loans that are secured primarily by improved properties, such as retail facilities, office buildings and other non-residential buildings as well as multifamily properties. At December 31, 2023, $467.2 million, or 42.1% of our total loan portfolio, consisted of commercial real estate loans.
We originate commercial real estate loans that are secured primarily by improved properties, such as retail facilities, office buildings and other non-residential buildings as well as multifamily properties. At December 31, 2024, $485.5 million, or 44.4% of our total loan portfolio, consisted of commercial real estate loans.
We originate construction loans to individuals to finance the construction of residential dwellings and also originate loans for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses. At December 31, 2023, $43.1 million, or 3.9% of our total loan portfolio, consisted of construction loans.
We originate construction loans to individuals to finance the construction of residential dwellings and also originate loans for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses. At December 31, 2024, $54.7 million, or 5.0% of our total loan portfolio, consisted of construction loans.
In addition, the Federal Deposit Insurance Act provides that an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement. Community Reinvestment Act and Fair Lending Laws.
Dividends may not reduce surplus without the prior consent of the Pennsylvania Department of Banking and Securities. In addition, the Federal Deposit Insurance Act provides that an insured depository institution may not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement. Community Reinvestment Act and Fair Lending Laws.
We 11 also invest in a limited amount of special revenue municipal bonds, which are used to fund projects that will eventually create revenue directly, such as a toll road or lease payments for a new building. Mortgage-Backed Securities.
We 11 also invest in a limited amount of special revenue municipal bonds, which are used to fund projects that will eventually create revenue directly, such as a toll road or lease payments for a new building. Mortgage-Backed Securities. We invest in MBS and CMO securities insured or guaranteed by the United States government or government-sponsored enterprises.
At December 31, 2023, the Company, on a consolidated basis, had total assets of $1.46 billion, total liabilities of $1.32 billion and stockholders’ equity of $139.8 million.
At December 31, 2024, the Company, on a consolidated basis, had total assets of $1.48 billion, total liabilities of $1.33 billion and stockholders’ equity of $147.4 million.
The variety of deposit accounts offered allows the Company to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience, the Company believes that its deposits are relatively stable.
The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit accounts offered allows the Company to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience, the Company believes that its deposits are relatively stable.
We invest in collateralized loan obligation (“CLO”) securities issued by specialized financial institutions or investment banks. These floating-rate securities are backed by pools of high-quality commercial and industrial and commercial real estate loans, typically first-lien bank loans to corporations. Our CLO portfolio had an amortized cost of $29.9 million and a fair value of $29.8 million at December 31, 2023.
We invest in CLO securities issued by specialized financial institutions or investment banks. These floating-rate securities are backed by pools of high-quality commercial and industrial and commercial real estate loans, typically first-lien bank loans to corporations.
The Pennsylvania Banking Code states, in part, that dividends may be declared and paid only out of accumulated net earnings and may not be declared or paid unless surplus is at least equal to capital. Dividends may not reduce surplus without the prior consent of the Pennsylvania Department of Banking and Securities.
As of December 31, 2024, the Bank was in compliance with the loans-to-one borrower limitations. Capital Distributions. The Pennsylvania Banking Code states, in part, that dividends may be declared and paid only out of accumulated net earnings and may not be declared or paid unless surplus is at least equal to capital.
While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. Deposits. Deposits are generated primarily from residents within the Company’s market area. The Company offers a variety of deposit accounts.
In addition, funds are derived from scheduled loan payments, investment maturities, loan prepayments, loan sales, retained earnings and income on earning assets. While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. Deposits.
As an alternative to pledging securities, the facility is also used for standby letters of credit to collateralize public deposits in excess of the level insured by the FDIC. Commitments for standby letters of credit to secure public deposits were $18.9 million and $26.2 million as of December 31, 2023 and 2022.
At December 31, 2024, we had $20.0 million FHLB advances outstanding. As an alternative to pledging securities, the facility is also used for standby letters of credit to collateralize public deposits in excess of the level insured by the FDIC.
An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate. As of December 31, 2023, the Bank was in compliance with the loans-to-one borrower limitations. Capital Distributions.
Generally, a Pennsylvania-chartered commercial bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of capital. An additional amount may be loaned, equal to 10% of unimpaired capital and surplus, if the loan is secured by readily marketable collateral, which generally does not include real estate.
The Company also uses borrowings, primarily FHLB of Pittsburgh advances, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and manage the cost of funds. In addition, funds are derived from scheduled loan payments, investment maturities, loan prepayments, loan sales, retained earnings and income on earning assets.
Deposits have traditionally been the Company’s primary source of funds for use in lending and investment activities. The Company also uses borrowings, primarily FHLB of Pittsburgh advances, to supplement cash flow needs, lengthen the maturities of liabilities for interest rate risk purposes and manage the cost of funds.
Our market area extends into West Virginia with three offices in Marshall and Ohio Counties. 6 The following table sets forth certain economic statistics for our market area.
Our primary market area extends into Marshall and Ohio counties in West Virginia. 6 While the majority of activities occur in this primary market, the Bank extends lending and depository services throughout Pennsylvania, West Virginia, Ohio, New York and beyond. The following table sets forth certain economic statistics for our primary market area.
As a member, we are required to own capital stock in the FHLB and are authorized to apply for advances on the security of such stock and certain of our home mortgages, provided certain standards related to creditworthiness have been met. We typically secure advances from the FHLB with one- to four-family residential mortgage and commercial real estate loans.
The FHLB functions as a central reserve bank providing credit for us and other member savings associations and financial institutions. As a member, we are required to own capital stock in the FHLB and are authorized to apply for advances on the security of such stock and certain mortgages, provided certain standards related to creditworthiness have been met.
The Bank held no CLO's as of December 31, 2022. Corporate Debt. At December 31, 2023, we held corporate debt securities with a fair value of $7.7 million. We invest in corporate debt issued by financial institutions which have fixed to floating-rate terms.
Our CLO portfolio had an amortized cost of $98.7 million and $29.9 million at December 31, 2024 and 2023, respectively, and a fair value of $98.8 million and $29.8 million at December 31, 2024 and 2023, respectively. Corporate Debt. We invest in corporate debt issued by financial institutions which have fixed to floating-rate terms.
The Bank is a member of the Federal Home Loan Bank (“FHLB”) System. Its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”). The principal executive office is located at 100 North Market Street, Carmichaels, Pennsylvania, and the telephone number at that address is (724) 966-5041. The website address is https://www.cb.bank .
The principal executive office is located at 100 North Market Street, Carmichaels, Pennsylvania, and the telephone number at that address is (724) 966-5041. The website address is https://www.cb.bank . Information on this website is not and should not be considered to be a part of this Report.
Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate. Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis.
Deposits are generated primarily from residents within the Company’s market area. The Company offers a variety of deposit accounts. Deposit account terms vary, with the principal differences being the minimum balance required, the amount of time the funds must remain on deposit and the interest rate.
The Bank was originally chartered in 1901 as The First National Bank of Carmichaels. In 1987, the Bank changed its name to Community Bank, National Association. In December 2006, the Bank completed a charter conversion from a national bank to a Pennsylvania-chartered commercial bank wholly-owned by the Company.
In December 2006, the Bank completed a charter conversion from a national bank to a Pennsylvania-chartered commercial bank wholly-owned by the Company. The Bank is a member of the Federal Home Loan Bank (“FHLB”) System. Its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”).
Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals. The flow of deposits is influenced significantly by general economic conditions, changes in money market and other prevailing interest rates and competition.
Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Deposit rates and terms are based primarily on current operating strategies and market rates, liquidity requirements, rates paid by competitors and growth goals.
Advances are made pursuant to several different programs. Each credit program has its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based either on a fixed percentage of a member institution’s stockholders’ equity or on the FHLB’s assessment of the institution’s creditworthiness.
Depending on the program, limitations on the amount of advances are based either on a fixed percentage of a member institution’s stockholders’ equity or on the FHLB’s assessment of the institution’s creditworthiness. At December 31, 2024, we had a maximum borrowing capacity with the FHLB of up to $489.5 million and available borrowing capacity of $467.6 million.
Population (1) Unemployment Rate (%) (2) Average Annual Wage (3) Pennsylvania 12,961,683 2.9 $ 66,404 Allegheny 1,233,253 2.8 72,540 Fayette 125,755 4.0 48,620 Greene 34,663 3.0 64,324 Washington 210,383 2.9 63,388 Westmoreland 352,057 3.0 53,456 West Virginia 1,770,071 4.0 55,900 Marshall 29,752 5.1 65,156 Ohio 41,447 3.9 53,508 (1) Based on the latest data published by the U.S.
Population (1) Unemployment Rate (%) (2) Average Annual Wage (3) Pennsylvania 13,078,751 3.3 $ 68,900 Allegheny 1,224,825 3.2 75,036 Fayette 123,915 4.8 50,648 Greene 34,357 3.6 64,324 Washington 210,232 3.4 66,508 Westmoreland 351,163 3.4 54,860 West Virginia 1,769,979 3.6 58,604 Marshall 29,405 4.1 65,000 Ohio 41,194 3.0 56,472 (1) Based on the latest data published by the U.S.
The sale of assets was completed on December 8, 2023 and resulted in a pre-tax gain of $24.6 million. Assets remaining in the EU subsidiary at December 31, 2023 consisted primarily of cash received from the sale of assets. The EU subsidiary will be dissolved with the remaining assets and liabilities being transferred to the Bank during 2024.
The sale of assets was completed on December 8, 2023 and resulted in an initial pre-tax gain of $24.6 million. During 2024, the Company recognized an additional gain of $138,000 following the final settlement of all liabilities and an earn-out payment of $708,000.
We perform a credit analysis to verify the creditworthiness of the financial institution prior to purchase. Sources of Funds General. Deposits have traditionally been the Company’s primary source of funds for use in lending and investment activities.
We perform a credit analysis to verify the creditworthiness of the financial institution prior to purchase. At December 31, 2024, we held corporate debt securities with a fair value of $8.1 million, compared to $7.7 million at December 31, 2023. Sources of Funds General.
Removed
Information on this website is not and should not be considered to be a part of this Report. Business Strategy We intend to operate as a well-capitalized and profitable community bank dedicated to providing exceptional personal service to our customers.
Added
Assets remaining in the EU subsidiary at December 31, 2024 consisted primarily of cash received from the sale of assets. The Bank intends to merge EU into the Bank during 2025. The Bank was originally chartered in 1901 as The First National Bank of Carmichaels. In 1987, the Bank changed its name to Community Bank, National Association.
Removed
We invest in mortgage-backed (“MBS”) and collateralized mortgage obligation (“CMO”) securities insured or guaranteed by the United States government or government-sponsored enterprises.
Added
We will continue to grow and create value for our stockholders. Our employees will be treated fairly and given opportunities for personal growth. We will be closely involved in improving our communities.
Removed
The FHLB functions as a central reserve bank providing credit for us and other member savings associations and financial institutions.
Added
We typically secure advances from the FHLB with one- to four-family residential mortgage and commercial real estate loans. Advances are made pursuant to several different programs. Each credit program has its own interest rate and range of maturities.
Removed
At December 31, 2023, we had a maximum borrowing capacity with the FHLB of up to $478.9 million and available borrowing capacity of $438.3 million. At December 31, 2023, we had $20.0 million FHLB advances outstanding.
Added
There were no standby letters of credit issued on our behalf by the FHLB to secure public deposits as of December 31, 2024 and $18.9 million as of December 31, 2023.
Removed
The capital conservation buffer requirement was phased in at 0.625% per year beginning January 1, 2016 and ended January 1, 2019, when the full 2.5% capital conservation buffer requirement became effective. Loans-to-One Borrower. Generally, a Pennsylvania-chartered commercial bank may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of capital.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurther, the Company may be required to expend additional capital resources on professional advisors, which could increase operational expenses and therefore negatively impact our net income. ITEM 1B UNRESOLVED STAFF COMMENTS Not applicable 23 ITEM 1C CYBERSECURITY Our risk management program is designed to identify, assess and mitigate risks across our company.
Biggest changeCompliance with increased or new standards and regulations applicable to our Company may entail management spending increased time addressing such standards and regulations. Further, the Company may be required to expend additional capital resources on professional advisors, which could increase operational expenses and therefore negatively impact our net income.
The Company’s profitability will depend upon its continued ability to compete successfully in its market areas. 22 General Risk Factors A worsening of economic conditions could adversely affect the Company’s financial condition and results of operations.
The Company’s profitability will depend upon its continued ability to compete successfully in its market areas. General Risk Factors A worsening of economic conditions could adversely affect the Company’s financial condition and results of operations.
At December 31, 2023, we had $9.7 million of goodwill on our Consolidated Statements of Financial Condition after incurring goodwill impairment of $18.7 million in 2020. Any further impairment to goodwill could have a material adverse impact on the Company’s consolidated financial conditions and results of operations. 100% of the goodwill is assigned to the Community Banking reporting unit.
At December 31, 2024, we had $9.7 million of goodwill on our Consolidated Statements of Financial Condition after incurring goodwill impairment of $18.7 million in 2020. Any further impairment to goodwill could have a material adverse impact on the Company’s consolidated financial conditions and results of operations. 100% of the goodwill is assigned to the Community Banking reporting unit.
Events and conditions that could result in impairment in the value of our goodwill include worsening business conditions and economic factors, particularly those that may result from the impact of a downturn in the economy as a result of COVID-19, changes in the industries in which we operate, adverse changes in the regulatory environment, or other factors leading to reduction in expected long-term profitability and cash flows. 20 Risk Related to Our Liquidity Position If we are unable to borrow funds, we may not be able to meet the cash flow requirements of our depositors, creditors, and borrowers, or the operating cash needed to fund corporate expansion and other corporate activities.
Events and conditions that could result in impairment in the value of our goodwill include worsening business conditions and economic factors, changes in the industries in which we operate, adverse changes in the regulatory environment, or other factors leading to reduction in expected long-term profitability and cash flows. 20 Risk Related to Our Liquidity Position If we are unable to borrow funds, we may not be able to meet the cash flow requirements of our depositors, creditors, and borrowers, or the operating cash needed to fund corporate expansion and other corporate activities.
Because the Company emphasizes commercial real estate and commercial loan originations, its credit risk may increase, and continued downturns in the local real estate market or economy could adversely affect its earnings. Commercial real estate and commercial loans generally have more inherent risk than the residential real estate loans.
Because the Company emphasizes commercial real estate and commercial loan originations, its credit risk profile is increased, and continued downturns in the local real estate market or economy could adversely affect its earnings. Commercial real estate and commercial loans generally have more inherent risk than the residential real estate loans.
Economic conditions and heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have increased the Company’s level of risk. Accordingly, the Company could suffer losses if it fails to properly anticipate and manage these risks.
Economic conditions and heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have increased the Company’s level of risk. Accordingly, the Company could suffer losses if it fails to properly anticipate and manage these risks. We could be adversely affected by failure in our internal controls.
This includes, but is not limited to, efforts to penetrate, disrupt or misuse our systems or information. Our information security program is designed to comply with industry standards, such as the National Institute of Technology Cybersecurity Framework. We successfully leverage several associations, industry groups, audits and enhanced monitoring to promote the effectiveness of our program.
Our information security program is designed to comply with industry standards, such as the National Institute of Technology Cybersecurity Framework. We successfully leverage several associations, industry groups, audits and enhanced monitoring to promote the effectiveness of our program.
Given the increasing risk involving cybersecurity and the Bank’s evolving needs and reliance on technology, our strategy involves the addition of a Chief Information Security Officer. The Chief Information Security Officer will be primarily responsible for the cybersecurity component of our risk program.
Our Chief Technology Officer, in conjunction with the Chief Operating Officer, is currently responsible for managing our information security program. Given the increasing risk involving cybersecurity and the Bank’s evolving needs and reliance on technology, our strategy involves the addition of a Chief Information Security Officer.
Risks Related to Competitive Matters Strong competition within the Company’s market area could adversely affect the Company’s earnings and slow growth. The Company faces intense competition both in making loans and attracting deposits. Price competition for loans and deposits might result in the Company earning less on its loans and paying more on its deposits, which reduces net interest income.
The Company faces intense competition both in making loans and attracting deposits. Price competition for loans and deposits might result in the Company earning less on its loans and paying more on its deposits, which reduces net interest income.
These responsibilities include performing and maintaining a cyber risk assessment, defense operations, incident response, vulnerability assessment, threat intelligence, access levels, third party risk and vendor management and business continuity planning. This key role will be developed as we expand our overall risk management program. Our objectives for managing cybersecurity risk is to greatly minimize the impacts of external threats.
The Chief Information Security Officer will be primarily responsible for the cybersecurity component of our risk program. These responsibilities include performing and maintaining a cyber risk assessment, defense operations, incident response, vulnerability assessment, threat intelligence, access levels, third party risk and vendor management and business continuity planning.
We could be adversely affected by failure in our internal controls. A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that customers, regulators and investors may have of us.
A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that customers, regulators and investors may have of us. We devote a significant amount of effort, time and resources to continually strengthening our controls and ensuring compliance with complex accounting standards and banking regulations.
Generally, for assets that are reported at fair value, the Company uses quoted market prices or valuation models that utilize observable market inputs to estimate fair value. Because the Company carries these assets on its books at their estimated fair value, it may incur losses even if the asset in question presents minimal credit risk.
Generally, for assets that are reported at fair value, the Company uses quoted market prices or valuation models that utilize observable market inputs to estimate fair value.
Removed
We devote a significant amount of effort, time and resources to continually strengthening our controls and ensuring compliance with complex accounting standards and banking regulations. Compliance with increased or new standards and regulations applicable to our Company may entail management spending increased time addressing such standards and regulations.
Added
Because the Company carries these assets on its books at their estimated fair value, it may incur losses even if the asset in question presents minimal credit risk. 22 Risks Related to Competitive Matters Strong competition within the Company’s market area could adversely affect the Company’s earnings and slow growth.
Removed
When considering financial, operational, regulatory, reputational and legal risk, our program is well matched for our size and complexity. Our Chief Technology Officer, in conjunction with the Chief Operating Officer, is currently responsible for managing our information security program.
Added
ITEM 1B UNRESOLVED STAFF COMMENTS Not applicable 23 ITEM 1C CYBERSECURITY Our risk management program is designed to identify, assess and mitigate risks across our company. When considering financial, operational, regulatory, reputational and legal risk, our program is well matched for our size and complexity.
Added
This key role will be developed as we expand our overall risk management program. Our objectives for managing cybersecurity risk is to greatly minimize the impacts of external threats. This includes, but is not limited to, efforts to penetrate, disrupt or misuse our systems or information.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOperations Center (Greene County): 600 Evergreene Drive, Waynesburg, PA 15370 Owned Branch Offices (Greene County): 30 West Greene Street, Waynesburg, PA 15370 Owned 100 Miller Lane, Waynesburg, PA 15370 Building Owned, Ground Lease 1993 South Eighty Eight Road, Greensboro, PA 15338 Owned Branch Offices (Washington County): 65 West Chestnut Street, Washington, PA 15301 Building Owned, Ground Lease 4139 Washington Road, McMurray, PA 15317 Leased 200 Main Street, Claysville, PA 15232 Owned Branch Offices (Fayette County): 545 West Main Street, Uniontown, PA 15401 Building Owned, Ground Lease Branch Office (Westmoreland County): 1670 Broad Avenue, Belle Vernon, PA 15012 Owned Branch Office (Allegheny County): 714 Brookline Boulevard, Pittsburgh, PA 15226 Owned Northern Loan Production Office: 100 Pinewood Lane, Suite 101, Warrendale, PA 15086 Leased Southpointe Loan Production Office: 325 Southpointe Boulevard, Canonsburg, PA 15317 Leased WEST VIRGINIA Branch Offices (Ohio County): 1701 Warwood Avenue, Wheeling, WV 26003 Owned 875 National Road, Wheeling, WV 26003 Owned Branch Office (Marshall County): 809 Lafayette Avenue, Moundsville, WV 26041 Owned
Biggest changeOperations Center (Greene County): 600 Evergreene Drive, Waynesburg, PA 15370 Operations Owned Branch Offices (Greene County): 30 West Greene Street, Waynesburg, PA 15370 Branch Owned 100 Miller Lane, Waynesburg, PA 15370 Branch Building Owned, Ground Lease 1993 South Eighty Eight Road, Greensboro, PA 15338 ITM Owned Branch Offices (Washington County): 65 West Chestnut Street, Washington, PA 15301 Branch Building Owned, Ground Lease 4139 Washington Road, McMurray, PA 15317 Branch Leased 200 Main Street, Claysville, PA 15232 Branch Owned Branch Offices (Fayette County): 712 West Main Street, Uniontown, PA 15401 Branch Leased 101 Independence Street, Perryopolis, PA 15473 ITM Owned Branch Office (Westmoreland County): 1670 Broad Avenue, Belle Vernon, PA 15012 Branch Leased Branch Office (Allegheny County): 714 Brookline Boulevard, Pittsburgh, PA 15226 Branch Owned Northern Loan Production Office: 100 Pinewood Lane, Suite 101, Warrendale, PA 15086 Loans Leased Southpointe Loan Production Office: 325 Southpointe Boulevard, Canonsburg, PA 15317 Loans Leased WEST VIRGINIA Branch Offices (Ohio County): 1701 Warwood Avenue, Wheeling, WV 26003 Branch Owned 875 National Road, Wheeling, WV 26003 Branch Owned Branch Office (Marshall County): 809 Lafayette Avenue, Moundsville, WV 26041 Branch Owned
Corporate Center (Washington County): 2111 North Franklin Drive, Washington, PA 15301 Owned Ralph J. Sommers, Jr.
Corporate Center (Washington County): 2111 North Franklin Drive, Washington, PA 15301 Corporate Owned Ralph J. Sommers, Jr.
We believe that our office facilities are adequate to meet our present and immediately foreseeable needs. The following table sets forth certain information concerning the main and each branch office at December 31, 2023. Location Owned or Leased PENNSYLVANIA Main Office (Greene County): 100 North Market Street, Carmichaels, PA 15320 Owned Barron P. "Pat" McCune, Jr.
We believe that our office facilities are adequate to meet our present and immediately foreseeable needs. The following table sets forth certain information concerning the main and each branch office at December 31, 2024. Location Owned or Leased PENNSYLVANIA Main Office (Greene County): 100 North Market Street, Carmichaels, PA 15320 Branch Owned Barron P. "Pat" McCune, Jr.
ITEM 2. PROPERTIES At December 31, 2023, our premises and equipment had an aggregate net book value of approximately $19.7 million. We conduct our business through 13 branch offices. The branch offices are utilized by the community banking segment. In addition, the community banking segment has a corporate office, an operations center and two loan production offices.
ITEM 2. PROPERTIES At December 31, 2024, our premises and equipment had an aggregate net book value of approximately $20.7 million. We conduct our business through 12 branch offices. The branch offices are utilized by the community banking segment. In addition, the community banking segment has a corporate office, an operations center and two loan production offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS At December 31, 2023, we were not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business which, in the aggregate, involve amounts that management believes are immaterial to our financial condition, results of operations and cash flows. ITEM 4. MINE SAFETY DISCLOSURES None. 25 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS At December 31, 2024, we were not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business which, in the aggregate, involve amounts that management believes are immaterial to our financial condition, results of operations and cash flows. ITEM 4. MINE SAFETY DISCLOSURES None. 25 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. Mine Safety Disclosures. 25 PART II ITEM 5. Market for Registrant’s Common Equity, Related Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 ITEM 6. [Reserved] 26 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 51
Biggest changeITEM 4. Mine Safety Disclosures. 25 PART II ITEM 5. Market for Registrant’s Common Equity, Related Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 ITEM 6. [Reserved] 26 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk 50

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 2015 Plan shall remain in effect as long as any awards are outstanding, but as a result of the approval of the 2021 Equity Incentive Plan, no more awards can be granted under the 2015 Plan.
Biggest changeThe 2015 and 2021 Plans shall remain in effect as long as any awards are outstanding, but as a result of the approval of the 2024 Equity Incentive Plan, no more awards can be granted under the 2015 and 2021 Plans. (2) Represents shares available under the 2024 Plan (the "Share Limit") that can be issued.
Certain shares of Company common stock are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. Equity Compensation Plans The following table provides information at December 31, 2023, for compensation plans under which equity securities may be issued.
Certain shares of Company common stock are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. Equity Compensation Plans The following table provides information at December 31, 2024, for compensation plans under which equity securities may be issued.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the NASDAQ Global Market under the symbol “CBFV.” The approximate number of holders of record of the Company’s common stock as of March 6, 2024, was 606.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on the NASDAQ Global Market under the symbol “CBFV.” The approximate number of holders of record of the Company’s common stock as of March 12, 2025, was 584.
Plan Category Number of securities to be issued upon exercise of outstanding options warrants and rights Weighted-average exercise price of outstanding options warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (A) (B) (C) Equity compensation plans: Approved by stockholders 337,444 (1) $ 24.11 (1) 161,464 (2) Not approved by stockholders — — — Total 337,444 $ 24.11 161,464 (1) Represents stock options available to be exercised from Treasury Stock under the 2015 Equity Incentive Plan (the "2015 Plan") and stock options granted under the 2021 Equity Incentive Plan (the "2021 Plan") that can be issued from a reserve upon exercise.
Plan Category Number of securities to be issued upon exercise of outstanding options warrants and rights Weighted-average exercise price of outstanding options warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (A) (B) (C) Equity compensation plans: Approved by stockholders 377,088 (1) $ 23.65 (1) 287,500 (2) Not approved by stockholders — — — Total 377,088 $ 23.65 287,500 (1) Represents stock options available to be exercised from Treasury Stock under the 2015 Equity Incentive Plan (the "2015 Plan") and stock options granted under the 2021 Equity Incentive Plan (the "2021 Plan") that can be issued from a reserve upon exercise.
At December 31, 2023, 183,440 stock options, and 67,990 restricted shares have been granted under the 2021 Plan. Issuer Purchases of Equity Securities The Company did not repurchase any of its equity securities during the three months ended December 31, 2023.
At December 31, 2024, there have been no restricted shares granted under the 2024 Plan. Issuer Purchases of Equity Securities The Company made the following purchases of its common stock during the three months ended December 31, 2024.
Removed
(2) Represents 161,464 shares available under the 2021 Plan (the "Share Limit") that can be issued of which a maximum of 161,464 shares may be issued as stock options or 64,586 shares may be issued as restricted stock awards or units based on the terms of the Plan whereby the Share Limit is reduced, on a one-for-one basis, for each share of common stock subject to a stock option grant, and on a two and one-half-for-one basis for each share of common stock issued pursuant to restricted stock awards or units.
Added
Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of the Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (2) October 1-31, 2024 1,092 $ 28.41 1,092 $ 6,980,522 November 1-30, 2024 5,547 28.78 5,547 6,821,989 December 1-31, 2024 5,531 28.84 5,531 6,663,913 Total 12,170 $ 28.77 12,170 (1) On July 22, 2024, the Company announced that the Board had approved a program commencing on July 25, 2024 to repurchase up to 5%, or 257,095 shares, of the Company's then outstanding common stock.
Added
This repurchase program is set to expire on July 25, 2025. In connection with the program, the Company has purchased a total of 23,928 shares of the Company's common stock at an average price of $27.47 per share. (2) Based on the closing price of the Company's common stock on December 31, 2024, which was $28.58.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2023 2022 2021 (Dollars in Thousands) Selected Financial Condition Data: Assets $ 1,456,091 $ 1,408,938 $ 1,425,479 Cash and Due From Banks 68,223 103,700 119,674 Securities 207,095 190,058 224,974 Loans, Net 1,100,689 1,037,054 1,009,214 Deposits 1,267,159 1,268,503 1,226,613 Short-Term Borrowings — 8,060 39,266 Other Borrowed Funds 34,678 14,638 17,601 Stockholders’ Equity 139,834 110,155 133,124 Year Ended December 31, 2023 2022 2021 (Dollars in Thousands) Selected Operating Data: Interest and Dividend Income $ 62,225 $ 47,716 $ 43,557 Interest Expense 17,672 4,781 3,405 Net Interest and Dividend Income 44,553 42,935 40,152 (Recovery) Provision for Credit Losses - Loans (284) 3,784 (1,125) Recovery for Credit Losses - Unfunded Commitments (218) — — Net Interest and Dividend Income After (Recovery) Provision for Credit Losses 45,055 39,151 41,277 Noninterest Income 24,012 9,820 16,280 Noninterest Expense 38,782 34,891 42,862 Income Before Income Tax Expense 30,285 14,080 14,695 Income Tax Expense 7,735 2,833 3,125 Net Income $ 22,550 $ 11,247 $ 11,570 27 At or For the Year Ended December 31, 2023 2022 2021 Per Common Share Data: Earnings Per Common Share - Basic $ 4.41 $ 2.19 $ 2.15 Earnings Per Common Share - Diluted 4.40 2.18 2.15 Dividends Per Common Share 1.00 0.96 0.96 Dividend Payout Ratio (1) 22.73 % 44.04 % 44.65 % Book Value Per Common Share $ 27.31 $ 21.60 $ 25.31 Common Shares Outstanding 5,119,543 5,100,189 5,260,672 At or For the Year Ended December 31, 2023 2022 2021 Selected Financial Ratios: Return on Average Assets 1.60 % 0.80 % 0.79 % Return on Average Equity 19.42 9.56 8.66 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 141.85 148.00 145.44 Average Equity to Average Assets 8.25 8.36 9.12 Net Interest Rate Spread (2) 2.73 3.07 2.81 Net Interest Rate Spread (Non-GAAP) (2)(4) 2.74 3.08 2.82 Net Interest Margin (3) 3.28 3.24 2.92 Net Interest Margin (Non-GAAP) (3)(4) 3.29 3.25 2.94 Net (Recoveries) Charge-offs to Average Loans (0.05) 0.25 0.01 Noninterest Expense to Average Assets 2.76 2.48 2.93 Efficiency Ratio (5) 56.56 66.14 75.95 Asset Quality Ratios: Allowance for Credit Losses to Total Loans 0.87 % 1.22 % 1.13 % Allowance for Credit Losses to Nonperforming Loans 433.35 221.06 159.40 Allowance for Credit Losses to Nonaccrual Loans 433.35 320.64 233.37 Delinquent and Nonaccrual Loans to Total Loans 0.62 0.81 0.78 Nonperforming Loans to Total Loans 0.20 0.55 0.71 Nonperforming Loans to Total Assets 0.15 0.41 0.51 Nonperforming Assets to Total Assets 0.16 0.41 0.51 Capital Ratios: Common Equity Tier 1 Capital to Risk-Weighted Assets (6) 13.64 % 12.33 % 11.95 % Tier 1 Capital to Risk-Weighted Assets (6) 13.64 12.33 11.95 Total Capital to Risk-Weighted Assets (6) 14.61 13.58 13.18 Tier 1 Leverage Capital to Adjusted Total Assets (6) 10.19 8.66 7.76 Other: Number of Branch Offices 13 13 14 Number of Full-Time Equivalent Employees 161 197 200 (1) Represents dividends per share divided by net income per share.
Biggest changeDecember 31, 2024 2023 2022 (Dollars in Thousands) Selected Financial Condition Data: Assets $ 1,481,564 $ 1,456,091 $ 1,408,938 Cash and Due From Banks 49,572 68,223 103,700 Securities 262,153 207,095 190,058 Loans, Net 1,082,821 1,100,689 1,037,054 Deposits 1,283,517 1,267,159 1,268,503 Short-Term Borrowings — — 8,060 Other Borrowed Funds 34,718 34,678 14,638 Stockholders’ Equity 147,378 139,834 110,155 Year Ended December 31, 2024 2023 2022 (Dollars in Thousands) Selected Operating Data: Interest and Dividend Income $ 76,131 $ 62,225 $ 47,716 Interest Expense 30,063 17,672 4,781 Net Interest and Dividend Income 46,068 44,553 42,935 Provision (Recovery) for Credit Losses - Loans 379 (284) 3,784 Provision (Recovery) for Credit Losses - Unfunded Commitments 191 (218) — Net Interest and Dividend Income After Net Provision (Recovery) for Credit Losses 45,498 45,055 39,151 Noninterest Income 5,494 24,012 9,820 Noninterest Expense 35,649 38,782 34,891 Income Before Income Tax Expense 15,343 30,285 14,080 Income Tax Expense 2,749 7,735 2,833 Net Income $ 12,594 $ 22,550 $ 11,247 27 At or For the Year Ended December 31, 2024 2023 2022 Per Common Share Data: Earnings Per Common Share - Basic $ 2.45 $ 4.41 $ 2.19 Earnings Per Common Share - Diluted 2.38 4.40 2.18 Dividends Per Common Share 1.00 1.00 0.96 Dividend Payout Ratio (1) 42.02 % 22.73 % 44.04 % Book Value Per Common Share $ 28.71 $ 27.32 $ 21.60 Common Shares Outstanding 5,132,654 5,118,713 5,100,189 At or For the Year Ended December 31, 2024 2023 2022 Selected Financial Ratios: Return on Average Assets 0.84 % 1.60 % 0.80 % Return on Average Equity 8.77 19.42 9.56 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 134.78 141.85 148.00 Average Equity to Average Assets 9.56 8.25 8.36 Net Interest Rate Spread (2) 2.47 2.73 3.07 Net Interest Rate Spread (Non-GAAP) (2)(4) 2.48 2.74 3.08 Net Interest Margin (3) 3.19 3.28 3.24 Net Interest Margin (Non-GAAP) (3)(4) 3.20 3.29 3.25 Net Charge-offs (Recoveries) to Average Loans 0.03 (0.05) 0.25 Noninterest Expense to Average Assets 2.37 2.76 2.48 Efficiency Ratio (5) 69.14 56.56 66.14 Asset Quality Ratios: Allowance for Credit Losses to Total Loans 0.90 % 0.87 % 1.22 % Allowance for Credit Losses to Nonperforming Loans 548.07 433.35 221.06 Allowance for Credit Losses to Nonaccrual Loans 548.07 433.35 320.64 Delinquent and Nonaccrual Loans to Total Loans 0.72 0.62 0.81 Nonperforming Loans to Total Loans 0.16 0.20 0.55 Nonperforming Loans to Total Assets 0.12 0.15 0.41 Nonperforming Assets to Total Assets 0.12 0.16 0.41 Capital Ratios: Common Equity Tier 1 Capital to Risk-Weighted Assets (6) 14.78 % 13.64 % 12.33 % Tier 1 Capital to Risk-Weighted Assets (6) 14.78 13.64 12.33 Total Capital to Risk-Weighted Assets (6) 15.79 14.61 13.58 Tier 1 Leverage Capital to Adjusted Total Assets (6) 9.98 10.19 8.66 Other: Number of Branch Offices 12 13 13 Number of Full-Time Equivalent Employees 160 161 197 (1) Represents dividends per share divided by net income per share.
Management will continue to periodically review the entire loan portfolio to determine the extent, if any, to which further additional credit loss provisions may be deemed necessary. 46 Analysis of the Allowance for Credit Losses. The following table summarizes changes in the allowance for credit losses by loan categories for each year indicated.
Management will continue to periodically review the entire loan portfolio to determine the extent, if any, to which further additional credit loss provisions may be deemed necessary. Analysis of the Allowance for Credit Losses. The following table summarizes changes in the allowance for credit losses by loan categories for each year indicated.
The weighting is judgmental and is based on the perceived level of appropriateness of the valuation methodology. Estimating the fair value involves the use of estimates and significant judgments that are based on a number of factors including actual operating results.
The weighting is judgmental and is based on the perceived level of appropriateness of the valuation methodology. Estimating the fair value involves the use of estimates and significant judgments that are based on a number of factors including 31 actual operating results.
At December 31, 2023 and December 31, 2022, we had no loans that were not classified as nonaccrual or 90 days past due where known information about possible credit problems of borrowers caused management to have serious concerns as to the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure as nonaccrual or 90 days past due.
At December 31, 2024 and December 31, 2023, we had no loans that were not classified as nonaccrual or 90 days past due where known information about possible credit problems of borrowers caused management to have serious concerns as to the ability of the borrowers to comply with present loan repayment terms and that may result in disclosure as nonaccrual or 90 days past due.
On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss methodology. The Company adopted ASU 2016-13 using a modified retrospective approach.
On January 1, 2023, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss methodology. The Company adopted ASU 2016-13 using a modified retrospective approach.
Where Non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein. Refer to the "Reconciliations of Non-GAAP Financial Measures to GAAP" within this Item 7 for further information. Comparison of Financial Condition at December 31, 2023 and 2022 Assets.
Where Non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein. Refer to the "Reconciliations of Non-GAAP Financial Measures to GAAP" within this Item 7 for further information. Comparison of Financial Condition at December 31, 2024 and 2023 Assets.
The Company operates two reporting units – Community Banking segment and Insurance Brokerage Services segment. The Company has assigned 100% of the goodwill to the Community Banking reporting unit. Determining the fair value of a reporting unit under the goodwill impairment test is judgmental and often involves the use of significant estimates and assumptions.
The Company operates two segments – Community Banking segment and Insurance Brokerage Services segment. The Company has assigned 100% of the goodwill to the Community Banking segment. Determining the fair value of a reporting unit under the goodwill impairment test is judgmental and often involves the use of significant estimates and assumptions.
The composition and maturities of the debt securities portfolio at December 31, 2023, are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur.
The composition and maturities of the debt securities portfolio at December 31, 2024, are summarized in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur.
The following table summarizes the scheduled repayments of our loan portfolio at December 31, 2023. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.
The following table summarizes the scheduled repayments of our loan portfolio at December 31, 2024. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less.
The information at December 31, 2023 and 2022, and for the years ended December 31, 2023 and 2022 is derived in part from, and should be read together with, the Company's audited consolidated financial statements and notes included in this Report and should be read together therewith.
The information at December 31, 2024 and 2023, and for the years ended December 31, 2024 and 2023 is derived in part from, and should be read together with, the Company's audited consolidated financial statements and notes included in this Report and should be read together therewith.
The following table sets forth the composition of our securities portfolio at the dates indicated. 2023 2022 December 31, Amortized Cost Fair Value Amortized Cost Fair Value (Dollars in Thousands) Available-for-Sale Debt Securities: U.S.
The following table sets forth the composition of our securities portfolio at the dates indicated. 2024 2023 December 31, Amortized Cost Fair Value Amortized Cost Fair Value (Dollars in Thousands) Available-for-Sale Debt Securities: U.S.
Such obligations include operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities and agreements with respect to investments. The following tables present certain of our contractual obligations at December 31, 2023.
Such obligations include operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities and agreements with respect to investments. The following tables present certain of our contractual obligations at December 31, 2024.
The information at December 31, 2021 and for the year ended December 31, 2021 is derived in part from audited financial statements that are not included in this Report.
The information at December 31, 2022 and for the year ended December 31, 2022 is derived in part from audited financial statements that are not included in this Report.
Selected Financial Data The following tables set forth selected historical financial and other data of the Company at and for the years ended December 31, 2023, 2022 and 2021.
Selected Financial Data The following tables set forth selected historical financial and other data of the Company at and for the years ended December 31, 2024, 2023 and 2022.
On December 1, 2023, the Company announced that the Bank and EU entered into an Asset Purchase Agreement with World pursuant to which EU sold substantially all of its assets to World for a purchase price of $30.5 million cash plus possible additional earn-out payments.
On December 1, 2023, the Company announced that the Bank and EU entered into an Asset Purchase Agreement with World pursuant to which EU sold substantially all of its assets to World for a purchase price of $30.5 million cash plus possible additional earn-out payments. The sale of assets was completed on December 8, 2023.
(5) Net interest margin represents net interest income divided by average total interest-earning assets. Net interest margin (GAAP) was 3.28% and 3.24% for the year ended December 31, 2023 and 2022, respectively. 42 Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
(5) Net interest margin represents net interest income divided by average total interest-earning assets. Net interest margin (GAAP) was 3.19% and 3.28% for the year ended December 31, 2024 and 2023, respectively. 42 Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
The Company is a separate legal entity from the Bank and must provide for its own liquidity to pay dividends to stockholders, to pay principal and interest on its subordinated debt and for other corporate purposes. At December 31, 2023, the Company (on an unconsolidated basis) had liquid assets of $16.0 million.
The Company is a separate legal entity from the Bank and must provide for its own liquidity to pay dividends to stockholders, to pay principal and interest on its subordinated debt and for other corporate purposes. At December 31, 2024, the Company (on an unconsolidated basis) had liquid assets of $16.2 million.
(3) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. Net interest rate spread (GAAP) was 2.73% and 3.07% for the year ended December 31, 2023 and 2022, respectively. (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(3) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. Net interest rate spread (GAAP) was 2.47% and 2.73% for the year ended December 31, 2024 and 2023, respectively. (4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
This arrangement is subject to annual renewal, incurs no service charge, and is secured by a blanket security agreement on $677.2 million of residential and commercial mortgage loans and the Bank’s investment in FHLB stock.
This arrangement is subject to annual renewal, incurs no service charge, and is secured by a blanket security agreement on $695.5 million of residential and commercial mortgage loans and the Bank’s investment in FHLB stock.
The Company designates an asset as “special mention” if the asset has a potential weakness that warrants management’s close attention. The Company uses an eight-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first four categories are not considered criticized and are aggregated as “pass” rated.
The Company designates an asset as “special mention” if the asset has a potential weakness that warrants management’s close attention. The Company uses an nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are not considered criticized and are aggregated as one to four “pass” and five "pass-watch" rated.
The Bank also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million as of December 31, 2023. At December 31, 2023, the Bank had funding commitments totaling $146.1 million, consisting primarily of commitments to originate loans, unused lines of credit and letters of credit.
The Bank also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million as of December 31, 2024. At December 31, 2024, the Bank had funding commitments totaling $167.6 million, consisting primarily of commitments to originate loans, unused lines of credit and letters of credit.
The estimates are based on the same methodologies and assumptions used for the Bank's regulatory reporting requirements. Of the amount at December 31, 2023, an estimated $23.2 million are uninsured time deposits and the following table sets forth their maturity.
The estimates are based on the same methodologies and assumptions used for the Bank's regulatory reporting requirements. Of the amount at December 31, 2024, an estimated $40.8 million are uninsured time deposits and the following table sets forth their maturity.
Net recoveries for the year ended December 31, 2023 were $557,000 primarily due to recoveries totaling $750,000 related to the prior year $2.7 million charged-off commercial and industrial loan. Net charge-offs for the year ended December 31, 2022 were $2.5 million. Noninterest Income .
Net charge-offs for the year ended December 31, 2024 were $281,000 while net recoveries for the year ended December 31, 2023 were $557,000 primarily due to recoveries totaling $750,000 related to the prior year $2.7 million charged-off commercial and industrial loan. 39 Noninterest Income .
The Bank believes that it had sufficient liquidity at December 31, 2023, to satisfy its short- and long-term liquidity needs at that date. The Bank’s most liquid assets are cash and due from banks, which totaled $68.2 million at December 31, 2023. Unpledged securities, which provide an additional source of liquidity, totaled $49.8 million.
The Bank believes that it had sufficient liquidity at December 31, 2024, to satisfy its short- and long-term liquidity needs at that date. The Bank’s most liquid assets are cash and due from banks, which totaled $49.6 million at December 31, 2024. Unpledged securities, which provide an additional source of liquidity, totaled $86.0 million.
The Bank can attract and retain deposits by adjusting the interest rates offered. The Bank’s primary investing activities are the origination of loans. For the year ended December 31, 2023 the Bank had net loan originations of $63.5 million.
The Bank can attract and retain deposits by adjusting the interest rates offered. The Bank’s primary investing activities are the origination of loans. For the year ended December 31, 2024 the Bank had net loan originations of $17.6 million.
Accrued interest receivable on loans is reported as a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $4.1 million at December 31, 2023 and is excluded from the estimate of credit losses.
Accrued interest receivable on loans is reported as a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $3.9 million at December 31, 2024 and is excluded from the estimate of credit losses.
The Bank also maintains a Borrower-In-Custody of Collateral line of credit agreement with the FRB for $103.8 million that requires monthly certification of collateral, is subject to annual renewal, incurs no service charge and is secured by $142.9 million of commercial and consumer indirect auto loans.
The Bank also maintains a Borrower-In-Custody of Collateral line of credit agreement with the FRB for $84.0 million that requires monthly certification of collateral, is subject to annual renewal, incurs no service charge and is secured by $108.3 million of commercial and consumer indirect auto loans.
At December 31, 2023, certificates of deposit due within one year of that date totaled $136.0 million, or 59.0% of total certificates of deposit. While liquidity levels at December 31, 2023 are currently sufficient, if these certificates of deposit do not remain with the Bank, the Bank may be required to seek other sources of funds.
At December 31, 2024, certificates of deposit due within one year of that date totaled $271.8 million, or 91.6% of total certificates of deposit. While liquidity levels at December 31, 2024 are currently sufficient, if these certificates of deposit do not remain with the Bank, the Bank may be required to seek other sources of funds.
Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 Overview. 2023 Annual Results were impacted by the following significant items: • On December 1, 2023, the Company announced that the Bank and EU entered into an Asset Purchase Agreement with World Insurance Associates, LLC ("World") pursuant to which EU sold substantially all of its assets to World for a purchase price of $30.5 million cash plus possible additional earn-out payments.
Refer to “Explanation of Use of Non-GAAP Financial Measures” at the end of this section. 38 Comparison of Operating Results for the Years Ended December 31, 2024 and 2023 Overview. 2024 and 2023 Annual Results were impacted by the following significant items: • On December 1, 2023, the Company announced that the Bank and EU entered into an Asset Purchase Agreement with World Insurance Associates, LLC ("World") pursuant to which EU sold substantially all of its assets to World for a purchase price of $30.5 million cash plus possible additional earn-out payments.
While average interest bearing deposits at other banks decreased $9.1 million, primarily related to changes in deposits and loans, there was a 292 bps increase in average yield due to an increase in Fed interest rates.
Average interest bearing deposits at other banks increased $34.8 million, primarily related to changes in deposits and loans, and there was a 1 bps increase in average yield due to an increase in Fed interest rates.
The allocation of the allowance by category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category. 2023 2022 December 31, Amount Percent of Total Loans Amount Percent of Total Loans (Dollars in Thousands) Real Estate: Residential $ 3,129 31.3 % $ 2,074 31.5 % Commercial 2,630 42.1 5,810 41.6 Construction 639 3.9 502 4.3 Commercial and Industrial 1,693 10.0 2,313 6.7 Consumer 1,367 10.1 1,517 14.0 Other 249 2.6 — 1.9 Total Allocated Allowance 9,707 100.0 12,216 100.0 Unallocated — — 603 — Total Allowance for Credit Losses $ 9,707 100.0 % $ 12,819 100.0 % Reconciliations of Non-GAAP Financial Measures to GAAP Reconciliations of Non-GAAP financial measures discussed in this Report to the most directly comparable GAAP financial measures are included in the following tables. 48 Interest income on interest-earning assets, net interest rate spread and net interest margin are presented on a fully tax-equivalent (“FTE”) basis.
The allocation of the allowance by category is not necessarily indicative of future losses and does not restrict the use of the allowance to absorb losses in any category. 2024 2023 December 31, Amount Percent of Total Loans Amount Percent of Total Loans (Dollars in Thousands) Real Estate: Residential $ 2,926 30.9 % $ 3,129 31.3 % Commercial 3,103 44.4 2,630 42.1 Construction 1,264 5.0 639 3.9 Commercial and Industrial 1,584 10.3 1,693 10.0 Consumer 687 6.5 1,367 10.1 Other 241 2.9 249 2.6 Total Allocated Allowance 9,805 100.0 9,707 100.0 Unallocated — — — — Total Allowance for Credit Losses $ 9,805 100.0 % $ 9,707 100.0 % Reconciliations of Non-GAAP Financial Measures to GAAP Reconciliations of Non-GAAP financial measures discussed in this Report to the most directly comparable GAAP financial measures are included in the following tables. 47 Interest income on interest-earning assets, net interest rate spread and net interest margin are presented on a fully tax-equivalent (“FTE”) basis.
Year Ended December 31, 2023 2022 Real Estate: Residential 0.05 % (0.03) % Commercial (0.01) — Construction — — Commercial and Industrial (0.89) 3.90 Consumer 0.14 0.04 Other — — Total Loans (0.05) % 0.25 % Allocation of Allowance for Credit Losses.
Year Ended December 31, 2024 2023 Real Estate: Residential — % 0.05 % Commercial 0.03 (0.01) Construction — — Commercial and Industrial (0.15) (0.89) Consumer 0.35 0.14 Other — — Total Loans 0.03 % (0.05) % Allocation of Allowance for Credit Losses.
The Company attempts to maximize observable inputs and limit the use of unobservable inputs when developing fair value measurements, Fair value measurements for assets where there exists limited or no observable market data and that are based primarily upon the Company’s or other third-party’s estimates, are often calculated based on the characteristics of the asset, the 31 economic and competitive environment and other such factors.
The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. 30 The Company attempts to maximize observable inputs and limit the use of unobservable inputs when developing fair value measurements, Fair value measurements for assets where there exists limited or no observable market data and that are based primarily upon the Company’s or other third-party’s estimates, are often calculated based on the characteristics of the asset, the economic and competitive environment and other such factors.
The Bank sold $69.3 million in market value of its lower-yielding U.S government agency, mortgage-backed and municipal securities with an average yield of 1.89% and purchased $69.3 million of higher-yielding mortgage-backed and collateralized mortgage obligation securities with an average yield of 5.49%, resulting in a pre-tax loss of $10.1 million. • Recovery for credit losses totaled $502,000 for 2023 as the Bank experienced net recoveries for the year ended December 31, 2023 of $557,000 primarily due to recoveries totaling $750,000 related to the prior year $2.7 million charged-off commercial and industrial loan.
The Bank sold $69.3 million in market value of its lower-yielding U.S government agency, mortgage-backed and municipal securities with an average yield of 1.89% and purchased $69.3 million of higher-yielding mortgage-backed and collateralized mortgage obligation securities with an average yield of 5.49%, resulting in a pre-tax loss of $10.1 million. • Provision for credit losses totaled $570,000 for 2024 and was primarily due to growth in construction and land development loans, while the Bank recorded a recovery for credit losses of $502,000 for 2023 as the Bank recovered $750,000 related to the prior year $2.7 million charged-off commercial and industrial loan.
Rising market interest rates led to the repricing of interest-bearing demand and money market deposits and a shift in deposits from noninterest-bearing to interest-bearing demand and time deposits which resulted in a 130 bps increase in average cost compared to the year ended December 31, 2022.
Rising market interest rates led to the repricing of interest-bearing demand and money market deposits and a shift in deposits from noninterest-bearing and interest-bearing demand and savings deposits to money market and time deposits resulted in a 97 bps increase in average cost compared to the year ended December 31, 2023., adding $9.9 million to interest expense.
Net Interest Income. Net interest income increased $1.6 million, or 3.8%, to $44.6 million for the year ended December 31, 2023 compared to $42.9 million for the year ended December 31, 2022. Net interest margin (Non-GAAP) increased 4 bps to 3.29% for the year ended December 31, 2023 compared to 3.25% the year ended December 31, 2022.
Net Interest Income. Net interest income increased $1.5 million, or 3.4%, to $46.1 million for the year ended December 31, 2024 compared to $44.6 million for the year ended December 31, 2023. Net interest margin (Non-GAAP) decreased 9 bps to 3.20% for the year ended December 31, 2024 compared to 3.29% the year ended December 31, 2023.
This increase was largely due to a 132 basis point increase in the cost of interest-bearing liabilities to 1.38% for the year ended December 31, 2023 compared to 0.53% for the year ended December 31, 2022, adding an additional $12.3 million to interest expense. • Interest expense on deposits increased $12.4 million, or 308.3%, to $16.4 million for the year ended December 31, 2023 compared to $4.0 million for the year ended December 31, 2022.
This increase was largely due to an 86 basis point increase in the cost of interest-bearing liabilities to 2.24% for the year ended December 31, 2024 compared to 1.38% for the year ended December 31, 2023, adding an additional $9.9 million to interest expense. • Interest expense on deposits increased $12.0 million, or 73.1%, to $28.4 million for the year ended December 31, 2024 compared to $16.4 million for the year ended December 31, 2023.
The following table sets forth the amounts and categories of our nonperforming assets as of December 31, 2023.
The following table sets forth the amounts and categories of our nonperforming assets as of the dates indicated.
The criticized rating categories used by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are below average quality, resulting in an undue credit risk, but not to the point of justifying a substandard classification.
The special mention category includes assets that are currently protected but are below average quality, resulting in an undue credit risk, but not to the point of justifying a substandard classification.
The following table reconciles net interest income, net interest spread and net interest margin on a FTE basis for the periods indicated: Year Ended December 31, 2023 2022 (Dollars in Thousands) Interest Income per Consolidated Statements of Income (GAAP) $ 62,225 $ 47,716 Adjustment to FTE Basis 155 134 Interest Income (Non-GAAP) 62,380 47,850 Interest Expense per Consolidated Statements of Income (GAAP) 17,672 4,781 Net Interest Income (Non-GAAP) $ 44,708 $ 43,069 Net Interest Income (GAAP) $ 44,553 $ 42,935 Divided by : Average Interest-Earning Assets $ 1,358,579 $ 1,324,875 Net Interest Margin (GAAP) 3.28 % 3.24 % Adjustment to FTE Basis 0.01 0.01 Net Interest Margin (Non-GAAP) 3.29 % 3.25 % Net Interest Rate Spread (GAAP) 2.73 % 3.07 % Adjustment to FTE Basis 0.01 0.01 Net Interest Rate Spread (Non-GAAP) 2.74 % 3.08 % Tangible book value per common share is a Non-GAAP measure and is calculated based on tangible common equity divided by period-end common shares outstanding.
The following table reconciles net interest income, net interest spread and net interest margin on a FTE basis for the periods indicated: Year Ended December 31, 2024 2023 (Dollars in Thousands) Interest Income per Consolidated Statements of Income (GAAP) $ 76,131 $ 62,225 Adjustment to FTE Basis 161 155 Interest Income (Non-GAAP) 76,292 62,380 Interest Expense per Consolidated Statements of Income (GAAP) 30,063 17,672 Net Interest Income (Non-GAAP) $ 46,229 $ 44,708 Net Interest Income (GAAP) $ 46,068 $ 44,553 Divided by : Average Interest-Earning Assets $ 1,444,514 $ 1,358,579 Net Interest Margin (GAAP) 3.19 % 3.28 % Adjustment to FTE Basis 0.01 0.01 Net Interest Margin (Non-GAAP) 3.20 % 3.29 % Net Interest Rate Spread (GAAP) 2.47 % 2.73 % Adjustment to FTE Basis 0.01 0.01 Net Interest Rate Spread (Non-GAAP) 2.48 % 2.74 % Tangible book value per common share is a Non-GAAP measure and is calculated based on tangible common equity divided by period-end common shares outstanding.
In addition, the Bank maintains a credit 49 arrangement with the FHLB with a maximum borrowing limit of approximately $478.9 million and available borrowing capacity of $438.3 million as of December 31, 2023. At December 31, 2023, $18.9 million of standby letters of credit were utilized to collateralize public deposits in excess of the level insured by the FDIC.
In addition, the Bank maintains a credit 48 arrangement with the FHLB with a maximum borrowing limit of approximately $489.5 million and available borrowing capacity of $467.6 million as of December 31, 2024. At December 31, 2024, there were no standby letters of credit utilized to collateralize public deposits in excess of the level insured by the FDIC.
A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.
A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur.
For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. The Company did not have a deferred tax asset valuation allowance as of December 31, 2023 and December 31, 2022.
The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. The Company did not have a deferred tax asset valuation allowance as of December 31, 2024 and December 31, 2023.
During the year, the Bank entered into $20.0 million of FHLB advances for a term of 24 months at 4.92%, the proceeds of which were utilized to match fund originations within the Bank’s commercial and industrial loan portfolio. Stockholders’ Equity.
Borrowings for each period consisted of $20.0 million of FHLB advances entered into during 2023 for a term of 24 months at 4.92%, the proceeds of which were utilized to match fund originations within the Bank’s commercial and industrial loan portfolio and $14.7 million related to the Company's unsecured subordinated debt obligation. Stockholders’ Equity.
This increase was largely due to a 98 basis point increase in the yield on interest-earning assets to 4.59% for the year ended December 31, 2023 compared to 3.61% for the year ended December 31, 2022, contributing an additional $12.7 million to interest income. • Interest income on loans increased $12.7 million, or 30.3%, to $54.7 million for the year ended December 31, 2023 compared to $41.9 million for the year ended December 31, 2022.
This increase was largely due to a 69 basis point increase in the yield on interest-earning assets to 5.28% for the year ended December 31, 2024 compared to 4.59% for the year ended December 31, 2023, contributing an additional $11.0 million to interest income. • Interest income on loans increased $4.7 million, or 8.7%, to $59.4 million for the year ended December 31, 2024 compared to $54.7 million for the year ended December 31, 2023.
Income Tax Expense. Income tax expense increased $4.9 million to $7.7 million for the year ended December 31, 2023, compared to $2.8 million for the year ended December 31, 2022 and is primarily attributed to the increase in pre-tax income. 41 Average Balances and Yields.
Income Tax Expense. Income tax expense decreased $5.0 million to $2.7 million for the year ended December 31, 2024, compared to $7.7 million for the year ended December 31, 2023 and is primarily attributed to the decrease in pre-tax income. 41 Average Balances and Yields.
Accrued interest receivable on available of sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $947,000, at December 31, 2023 and is excluded from the estimate of credit losses. Allowance for Loan Losses.
Accrued interest receivable on available of sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $1.7 million, at December 31, 2024 and is excluded from the estimate of credit losses. Fair Value Measurements.
If current conditions change from those expected, it is reasonably possible that the judgments and estimates described above could change in future periods and require management to further evaluate goodwill for impairment.
If current conditions change from those expected, it is reasonably possible that the judgments and estimates described above could change in future periods and require management to further evaluate goodwill for impairment. If the Company determines a triggering event occurs in the future, changes in the judgments, assumptions and inputs noted above could result in additional goodwill impairment. Deferred Taxes.
Such agencies have, in the past, and may in the future require us to classify certain assets which management has not otherwise classified or require a classification more severe than established by management.
Such agencies have, in the past, and may in the future require us to classify certain assets which management has not otherwise classified or require a classification more severe than established by management. The following table shows the principal amount of special mention and classified loans at December 31, 2024 and 2023.
December 31, 2023 2022 (Dollars in Thousands) Less than 0.25% $ 8,009 $ 43,516 0.25% to 0.49% 5,512 10,732 0.50% to 0.99% 5,139 7,721 1.00% to 1.49% 4,316 5,929 1.50% to 1.99% 3,626 4,717 2.00% to 2.49% 6,220 7,379 2.49% to 2.99% 146 12,779 3.00% to 3.99% 604 16,210 4.00% to 4.99% 145,475 143 5.00% or Greater 51,594 — Total Time Deposits $ 230,641 $ 109,126 37 The following table sets forth, by interest rate ranges and scheduled maturity, information concerning our time deposits at the date indicated.
December 31, 2024 2023 (Dollars in Thousands) Less than 0.25% $ 1,493 $ 8,009 0.25% to 0.49% 3,707 5,512 0.50% to 0.99% 2,489 5,139 1.00% to 1.49% 2,932 4,316 1.50% to 1.99% 6,001 3,626 2.00% to 2.49% 9,753 6,220 2.49% to 2.99% 1,056 146 3.00% to 3.99% 16,475 604 4.00% to 4.99% 224,230 145,475 5.00% or Greater 28,733 51,594 Total Time Deposits $ 296,869 $ 230,641 37 The following table sets forth, by interest rate ranges and scheduled maturity, information concerning our time deposits at the date indicated.
The following table sets forth the distribution of our average deposit accounts, by account type, for the years indicated. 2023 2022 Year Ended December 31, Average Balance Percent Weighted Average Rate Average Balance Percent Weighted Average Rate (Dollars in Thousands) Noninterest-Bearing Demand Accounts $ 326,408 26.0 % — % $ 389,553 31.4 % — % Interest-Bearing Demand Accounts 354,060 28.2 1.90 282,850 22.8 0.48 Money Market Accounts 199,962 15.9 2.28 194,223 15.7 0.50 Savings Accounts 220,146 17.5 0.09 248,334 20.0 0.04 Time Deposits 156,310 12.4 3.16 124,817 10.1 1.28 Total Deposits $ 1,256,886 100.0 % 1.31 % $ 1,239,777 100.0 % 0.32 % The following table sets forth time deposits classified by interest rate as of the dates indicated.
The following table sets forth the distribution of our average deposit accounts, by account type, for the years indicated. 2024 2023 Year Ended December 31, Average Balance Percent Weighted Average Rate Average Balance Percent Weighted Average Rate (Dollars in Thousands) Noninterest-Bearing Demand Accounts $ 270,528 20.7 % — % $ 326,408 26.0 % — % Interest-Bearing Demand Accounts 326,073 24.9 2.27 354,060 28.2 1.90 Money Market Accounts 215,864 16.5 3.11 199,962 15.9 2.28 Savings Accounts 180,647 13.8 0.11 220,146 17.5 0.09 Time Deposits 314,510 24.1 4.49 156,310 12.4 3.16 Total Deposits $ 1,307,622 100.0 % 2.17 % $ 1,256,886 100.0 % 1.31 % The following table sets forth time deposits classified by interest rate as of the dates indicated.
Interest expense increased $12.9 million, or 269.6%, to $17.7 million for the year ended December 31, 2023 compared to $4.8 million for the year ended December 31, 2022.
Interest expense increased $12.4 million, or 70.1%, to $30.1 million for the year ended December 31, 2024 compared to $17.7 million for the year ended December 31, 2023.
Average loans increased $57.8 million while the loan yield increased 97 bps to 5.09% for the year ended December 31, 2023 compared to 4.12% for the year ended December 31, 2022. • Interest income on taxable investment securities increased $165,000, or 4.3%, to $4.0 million for the year ended December 31, 2023 compared to $3.9 million for the year ended December 31, 2022.
Average loans decreased $3.3 million while the loan yield increased 46 bps to 5.55% for the year ended December 31, 2024 compared to 5.09% for the year ended December 31, 2023. • Interest income on taxable investment securities increased $7.5 million, or 187.1%, to $11.5 million for the year ended December 31, 2024 compared to $4.0 million for the year ended December 31, 2023.
The change is primarily related to net funding of loans. Securities. Securities increased $17.0 million, or 8.9%, to $207.1 million at December 31, 2023, compared to $190.1 million at December 31, 2022.
The change is primarily related to net funding of loans. Securities. Securities increased $55.1 million, or 26.6%, to $262.2 million at December 31, 2024, compared to $207.1 million at December 31, 2023.
Year Ended December 31, 2023 2022 (Dollars in Thousands) Balance at Beginning of Year $ 12,819 $ 11,582 Impact of ASC 326 - Loans (3,385) — (Recovery) Provision for Loan Losses (284) 3,784 Charge-offs: Real Estate: Residential (219) (32) Commercial and Industrial — (2,712) Consumer (370) (151) Total Charge-offs (589) (2,895) Recoveries: Real estate: Residential 43 145 Commercial 32 — Commercial and Industrial 876 117 Consumer 195 86 Total Recoveries 1,146 348 Net Recoveries (Charge-offs) 557 (2,547) Balance at End of Year $ 9,707 $ 12,819 Allowance for Credit Losses to Total Loans 0.87 % 1.22 % Allowance for Credit Losses to Nonaccrual Loans 433.35 320.64 Allowance for Credit Losses to Nonperforming Loans 433.35 221.06 Net (Recoveries) Charge-offs to Average Loans (0.05) 0.25 The allowance for credit losses decreased $3.1 million, or 24.3%, to $9.7 million at December 31, 2023, compared to $12.8 million at December 31, 2022.
Year Ended December 31, 2024 2023 (Dollars in Thousands) Balance at Beginning of Year $ 9,707 $ 12,819 Impact of ASC 326 - Loans — (3,385) Provision (Recovery) for Loan Losses 379 (284) Charge-offs: Real Estate: Residential (28) (219) Commercial and Industrial (12) — Consumer (485) (370) Total Charge-offs (652) (589) Recoveries: Real estate: Residential 14 43 Commercial — 32 Commercial and Industrial 175 876 Consumer 182 195 Total Recoveries 371 1,146 Net (Charge-offs) Recoveries (281) 557 Balance at End of Year $ 9,805 $ 9,707 Allowance for Credit Losses to Total Loans 0.90 % 0.87 % Allowance for Credit Losses to Nonaccrual Loans 548.07 433.35 Allowance for Credit Losses to Nonperforming Loans 548.07 433.35 Net (Recoveries) Charge-offs to Average Loans 0.03 (0.05) The allowance for credit losses increased $98,000, or 1.0%, to $9.8 million at December 31, 2024, compared to $9.7 million at December 31, 2023.
December 31, 2023 2022 (Dollars in Thousands, Except Share and Per Share Data) Stockholders' Equity (GAAP) (Numerator) $ 139,834 $ 110,155 Goodwill and Other Intangible Assets, Net (10,690) (13,245) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator) $ 129,144 $ 96,910 Common Shares Outstanding (Denominator) 5,119,543 5,100,189 Book Value per Common Share (GAAP) $ 27.31 $ 21.60 Tangible Book Value per Common Share (Non-GAAP) $ 25.23 $ 19.00 Liquidity Liquidity is the ability to meet current and future financial obligations of a short-term nature.
December 31, 2024 2023 (Dollars in Thousands, Except Share and Per Share Data) Stockholders' Equity (GAAP) (Numerator) $ 147,378 $ 139,834 Goodwill and Other Intangible Assets, Net (9,732) (10,690) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator) $ 137,646 $ 129,144 Common Shares Outstanding (Denominator) 5,132,654 5,118,713 Book Value per Common Share (GAAP) $ 28.71 $ 27.32 Tangible Book Value per Common Share (Non-GAAP) $ 26.82 $ 25.23 Liquidity Liquidity is the ability to meet current and future financial obligations of a short-term nature.
Total assets increased $47.2 million, or 3.4%, to $1.46 billion at December 31, 2023, compared to $1.41 billion at December 31, 2022. Cash and Due From Banks. Cash and due from banks decreased $35.5 million, or 34.2%, to $68.2 million at December 31, 2023, compared to $103.7 million at December 31, 2022.
Total assets increased $25.5 million, or 1.8%, to $1.48 billion at December 31, 2024, compared to $1.46 billion at December 31, 2023. Cash and Due From Banks. Cash and due from banks decreased $18.7 million, or 27.3%, to $49.6 million at December 31, 2024, compared to $68.2 million at December 31, 2023.
Payment Due by Period Total Less Than Or Equal to One Year More Than One to Three Years More Than Three to Five Years More Than Five Years (Dollars in Thousands) Certificates of deposit $ 230,641 $ 136,016 $ 86,600 $ 6,135 $ 1,890 Other Borrowed Funds 34,678 — 20,000 — 14,678 Operating Lease Obligations 1,981 355 505 437 684 Total $ 267,300 $ 136,371 $ 107,105 $ 6,572 $ 17,252 Capital Resources At December 31, 2023 and 2022, respectively, the Bank was considered "well capitalized" under the regulatory framework for prompt corrective action. 50 The following table presents the Bank’s regulatory capital amounts and ratios, as well as the minimum amounts and ratios required to be well capitalized at the dates indicated. 2023 2022 December 31, Amount Ratio Amount Ratio (Dollars in Thousands) Common Equity Tier 1 Capital (to Risk-Weighted Assets) Actual $ 143,654 13.64 % $ 121,188 12.33 % For Capital Adequacy Purposes 47,385 4.50 44,221 4.50 To Be Well Capitalized 68,445 6.50 63,875 6.50 Tier I Capital (to Risk-Weighted Assets) Actual 143,654 13.64 121,188 12.33 For Capital Adequacy Purposes 63,180 6.00 58,961 6.00 To Be Well Capitalized 84,240 8.00 78,615 8.00 Total Capital (to Risk-Weighted Assets) Actual 153,861 14.61 133,478 13.58 For Capital Adequacy Purposes 84,240 8.00 78,615 8.00 To Be Well Capitalized 105,300 10.00 98,269 10.00 Tier I Leverage Capital (to Adjusted Total Assets) Actual 143,654 10.19 121,188 8.66 For Capital Adequacy Purposes 56,385 4.00 55,969 4.00 To Be Well Capitalized 70,481 5.00 69,962 5.00 Impact of Inflation and Changing Price The consolidated financial statements and related notes of the Company have been prepared in accordance with GAAP.
Payment Due by Period Total Less Than Or Equal to One Year More Than One to Three Years More Than Three to Five Years More Than Five Years (Dollars in Thousands) Certificates of deposit $ 296,869 $ 271,816 $ 20,130 $ 4,309 $ 614 Other Borrowed Funds 34,718 20,000 — — 14,718 Operating Lease Obligations 3,761 481 809 664 1,807 Total $ 335,348 $ 292,297 $ 20,939 $ 4,973 $ 17,139 Capital Resources At December 31, 2024 and 2023, respectively, the Bank was considered "well capitalized" under the regulatory framework for prompt corrective action. 49 The following table presents the Bank’s regulatory capital amounts and ratios, as well as the minimum amounts and ratios required to be well capitalized at the dates indicated. 2024 2023 December 31, Amount Ratio Amount Ratio (Dollars in Thousands) Common Equity Tier 1 Capital (to Risk-Weighted Assets) Actual $ 152,238 14.78 % $ 143,654 13.64 % For Capital Adequacy Purposes 46,366 4.50 47,385 4.50 To Be Well Capitalized 66,973 6.50 68,445 6.50 Tier I Capital (to Risk-Weighted Assets) Actual 152,238 14.78 143,654 13.64 For Capital Adequacy Purposes 61,821 6.00 63,180 6.00 To Be Well Capitalized 82,428 8.00 84,240 8.00 Total Capital (to Risk-Weighted Assets) Actual 162,733 15.79 153,861 14.61 For Capital Adequacy Purposes 82,428 8.00 84,240 8.00 To Be Well Capitalized 103,035 10.00 105,300 10.00 Tier I Leverage Capital (to Adjusted Total Assets) Actual 152,238 9.98 143,654 10.19 For Capital Adequacy Purposes 60,996 4.00 56,385 4.00 To Be Well Capitalized 76,245 5.00 70,481 5.00 Impact of Inflation and Changing Price The consolidated financial statements and related notes of the Company have been prepared in accordance with GAAP.
Additionally, average interest-bearing deposits increased $80.3 million. 39 • Interest expense on short-term borrowings decreased $31,000, or 49.2%, to $32,000 for the year ended December 31, 2023 compared to $63,000 for the year ended December 31, 2022 primarily due to the transition of sweep accounts into other deposit products. • Interest expense on other borrowed funds increased $514,000, or 74.2%, to $1.2 million for the year ended December 31, 2023 compared to $693,000 for the year ended December 31, 2022 primarily due to an $8.7 million increase in average balances due to $20.0 million of FHLB long-term advances added during the second quarter of 2023.
Additionally, average interest-bearing deposits increased $106.6 million, adding $2.1 million to interest expense. • Interest expense on other borrowed funds increased $415,000, or 34.4%, to $1.6 million for the year ended December 31, 2024 compared to $1.2 million for the year ended December 31, 2023 primarily due to an $8.4 million increase in average balances due to $20.0 million of FHLB long-term advances added during the second quarter of 2023.
Nonperforming assets decreased $3.4 million to $2.4 million at December 31, 2023, compared to $5.8 million at December 31, 2022. Nonperforming loans decreased $3.6 million to $2.2 million at December 31, 2023 compared to $5.8 million at December 31, 2022.
Nonperforming assets decreased $613,000 to $1.8 million at December 31, 2024, compared to $2.4 million at December 31, 2023. Nonperforming loans decreased $451,000 to $1.8 million at December 31, 2024 compared to $2.2 million at December 31, 2023.
The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. 2023 2022 Year Ended December 31, Average Balance Interest and Dividends Yield/ Cost Average Balance Interest and Dividends Yield/ Cost (Dollars in Thousands) Assets: Interest-Earning Assets: Loans, Net (1) $ 1,076,928 $ 54,763 5.09 % $ 1,019,124 $ 42,010 4.12 % Securities Taxable 208,472 4,017 1.93 220,818 3,852 1.74 Tax Exempt 5,821 199 3.42 8,383 270 3.22 Equity Securities 2,693 106 3.94 2,693 91 3.38 Interest-Earning Deposits at Other Banks 61,638 3,084 5.00 70,765 1,473 2.08 Other Interest-Earning Assets 3,027 211 6.97 3,092 154 4.98 Total Interest-Earning Assets 1,358,579 62,380 4.59 1,324,875 47,850 3.61 Noninterest-Earning Assets 48,448 81,553 Total Assets $ 1,407,027 $ 1,406,428 Liabilities and Stockholders' equity: Interest-Bearing Liabilities: Interest-Bearing Demand Deposits $ 354,060 $ 6,741 1.90 % $ 282,850 $ 1,362 0.48 % Money Market 199,962 4,554 2.28 194,223 976 0.50 Savings 220,146 202 0.09 248,334 88 0.04 Time Deposits 156,310 4,936 3.16 124,817 1,599 1.28 Total Interest-Bearing Deposits 930,478 16,433 1.77 850,224 4,025 0.47 Short-term Borrowings 931 32 3.44 27,360 63 0.23 Other Borrowed Funds 26,328 1,207 4.58 17,609 693 3.94 Total Interest-Bearing Liabilities 957,737 17,672 1.85 895,193 4,781 0.53 Noninterest-Bearing Demand Deposits 326,408 389,553 Total Funding and Cost of Funds 1,284,145 1.38 1,284,746 0.37 Other Liabilities 6,764 4,072 Total Liabilities 1,290,909 1,288,818 Stockholders' Equity 116,118 117,610 Total Liabilities and Stockholders' Equity $ 1,407,027 $ 1,406,428 Net Interest Income (Non-GAAP) (2) $ 44,708 $ 43,069 Net Interest Rate Spread (Non-GAAP) (2)(3) 2.74 3.08 Net Interest-Earning Assets (4) $ 400,842 $ 429,682 Net Interest Margin (Non-GAAP) (2)(5) 3.29 3.25 Return on Average Assets 1.60 0.80 Return on Average Equity 19.42 9.56 Average Equity to Average Assets 8.25 8.36 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 141.85 148.00 (1) Net of the allowance for credit losses and includes nonaccrual loans with a zero yield (2) Refer to Explanation of Use of Non-GAAP Financial Measures in this Report for the calculation of the measure and reconciliation to the most comparable GAAP measure.
The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. 2024 2023 Year Ended December 31, Average Balance Interest and Dividends Yield/ Cost Average Balance Interest and Dividends Yield/ Cost (Dollars in Thousands) Assets: Interest-Earning Assets: Loans, Net (1) $ 1,073,601 $ 59,544 5.55 % $ 1,076,928 $ 54,763 5.09 % Securities Taxable 268,604 11,533 4.29 208,472 4,017 1.93 Tax Exempt — — — 5,821 199 3.42 Equity Securities 2,693 110 4.08 2,693 106 3.94 Interest-Earning Deposits at Other Banks 96,474 4,831 5.01 61,638 3,084 5.00 Other Interest-Earning Assets 3,142 274 8.72 3,027 211 6.97 Total Interest-Earning Assets 1,444,514 76,292 5.28 1,358,579 62,380 4.59 Noninterest-Earning Assets 57,986 48,448 Total Assets $ 1,502,500 $ 1,407,027 Liabilities and Stockholders' equity: Interest-Bearing Liabilities: Interest-Bearing Demand Deposits $ 326,073 $ 7,414 2.27 % $ 354,060 $ 6,741 1.90 % Money Market 215,864 6,706 3.11 199,962 4,554 2.28 Savings 180,647 202 0.11 220,146 202 0.09 Time Deposits 314,510 14,119 4.49 156,310 4,936 3.16 Total Interest-Bearing Deposits 1,037,094 28,441 2.74 930,478 16,433 1.77 Short-term Borrowings — — — 931 32 3.44 Other Borrowed Funds 34,697 1,622 4.67 26,328 1,207 4.58 Total Interest-Bearing Liabilities 1,071,791 30,063 2.80 957,737 17,672 1.85 Noninterest-Bearing Demand Deposits 270,528 326,408 Total Funding and Cost of Funds 1,342,319 2.24 1,284,145 1.38 Other Liabilities 16,559 6,764 Total Liabilities 1,358,878 1,290,909 Stockholders' Equity 143,622 116,118 Total Liabilities and Stockholders' Equity $ 1,502,500 $ 1,407,027 Net Interest Income (Non-GAAP) (2) $ 46,229 $ 44,708 Net Interest Rate Spread (Non-GAAP) (2)(3) 2.48 2.74 Net Interest-Earning Assets (4) $ 372,723 $ 400,842 Net Interest Margin (Non-GAAP) (2)(5) 3.20 3.29 Return on Average Assets 0.84 1.60 Return on Average Equity 8.77 19.42 Average Equity to Average Assets 9.56 8.25 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 134.78 141.85 (1) Net of the allowance for credit losses and includes nonaccrual loans with a zero yield (2) Refer to Explanation of Use of Non-GAAP Financial Measures in this Report for the calculation of the measure and reconciliation to the most comparable GAAP measure.
Total liabilities increased $17.5 million, or 1.3%, to $1.32 billion at December 31, 2023 compared to $1.30 billion at December 31, 2022. Deposits. Total deposits decreased $1.3 million to $1.267 billion as of December 31, 2023 compared to $1.269 billion at December 31, 2022.
Total liabilities increased $17.9 million, or 1.4%, to $1.33 billion at December 31, 2024 compared to $1.32 billion at December 31, 2023. Deposits. Total deposits increased $16.4 million, or 1.3%, to $1.28 billion as of December 31, 2024 compared to $1.27 billion at December 31, 2023.
Net interest margin (GAAP) increased to 3.28% for the year ended December 31, 2023 compared to 3.24% for the year ended December 31, 2022. Interest and dividend income increased $14.5 million, or 30.4%, to $62.2 million for the year ended December 31, 2023 compared to $47.7 million for the year ended December 31, 2022.
Net interest margin (GAAP) decreased to 3.19% for the year ended December 31, 2024 compared to 3.28% for the year ended December 31, 2023. Interest and dividend income increased $13.9 million, or 22.3%, to $76.1 million for the year ended December 31, 2024 compared to $62.2 million for the year ended December 31, 2023.
The sale of assets was completed on December 8, 2023 and resulted in a pre-tax gain of $24.6 million. • During the fourth quarter of 2023, the Bank executed a balance sheet repositioning strategy of its portfolio of available-for-sale securities.
The sale of assets was completed on December 8, 2023 and resulted in a pre-tax gain of $24.6 million.
Total loans increased $60.5 million, or 5.8%, to $1.11 billion at December 31, 2023 compared to $1.05 billion at December 31, 2022.
Total loans decreased $17.8 million, or 1.6%, to $1.09 billion at December 31, 2024 compared to $1.11 billion at December 31, 2023.
The Company's equity securities, which are primarily comprised of bank stocks, reflected a loss in value of $110,000 for the current period compared to a loss of $168,000 in value in the prior period primarily from a change in market value of these securities. • The Company recorded a $11,000 net gain on disposal of fixed assets in the current year, compared to a $431,000 gain in the prior year resulting from the sale of two former branch locations. 40 Noninterest Expense.
The Company's equity securities, which are primarily comprised of bank stocks, reflected a gain in value of $51,000 for the current period compared to a loss of $110,000 in value in the prior period primarily from a change in market value of these securities. • Insurance commissions decreased $5.8 million due to the sale of EU during the year ended December 31, 2023. • Other income for the year ended December 31, 2024 includes a $708,000 earn-out payment related to EU. • The Company recorded a $274,000 net gain on disposal of fixed assets in the current year related to the sale of one branch location, compared to a $11,000 gain in the prior year. 40 Noninterest Expense.
Loan growth was driven by increases in commercial and industrial loans, commercial real estate loans, residential mortgage loans and other loans of $41.2 million, $30.3 million, $17.1 million, and $8.9 million, respectively, partially offset by a decrease in consumer loans of $35.3 million.
The change was driven by decreases in consumer loans and residential mortgage loans of $41.1 million and $9.8 million, respectively, partially offset by increases in commercial real estate loans, construction real estate loans, other loans and commercial and industrial loans of $18.4 million, $11.6 million, $2.5 million and $769,000, respectively.
Net charge-offs for the year ended December 31, 2022 were $2.5 million. The following table presents the ratio of net (recoveries) charge-offs as a percent of average loans for the periods indicated.
Net recoveries for the year ended December 31, 2023 were $557,000 primarily due to recoveries totaling $750,000 related to the prior year $2.7 million charged-off commercial and industrial loan. The following table presents the ratio of net charge-offs (recoveries) as a percent of average loans for the periods indicated.
December 31, 2023 Nonaccrual With No ACL Nonaccrual With ACL Loans Past Due 90 Days Still Accruing Total Nonperforming Assets (Dollars in Thousands) Nonaccrual Loans: Real Estate: Residential $ 1,476 $ — $ — $ 1,476 Commercial 360 — — 360 Commercial and Industrial 316 — — 316 Consumer 88 — — 88 Total Nonaccrual Loans $ 2,240 $ — $ — 2,240 Other Real Estate Owned: Residential 162 Commercial — Total Other Real Estate Owned 162 Total Nonperforming Assets $ 2,402 The following table sets forth the amounts and categories of nonperforming assets as of December 31, 2022, prior to adoption of ASU 2016-13.
December 31, 2024 Nonaccrual With No ACL Nonaccrual With ACL Loans Past Due 90 Days Still Accruing Total Nonperforming Assets (Dollars in Thousands) Nonaccrual Loans: Real Estate: Residential $ 1,388 $ — $ — $ 1,388 Commercial 188 — — 188 Consumer 213 — — 213 Total Nonaccrual Loans $ 1,789 $ — $ — 1,789 Other Real Estate Owned: Residential — Total Other Real Estate Owned — Total Nonperforming Assets $ 1,789 December 31, 2023 Nonaccrual With No ACL Nonaccrual With ACL Loans Past Due 90 Days Still Accruing Total Nonperforming Assets (Dollars in Thousands) Nonaccrual Loans: Real Estate: Residential $ 1,476 $ — $ — $ 1,476 Commercial 360 — — 360 Commercial and Industrial 316 — — 316 Consumer 88 — — 88 Total Nonaccrual Loans $ 2,240 $ — $ — 2,240 Other Real Estate Owned: Residential 162 Total Other Real Estate Owned 162 Total Nonperforming Assets $ 2,402 At December 31, 2024 and December 31, 2023, we had no loans 90 days or more past due that were still accruing interest.
The brokered certificates of deposits all mature within three months and were utilized to fund the purchase of floating rate collateralized loan obligation securities. FDIC insured deposits totaled approximately 59.4% of total deposits while an additional 16.0% of deposits were collateralized with investment securities.
Brokered time deposits totaled $39.0 million as of December 31, 2024, compared to $29.0 million at December 31, 2023, all of which mature within three months and were utilized to fund the purchase of floating rate CLO securities. FDIC insured deposits totaled approximately 62.5% of total deposits while an additional 15.9% of deposits were collateralized with investment securities.
The breakdown of noninterest income for the year ended December 31, 2023 compared to year ended December 31, 2022 is as follows: Year Ended December 31, 2023 2022 Dollar Change Percent Change (Dollars in Thousands) Service Fees $ 1,819 $ 2,160 $ (341) (15.8) % Insurance Commissions 5,839 5,934 (95) (1.6) % Other Commissions 521 669 (148) (22.1) % Net Loss on Securities (10,199) (168) (10,031) (5970.8) % Net Gain on Purchased Tax Credits 29 57 (28) (49.1) % Gain on Sale of Subsidiary 24,578 — 24,578 — % Net Gain on Disposal of Premises and Equipment 11 431 (420) (97.4) % Income from Bank-Owned Life Insurance 576 561 15 2.7 % Net Gain from Bank-Owned Life Insurance Claims 303 — 303 — % Other Income 535 176 359 204.0 % Total Noninterest Income $ 24,012 $ 9,820 $ 14,192 144.5 % Noninterest income increased $14.2 million, or 144.5%, to $24.0 million for the year ended December 31, 2023, compared to $9.8 million for the year ended December 31, 2022. • The Company recorded a $24.6 million pre-tax gain on the sale of EU assets during the year ended December 31, 2023.
The breakdown of noninterest income for the year ended December 31, 2024 compared to year ended December 31, 2023 is as follows: Year Ended December 31, 2024 2023 Dollar Change Percent Change (Dollars in Thousands) Service Fees $ 1,680 $ 1,819 $ (139) (7.6) % Insurance Commissions 6 5,839 (5,833) (99.9) % Other Commissions 251 521 (270) (51.8) % Net Gain on Sales of Loans 52 — 52 — % Net Gain (Loss) on Securities 51 (10,199) 10,250 100.5 % Net Gain on Purchased Tax Credits 49 29 20 69.0 % Gain on Sale of Subsidiary 138 24,578 (24,440) (99.4) % Net Gain on Disposal of Premises and Equipment 274 11 263 2390.9 % Income from Bank-Owned Life Insurance 594 576 18 3.1 % Net Gain from Bank-Owned Life Insurance Claims 915 303 612 202.0 % Other Income 1,484 535 949 177.4 % Total Noninterest Income $ 5,494 $ 24,012 $ (18,518) (77.1) % Noninterest income decreased $18.5 million, or 77.1%, to $5.5 million for the year ended December 31, 2024, compared to $24.0 million for the year ended December 31, 2023. • The Company recorded a $24.6 million pre-tax gain on the sale of EU assets during the year ended December 31, 2023.
Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.
Government Agencies $ 4,995 $ 3,949 $ 53,993 $ 44,634 Obligations of States and Political Subdivisions 3,481 3,373 14,053 13,342 Mortgage-Backed Securities - Government-Sponsored Enterprises 57,377 54,532 46,345 41,427 Collateralized Mortgage Obligations - Government-Sponsored Enterprises 120,655 105,130 96,930 79,642 Collateralized Loan Obligations 29,862 29,804 — — Corporate Debt 9,484 7,719 9,487 8,315 Total Available-for-Sale Debt Securities $ 225,854 $ 204,507 $ 220,808 $ 187,360 Equity Securities: Mutual Funds 888 875 Other 1,700 1,823 Total Equity Securities 2,588 2,698 Total Securities $ 207,095 $ 190,058 Securities Portfolio Maturities and Yields.
Government Agencies $ 4,996 $ 3,945 $ 4,995 $ 3,949 Obligations of States and Political Subdivisions 3,496 3,347 3,481 3,373 Mortgage-Backed Securities - Government-Sponsored Enterprises 53,628 50,363 57,377 54,532 Collateralized Mortgage Obligations - Government-Sponsored Enterprises 111,076 94,957 120,655 105,130 Collateralized Loan Obligations 98,741 98,779 29,862 29,804 Corporate Debt 9,479 8,123 9,484 7,719 Total Available-for-Sale Debt Securities $ 281,416 $ 259,514 $ 225,854 $ 204,507 Equity Securities: Mutual Funds 879 888 Other 1,760 1,700 Total Equity Securities 2,639 2,588 Total Securities $ 262,153 $ 207,095 Securities Portfolio Maturities and Yields.
Losses of principal are charged directly to the allowance when a loss occurs or when a determination is made that the specific loss is probable. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revisions as more information becomes available.
This evaluation is inherently subjective as it requires estimates that are susceptible to significant revisions as more information becomes available.
While average investment securities decreased $12.3 million, there was a 19 bps increase in average yield. • Interest income on tax-exempt investment securities decreased $56,000, or 26.3%, to $157,000 for the year ended December 31, 2023 compared to $213,000 for the year ended December 31, 2022 primarily driven by a decrease of $2.6 million in average balances of municipal securities. • Interest from other interest-earning assets, which primarily consists of interest-earning cash, increased $1.7 million, or 102.5%, to $3.3 million for the year ended December 31, 2023 compared to $1.6 million for the year ended December 31, 2022.
Average investment securities increased $60.1 million and there was a 236 bps increase in average yield. • Interest from other interest-earning assets, which primarily consists of interest-earning cash, increased $1.8 million, or 54.9%, to $5.1 million for the year ended December 31, 2024 compared to $3.3 million for the year ended December 31, 2023.
The breakdown of noninterest expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 is as follows: Year Ended December 31, 2023 2022 Dollar Change Percent Change (Dollars in Thousands) Salaries and Employee Benefits $ 21,903 $ 18,469 $ 3,434 18.6 % Occupancy 2,998 3,047 (49) (1.6) % Equipment 1,064 739 325 44.0 % Data Processing 3,014 2,152 862 40.1 % Federal Deposit Insurance Corporation Assessment 754 638 116 18.2 % Pennsylvania Shares Tax 889 979 (90) (9.2) % Contracted Services 1,166 1,628 (462) (28.4) % Legal and Professional Fees 1,182 1,237 (55) (4.4) % Advertising 426 527 (101) (19.2) % Other Real Estate Owned (Income) (115) (151) 36 (23.8) % Amortization of Intangible Assets 1,766 1,782 (16) (0.9) % Other 3,735 3,844 (109) (2.8) % Total Noninterest Expense $ 38,782 $ 34,891 $ 3,891 11.2 % Noninterest expense increased $3.9 million, or 11.2%, to $38.8 million for the year ended December 31, 2023 compared to $34.9 million for the year ended December 31, 2022. • Salaries and employee benefits increased $3.4 million to $21.9 million for the year ended December 31, 2023 compared to $18.5 million for the year ended December 31, 2022.
The breakdown of noninterest expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 is as follows: Year Ended December 31, 2024 2023 Dollar Change Percent Change (Dollars in Thousands) Salaries and Employee Benefits $ 18,821 $ 21,903 $ (3,082) (14.1) % Occupancy 3,096 2,998 98 3.3 % Equipment 1,155 1,064 91 8.6 % Data Processing 3,308 3,014 294 9.8 % Federal Deposit Insurance Corporation Assessment 639 754 (115) (15.3) % Pennsylvania Shares Tax 1,161 889 272 30.6 % Contracted Services 1,623 1,166 457 39.2 % Legal and Professional Fees 985 1,182 (197) (16.7) % Advertising 484 426 58 13.6 % Other Real Estate Owned (Income) 50 (115) 165 (143.5) % Amortization of Intangible Assets 958 1,766 (808) (45.8) % Other 3,369 3,735 (366) (9.8) % Total Noninterest Expense $ 35,649 $ 38,782 $ (3,133) (8.1) % Noninterest expense decreased $3.1 million, or 8.1%, to $35.6 million for the year ended December 31, 2024 compared to $38.8 million for the year ended December 31, 2023. • Salaries and employee benefits decreased $3.1 million to $18.8 million for the year ended December 31, 2024 compared to $21.9 million for the year ended December 31, 2023.
The following table shows the principal amount of special mention and classified loans at December 31, 2023 and 2022. 45 December 31, 2023 2022 (Dollars in Thousands) Special Mention $ 54,978 $ 43,804 Substandard 14,457 14,499 Doubtful — 415 Loss — — Total $ 69,435 $ 58,718 The total amount of special mention and classified loans increased $10.7 million, or 18.3%, to $69.4 million at December 31, 2023, compared to $58.7 million at December 31, 2022.
December 31, 2024 2023 (Dollars in Thousands) Special Mention $ 33,543 $ 54,978 Substandard 6,854 14,457 Doubtful — — Loss — — Total $ 40,397 $ 69,435 The total amount of special mention and classified loans decreased $29.0 million, or 41.8%, to $40.4 million at December 31, 2024, compared to $69.4 million at December 31, 2023.
The Company did not have loans held for sale at the dates indicated below. 2023 2022 December 31, Amount Percent Amount Percent (Dollars in Thousands) Real Estate: Residential $ 347,808 31.3 % $ 330,725 31.5 % Commercial 467,154 42.1 436,805 41.6 Construction 43,116 3.9 44,923 4.3 Commercial and Industrial 111,278 10.0 70,044 6.7 Consumer 111,643 10.1 146,927 14.0 Other 29,397 2.6 20,449 1.9 Total Loans 1,110,396 100.0 % 1,049,873 100.0 % Allowance for Credit Losses (9,707) (12,819) Loans, Net $ 1,100,689 $ 1,037,054 35 Loan Portfolio Maturities and Yields.
The following table sets forth the composition of the Company’s loan portfolio by type of loan at the dates indicated. 2024 2023 December 31, Amount Percent Amount Percent (Dollars in Thousands) Real Estate: Residential $ 337,990 30.9 % $ 347,808 31.3 % Commercial 485,513 44.4 467,154 42.1 Construction 54,705 5.0 43,116 3.9 Commercial and Industrial 112,047 10.3 111,278 10.0 Consumer 70,508 6.5 111,643 10.1 Other 31,863 2.9 29,397 2.6 Total Loans 1,092,626 100.0 % 1,110,396 100.0 % Allowance for Credit Losses (9,805) (9,707) Loans, Net $ 1,082,821 $ 1,100,689 The Company's loan portfolio is a mix of consumer and commercial credits.
Excluding the $34.9 million decrease in indirect automobile loans, total loans increased $95.4 million, or 9.1%. Average loans, net for the year ended December 31, 2023 increased $57.8 million compared to the year ended December 31, 2022. Loan Portfolio Composition. The following table sets forth the composition of the Company’s loan portfolio by type of loan at the dates indicated.
Excluding the $41.5 million decrease in indirect automobile loans, total loans increased $23.7 million, or 1.1%. Average loans, net for the year ended December 31, 2024 decreased $3.3 million compared to the year ended December 31, 2023. Loan Portfolio Composition.
Stockholders’ equity increased $29.7 million, or 27.0%, to $139.8 million at December 31, 2023, compared to $110.2 million at December 31, 2022. • Key factors positively impacting stockholders’ equity included $22.6 million of net income for the current period, a $9.5 million change in accumulated other comprehensive loss and a $2.1 million positive adjustment, net of tax, due to the Company’s January 1, 2023 adoption of CECL.
Stockholders’ equity increased $7.5 million, or 5.4%, to $147.4 million at December 31, 2024, compared to $139.8 million at December 31, 2023. • Key factors positively impacting stockholders’ equity included $12.6 million of net income for the current period, partially offset by the payment of $5.1 million in dividends since December 31, 2023 and a $488,000 change in accumulated other comprehensive loss. • Book value per share was $28.71 at December 31, 2024 compared to $27.32 at December 31, 2023, an increase of $1.39.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeEVE EVE as a Percent of Portfolio Value of Assets Net Interest Income at Risk Change in Interest Rates in Basis Points Dollar Amount Dollar Change Percent Change NPV Ratio Basis Point Change Dollar Amount Dollar Change Percent Change (Dollars in Thousands) +400 $ 146,021 $ (39,715) (21.4) % 11.69 % (179) $ 52,306 $ 2,974 6.0 % +300 $ 154,756 $ (30,980) (16.7) % 12.11 % (137) $ 51,501 $ 2,169 4.4 % +200 165,195 (20,541) (11.1) 12.61 (87) 50,788 1,456 3.0 +100 175,901 (9,835) (5.3) 13.09 (39) 50,093 761 1.5 Flat 185,736 — — 13.48 — 49,332 — — -100 193,970 8,234 4.4 13.71 23 47,854 (1,478) (3.0) -200 198,490 12,754 6.9 13.69 21 46,039 (3,293) (6.7) -300 198,613 12,877 6.9 13.38 (10) 44,067 (5,265) (10.7) -400 193,490 7,754 4.2 12.76 (72) 42,267 (7,065) (14.3) Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement.
Biggest changeEVE EVE as a Percent of Portfolio Value of Assets Net Interest Income at Risk Change in Interest Rates in Basis Points Dollar Amount Dollar Change Percent Change NPV Ratio Basis Point Change Dollar Amount Dollar Change Percent Change (Dollars in Thousands) +400 $ 177,918 $ (32,439) (15.4) % 13.68 % (116) $ 52,315 $ 2,642 5.3 % +300 185,040 (25,317) (12.0) 13.95 (89) 51,612 1,939 3.9 +200 193,734 (16,623) (7.9) 14.29 (55) 50,982 1,309 2.6 +100 202,287 (8,070) (3.8) 14.59 (25) 50,359 686 1.4 Flat 210,357 — — 14.84 — 49,673 — — -100 217,671 7,314 3.5 15.01 17 48,947 (726) (1.5) -200 221,798 11,441 5.4 14.97 13 48,113 (1,560) (3.1) -300 222,781 12,424 5.9 14.74 (10) 46,866 (2,807) (5.7) -400 217,379 7,022 3.3 14.13 (71) 45,788 (3,885) (7.8) Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement.
For both net interset income and capital at risk, our interest rate risk analysis calculates a base case scenario that assumes no change in interest rates.
For both net interest income and capital at risk, our interest rate risk analysis calculates a base case scenario that assumes no change in interest rates.
With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our economic value of equity (“EVE”) ratio to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less 51 the present value of the expected cash flows arising from our liabilities.
With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our economic value of equity (“EVE”) ratio to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less 50 the present value of the expected cash flows arising from our liabilities.
The table below sets forth, as of December 31, 2023, the estimated changes in EVE and net interest income at risk that would result from the designated instantaneous changes in market interest rates.
The table below sets forth, as of December 31, 2024, the estimated changes in EVE and net interest income at risk that would result from the designated instantaneous changes in market interest rates.

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