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What changed in CITIZENS & NORTHERN CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CITIZENS & NORTHERN CORP'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.

+220 added−235 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-11)

Top changes in CITIZENS & NORTHERN CORP's 2024 10-K

220 paragraphs added · 235 removed · 157 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn 2019 and 2020, the Corporation has expanded into Southeastern Pennsylvania by acquisitions and Southcentral Pennsylvania by opening new branches. The Corporation acquired Covenant Financial, Inc. (“Covenant”), effective July 1, 2020. Covenant was the parent company of Covenant Bank, a commercial bank which operated a community bank office in Bucks County, Pennsylvania and another in Chester County, Pennsylvania.
Biggest changeCovenant was the parent company of Covenant Bank, a commercial bank which operated a community bank office in Bucks County, Pennsylvania and another in Chester County, Pennsylvania. The Covenant acquisition followed the 2019 acquisition of Monument Bancorp, Inc. (“Monument”), a commercial bank with offices in Bucks County.
The Bank competes with online financial institutions, local commercial banks headquartered in our market areas and other commercial banks with branches in our market area. Many of the online financial institutions and some of the banks that have branches in our market areas are larger in overall size.
The Bank competes with fintech and other online financial institutions, local commercial banks headquartered in our market areas and other commercial banks with branches in our market area. Many of the online financial institutions and some of the banks that have branches in our market areas are larger in overall size.
Our talent strategy focuses on acquiring new employees through branding and outreach programs, developing employees though a robust onboarding program, ongoing training, and performance management, and retaining employees through recognition, engagement, and an attractive total rewards package. At December 31, 2023, the Corporation had 404 full-time equivalent employees.
Our talent strategy focuses on acquiring new employees through branding and outreach programs, developing employees though a robust onboarding program, ongoing training, and performance management, and retaining employees through recognition, engagement, and an attractive total rewards package. At December 31, 2024, the Corporation had 386 full-time equivalent employees.
At December 31, 2023, the Bank had 29 branch offices, including 22 in the Northern tier/Northcentral region of Pennsylvania, 1 in the Southern tier of New York State, 4 in Southeastern Pennsylvania (3 in Bucks County and 1 in Chester County) and 2 in Southcentral Pennsylvania (York and Lancaster).
At December 31, 2024, the Bank had 28 branch offices, including 21 in the Northern tier/Northcentral region of Pennsylvania, 1 in the Southern tier of New York State, 4 in Southeastern Pennsylvania (3 in Bucks County and 1 in Chester County) and 2 in Southcentral Pennsylvania (York and Lancaster).
Mainly as a result of the acquisitions and subsequent growth in the newer markets, the Corporation’s consolidated total assets at December 31, 2023 of $2.5 billion were up 52% from the corresponding total at December 31, 2019.
Mainly as a result of the acquisitions and subsequent growth in the newer markets, the Corporation’s consolidated total assets at December 31, 2024 of $2.6 billion were up 58% from the corresponding total at December 31, 2019.
Similarly, gross loans of $1.8 billion at December 31, 2023 were up 56% from December 31, 2019 and total deposits of $2.0 billion were up 61% from December 31, 2019. C&N Bank is a Pennsylvania banking institution that was formed by the consolidation of Northern National Bank of Wellsboro and Citizens National Bank of Towanda in 1971.
Similarly, gross loans of $1.9 billion at December 31, 2024 were up 60% from December 31, 2019 and total deposits of $2.1 billion were up 67% from December 31, 2019. C&N Bank is a Pennsylvania banking institution that was formed by the consolidation of Northern National Bank of Wellsboro and Citizens National Bank of Towanda in 1971.
At December 31, 2023, C&N Bank had total assets of $2,501,822,000, total deposits of $2,030,909,000 and net loans outstanding of $1,828,931,000. 3 Table of Contents Most activities of the Corporation and its subsidiaries are regulated by federal or state agencies.
At December 31, 2024, C&N Bank had total assets of $2,598,537,000, total deposits of $2,111,547,000 and net loans outstanding of $1,875,813,000. 3 Table of Contents Most activities of the Corporation and its subsidiaries are regulated by federal or state agencies.
The Covenant acquisition followed the 2019 acquisition of Monument Bancorp, Inc. (“Monument”), a commercial bank with offices in Bucks County. In Southcentral Pennsylvania, in 2021, the Corporation converted the lending office in York, Pennsylvania to a full-service branch and established a new branch in Lancaster, Pennsylvania.
In Southcentral Pennsylvania, in 2021, the Corporation converted the lending office in York, Pennsylvania to a full-service branch and established a new branch in Lancaster, Pennsylvania.
Citizens & Northern Investment Corporation was formed in 1999 to engage in investment activities. Bucktail reinsures credit and mortgage life and accident and health insurance on behalf of C&N Bank. Over the past few years, the Corporation has been employing a growth strategy.
Citizens & Northern Investment Corporation was formed in 1999 to engage in investment activities. Bucktail reinsures credit and mortgage life and accident and health insurance on behalf of C&N Bank. Since 2019, the Corporation has expanded into Southeastern Pennsylvania by acquisitions and Southcentral Pennsylvania by opening new branches. The Corporation acquired Covenant Financial, Inc. (“Covenant”), effective July 1, 2020.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGovernment Regulation and Monetary Policy - The Corporation and the banking industry are subject to extensive regulation and supervision under federal and state laws and regulations. The requirements and limitations imposed by such laws and regulations limit the way the Corporation conducts its business, undertakes new investments and activities, and obtains financing.
Biggest changeThe requirements and limitations imposed by such laws and regulations limit the way the Corporation conducts its business, undertakes new investments and activities, and obtains financing. These regulations are designed primarily for the protection of the deposit insurance funds and consumers and not to benefit the Corporation’s shareholders.
Banking regulators generally give commercial real estate lending greater scrutiny and may require banks with higher levels of commercial real estate loans to implement enhanced risk management practices, including stricter underwriting, internal controls, risk management policies, more granular reporting, and portfolio stress testing, as well as possibly higher levels of allowances for losses and capital levels as a result of commercial real estate lending growth and exposures.
Banking regulators generally give commercial real estate lending greater scrutiny and may require banks with higher levels of commercial real estate loans to implement enhanced risk management practices, including stricter underwriting, internal controls, risk management policies, more granular reporting, and portfolio stress testing, as well as possibly higher levels of allowances for credit losses and capital levels as a result of commercial real estate lending growth and exposures.
Limited Geographic Diversification - The Corporation grants commercial, residential and personal loans to customers primarily in the Corporation’s legacy markets of the Northern tier/Northcentral regions of Pennsylvania and Southern tier of New York and in Southeastern and Southcentral Pennsylvania.
Limited Geographic Diversification - The Corporation grants commercial, residential and personal loans to customers primarily in the Corporation’s markets of the Northern tier/Northcentral regions of Pennsylvania, Southern tier of New York and Southeastern and Southcentral Pennsylvania.
The unrealized decrease in fair value was consistent with the increases in market interest rates that occurred subsequent to the purchases of the securities, and no allowance for credit losses was required on available-for-sale debt securities in an unrealized loss position at December 31, 2023.
The unrealized decrease in fair value was consistent with the increases in market interest rates that occurred subsequent to the purchases of the securities, and no allowance for credit losses was required on available-for-sale debt securities in an unrealized loss position at December 31, 2024.
However, legal agreements with counterparties typically include provisions allowing them to restrict or terminate the Corporation’s access to these credit facilities with or without advance notice and at their sole discretion. Financial institutions are interconnected because of trading, clearing, counterparty, and other relationships.
However, legal agreements with counterparties typically include provisions allowing them to restrict or terminate the Corporation’s access to these credit facilities with or without advance notice and at their sole discretion. 8 Table of Contents Financial institutions are interconnected because of trading, clearing, counterparty, and other relationships.
If the volume of such forced repurchases of loans were to increase significantly, or if the Corporation were to be dropped from the programs, it could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity. ITEM 1B . UNRESOLVED STAFF COMMENTS Not applicable. ​
If the volume of such forced repurchases of loans were to increase significantly, or if the Corporation were to be dropped from the programs, it could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity. ITEM 1B . UNRESOLVED STAFF COMMENTS Not applicable. ​ 9 Table of Contents
Deterioration in economic conditions could adversely affect the quality of the Corporation’s loan portfolio and the demand for its products and services, and accordingly, could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity. Competition - All phases of the Corporation’s business are competitive.
Deterioration in economic conditions could adversely affect the quality of the Corporation’s loan portfolio and the demand for its products and services, and accordingly, could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity. 6 Table of Contents Competition - All phases of the Corporation’s business are competitive.
In such events, the Corporation’s cost of funds may increase, thereby reducing net interest 8 Table of Contents income, or the Corporation may need to sell a portion of its securities and/or loan portfolio, which, depending upon market conditions, could necessitate realizing a loss.
In such events, the Corporation’s cost of funds may increase, thereby reducing net interest income, or the Corporation may need to sell a portion of its securities and/or loan portfolio, which, depending upon market conditions, could necessitate realizing a loss.
Denial of service attacks have been launched against a number of large financial services institutions. The Corporation may be subject to similar attacks in the future. Hacking and identity theft risks could 7 Table of Contents cause serious reputational harm and financial loss to the Corporation.
Denial of service attacks have been launched against a number of large financial services institutions. The Corporation may be subject to similar attacks in the future. Hacking and identity theft risks could cause serious reputational harm and financial loss to the Corporation.
The borrower’s cash flows may be affected significantly by general economic conditions, a downturn in the local economy or in occupancy rates in the market where the property is located, any of which could increase the likelihood of default.
The borrower’s cash flows may be affected significantly by general economic conditions, a downturn in the local economy or in occupancy rates in the market where the property is located, or other external events, any of which could increase the likelihood of default.
A decline in local economic conditions may have a greater effect on the Corporation’s earnings and capital than on the earnings and capital of other financial institutions whose real estate loan portfolios are more geographically diverse.
A decline in local 5 Table of Contents economic conditions may have a greater effect on the Corporation’s earnings and capital than on the earnings and capital of other financial institutions whose real estate loan portfolios are more geographically diverse.
Acquisitions may involve the payment of a premium over book and market values, and, therefore, some dilution of the Corporation’s tangible book value and net income per share of common stock may occur in connection with any future transaction.
Acquisitions may involve the payment of a premium over book and market values, and, therefore, some dilution of the Corporation’s tangible book value and earnings per common share may occur in connection with any future transaction.
The failures of Silicon Valley Bank in California, Signature Bank in New York and First Republic Bank in California during the first and second quarters of 2023 caused an element of panic and uncertainty in the investor community and among bank customers generally, including, specifically, deposit customers.
For example, the failures of Silicon Valley Bank in California, Signature Bank in New York and First Republic Bank in California in 2023 caused an element of panic and uncertainty in the investor community and among bank customers generally, including, specifically, deposit customers.
Risks Related to Banking Industry Turmoil – The Corporation is exposed to the risk that when a bank or other financial institution experiences financial difficulties, there could be an adverse “contagion” impact on other banking institutions.
Moreover, the Corporation is exposed to the risk that when a bank or other financial institution experiences financial difficulties, there could be an adverse “contagion” impact on other banking institutions.
At December 31, 2023, the fair value of the Corporation’s available-for-sale debt securities portfolio was $415.8 million, or 10.6% less than the amortized cost basis.
At December 31, 2024, the fair value of the Corporation’s available-for-sale debt securities portfolio was $402.4 million, or 10.6% less than the amortized cost basis.
As of December 31, 2023, the total outstanding balance of residential mortgage loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $1,335,000.
As of December 31, 2024, the total outstanding balance of residential mortgage loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $2,671,000.
At December 31, 2023, the total outstanding balance of residential mortgages sold and serviced through the two programs amounted to $323,298,000.
At December 31, 2024, the total outstanding balance of residential mortgages sold and serviced through the two programs amounted to $329,766,000.
The banking regulatory agencies have recently expressed concerns about weaknesses in the current commercial real estate market.
Over the past few years, the banking regulatory agencies have expressed concerns about weaknesses in the current commercial real estate market.
These types of loans are generally viewed as having more risk of default than residential real estate loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt.
A significant portion of the Corporation's loan portfolio consists of commercial real estate loans, including owner occupied properties, non-owner-occupied properties, and other commercial properties. These types of loans are generally viewed as having more risk of default than residential real estate loans and depend on cash flows from the owner’s business or the property’s tenants to service the debt.
These regulations are designed primarily for the protection of the deposit insurance funds and consumers and not to benefit the Corporation’s shareholders. Financial institution regulation has been the subject of significant legislation in recent years and may be the subject of further significant legislation in the future, none of which is in the control of the Corporation.
Financial institution regulation has been the subject of significant legislation in recent years and may be the subject of further significant legislation in the future, none of which is in the control of the Corporation.
The Federal Reserve’s rate increases, along with an accompanying tightening of the money supply, have been conducted in an effort to contain inflation. Significant fluctuations in interest rates, including fluctuations in interest rates triggered by the Federal Reserve’s actions, could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity.
In the latter portion of 2024, the Federal Reserve lowered the Federal Funds rate twice to a range of 4.25% to 4.50% at December 31, 2024. Significant fluctuations in interest rates, including fluctuations in interest rates triggered by the Federal Reserve’s actions, could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity.
While the Corporation does not believe that the circumstances of these three failures are necessarily indicators of broader issues for concern with all other banks or with the banking system itself, the failures have reduced customer confidence and are 5 Table of Contents likely to affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have negative reputational ramifications for institutions in the banking industry, including, possibly, the Corporation.
These types of events may reduce customer confidence and may affect sources of funding and liquidity, increase regulatory requirements and costs, adversely affect financial markets and/or have negative reputational ramifications for institutions in the banking industry, including, possibly, the Corporation.
In 2022, the Federal Reserve changed course, raising the Federal Funds rate several times to a range of 4.25% to 4.50% at December 31, 2022. Furthermore, in 2023, the Federal Reserve raised 6 Table of Contents the rate several times to a range of 5.25% to 5.50% at December 31, 2023.
In 2022 and 2023, the Federal Reserve changed course and raised the rate several times to a range of 5.25% to 5.50% at December 31, 2023. The Federal Reserve’s rate increases, along with an accompanying tightening of the money supply, were conducted in an effort to contain inflation.
CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts.
CECL requires an estimate of credit losses for the remaining estimated life of the financial asset using historical experience, current conditions, and reasonable and supportable forecasts. Such risk management and accounting policies and procedures, however, may not prevent unexpected losses that could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity.
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The Corporation will continue to closely monitor the ongoing events and volatility in the financial services industry, together with any responsive measures taken by the banking regulators to mitigate or manage the turmoil.
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Artificial Intelligence Risks and Challenges - The Corporation or its third-party vendors, clients or counterparties may develop or incorporate artificial intelligence ("AI") technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Corporation's business.
Removed
Such risk management and accounting policies and procedures, however, may not prevent unexpected losses that could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity. ​ A significant portion of the Corporation's loan portfolio consists of commercial real estate loans, including owner occupied properties, non-owner-occupied properties, and other commercial properties.
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The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI.
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These evolving laws and regulations could require changes in the Corporation's implementation of AI technology and increase its compliance costs and 7 Table of Contents the risk of non-compliance.
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AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
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In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.
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This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous output, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
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Further, the Corporation may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Corporation may have limited visibility.
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Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures. Government Regulation and Monetary Policy - The Corporation and the banking industry are subject to extensive regulation and supervision under federal and state laws and regulations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Information Security Program is updated at least annually and the Board of Directors, with input from the Risk Management Committee, approves all material changes. ​ The Corporation has an Incident Response Plan that provides a documented guideline for handling potential threats and taking appropriate measures including timely notification and escalation to executive leadership and the Board of Directors.
Biggest changeThe Information Security Program is updated at least annually and the Board of Directors, with input from the Risk Management Committee, approves all material changes. ​ 10 Table of Contents The Corporation has an Incident Response Plan that provides a documented guideline for handling potential threats and taking appropriate measures including timely notification and escalation to executive leadership and the Board of Directors.
The Board has appointed a Risk Management Committee currently made up of five members of the Board with governance and oversight of the Corporation’s enterprise-wide risk management program. The members of the Risk Management Committee collectively have years of business management and professional experience in the banking industry and other industries including exposure to cyber risk management considerations.
The Board has appointed a Risk Management Committee currently made up of six members of the Board with governance and oversight of the Corporation’s enterprise-wide risk management program. The members of the Risk Management Committee collectively have years of business management and professional experience in the banking industry and other industries including exposure to cyber risk management considerations.
The Corporation cannot guarantee, however, that such agreements, due diligence, and oversight procedures will prevent a cyber incident from impacting our systems or information. Additionally, the 9 Table of Contents Corporation may not be able to obtain adequate or any reimbursement from its insurance coverage or from its service providers in the event it should suffer any such incidents.
The Corporation cannot guarantee, however, that such agreements, due diligence, and oversight procedures will prevent a cyber incident from impacting our systems or information. Additionally, the Corporation may not be able to obtain adequate or any reimbursement from its insurance coverage or from its service providers in the event it should suffer any such incidents.
Due to applicable laws and regulations or contractual obligations, the Corporation may be held responsible for cyber incidents attributed to its service providers in relation to any data that the Corporation shares with them. ​ During 2023, the Corporation has not experienced a cybersecurity threat or incident that has materially affected or is reasonably likely to materially affect the Corporation, including its business strategy, results of consolidated operations or financial condition.
Due to applicable laws and regulations or contractual obligations, the Corporation may be held responsible for cyber incidents attributed to its service providers in relation to any data that the Corporation shares with them. ​ During 2024, the Corporation did not experience a cybersecurity threat or incident that has materially affected or is reasonably likely to materially affect the Corporation, including its business strategy, results of consolidated operations or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES A summary of the Corporation’s operating properties is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ Number of ​ Number of ​ ​ of ​ Owned ​ Leased ​ ​ Locations ​ Properties ​ Properties Branches ​ 29 ​ 23 ​ 6 Limited Purpose Office-Lending ​ 1 ​ 1 ​ 0 Administrative/Multi-purpose ​ 2 ​ 1 ​ 1 Ancillary Facilities ​ 2 ​ 1 ​ 1 Total ​ 34 ​ 26 ​ 8 ​ 10 Table of Contents ​
Biggest changePROPERTIES A summary of the Corporation’s operating properties is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Number ​ Number of ​ Number of ​ ​ of ​ Owned ​ Leased ​ ​ Locations ​ Properties ​ Properties Branches ​ 28 ​ 22 ​ 6 Limited Purpose Office-Lending ​ 1 ​ 1 ​ 0 Administrative/Multi-purpose ​ 4 ​ 2 ​ 2 Total ​ 33 ​ 25 ​ 8 ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The Corporation and the Bank are involved in various legal proceedings incidental to their business. Management believes the aggregate liability, if any, resulting from such pending and threatened legal proceedings will not have a material adverse effect on the Corporation’s financial condition or results of operations. ​ ITEM 4.
Biggest changeManagement believes the aggregate liability, if any, resulting from such pending and threatened legal proceedings will not have a material adverse effect on the Corporation’s financial condition or results of operations. ​ ITEM 4. MINE SAFETY DISCLOSURE Not applicable. ​ 11 Table of Contents PART II
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MINE SAFETY DISCLOSURE Not applicable. ​ PART II
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ITEM 3. LEGAL PROCEEDINGS Class Action Litigation On March 27, 2024, a putative class action lawsuit was filed in the US District Court for the Western District of Texas by investors in a purported Ponzi scheme operated by two individuals, one of whom maintained accounts at C&N Bank.
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The plaintiffs have sued C&N Bank, along with another bank, and additional law firm and accounting firm defendants. The case is styled Goldovsky, et al. v. Rauld, et al.
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Plaintiffs have asserted claims against C&N Bank and the other bank for aiding and abetting alleged violations of the Texas Securities Act, and additional claims against the legal and accounting professionals for statutory fraud, common law fraud, negligent misrepresentation, and knowing participation in breach of fiduciary duty.
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C&N Bank has filed motions to dismiss the case for wont of personal jurisdiction and failure to state a claim. The Plaintiffs have responded to those motions. Plaintiffs have filed an application for certification of the suit as a class action. The court has stayed the motions to dismiss pending consideration of the class action certification application.
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Following depositions of the four plaintiffs on issues germane to class action certification, C&N Bank and each of the other defendants have filed briefs in opposition to the plaintiff’s class certification motion. A hearing on the motion for class certification took place on February 18, 2025. A ruling on class certification is pending.
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Based on the information available to the Corporation, the Corporation does not believe at this time that a loss is probable in this matter, nor can a range of possible losses be determined. Accordingly, no liability has been recorded for this litigation matter in the accompanying consolidated financial statements.
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The Corporation’s estimate may change from time to time, and actual losses could vary. ​ The Corporation and the Bank are involved in various legal proceedings incidental to their business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth a summary of purchases by the Corporation, in the open market, of its equity securities during the fourth quarter 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Maximum ​ ​ ​ ​ ​ ​ ​ Shares ​ Number of ​ ​ ​ ​ ​ ​ ​ Purchased ​ Shares that May ​ ​ ​ ​ ​ ​ ​ as Part of ​ Yet ​ ​ ​ ​ ​ ​ ​ Publicly ​ be Purchased ​ ​ Total Number ​ Average ​ Announced ​ Under ​ ​ of Shares ​ Price Paid ​ Plans ​ the Plans or Period ​ Purchased ​ per Share ​ or Programs ​ Programs October 1 - 31, 2023 0 ​ $ N/A 0 750,000 November 1 - 30, 2023 0 ​ $ N/A 0 750,000 December 1 - 31, 2023 0 ​ $ N/A 0 750,000 ​ 11 Table of Contents PERFORMANCE GRAPH Set forth below is a chart comparing the Corporation’s cumulative return to stockholders against the cumulative return of the Russell 2000 Index and the Corporation’s peer group index (the NASDAQ Bank Index) for the five-year period commencing December 31, 2018 and ended December 31, 2023.
Biggest changeAs permitted by securities laws and other legal requirements and subject to market conditions and other factors, purchases may be made from time to time in the open market at prevailing prices, or through privately negotiated transactions. ​ The following table sets forth a summary of purchases by the Corporation, in the open market, of its equity securities during the fourth quarter 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Maximum ​ ​ ​ ​ ​ ​ ​ Shares ​ Number of ​ ​ ​ ​ ​ ​ ​ Purchased ​ Shares that May ​ ​ ​ ​ ​ ​ ​ as Part of ​ Yet ​ ​ ​ ​ ​ ​ ​ Publicly ​ be Purchased ​ ​ Total Number ​ Average ​ Announced ​ Under ​ ​ of Shares ​ Price Paid ​ Plans ​ the Plans or Period ​ Purchased ​ per Share ​ or Programs ​ Programs October 1 - 31, 2024 0 ​ $ 0 0 723,966 November 1 - 30, 2024 0 ​ $ 0 0 723,966 December 1 - 31, 2024 0 ​ $ 0 0 723,966 Total ​ 0 ​ $ 0 ​ 0 ​ ​ ​ ​ 12 Table of Contents PERFORMANCE GRAPH Set forth below is a chart comparing the Corporation’s cumulative return to stockholders against the cumulative return of the Russell 2000 Index and the Corporation’s peer group index (the NASDAQ Bank Index) for the five-year period commencing December 31, 2019 and ended December 31, 2024.
As of December 31, 2023, there were 2,036 shareholders of record of the Corporation’s common stock. While the Corporation has a history of paying cash dividends, future dividend payments will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements.
As of December 31, 2024, there were 2,036 shareholders of record of the Corporation’s common stock. While the Corporation has a history of paying cash dividends, future dividend payments will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements.
The figures shown in the table below are as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ Number of ​ Weighted- ​ Securities ​ ​ Securities to be ​ average ​ Remaining ​ ​ Issued Upon ​ Exercise ​ for Future ​ ​ Exercise of ​ Price of ​ Issuance Under ​ ​ Outstanding ​ Outstanding ​ Equity Compen- ​ Options Options sation Plans Equity compensation plans approved by shareholders 646 ​ $ 20.45 500,000 ​ ​ ​ ​ ​ ​ ​ ​ Equity compensation plans not approved by shareholders 0 ​ N/A 0 ​ More details related to the Corporation’s equity compensation plans are provided in Notes 1 and 12 to the consolidated financial statements. ​ ITEM 6.
The figures shown in the table below are as of December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ Number of ​ Weighted- ​ Securities ​ ​ Securities to be ​ average ​ Remaining ​ ​ Issued Upon ​ Exercise ​ for Future ​ ​ Exercise of ​ Price of ​ Issuance Under ​ ​ Outstanding ​ Outstanding ​ Equity Compen- ​ Options Options sation Plans Equity compensation plans approved by shareholders 0 ​ $ N/A 407,659 ​ ​ ​ ​ ​ ​ ​ ​ Equity compensation plans not approved by shareholders 0 ​ N/A 0 ​ More details related to the Corporation’s equity compensation plans are provided in Notes 1 and 12 to the consolidated financial statements. ​ ITEM 6.
This meets Securities & Exchange Commission requirements for showing dividend reinvestment share performance over a five-year period and measures the return to an investor for placing $100.00 into a group of bank stocks and reinvesting any and all dividends into the purchase of more of the same stock for which dividends were paid. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Citizens & Northern Corporation 100.00 111.83 83.01 114.60 105.03 108.92 Russell 2000 Index 100.00 125.49 150.50 172.75 137.40 160.60 Peer Group (NASDAQ Bank Index) 100.00 124.38 115.04 164.41 137.65 132.92 ​ 12 Table of Contents EQUITY COMPENSATION PLAN INFORMATION The following table sets forth information concerning the Citizens & Northern 2023 Equity Stock Incentive Plan which was approved by the Corporation’s shareholders in April 2023.
This meets Securities & Exchange Commission requirements for showing dividend reinvestment share performance over a five-year period and measures the return to an investor for placing $100.00 into a group of bank stocks and reinvesting any and all dividends into the purchase of more of the same stock for which dividends were paid. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Citizens & Northern Corporation 100.00 74.23 102.47 93.91 97.39 85.52 Russell 2000 Index 100.00 119.93 137.67 109.50 127.98 142.73 Peer Group (NASDAQ Bank Index) 100.00 92.50 132.19 110.67 106.87 128.85 ​ ​ 13 Table of Contents EQUITY COMPENSATION PLAN INFORMATION The following table sets forth information concerning the Citizens & Northern 2023 Equity Stock Incentive Plan which was approved by the Corporation’s shareholders in April 2023.
Under the newly approved program, the Corporation is authorized to repurchase up to 750,000 shares of the Corporation’s common stock, or slightly less than 5% of the Corporation’s issued and outstanding shares at August 4, 2023.
Under the program, the Corporation is authorized to repurchase up to 750,000 shares of the Corporation’s common stock, or slightly less than 5% of the Corporation’s issued and outstanding shares at August 4, 2023. The program was effective when publicly announced and will continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion.
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The new program was effective when publicly announced and will continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion.
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During the year ended December 31, 2024, 26,034 shares were repurchased for a total cost of $443,000, at an average price of $17.02 per share. At December 31, 2024, there were 723,966 shares available to be repurchased under the program.
Removed
Through December 31, 2023, no shares were repurchased under the new program. As permitted by securities laws and other legal requirements and subject to market conditions and other factors, purchases may be made from time to time in the open market at prevailing prices, or through privately negotiated transactions.
Removed
The 646 shares issuable pursuant to stock options at December 31, 2023 were issued under a previous plan and expired in January 2024.

Item 7. Management's Discussion & Analysis

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

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Biggest changeTABLE VII – Five-year Summary of Loans by Type ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) 2023 % ​ 2022 % ​ 2021 % ​ 2020 % ​ 2019 % Commercial real estate - non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 499,104 ​ 27.0 ​ $ 454,386 ​ 26.1 ​ $ 358,352 ​ 22.9 ​ $ 328,662 ​ 20.0 ​ $ 208,579 ​ 17.6 Multi-family (5 or more) residential ​ ​ 64,076 ​ 3.5 ​ ​ 55,406 ​ 3.2 ​ ​ 49,054 ​ 3.1 ​ ​ 54,893 ​ 3.3 ​ ​ 30,474 ​ 2.6 1-4 Family - commercial purpose ​ 174,162 9.4 ​ ​ 165,805 9.5 ​ ​ 175,027 11.2 ​ ​ 198,918 12.1 ​ ​ 147,121 12.4 Total commercial real estate - non-owner occupied ​ 737,342 39.9 ​ 675,597 38.8 ​ 582,433 37.2 ​ 582,473 35.4 ​ 386,174 32.6 Commercial real estate - owner occupied ​ ​ 237,246 ​ 12.8 ​ ​ 205,910 ​ 11.8 ​ ​ 196,083 ​ 12.5 ​ ​ 191,075 ​ 11.6 ​ ​ 78,729 ​ 6.7 All other commercial loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 78,832 4.3 ​ 95,368 5.5 ​ 118,488 7.6 ​ 222,923 13.6 ​ 67,288 5.7 Commercial lines of credit ​ 117,236 6.3 ​ 141,444 8.1 ​ 106,338 6.8 ​ 105,802 6.4 ​ 92,509 7.8 Political subdivisions ​ 79,031 4.3 ​ 86,663 5.0 ​ 75,401 4.8 ​ 46,295 2.8 ​ 46,054 3.9 Commercial construction and land ​ 104,123 5.6 ​ 60,892 3.5 ​ 59,505 3.8 ​ 41,000 2.5 ​ 32,717 2.8 Other commercial loans ​ 20,471 1.2 ​ 25,710 1.5 ​ 26,498 1.8 ​ 29,310 1.9 ​ 28,735 2.4 Total all other commercial loans ​ 399,693 21.7 ​ 410,077 23.6 ​ 386,230 24.8 ​ 445,330 27.2 ​ 267,303 22.6 Residential mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family - residential ​ ​ 389,262 21.1 ​ ​ 363,005 ​ 20.9 ​ ​ 327,593 ​ 20.9 ​ ​ 356,532 ​ 21.7 ​ ​ 388,415 ​ 32.9 1-4 Family residential construction ​ ​ 24,452 1.3 ​ ​ 30,577 1.8 ​ ​ 23,151 1.5 ​ ​ 18,736 1.1 ​ ​ 14,640 1.2 Total residential mortgage ​ 413,714 22.4 ​ 393,582 22.7 ​ 350,744 22.4 ​ 375,268 22.8 ​ 403,055 34.1 Consumer loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer lines of credit (including HELOCs) ​ 41,503 2.2 ​ 36,650 2.1 ​ 33,522 2.1 ​ 34,566 2.1 ​ 30,810 2.6 All other consumer ​ ​ 18,641 1.0 ​ 18,224 1.0 ​ 15,837 1.0 ​ 15,497 0.9 ​ 16,151 1.4 Total consumer ​ 60,144 3.2 ​ 54,874 3.1 ​ 49,359 3.1 ​ 50,063 3.0 ​ 46,961 4.0 Total ​ 1,848,139 100.0 ​ 1,740,040 100.0 ​ 1,564,849 100.0 ​ 1,644,209 100.0 ​ 1,182,222 100.0 Less: allowance for credit losses on loans ​ (19,208) ​ ​ (16,615) ​ ​ (13,537) ​ ​ (11,385) ​ ​ (9,836) ​ Loans, net ​ $ 1,828,931 ​ ​ ​ $ 1,723,425 ​ ​ ​ $ 1,551,312 ​ ​ ​ $ 1,632,824 ​ ​ ​ $ 1,172,386 ​ ​ ​ Additional details regarding the composition of the non-owner occupied commercial real estate loan portfolio at December 31, 2023 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ December 31, ​ % of Non-owner ​ % of ​ ​ 2023 ​ Occupied CRE ​ Total Loans Industrial ​ $ 109,160 ​ 21.9 % ​ 5.9 % Retail ​ ​ 94,824 ​ 19.0 % ​ 5.1 % Office ​ ​ 94,341 ​ 18.9 % ​ 5.1 % Hotels ​ ​ 73,094 ​ 14.6 % ​ 4.0 % Mixed Use ​ ​ 59,687 ​ 12.0 % ​ 3.2 % Other ​ ​ 67,998 ​ 13.6 % ​ 3.7 % Total Non-owner Occupied CRE Loans ​ $ 499,104 ​ ​ ​ ​ ​ ​ Total Gross Loans ​ $ 1,848,139 ​ ​ ​ ​ ​ ​ ​ ​ 30 Table of Contents TABLE VIII – LOAN MATURITY DISTRIBUTION ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed-Rate Loans ​ ​ Variable- or Adjustable-Rate Loans ​ All Loans ​ ​ 1 Year ​ 1-5 ​ >5 ​ ​ ​ ​ ​ 1 Year ​ 1-5 ​ >5 ​ ​ ​ ​ ​ ​ (In Thousands) or Less Years Years Total or Less Years Years Total ​ ​ Total Commercial Real Estate- Nonowner Occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 30,180 ​ $ 181,360 ​ $ 27,690 ​ $ 239,230 ​ ​ $ 70,947 ​ $ 183,009 ​ $ 5,918 ​ $ 259,874 ​ ​ $ 499,104 Multi-family (5 or more) residential ​ 5,775 ​ 20,151 ​ 2,157 ​ 28,083 ​ ​ 7,166 ​ 28,526 ​ 301 ​ 35,993 ​ ​ ​ 64,076 1-4 Family - commercial purpose ​ ​ 14,537 ​ ​ 51,672 ​ ​ 10,784 ​ ​ 76,993 ​ ​ 14,906 ​ 81,862 ​ 401 ​ 97,169 ​ ​ ​ 174,162 Total commercial real estate - non-owner occupied ​ ​ 50,492 ​ ​ 253,183 ​ ​ 40,631 ​ ​ 344,306 ​ ​ ​ 93,019 ​ ​ 293,397 ​ ​ 6,620 ​ ​ 393,036 ​ ​ ​ 737,342 Commercial real estate - owner occupied ​ ​ 11,425 ​ ​ 76,136 ​ ​ 25,997 ​ ​ 113,559 ​ ​ ​ 22,281 ​ ​ 100,449 ​ ​ 957 ​ ​ 123,687 ​ ​ ​ 237,246 All other commercial loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ ​ 1,453 ​ ​ 44,794 ​ ​ 7,719 ​ ​ 53,966 ​ ​ ​ 10,552 ​ ​ 13,686 ​ ​ 628 ​ ​ 24,866 ​ ​ ​ 78,832 Commercial lines of credit ​ ​ 6,122 ​ ​ 0 ​ ​ 0 ​ ​ 6,122 ​ ​ ​ 106,505 ​ ​ 1,003 ​ ​ 3,606 ​ ​ 111,114 ​ ​ ​ 117,236 Political subdivisions ​ ​ 919 ​ ​ 19,150 ​ ​ 56,213 ​ ​ 76,282 ​ ​ ​ 15 ​ ​ 2,639 ​ ​ 95 ​ ​ 2,749 ​ ​ ​ 79,031 Commercial construction and land ​ ​ 7,112 ​ ​ 21,889 ​ ​ 746 ​ ​ 29,747 ​ ​ ​ 57,370 ​ ​ 17,006 ​ ​ 0 ​ ​ 74,376 ​ ​ ​ 104,123 Other commercial loans ​ ​ 981 ​ ​ 3,725 ​ ​ 2,404 ​ ​ 7,110 ​ ​ ​ 6,320 ​ ​ 7,041 ​ ​ 0 ​ ​ 13,361 ​ ​ ​ 20,471 Total all other commercial loans ​ ​ 16,587 ​ ​ 89,558 ​ ​ 67,082 ​ ​ 173,227 ​ ​ ​ 180,762 ​ ​ 41,375 ​ ​ 4,329 ​ ​ 226,466 ​ ​ ​ 399,693 Residential mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family - residential ​ ​ 402 ​ ​ 7,566 ​ ​ 149,915 ​ ​ 157,883 ​ ​ ​ 17,120 ​ ​ 62,189 ​ ​ 152,070 ​ ​ 231,379 ​ ​ ​ 389,262 1-4 Family residential construction ​ ​ 138 ​ ​ 918 ​ ​ 9,490 ​ ​ 10,546 ​ ​ ​ 0 ​ ​ 0 ​ ​ 13,906 ​ ​ 13,906 ​ ​ ​ 24,452 Total residential mortgage ​ ​ 540 ​ ​ 8,484 ​ ​ 159,405 ​ ​ 168,429 ​ ​ ​ 17,120 ​ ​ 62,189 ​ ​ 165,976 ​ ​ 245,285 ​ ​ ​ 413,714 Consumer loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 0 Consumer lines of credit (including HELOCs) ​ ​ 334 ​ ​ 0 ​ ​ 2 ​ ​ 336 ​ ​ ​ 41,167 ​ ​ 0 ​ ​ 0 ​ ​ 41,167 ​ ​ ​ 41,503 All other consumer ​ ​ 751 ​ ​ 12,014 ​ ​ 2,360 ​ ​ 15,125 ​ ​ ​ 3,516 ​ ​ 0 ​ ​ 0 ​ ​ 3,516 ​ ​ ​ 18,641 Total consumer ​ ​ 1,085 ​ ​ 12,014 ​ ​ 2,362 ​ ​ 15,461 ​ ​ ​ 44,683 ​ ​ 0 ​ ​ 0 ​ ​ 44,683 ​ ​ ​ 60,144 Total ​ $ 80,129 ​ $ 439,375 ​ $ 295,477 ​ $ 814,982 ​ ​ $ 357,865 ​ $ 497,410 ​ $ 177,882 ​ $ 1,033,157 ​ ​ $ 1,848,139 ​ PROVISION AND ALLOWANCE FOR CREDIT LOSSES On January 1, 2023, the Corporation adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASC 326).
Biggest changeBased on the fairly limited volume of required repurchases to date, no allowance has been established for representation and warranty exposures as of December 31, 2024. 28 Table of Contents TABLE VII – Five-Year Summary of Loans by Type ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) 2024 % ​ 2023 % ​ 2022 % ​ 2021 % ​ 2020 % Commercial real estate - non-owner occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 471,171 ​ 24.9 ​ $ 499,104 ​ 27.0 ​ $ 454,386 ​ 26.1 ​ $ 358,352 ​ 22.9 ​ $ 328,662 ​ 20.0 Multi-family (5 or more) residential ​ ​ 105,174 ​ 5.5 ​ ​ 64,076 ​ 3.5 ​ ​ 55,406 ​ 3.2 ​ ​ 49,054 ​ 3.1 ​ ​ 54,893 ​ 3.3 1-4 Family - commercial purpose ​ 163,220 8.6 ​ ​ 174,162 9.4 ​ ​ 165,805 9.5 ​ ​ 175,027 11.2 ​ ​ 198,918 12.1 Total commercial real estate - non-owner occupied ​ 739,565 39.0 ​ 737,342 39.9 ​ 675,597 38.8 ​ 582,433 37.2 ​ 582,473 35.4 Commercial real estate - owner occupied ​ ​ 261,071 ​ 13.8 ​ ​ 237,246 ​ 12.8 ​ ​ 205,910 ​ 11.8 ​ ​ 196,083 ​ 12.5 ​ ​ 191,075 ​ 11.6 All other commercial loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ 96,665 5.1 ​ 78,832 4.3 ​ 95,368 5.5 ​ 118,488 7.6 ​ 222,923 13.6 Commercial lines of credit ​ 120,078 6.3 ​ 117,236 6.3 ​ 141,444 8.1 ​ 106,338 6.8 ​ 105,802 6.4 Political subdivisions ​ 94,009 5.0 ​ 79,031 4.3 ​ 86,663 5.0 ​ 75,401 4.8 ​ 46,295 2.8 Commercial construction and land ​ 92,741 4.9 ​ 104,123 5.6 ​ 60,892 3.5 ​ 59,505 3.8 ​ 41,000 2.5 Other commercial loans ​ 19,784 1.0 ​ 20,471 1.2 ​ 25,710 1.5 ​ 26,498 1.8 ​ 29,310 1.9 Total all other commercial loans ​ 423,277 22.3 ​ 399,693 21.7 ​ 410,077 23.6 ​ 386,230 24.8 ​ 445,330 27.2 Residential mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family - residential ​ ​ 383,797 20.2 ​ ​ 389,262 21.1 ​ ​ 363,005 ​ 20.9 ​ ​ 327,593 ​ 20.9 ​ ​ 356,532 ​ 21.7 1-4 Family residential construction ​ ​ 24,212 1.3 ​ ​ 24,452 1.3 ​ ​ 30,577 1.8 ​ ​ 23,151 1.5 ​ ​ 18,736 1.1 Total residential mortgage ​ 408,009 21.5 ​ 413,714 22.4 ​ 393,582 22.7 ​ 350,744 22.4 ​ 375,268 22.8 Consumer loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer lines of credit (including HELOCs) ​ 47,196 2.5 ​ 41,503 2.2 ​ 36,650 2.1 ​ 33,522 2.1 ​ 34,566 2.1 All other consumer ​ ​ 16,730 0.9 ​ 18,641 1.0 ​ 18,224 1.0 ​ 15,837 1.0 ​ 15,497 0.9 Total consumer ​ 63,926 3.4 ​ 60,144 3.2 ​ 54,874 3.1 ​ 49,359 3.1 ​ 50,063 3.0 Total ​ 1,895,848 100.0 ​ 1,848,139 100.0 ​ 1,740,040 100.0 ​ 1,564,849 100.0 ​ 1,644,209 100.0 Less: allowance for credit losses on loans ​ (20,035) ​ ​ (19,208) ​ ​ (16,615) ​ ​ (13,537) ​ ​ (11,385) ​ Loans, net ​ $ 1,875,813 ​ ​ ​ $ 1,828,931 ​ ​ ​ $ 1,723,425 ​ ​ ​ $ 1,551,312 ​ ​ ​ $ 1,632,824 ​ ​ ​ Additional details regarding the composition of the non-owner occupied commercial real estate loan portfolio at December 31, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ December 31, ​ % of Non-owner ​ % of ​ ​ 2024 ​ Occupied CRE ​ Total Loans Office ​ $ 102,831 ​ 21.8 % ​ 5.4 % Retail ​ ​ 96,142 ​ 20.4 % ​ 5.1 % Industrial ​ ​ 79,839 ​ 16.9 % ​ 4.2 % Hotels ​ ​ 70,229 ​ 14.9 % ​ 3.7 % Mixed Use ​ ​ 60,837 ​ 12.9 % ​ 3.2 % Other ​ ​ 61,293 ​ 13.0 % ​ 3.2 % Total Non-owner Occupied CRE Loans ​ $ 471,171 ​ ​ ​ ​ ​ ​ Total Gross Loans ​ $ 1,895,848 ​ ​ ​ ​ ​ ​ ​ ​ 29 Table of Contents TABLE VIII – LOAN MATURITY DISTRIBUTION ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed-Rate Loans ​ ​ Variable- or Adjustable-Rate Loans ​ All Loans ​ ​ 1 Year 1-5 >5-15 >15 ​ ​ ​ ​ 1 Year 1-5 >5-15 >15 ​ ​ ​ ​ ​ (In Thousands) or Less Years Years Years Total or Less Years Years Years Total ​ ​ Total Commercial Real Estate- Nonowner Occupied: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-owner occupied ​ $ 19,319 $ 202,763 $ 11,483 $ 9 $ 233,574 ​ ​ $ 80,396 $ 154,149 $ 3,052 $ 0 $ 237,597 ​ ​ $ 471,171 Multi-family (5 or more) residential ​ 7,335 18,009 2,419 678 28,441 ​ ​ 22,578 54,155 0 0 76,733 ​ ​ ​ 105,174 1-4 Family - commercial purpose ​ ​ 8,245 ​ 45,212 ​ 12,347 ​ 94 ​ 65,898 ​ ​ 10,228 86,931 ​ 163 0 97,322 ​ ​ ​ 163,220 Total commercial real estate - non-owner occupied ​ ​ 34,899 ​ 265,984 ​ 26,249 ​ 781 ​ 327,913 ​ ​ ​ 113,202 ​ 295,235 ​ 3,215 ​ 0 ​ 411,652 ​ ​ ​ 739,565 Commercial real estate - owner occupied ​ ​ 10,073 ​ 81,204 ​ 24,696 ​ 410 ​ 116,382 ​ ​ ​ 28,786 ​ 115,903 ​ 0 ​ 0 ​ 144,689 ​ ​ ​ 261,071 All other commercial loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ ​ 1,828 ​ 47,387 ​ 14,186 ​ 464 ​ 63,865 ​ ​ ​ 12,950 ​ 19,248 ​ 602 ​ 0 ​ 32,800 ​ ​ ​ 96,665 Commercial lines of credit ​ ​ 5,539 ​ 74 ​ 764 ​ 0 ​ 6,377 ​ ​ ​ 113,627 ​ 74 ​ 0 ​ 0 ​ 113,701 ​ ​ ​ 120,078 Political subdivisions ​ ​ 7,206 ​ 15,636 ​ 47,035 ​ 7,763 ​ 77,640 ​ ​ ​ 0 ​ 6,380 ​ 9,989 ​ 0 ​ 16,369 ​ ​ ​ 94,009 Commercial construction and land ​ ​ 6,712 ​ 24,838 ​ 658 ​ 0 ​ 32,208 ​ ​ ​ 56,420 ​ 4,113 ​ 0 ​ 0 ​ 60,533 ​ ​ ​ 92,741 Other commercial loans ​ ​ 277 ​ 5,283 ​ 1,918 ​ 87 ​ 7,565 ​ ​ ​ 4,283 ​ 7,936 ​ 0 ​ 0 ​ 12,219 ​ ​ ​ 19,784 Total all other commercial loans ​ ​ 21,562 ​ 93,218 ​ 64,561 ​ 8,314 ​ 187,655 ​ ​ ​ 187,280 ​ 37,751 ​ 10,591 ​ 0 ​ 235,622 ​ ​ ​ 423,277 Residential mortgage loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1-4 Family - residential ​ ​ 1,232 ​ 5,807 ​ 88,293 ​ 52,103 ​ 147,435 ​ ​ ​ 18,796 ​ 66,055 ​ 151,511 ​ 0 ​ 236,362 ​ ​ ​ 383,797 1-4 Family residential construction ​ ​ 163 ​ 811 ​ 5,553 ​ 2,448 ​ 8,975 ​ ​ ​ 0 ​ 0 ​ 15,237 ​ 0 ​ 15,237 ​ ​ ​ 24,212 Total residential mortgage ​ ​ 1,395 ​ 6,618 ​ 93,846 ​ 54,551 ​ 156,410 ​ ​ ​ 18,796 ​ 66,055 ​ 166,748 ​ 0 ​ 251,599 ​ ​ ​ 408,009 Consumer loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumer lines of credit (including HELOCs) ​ ​ 321 ​ 0 ​ 0 ​ 1 ​ 322 ​ ​ ​ 46,874 ​ 0 ​ 0 ​ 0 ​ 46,874 ​ ​ ​ 47,196 All other consumer ​ ​ 1,003 ​ 9,864 ​ 1,920 ​ 0 ​ 12,787 ​ ​ ​ 3,943 ​ 0 ​ 0 ​ 0 ​ 3,943 ​ ​ ​ 16,730 Total consumer ​ ​ 1,324 ​ 9,864 ​ 1,920 ​ 1 ​ 13,109 ​ ​ ​ 50,817 ​ 0 ​ 0 ​ 0 ​ 50,817 ​ ​ ​ 63,926 Total ​ $ 69,253 $ 456,888 $ 211,272 $ 64,057 $ 801,469 ​ ​ $ 398,881 $ 514,944 $ 180,554 $ 0 $ 1,094,379 ​ ​ $ 1,895,848 ​ ​ ​ 30 Table of Contents PROVISION AND ALLOWANCE FOR CREDIT LOSSES A summary of the provision for credit losses for the years ended December 31, 2024 and 2023, is as follows: ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Year ​ Year ​ ​ ​ Ended ​ Ended ​ ​ ​ December 31, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ Provision for credit losses: ​ ​ ​ ​ ​ ​ ​ Loans receivable ​ $ 2,430 ​ $ 753 ​ Off-balance sheet exposures ​ (235) ​ (567) ​ Total provision for credit losses ​ $ 2,195 ​ $ 186 ​ For the year ended December 31, 2024, there was a provision for credit losses of $2,195,000, an increase of $2,009,000 in expense compared to a provision for loan losses of $186,000 in 2023.
The volatility in stockholders’ equity related to accumulated other comprehensive loss from available-for-sale debt securities has been caused by significant fluctuations in interest rates including overall significant increases in rates as compared to market rates when most of the Corporation’s securities were purchased.
The volatility in stockholders’ equity related to accumulated other comprehensive loss from available-for-sale debt securities has been caused by fluctuations in interest rates including overall increases in rates as compared to market rates when most of the Corporation’s securities were purchased.
Additionally, in 2023, the Corporation recognized income of $156,000 from dividends on Federal Reserve Bank stock with no comparable amount in 2022 and income of $234,000, with no comparable amount in 2022, from a conversion assistance payment received related to a change in wealth management platform for providing brokerage and investment advisory services. ​ Ø Service charges on deposit accounts of $5,567,000 increased $548,000 as the volume of consumer and business overdraft activity increased and included in 2022 was a reduction in income of $290,000 related to refunds of consumer overdraft fees as the result of updated regulatory guidance on certain overdraft fees. ​ Ø Trust revenue of $7,413,000 increased $419,000 reflecting revenue from new business. ​ 14 Table of Contents Ø Brokerage and insurance revenue of $1,675,000 decreased $616,000 due to a reduction in sales volume. ​ Ø Loan servicing fees, net, of $602,000 decreased $358,000, as the fair value of servicing rights decreased $200,000 in 2023 as compared to an increase of $126,000 in 2022. ​ ● Net losses on available-for-sale debt securities were $3,036,000 for the year ended December 31, 2023, compared to net gains on available-for-sale debt securities of $20,000 for the year ended December 31, 2022.
Additionally, in 2023, the Corporation recognized income of $156,000 from dividends on Federal Reserve Bank stock with no comparable amount in 2022 and income of $234,000, with no comparable amount in 2022, from a conversion assistance payment received related to a change in wealth management platform for providing brokerage and investment advisory services. ​ Ø Service charges on deposit accounts of $5,567,000 increased $548,000 as the volume of consumer and business overdraft activity increased and included in 2022 was a reduction in income of $290,000 related to refunds of consumer overdraft fees as the result of updated regulatory guidance on certain overdraft fees. ​ Ø Trust revenue of $7,413,000 increased $419,000 reflecting revenue from new business. ​ Ø Brokerage and insurance revenue of $1,675,000 decreased $616,000 due to a reduction in sales volume. ​ Ø Loan servicing fees, net, of $602,000 decreased $358,000, as the fair value of servicing rights decreased $200,000 in 2023 as compared to an increase of $126,000 in 2022. ​ ● Net losses on available-for-sale debt securities were $3,036,000 for the year ended December 31, 2023, compared to net gains on available-for-sale debt securities of $20,000 for the year ended December 31, 2022.
As summarized in the table that immediately follows, the Corporation’s highly liquid sources of available funds described above, including unused borrowing capacity with the Federal Home Loan Bank of Pittsburgh, unused availability on the Federal Reserve Bank of Philadelphia’s discount window, available federal funds lines with other banks and unencumbered available-for-sale debt securities totaled $1.1 billion at December 31, 2023, 2023.
As summarized in the table that immediately follows, the Corporation’s highly liquid sources of available funds described above, including unused borrowing capacity with the Federal Home Loan Bank of Pittsburgh, unused availability on the Federal Reserve Bank of Philadelphia’s discount window, available federal funds lines with other banks and unencumbered available-for-sale debt securities totaled $1.1 billion at December 31, 2024.
As described in Note 6 to the consolidated financial statements, management determined the Corporation does not have the intent to sell, nor is it more likely than not that it will be required to sell, available-for-sale debt securities in an unrealized loss position at December 31, 2023 before it is able to recover the amortized cost basis.
As described in Note 6 to the consolidated financial statements, management determined the Corporation does not have the intent to sell, nor is it more likely than not that it will be required to sell, available-for-sale debt securities in an unrealized loss position at December 31, 2024 before it is able to recover the amortized cost basis.
The new program was effective when publicly announced and will continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion.
The program was effective when publicly announced and will continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion.
Management believes, as of December 31, 2023, that C&N Bank meets all capital adequacy requirements to which it is subject and maintains a capital conservation buffer (described in more detail below) that allows the Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers.
Management believes, as of December 31, 2024, that C&N Bank meets all capital adequacy requirements to which it is subject and maintains a capital conservation buffer (described in more detail below) that allows the Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers.
Residential mortgages originated and sold through the MPF Xtra program consist primarily of conforming, prime loans sold to the Federal National Mortgage Association (Fannie Mae), a quasi-government entity. The Corporation also originates and sells residential mortgage loans to the secondary market through the MPF Original program, administered by the Federal Home Loan Banks of Pittsburgh and Chicago.
The Corporation originates and sells residential mortgage loans to the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Residential mortgages originated and sold through the MPF Xtra program consist primarily of conforming, prime loans sold to the Federal National Mortgage Association (Fannie Mae), a quasi-government entity.
Further, management reviewed the Corporation’s holdings as of December 31, 2023 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at December 31, 2023, other than securities issued or guaranteed by U.S.
Further, management reviewed the Corporation’s holdings as of December 31, 2024 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at December 31, 2024, other than securities issued or guaranteed by U.S.
These securities were investment grade (rated Aaa), and there have been no payment defaults on these securities. Based on the results of management’s assessment, there was no ACL required on available-for-sale debt securities in an unrealized loss position at December 31, 2023.
These securities were investment grade (rated Aaa), and there have been no payment defaults on these securities. Based on the results of management’s assessment, there was no ACL required on available-for-sale debt securities in an unrealized loss position at December 31, 2024.
Information related to maturities of time deposits is provided in Note 10 to the consolidated financial statements. Information related to maturities of borrowed funds is provided in Note 11 to the consolidated financial statements. The Corporation’s operating lease commitments with terms of one year or less and other commitments at December 31, 2023 are immaterial.
Information related to maturities of time deposits is provided in Note 10 to the consolidated financial statements. Information related to maturities of borrowed funds is provided in Note 11 to the consolidated financial statements. The Corporation’s operating lease commitments with terms of one year or less and other commitments at December 31, 2024 are immaterial.
On September 25, 2023, the Corporation announced a new treasury stock repurchase program. Under the newly approved program, the Corporation is authorized to repurchase up to 750,000 shares of the Corporation’s common stock, or slightly less than 5% of the Corporation’s issued and outstanding shares at August 4, 2023.
On September 25, 2023, the Corporation announced a new treasury stock repurchase program. Under the program, the Corporation is authorized to repurchase up to 750,000 shares of the Corporation’s common stock, or slightly less than 5% of the Corporation’s issued and outstanding shares at August 4, 2023.
Significant variances included the following: Ø Increase in cash surrender value of life insurance of $2,703,000 increased $2,158,000 in 2023 from 2022 including $2,100,000 in income from a one-time enhancement on a $30 million purchase of new BOLI as previously discussed. ​ Ø Other noninterest income of $4,610,000 increased $912,000 as dividends on FHLB-Pittsburgh stock totaled $1,138,000, an increase of $541,000.
Significant variances included the following: 16 Table of Contents Ø Increase in cash surrender value of life insurance of $2,703,000 increased $2,158,000 in 2023 from 2022 including $2,100,000 in income from a one-time enhancement on a $30 million purchase of new BOLI as previously discussed. ​ Ø Other noninterest income of $4,610,000 increased $912,000 as dividends on FHLB-Pittsburgh stock totaled $1,138,000, an increase of $541,000.
Management believes the recorded net deferred tax asset at December 31, 2023 is fully realizable; however, if management determines the Corporation will be unable to realize all or part of the net deferred tax asset, the Corporation would adjust the deferred tax asset, which would negatively impact earnings.
Management believes the recorded net deferred tax asset at December 31, 2024 is fully realizable; however, if management determines the Corporation will be unable to realize all or part of the net deferred tax asset, the Corporation would adjust the deferred tax asset, which would negatively impact earnings.
The following table presents the contractual maturities and the weighted-average yields (calculated based on amortized cost) of investment securities as of December 31, 2023. Yields on tax-exempt securities are presented on a fully taxable-equivalent basis.
The following table presents the contractual maturities and the weighted-average yields (calculated based on amortized cost) of investment securities as of December 31, 2024. Yields on tax-exempt securities are presented on a fully taxable-equivalent basis.
The securities section of Management’s Discussion and Analysis and Note 6 to the consolidated financial statements provide additional information concerning information management considered in evaluating debt and equity securities for credit losses at December 31, 2023. ​
The securities section of Management’s Discussion and Analysis and Note 6 to the consolidated financial statements provide additional information concerning information management considered in evaluating debt and equity securities for credit losses at December 31, 2024. ​
In 2023, the net credit for credit losses related to off-balance sheet exposures of $211,000 is included in the provision for credit losses in the consolidated statements of income. Ø Salaries and employee benefits expense of $44,195,000 increased $2,362,000, including increases in base salaries expense of $1,713,000, or 6.0% and in estimated cash and stock-based incentive compensation expense of $670,000 consistent with comparisons in both years of the Corporation’s earnings performance to that of defined peer groups . Ø Data processing and telecommunications expense of $7,582,000 increased $776,000, including the impact of increases in software licensing and maintenance costs as well as costs related to enhancements of data management capabilities. ​ Ø Professional fees of $2,497,000 increased $492,000, including $389,000 of conversion costs related to a change in wealth management platform for providing brokerage and investment advisory services. ​ Ø Pennsylvania shares tax expense of $1,602,000 in 2023 is lower by $354,000, consistent with a reduction in C&N Bank’s equity that provides the base for determining the annual tax. ​ ● The income tax provision of $6,335,000, or 20.8% of pre-tax income for the year ended December 31, 2023 increased $603,000 from $5,732,000, or 17.7% of pre-tax income for the year ended December 31, 2022.
In 2023, the net credit for credit losses related to off-balance sheet exposures of $567,000 is included in the provision for credit losses in the consolidated statements of income. Ø Salaries and employee benefits expense of $44,195,000 increased $2,362,000, including increases in base salaries expense of $1,713,000, or 6.0% and in cash and stock-based incentive compensation expense of $670,000 consistent with comparisons in both years of the Corporation’s earnings performance to that of defined peer groups . Ø Data processing and telecommunications expense of $7,582,000 increased $776,000, including the impact of increases in software licensing and maintenance costs as well as costs related to enhancements of data management capabilities. ​ 17 Table of Contents Ø Professional fees of $2,497,000 increased $492,000, including $389,000 of conversion costs related to a change in wealth management platform for providing brokerage and investment advisory services. Ø Pennsylvania shares tax expense of $1,602,000 in 2023 was lower by $354,000, consistent with a reduction in C&N Bank’s equity that provided the base for determining the annual tax. ​ ● The income tax provision of $6,335,000, or 20.8% of pre-tax income for the year ended December 31, 2023 increased $603,000 from $5,732,000, or 17.7% of pre-tax income for the year ended December 31, 2022.
GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase/(Decrease) ​ ​ 2023 2022 ​ 2021 ​ 2023/2022 2022/2021 Net Interest Income Under U.S.
GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase/(Decrease) ​ ​ 2024 2023 ​ 2022 ​ 2024/2023 2023/2022 Net Interest Income Under U.S.
Significant changes in the average balances of the Corporation’s earning 28 Table of Contents assets and interest-bearing liabilities are described in the Net Interest Income section of Management’s Discussion and Analysis. Other significant balance sheet items, including securities, the allowance for credit losses for loans and stockholders’ equity, are discussed in separate sections of Management’s Discussion and Analysis.
Significant changes in the average balances of the Corporation’s earning assets and interest-bearing liabilities are described in the Net Interest Income section of Management’s Discussion and Analysis. Other significant balance sheet items, including securities, the allowance for credit losses for loans and stockholders’ equity, are discussed in separate sections of Management’s Discussion and Analysis.
Also included in Table VII is additional detail regarding the composition of the non-owner occupied commercial real estate loan portfolio at December 31, 2023.
Also included in Table VII is additional detail regarding the composition of the non-owner occupied commercial real estate loan portfolio at December 31, 2024.
STOCKHOLDERS’ EQUITY AND CAPITAL ADEQUACY Details concerning capital ratios at December 31, 2023 and December 31, 2022 are presented in Note 17 to the consolidated financial statements.
STOCKHOLDERS’ EQUITY AND CAPITAL ADEQUACY Details concerning capital ratios at December 31, 2024 and December 31, 2023 are presented in Note 17 to the consolidated financial statements.
At December 31, 2023, the minimum risk-based capital ratios, and the capital ratios including the capital conservation buffer, are as follows: ​ ​ ​ ​ ​ Minimum common equity tier 1 capital ratio 4.5 % Minimum common equity tier 1 capital ratio plus capital conservation buffer 7.0 % Minimum tier 1 capital ratio 6.0 % Minimum tier 1 capital ratio plus capital conservation buffer 8.5 % Minimum total capital ratio 8.0 % Minimum total capital ratio plus capital conservation buffer 10.5 % 37 Table of Contents ​ A banking organization with a buffer greater than 2.5% over the minimum risk-based capital ratios would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero.
At December 31, 2024, the minimum risk-based capital ratios, and the capital ratios including the capital conservation buffer, are as follows: ​ ​ ​ ​ ​ Minimum common equity tier 1 capital ratio 4.5 % Minimum common equity tier 1 capital ratio plus capital conservation buffer 7.0 % Minimum tier 1 capital ratio 6.0 % Minimum tier 1 capital ratio plus capital conservation buffer 8.5 % Minimum total capital ratio 8.0 % Minimum total capital ratio plus capital conservation buffer 10.5 % ​ A banking organization with a buffer greater than 2.5% over the minimum risk-based capital ratios would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero.
All shares of common stock repurchased pursuant to the new program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plans and its equity compensation program.
All shares of common stock repurchased pursuant to the program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of 36 Table of Contents Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plans and its equity compensation program.
The ACL includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis), and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and which are individually evaluated for credit losses 17 Table of Contents (individual basis).
The ACL includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis), and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and which are individually evaluated for credit losses (individual basis).
(2) Fees on loans are included with interest on loans and amounted to $1,856,000 in 2023, $2,958,000 in 2022 and $7,958,000 in 2021. (3) The table that follows is a reconciliation of net interest income under U.S.
(2) Fees on loans are included with interest on loans and amounted to $1,927,000 in 2024, $1,856,000 in 2023 and $2,958,000 in 2022. (3) The table that follows is a reconciliation of net interest income under U.S.
A summary of payout restrictions based on the capital conservation buffer is as follows: ​ ​ ​ ​ ​ Capital Conservation Buffer Maximum Payout (as a % of risk-weighted assets) ​ (as a % of eligible retained income) Greater than 2.5% ​ No payout limitation applies ​ ≤2.5% and >1.875% ​ 60 % ≤1.875% and >1.25% ​ 40 % ≤1.25% and >0.625% ​ 20 % ≤0.625% ​ 0 % ​ At December 31, 2023, C&N Bank’s Capital Conservation Buffer (determined based on the minimum total capital ratio) was 6.89%.
A summary of payout restrictions based on the capital conservation buffer is as follows: ​ ​ ​ ​ ​ Capital Conservation Buffer Maximum Payout (as a % of risk-weighted assets) ​ (as a % of eligible retained income) Greater than 2.5% ​ No payout limitation applies ​ ≤2.5% and >1.875% ​ 60 % ≤1.875% and >1.25% ​ 40 % ≤1.25% and >0.625% ​ 20 % ≤0.625% ​ 0 % ​ At December 31, 2024, C&N Bank’s Capital Conservation Buffer (determined based on the minimum total capital ratio) was 7.19%.
Interest expense on short-term borrowings in 2023 was $2,811,000 as compared to $429,000 in 2022 as the average balance of short-term borrowings increased to $62,926,000 in 2023 from $21,766,000 in 2022. The average rate on short-term borrowings was 5.15% in 2023 compared to 1.97% in 2022.
Interest expense on short-term borrowings in 2023 was $3,240,000 as compared to $429,000 in 2022 as the average balance of short-term borrowings increased to $62,926,000 in 2023 from $21,766,000 in 2022. The average rate on short-term borrowings was 5.15% in 2023 compared to 1.97% in 2022.
The Corporation may be required to repurchase a loan and reimburse a portion of fees received or reimburse the investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. At December 31, 2023, outstanding balances of such loans sold totaled $323,298,000.
The Corporation may be required to repurchase a loan and reimburse a portion of fees received or reimburse the investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. At December 31, 2024, outstanding balances of such loans sold totaled $329,766,000.
If required to raise cash in an emergency situation, the Corporation could utilize available-for-sale debt securities as collateral for borrowings or sell securities to meet its obligations. At December 31, 2023, the carrying value of available-for-sale debt securities in excess of amounts required to meet pledging or repurchase agreement obligations was $256,058,000.
If required to raise cash in an emergency situation, the Corporation could utilize available-for-sale debt securities as collateral for borrowings or sell securities to meet its obligations. At December 31, 2024, the carrying value of available-for-sale debt securities in excess of amounts required to meet pledging or repurchase agreement obligations was $236,945,000.
The net losses on available-for-sale debt securities of $3,036,000 for the year ended December 31, 2023, were primarily from the sales in the fourth quarter related to the previously described repositioning of the portfolio. ● Noninterest expense totaled $74,148,000 for the year ended December 31, 2023, an increase of $6,193,000 from the total for the year ended December 31, 2022.
The net losses on available-for-sale debt securities of $3,036,000 for the year ended December 31, 2023, were primarily from the previously described repositioning of the portfolio. ● Noninterest expense totaled $74,148,000 for the year ended December 31, 2023, an increase of $6,193,000 from the total for the year ended December 31, 2022.
As a result of the repositioning, the Corporation recognized a net charge to earnings of approximately $1.3 million, or $0.08 per diluted share in the fourth quarter 2023 reflecting the net impact of: (1) a $3.0 million pre-tax loss and after-tax loss of $2.4 million from the sale of available-for-sale debt securities with an amortized cost basis of $45.5 million, (2) a tax charge of $950,000 from initiating the surrender of BOLI with a book value of $14.3 million, and (3) noninterest income of $2.1 million from a one-time enhancement on a $30 million purchase of new BOLI.
As a result of the repositioning, the Corporation recognized a net charge to earnings of approximately $1.3 million, or $0.08 per diluted share in the fourth quarter 2023 reflecting the net impact of: (1) a $3.0 million pre-tax loss and after-tax loss of $2.4 million from the sale of available-for-sale debt securities with an amortized cost basis of $45.5 million, (2) a tax charge of $950,000 from initiating the surrender of BOLI with a book value of $14.3 million, and (3) noninterest income of $2.1 million from a one-time enhancement on a $30 million purchase of new BOLI. ● For the year ended December 31, 2023, net interest income totaled $80,400,000, $2,728,000 lower than in 2022.
Summary ratings information at December 31, 2023, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poors or Fitch, is as follows: AAA or pre-refunded – 21% of the portfolio; AA – 72%; A – 7%. ● Private label commercial mortgage-backed securities (PLCMBS) – There were two PLCMBS securities, both of which were from the most senior payment (subordination) classes of their respective issuances.
Summary ratings information at December 31, 2024, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poors or Fitch, is as follows: AAA or pre-refunded – 20% of the portfolio; AA – 74%; A – 6%. 26 Table of Contents ● Private label commercial mortgage-backed securities (PLCMBS) – There were two PLCMBS securities, both of which were from the most senior payment (subordination) classes of their respective issuances.
The volatility in the fair value of the portfolio, including the significant reduction in fair value, resulted from changes in interest rates. As shown above, the market yield on the 5-year U.S. Treasury Note was 0.15% lower at December 31, 2023 in comparison to December 31, 2022, and 2.58% higher than at December 31, 2021.
The volatility in the fair value of the portfolio, including the significant reduction in fair value, resulted from changes in interest rates. As shown above, the market yield on the 5-year U.S. Treasury Note was 0.54% higher at December 31, 2024 in comparison to December 31, 2023, and 0.39% higher than at December 31, 2022.
At December 31, 2023, the securities have external ratings ranging from BBB-/Baa3 to A-. ● Obligations of states and political subdivisions (municipal bonds) – All of the Corporation’s holdings of municipal bonds were investment grade and there have been no payment defaults.
All of the issuers have publicly traded common stock . At December 31, 2024, the securities have external ratings ranging from BBB-/Baa3 to A-. ● Obligations of states and political subdivisions (municipal bonds) – All of the Corporation’s holdings of municipal bonds were investment grade and there have been no payment defaults.
INCOME TAXES The effective income tax rate was 20.8% of pre-tax income in 2023, up from 17.7% in 2022 and 18.9% in 2021.
INCOME TAXES The effective income tax rate was 18.6% of pre-tax income in 2024, down from 20.8% in 2023 and up from 17.7% in 2022.
Included in uninsured deposits are deposits collateralized by securities (almost exclusively municipal deposits) totaling $151.0 million at December 31, 2023. As shown in the table below, total uninsured and uncollateralized deposits amounted to 21.7% of total deposits at December 31, 2023, down from 24.0% at December 31, 2022.
Included in uninsured deposits are deposits collateralized by securities (almost exclusively municipal deposits) totaling $162.0 million at December 31, 2024. As shown in the table below, total uninsured and uncollateralized deposits amounted to 22.3% of total deposits at December 31, 2024, up from 21.7% at December 31, 2023.
As described in more detail below, the results for 2023 included the impact of a $1.3 million charge, or $0.08 per diluted share, related to the repositioning of available-for-sale securities and BOLI investments. Significant variances were as follows: ● In December 2023 , the Corporation repositioned its available-for-sale securities portfolio and its investments in bank-owned life insurance (“BOLI”).
As noted above, the results for 2023 included the impact of a $1.3 million charge, or $0.08 per diluted share, related to the repositioning of available-for-sale securities and BOLI. Significant variances were as follows: ● In December 2023 , the Corporation repositioned its available-for-sale securities portfolio and its investments in BOLI.
Tables IX through XII present historical data related to loans and the allowance for credit losses. . ​ 32 Table of Contents ​ TABLE IX - ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2023 2022 2021 2020 2019 Balance, beginning of year $ 16,615 ​ $ 13,537 ​ $ 11,385 ​ $ 9,836 ​ $ 9,309 ​ Adoption of ASU 2016-13 (CECL) 2,104 ​ 0 ​ 0 ​ 0 ​ 0 ​ Charge-offs (356) ​ (4,245) ​ (1,575) ​ (2,465) ​ (379) ​ Recoveries 92 ​ 68 ​ 66 ​ 101 ​ 57 ​ Net charge-offs (264) ​ (4,177) ​ (1,509) ​ (2,364) ​ (322) ​ Provision for credit losses 753 ​ 7,255 ​ 3,661 ​ 3,913 ​ 849 ​ Balance, end of year $ 19,208 ​ $ 16,615 ​ $ 13,537 ​ $ 11,385 ​ $ 9,836 ​ Net charge-offs as a % of average loans 0.01 % 0.26 % 0.09 % 0.16 % 0.03 % ​ ​ TABLE X - COMPONENTS OF THE ALLOWANCE FOR CREDIT LOSSES ​ UPON ADOPTION OF CECL ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ December 31, ​ January 1, ​ ​ 2023 ​ 2023 Loans individually evaluated ​ $ 743 ​ $ 751 Loans collectively evaluated: ​ ​ ​ ​ ​ ​ Commercial real estate - nonowner occupied ​ ​ 10,379 ​ ​ 9,641 Commercial real estate - owner occupied ​ ​ 2,111 ​ ​ 1,765 All other commercial loans ​ ​ 3,811 ​ ​ 3,914 Residential mortgage ​ ​ 1,764 ​ ​ 2,407 Consumer ​ ​ 400 ​ ​ 241 Total Allowance ​ $ 19,208 ​ $ 18,719 ​ PRIOR TO CECL ADOPTION ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ As of December 31, ​ 2022 2021 2020 2019 ASC 310 - Impaired loans - individually evaluated ​ $ 453 ​ $ 740 ​ $ 925 ​ $ 1,051 ASC 450 - Collectively evaluated: ​ ​ ​ ​ Commercial ​ 10,845 ​ 7,553 ​ 5,545 ​ 3,913 Residential mortgage ​ 4,073 ​ 4,338 ​ 4,091 ​ 4,006 Consumer ​ 244 ​ 235 ​ 239 ​ 281 Unallocated ​ 1,000 ​ 671 ​ 585 ​ 585 Total Allowance ​ $ 16,615 ​ $ 13,537 ​ $ 11,385 ​ $ 9,836 ​ ​ 33 Table of Contents TABLE XI - PAST DUE AND NONPERFORMING ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) As of December 31, ​ 2023 2022 2021 2020 2019 Loans individually evaluated with a valuation allowance $ 7,786 ​ $ 3,460 ​ $ 6,540 ​ $ 8,082 ​ $ 3,375 ​ Loans individually evaluated without a valuation allowance 3,478 ​ 14,871 ​ 2,636 ​ 2,895 ​ 1,670 ​ Purchased credit impaired loans ​ 0 ​ ​ 1,027 ​ ​ 6,558 ​ ​ 6,841 ​ ​ 441 ​ Total individually evaluated loans $ 11,264 ​ $ 19,358 ​ $ 15,734 ​ $ 17,818 ​ $ 5,486 ​ Total loans past due 30-89 days and still accruing $ 9,275 ​ $ 7,079 ​ $ 5,106 ​ $ 5,918 ​ $ 8,889 ​ Nonperforming assets: ​ ​ ​ ​ ​ Purchased credit impaired loans $ 0 ​ $ 1,027 ​ $ 6,558 ​ $ 6,841 ​ $ 441 ​ Other nonaccrual loans ​ 15,177 ​ ​ 22,058 ​ ​ 12,441 ​ ​ 14,575 ​ ​ 8,777 ​ Total nonaccrual loans ​ 15,177 ​ ​ 23,085 ​ ​ 18,999 ​ ​ 21,416 ​ ​ 9,218 ​ Total loans past due 90 days or more and still accruing 3,190 ​ 2,237 ​ 2,219 ​ 1,975 ​ 1,207 ​ Total nonperforming loans 18,367 ​ 25,322 ​ 21,218 ​ 23,391 ​ 10,425 ​ Foreclosed assets held for sale (real estate) 478 ​ 275 ​ 684 ​ 1,338 ​ 2,886 ​ Total nonperforming assets $ 18,845 ​ $ 25,597 ​ $ 21,902 ​ $ 24,729 ​ $ 13,311 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total nonperforming loans as a % of loans 0.99 % 1.46 % 1.36 % 1.42 % 0.88 % Total nonperforming assets as a % of assets 0.75 % 1.04 % 0.94 % 1.10 % 0.80 % Allowance for credit losses as a % of total loans 1.04 % 0.95 % 0.87 % 0.69 % 0.83 % ​ ​ ​ 34 Table of Contents TABLE XII – FIVE-YEAR HISTORY OF LOAN LOSSES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) 2023 2022 2021 2020 2019 Average Average gross loans ​ $ 1,792,149 ​ $ 1,628,094 ​ $ 1,596,756 ​ $ 1,445,098 ​ $ 1,057,559 ​ $ 1,503,931 ​ Year-end gross loans ​ 1,848,139 ​ 1,740,040 ​ 1,564,849 ​ 1,644,209 ​ 1,182,222 ​ $ 1,595,892 ​ Year-end allowance for credit losses on loans ​ 19,208 ​ 16,615 ​ 13,537 ​ 11,385 ​ 9,836 ​ $ 14,116 ​ Year-end nonaccrual loans ​ 15,177 ​ 23,085 ​ 18,999 ​ 21,416 ​ 9,218 ​ $ 17,579 ​ Year-end loans 90 days or more past due and still accruing ​ 3,190 ​ 2,237 ​ 2,219 ​ 1,975 ​ 1,207 ​ 2,166 ​ Net charge-offs ​ 264 ​ 4,177 ​ 1,509 ​ 2,364 ​ 322 ​ 1,727 ​ Provision for credit losses on loans ​ 753 ​ 7,255 ​ 3,661 ​ 3,913 ​ 849 ​ 3,286 ​ Earnings coverage of charge-offs ​ 119 x 8 x 26 x 10 x 76 x 18 x Allowance coverage of charge-offs ​ 73 x 4 x 9 x 5 x 31 x 8 x Net charge-offs as a % of provision for credit losses on loans ​ 35.06 % 57.57 % 41.22 % 60.41 % 37.93 % 52.31 % Net charge-offs as a % of average gross loans ​ 0.01 % 0.26 % 0.09 % 0.16 % 0.03 % 0.11 % Income before income taxes on a fully taxable equivalent basis ​ 31,402 ​ 33,576 ​ 38,822 ​ 24,192 ​ 24,453 ​ 30,489 ​ ​ CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS The Corporation’s significant fixed and determinable contractual obligations as of December 31, 2023 include repayment obligations related to time deposits and borrowed funds.
TABLE IX - ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2024 2023 2022 2021 2020 Balance, beginning of year $ 19,208 ​ $ 16,615 ​ $ 13,537 ​ $ 11,385 ​ $ 9,836 ​ Adoption of ASU 2016-13 (CECL) 0 ​ 2,104 ​ 0 ​ 0 ​ 0 ​ Charge-offs (1,716) ​ (356) ​ (4,245) ​ (1,575) ​ (2,465) ​ Recoveries 113 ​ 92 ​ 68 ​ 66 ​ 101 ​ Net charge-offs (1,603) ​ (264) ​ (4,177) ​ (1,509) ​ (2,364) ​ Provision for credit losses on loans 2,430 ​ 753 ​ 7,255 ​ 3,661 ​ 3,913 ​ Balance, end of year $ 20,035 ​ $ 19,208 ​ $ 16,615 ​ $ 13,537 ​ $ 11,385 ​ Net charge-offs as a % of average loans 0.09 % 0.01 % 0.26 % 0.09 % 0.16 % ​ TABLE X - COMPONENTS OF THE ALLOWANCE FOR CREDIT LOSSES ​ UPON ADOPTION OF CECL ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ December 31, ​ December 31, ​ January 1, ​ ​ 2024 ​ 2023 ​ 2023 Loans individually evaluated ​ $ 122 ​ $ 743 ​ $ 751 Loans collectively evaluated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial real estate - nonowner occupied ​ ​ 11,964 ​ ​ 10,379 ​ ​ 9,641 Commercial real estate - owner occupied ​ ​ 2,722 ​ ​ 2,111 ​ ​ 1,765 All other commercial loans ​ ​ 3,361 ​ ​ 3,811 ​ ​ 3,914 Residential mortgage ​ ​ 1,356 ​ ​ 1,764 ​ ​ 2,407 Consumer ​ ​ 510 ​ ​ 400 ​ ​ 241 Total Allowance ​ $ 20,035 ​ $ 19,208 ​ $ 18,719 PRIOR TO CECL ADOPTION ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ As of December 31, ​ 2022 2021 2020 ASC 310 - Impaired loans - individually evaluated ​ $ 453 ​ $ 740 ​ $ 925 ASC 450 - Collectively evaluated: ​ ​ ​ Commercial ​ 10,845 ​ 7,553 ​ 5,545 Residential mortgage ​ 4,073 ​ 4,338 ​ 4,091 Consumer ​ 244 ​ 235 ​ 239 Unallocated ​ 1,000 ​ 671 ​ 585 Total Allowance ​ $ 16,615 ​ $ 13,537 ​ $ 11,385 ​ ​ 32 Table of Contents TABLE XI - PAST DUE AND NONPERFORMING ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) ​ As of December 31, ​ 2024 2023 2022 2021 2020 Loans individually evaluated with a valuation allowance ​ $ 258 ​ $ 7,786 ​ $ 3,460 ​ $ 6,540 ​ $ 8,082 ​ Loans individually evaluated without a valuation allowance ​ 18,843 ​ 3,478 ​ 14,871 ​ 2,636 ​ 2,895 ​ Purchased credit impaired loans ​ ​ 0 ​ ​ 0 ​ ​ 1,027 ​ ​ 6,558 ​ ​ 6,841 ​ Total individually evaluated loans ​ $ 19,101 ​ $ 11,264 ​ $ 19,358 ​ $ 15,734 ​ $ 17,818 ​ Total loans past due 30-89 days and still accruing ​ $ 5,658 ​ $ 9,275 ​ $ 7,079 ​ $ 5,106 ​ $ 5,918 ​ Nonperforming assets: ​ ​ ​ ​ ​ ​ Purchased credit impaired loans ​ $ 0 ​ $ 0 ​ $ 1,027 ​ $ 6,558 ​ $ 6,841 ​ Other nonaccrual loans ​ ​ 23,842 ​ ​ 15,177 ​ ​ 22,058 ​ ​ 12,441 ​ ​ 14,575 ​ Total nonaccrual loans ​ ​ 23,842 ​ ​ 15,177 ​ ​ 23,085 ​ ​ 18,999 ​ ​ 21,416 ​ Total loans past due 90 days or more and still accruing ​ 119 ​ 3,190 ​ 2,237 ​ 2,219 ​ 1,975 ​ Total nonperforming loans ​ 23,961 ​ 18,367 ​ 25,322 ​ 21,218 ​ 23,391 ​ Foreclosed assets held for sale (real estate) ​ 181 ​ 478 ​ 275 ​ 684 ​ 1,338 ​ Total nonperforming assets ​ $ 24,142 ​ $ 18,845 ​ $ 25,597 ​ $ 21,902 ​ $ 24,729 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total nonperforming loans as a % of loans ​ 1.26 % 0.99 % 1.46 % 1.36 % 1.42 % Total nonperforming assets as a % of assets ​ 0.92 % 0.75 % 1.04 % 0.94 % 1.10 % Nonaccrual loans as a % of loans ​ ​ 1.26 % ​ 0.82 % ​ 1.33 % ​ 1.21 % ​ 1.30 % Allowance for credit losses as a % of nonaccrual loans ​ ​ 84.03 % ​ 79.01 % ​ 71.97 % ​ 71.25 % ​ 53.16 % Allowance for credit losses as a % of total loans ​ 1.06 % 1.04 % 0.95 % 0.87 % 0.69 % ​ TABLE XII – FIVE-YEAR HISTORY OF LOAN LOSSES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) 2024 2023 2022 2021 2020 Average Average gross loans ​ $ 1,881,122 ​ $ 1,792,149 ​ $ 1,628,094 ​ $ 1,596,756 ​ $ 1,445,098 ​ $ 1,668,644 ​ Year-end gross loans ​ 1,895,848 ​ 1,848,139 ​ 1,740,040 ​ 1,564,849 ​ 1,644,209 ​ $ 1,738,617 ​ Year-end allowance for credit losses on loans ​ 20,035 ​ 19,208 ​ 16,615 ​ 13,537 ​ 11,385 ​ $ 16,156 ​ Year-end nonaccrual loans ​ 23,842 ​ 15,177 ​ 23,085 ​ 18,999 ​ 21,416 ​ $ 20,504 ​ Year-end loans 90 days or more past due and still accruing ​ 119 ​ 3,190 ​ 2,237 ​ 2,219 ​ 1,975 ​ 1,948 ​ Net charge-offs ​ 1,603 ​ 264 ​ 4,177 ​ 1,509 ​ 2,364 ​ 1,983 ​ Provision for credit losses on loans ​ 2,430 ​ 753 ​ 7,255 ​ 3,661 ​ 3,913 ​ 3,602 ​ Earnings coverage of charge-offs ​ 20 x 119 x 8 x 26 x 10 x 16 x Allowance coverage of charge-offs ​ 12 x 73 x 4 x 9 x 5 x 8 x Net charge-offs as a % of provision for credit losses on loans ​ 65.97 % 35.06 % 57.57 % 41.22 % 60.41 % 55.06 % Net charge-offs as a % of average gross loans ​ 0.09 % 0.01 % 0.26 % 0.09 % 0.16 % 0.12 % Income before income taxes on a fully taxable equivalent basis ​ 32,690 ​ 31,402 ​ 33,576 ​ 38,822 ​ 24,192 ​ 32,136 ​ ​ CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS The Corporation’s significant fixed and determinable contractual obligations as of December 31, 2024 include repayment obligations related to time deposits and borrowed funds.
Government, particularly related to changes in interest rates ● changes in general economic conditions ● recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, sources of liquidity and capital funding, and regulatory responses to these developments ● the Corporation’s credit standards and its on-going credit assessment processes might not protect it from significant credit losses ● legislative or regulatory changes ● downturn in demand for loan, deposit and other financial services in the Corporation’s market area ● increased competition from other banks and non-bank providers of financial services ● technological changes and increased technology-related costs ● information security breach or other technology difficulties or failures ● changes in accounting principles, or the application of generally accepted accounting principles ● failure to achieve merger-related synergies and difficulties in integrating the business and operations of acquired institutions ● fraud and cyber malfunction risks as usage of artificial intelligence continues to expand ​ These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. ​ 13 Table of Contents EARNINGS OVERVIEW 2023 vs. 2022 Net income for the year ended December 31, 2023 was $24,148,000, or $1.57 per diluted share, as compared to $26,618,000, or $1.71 per diluted share, for the year ended December 31, 2022.
Government, particularly related to changes in interest rates ● changes in general economic conditions ● the potential for adverse developments in the banking industry that could have a negative impact on customer confidence ● the Corporation’s credit standards and its on-going credit assessment processes might not protect it from significant credit losses ● legislative or regulatory changes ● downturn in demand for loan, deposit and other financial services in the Corporation’s market area ● increased competition from other banks and non-bank providers of financial services ● technological changes and increased technology-related costs ● information security breach or other technology difficulties or failures ● changes in accounting principles, or the application of generally accepted accounting principles ● fraud and cyber malfunction risks as usage of artificial intelligence continues to expand ​ These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. ​ 14 Table of Contents EARNINGS OVERVIEW 2024 vs. 2023 Net income for the year ended December 31, 2024 was $25,958,000, or $1.69 per diluted share, as compared to $24,148,000, or $1.57 per diluted share, for the year ended December 31, 2023.
The composition of the available-for-sale debt securities portfolio at December 31, 2023, December 31, 2022 and December 31, 2021 is as follows: TABLE VI - INVESTMENT SECURITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ Amortized ​ Fair ​ Amortized ​ Fair ​ Amortized ​ Fair (In Thousands) Cost Value ​ Cost Value Cost Value ​ AVAILABLE-FOR-SALE DEBT SECURITIES: ​ ​ ​ ​ ​ ​ ​ ​ Obligations of the U.S.
Government sponsored agencies, 16.3%. 25 Table of Contents The composition of the available-for-sale debt securities portfolio at December 31, 2024, December 31, 2023 and December 31, 2022 is as follows: TABLE VI - INVESTMENT SECURITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ Amortized ​ Fair ​ Amortized ​ Fair ​ Amortized ​ Fair (In Thousands) Cost Value ​ Cost Value Cost Value ​ AVAILABLE-FOR-SALE DEBT SECURITIES: ​ ​ ​ ​ ​ ​ ​ ​ Obligations of the U.S.
Treasury Obligations (a) ​ ​ ​ ​ ​ 3.84 % ​ ​ ​ ​ 3.99 % ​ ​ ​ ​ 1.26 % ​ (a) Source: Treasury.gov (Daily Treasury Par Yield Curve Rates) As reflected in the table above, the fair value of available-for-sale securities was lower than the amortized cost basis by $49,213,000, or 10.6% at December 31, 2023 and $63,761,000 or 11.3% at December 31, 2022 while the aggregate unrealized gain position was $6,087,000 (1.2%) at December 31, 2021.
Treasury Obligations (a) ​ ​ ​ ​ ​ 4.38 % ​ ​ ​ ​ 3.84 % ​ ​ ​ ​ 3.99 % ​ (a) Source: Treasury.gov (Daily Treasury Par Yield Curve Rates) As reflected in the table above, the fair value of available-for-sale securities was lower than the amortized cost basis by $47,543,000, or 10.6% at December 31, 2024, $49,213,000 or 10.6% at December 31, 2023 and $63,761,000 or 11.3% at December 31, 2022.
The data in Table VII shows the recorded investment in non-owner occupied commercial real estate loans for which the primary purpose is utilization of office space by third parties was $94,341,000, or 5.1% of gross loans receivable.
The data in Table VII shows the amortized cost in non-owner occupied commercial real estate loans for which the primary purpose is utilization of office space by third parties was $102,831,000, or 5.4% of gross loans receivable.
Similarly, total loans individually evaluated for credit loss decreased to $11.3 million at December 31, 2023 from $19.4 million at December 31, 2022.
Similarly, total loans individually evaluated for credit loss increased to $19.1 million at December 31, 2024 from $11.3 million at December 31, 2023.
Through December 31, 2023, the Corporation’s activity under the MPF Direct Program has been minimal. For loan sales originated under the MPF programs, the Corporation provides customary representations and warranties to investors that specify, among other things, that the loans have been underwritten to the standards established by the investor.
For loan sales originated under the MPF programs, the Corporation provides customary representations and warranties to investors that specify, among other things, that the loans have been underwritten to the standards established by the investor.
The average yield on interest-bearing due from banks was 4.22% in 2023 and 1.25% in 2022. The average balance of interest-bearing due from banks was $32,709,000 in 2023 as compared to $51,407,000 in 2022.
The average yield on interest-bearing due from banks was 4.22% in 2023 and 1.25% in 2022. The average balance of interest-bearing due from banks was $32,709,000 in 2023 as compared to $51,407,000 in 2022. Within this category, the largest asset balance in 2023 and 2022 was interest-bearing deposits held with the Federal Reserve.
More detailed information concerning the Corporation’s earnings results are provided in other sections of Management’s Discussion and Analysis. CRITICAL ACCOUNTING POLICIES The presentation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect many of the reported amounts and disclosures. Actual results could differ from these estimates.
CRITICAL ACCOUNTING POLICIES The presentation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect many of the reported amounts and disclosures. Actual results could differ from these estimates.
The balance in accumulated other comprehensive loss related to unrealized losses on available-for-sale debt securities, net of deferred income tax, amounted to $38,878,000 at December 31, 2023 and $50,370,000 at December 31, 2022 as compared to the balance in accumulated other comprehensive income related to unrealized gains on available-for-sale debt securities, net of deferred income tax of $ 4,809,000 at December 31, 2021.
The balance in accumulated other comprehensive loss related to unrealized losses on available-for-sale debt securities, net of deferred income tax, amounted to $37,084,000 at December 31, 2024 and $38,878,000 at December 31, 2023.
The Corporation believes presentation of net interest income on a fully taxable-equivalent basis provides investors with meaningful information for purposes of comparing returns on tax-exempt securities and loans with returns on taxable securities and loans. Accordingly, the net interest income amounts reflected in these tables exceed the amounts presented in the consolidated financial statements.
In each of these tables, the amounts of interest income earned on tax-exempt securities and loans have been adjusted to a fully taxable-equivalent basis. The Corporation believes presentation of net interest income on a fully taxable-equivalent basis provides investors with meaningful information for purposes of comparing returns on tax-exempt securities and loans with returns on taxable securities and loans.
At December 31, 2022, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of overnight borrowing of $77,000,000, long-term borrowings of $62,272,000 and letters of credit totaling $10,827,000. Additionally, the Corporation uses “RepoSweep” arrangements to borrow funds from commercial banking customers on an overnight basis.
At December 31, 2023, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of overnight and short-term borrowings of $31,500,000, long-term borrowings with par values totaling $138,313,000 and letters of credit totaling $19,208,000. Additionally, the Corporation uses “RepoSweep” arrangements to borrow funds from commercial banking customers on an overnight basis.
Additional information related to income taxes is presented in Note 13 to the consolidated financial statements. SECURITIES Management continually evaluates several objectives in determining the size, securities mix and other characteristics of the available-for-sale debt securities (investment) portfolio.
Additional information related to income taxes is presented in Note 13 to the consolidated financial statements. SECURITIES Management continually evaluates several objectives in determining the size, securities mix and other characteristics of the available-for-sale debt securities (investment) portfolio. Key objectives include supporting liquidity needs and maximizing return on earning assets within reasonable risk parameters.
(2) The change in interest due to both volume and rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. ​ ​ 24 Table of Contents NONINTEREST INCOME TABLE IV - COMPARISON OF NONINTEREST INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ $ ​ % ​ 2023 ​ 2022 ​ Change ​ Change Trust revenue ​ $ 7,413 ​ $ 6,994 ​ $ 419 ​ 6.0 % Brokerage and insurance revenue ​ 1,675 ​ ​ 2,291 ​ ​ (616) ​ (26.9) % Service charges on deposit accounts ​ 5,567 ​ ​ 5,019 ​ ​ 548 ​ 10.9 % Interchange revenue from debit card transactions ​ 4,160 ​ ​ 4,148 ​ ​ 12 ​ 0.3 % Net gains from sales of loans ​ 723 ​ ​ 757 ​ ​ (34) ​ (4.5) % Loan servicing fees, net ​ 602 ​ ​ 960 ​ ​ (358) ​ (37.3) % Increase in cash surrender value of life insurance ​ 2,703 ​ ​ 545 ​ ​ 2,158 ​ 396.0 % Other noninterest income ​ 4,610 ​ ​ 3,698 ​ ​ 912 ​ 24.7 % Realized (losses) gains on available-for-sale debt securities, net ​ ​ (3,036) ​ ​ 20 ​ ​ (3,056) ​ N/M % Total noninterest income ​ $ 24,417 ​ $ 24,432 ​ $ (15) ​ (0.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ $ ​ % ​ 2022 ​ 2021 ​ Change ​ Change Trust revenue ​ $ 6,994 ​ $ 7,234 ​ $ (240) ​ (3.3) % Brokerage and insurance revenue ​ 2,291 ​ ​ 1,860 ​ ​ 431 ​ 23.2 % Service charges on deposit accounts ​ 5,019 ​ ​ 4,633 ​ ​ 386 ​ 8.3 % Interchange revenue from debit card transactions ​ 4,148 ​ ​ 3,855 ​ ​ 293 ​ 7.6 % Net gains from sales of loans ​ 757 ​ ​ 3,428 ​ ​ (2,671) ​ (77.9) % Loan servicing fees, net ​ 960 ​ ​ 694 ​ ​ 266 ​ 38.3 ​ Increase in cash surrender value of life insurance ​ 545 ​ ​ 573 ​ ​ (28) ​ (4.9) % Other noninterest income ​ 3,698 ​ ​ 3,580 ​ ​ 118 ​ 3.3 % Realized gains on available-for-sale debt securities, net ​ ​ 20 ​ ​ 24 ​ ​ (4) ​ (16.7) % Total noninterest income ​ $ 24,432 ​ $ 25,881 ​ $ (1,449) ​ (5.6) % ​ NONINTEREST EXPENSE TABLE V - COMPARISON OF NONINTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ $ ​ % ​ ​ 2023 ​ 2022 ​ Change ​ Change Salaries and employee benefits $ 44,195 $ 41,833 $ 2,362 5.6 % Net occupancy and equipment expense ​ 5,357 ​ 5,533 ​ (176) (3.2) % Data processing and telecommunications expense ​ 7,582 ​ 6,806 ​ 776 11.4 % Automated teller machine and interchange expense ​ 1,682 ​ 1,601 ​ 81 5.1 % Pennsylvania shares tax ​ 1,602 ​ 1,956 ​ (354) (18.1) % Professional fees ​ 2,497 ​ 2,005 ​ 492 24.5 % Other noninterest expense ​ 11,233 ​ 8,221 ​ 3,012 36.6 % Total noninterest expense ​ $ 74,148 ​ $ 67,955 ​ $ 6,193 9.1 % ​ ​ 25 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ $ ​ % ​ ​ 2022 ​ 2021 ​ Change ​ Change Salaries and employee benefits $ 41,833 $ 37,603 $ 4,230 11.2 % Net occupancy and equipment expense ​ 5,533 ​ 4,984 ​ 549 11.0 % Data processing and telecommunications expense ​ 6,806 ​ 5,903 ​ 903 15.3 % Automated teller machine and interchange expense ​ 1,601 ​ 1,433 ​ 168 11.7 % Pennsylvania shares tax ​ 1,956 ​ 1,951 ​ 5 0.3 % Professional fees ​ 2,005 ​ 2,243 ​ (238) (10.6) % Other noninterest expense ​ 8,221 ​ 8,355 ​ (134) (1.6) % Total noninterest expense ​ $ 67,955 ​ $ 62,472 ​ $ 5,483 8.8 % ​ Additional detailed information concerning fluctuations in the Corporation’s earnings results and other financial information are provided in other sections of Management’s Discussion and Analysis.
(2) The change in interest due to both volume and rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each. ​ ​ 23 Table of Contents NONINTEREST INCOME TABLE IV - COMPARISON OF NONINTEREST INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ $ ​ % ​ 2024 ​ 2023 ​ Change ​ Change Trust revenue ​ $ 7,928 ​ $ 7,413 ​ $ 515 ​ 6.9 % Brokerage and insurance revenue ​ 2,271 ​ ​ 1,675 ​ ​ 596 ​ 35.6 % Service charges on deposit accounts ​ 5,867 ​ ​ 5,567 ​ ​ 300 ​ 5.4 % Interchange revenue from debit card transactions ​ 4,276 ​ ​ 4,160 ​ ​ 116 ​ 2.8 % Net gains from sales of loans ​ 1,158 ​ ​ 723 ​ ​ 435 ​ 60.2 % Loan servicing fees, net ​ 649 ​ ​ 602 ​ ​ 47 ​ 7.8 % Increase in cash surrender value of life insurance ​ 1,830 ​ ​ 2,703 ​ ​ (873) ​ (32.3) % Other noninterest income ​ 5,230 ​ ​ 4,610 ​ ​ 620 ​ 13.4 % Realized (losses) on available-for-sale debt securities, net ​ ​ 0 ​ ​ (3,036) ​ ​ 3,036 ​ N/M % Total noninterest income ​ $ 29,209 ​ $ 24,417 ​ $ 4,792 ​ 19.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ $ ​ % ​ 2023 ​ 2022 ​ Change ​ Change Trust revenue ​ $ 7,413 ​ $ 6,994 ​ $ 419 ​ 6.0 % Brokerage and insurance revenue ​ 1,675 ​ ​ 2,291 ​ ​ (616) ​ (26.9) % Service charges on deposit accounts ​ 5,567 ​ ​ 5,019 ​ ​ 548 ​ 10.9 % Interchange revenue from debit card transactions ​ 4,160 ​ ​ 4,148 ​ ​ 12 ​ 0.3 % Net gains from sales of loans ​ 723 ​ ​ 757 ​ ​ (34) ​ (4.5) % Loan servicing fees, net ​ 602 ​ ​ 960 ​ ​ (358) ​ (37.3) % Increase in cash surrender value of life insurance ​ 2,703 ​ ​ 545 ​ ​ 2,158 ​ 396.0 % Other noninterest income ​ 4,610 ​ ​ 3,698 ​ ​ 912 ​ 24.7 % Realized (losses) gains on available-for-sale debt securities, net ​ ​ (3,036) ​ ​ 20 ​ ​ (3,056) ​ N/M % Total noninterest income ​ $ 24,417 ​ $ 24,432 ​ $ (15) ​ (0.1) % ​ (1) N/M Not Meaningful NONINTEREST EXPENSE TABLE V - COMPARISON OF NONINTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ $ ​ % ​ ​ 2024 ​ 2023 ​ Change ​ Change Salaries and employee benefits $ 44,930 $ 44,195 $ 735 1.7 % Net occupancy and equipment expense ​ 5,473 ​ 5,357 ​ 116 2.2 % Data processing and telecommunications expense ​ 7,768 ​ 7,582 ​ 186 2.5 % Automated teller machine and interchange expense ​ 1,818 ​ 1,682 ​ 136 8.1 % Pennsylvania shares tax ​ 1,733 ​ 1,602 ​ 131 8.2 % Professional fees ​ 2,175 ​ 2,497 ​ (322) (12.9) % Other noninterest expense ​ 10,361 ​ 11,233 ​ (872) (7.8) % Total noninterest expense ​ $ 74,258 ​ $ 74,148 ​ $ 110 0.1 % ​ ​ 24 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in Thousands) ​ Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ $ ​ % ​ ​ 2023 ​ 2022 ​ Change ​ Change Salaries and employee benefits $ 44,195 $ 41,833 $ 2,362 5.6 % Net occupancy and equipment expense ​ 5,357 ​ 5,533 ​ (176) (3.2) % Data processing and telecommunications expense ​ 7,582 ​ 6,806 ​ 776 11.4 % Automated teller machine and interchange expense ​ 1,682 ​ 1,601 ​ 81 5.1 % Pennsylvania shares tax ​ 1,602 ​ 1,956 ​ (354) (18.1) % Professional fees ​ 2,497 ​ 2,005 ​ 492 24.5 % Other noninterest expense ​ 11,233 ​ 8,221 ​ 3,012 36.6 % Total noninterest expense ​ $ 74,148 ​ $ 67,955 ​ $ 6,193 9.1 % ​ Additional detailed information concerning fluctuations in the Corporation’s earnings results and other financial information are provided in other sections of Management’s Discussion and Analysis.
The Corporation has 18 Table of Contents experienced growth in outstanding commercial real estate and residential mortgage loans over the last three quarters of 2022 and in 2023. Income from interest-bearing due from banks totaled $1,379,000 in 2023, an increase of $734,000 from the total for 2022.
Average outstanding loans receivable increased $164,055,000 (10.1%) to $1,792,149,000 in 2023 from $1,628,094,000 in 2022. The Corporation experienced growth in outstanding commercial real estate and residential mortgage loans over the last three quarters of 2022 and in 2023. Income from interest-bearing due from banks totaled $1,379,000 in 2023, an increase of $734,000 from the total for 2022.
Table XI shows that total nonperforming assets as a percentage of total assets was 0.75% at December 31, 2023, down from 1.04% at December 31, 2022 and lower than that at year-end 2019 through 2021. Total nonperforming assets were $18.8 million at December 31, 2023, down from $25.6 million at December 31, 2022.
Table XI shows that total nonperforming assets as a percentage of total assets was 0.92% at December 31, 2024, up from 0.75% at December 31, 2023 but lower than that at year-end 2020 through 2022. Total nonperforming assets were $24.1 million at December 31, 2024, up from $18.8 million at December 31, 2023.
Government agencies or sponsored agencies: ​ ​ ​ ​ ​ ​ ​ Residential pass-through securities ​ 105,549 ​ 95,405 ​ 112,782 ​ 99,941 ​ 98,048 ​ 98,181 ​ Residential collateralized mortgage obligations ​ 50,212 ​ 46,462 ​ 44,868 ​ 40,296 ​ 44,015 ​ 44,247 ​ Commercial mortgage-backed securities ​ 76,412 ​ 66,682 ​ 91,388 ​ 79,686 ​ 86,926 ​ 87,468 ​ Private label commercial mortgage-backed securities ​ 8,215 ​ 8,160 ​ 8,070 ​ 8,023 ​ 0 ​ 0 ​ Total Available-for-Sale Debt Securities ​ $ 464,968 ​ $ 415,755 ​ $ 561,794 ​ $ 498,033 ​ $ 511,592 ​ $ 517,679 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate Unrealized (Loss) Gain ​ ​ ​ ​ $ (49,213) ​ ​ ​ ​ $ (63,761) ​ ​ ​ ​ $ 6,087 ​ Aggregate Unrealized (Loss) Gain as a % of Amortized Cost ​ ​ ​ ​ ​ (10.6) % ​ ​ ​ ​ (11.3) % ​ ​ ​ ​ 1.2 % Market Yield on 5-Year U.S.
Government agencies or sponsored agencies: ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential pass-through securities ​ 104,378 ​ 94,414 ​ 105,549 ​ 95,405 ​ 112,782 ​ 99,941 ​ Residential collateralized mortgage obligations ​ 53,389 ​ 49,894 ​ 50,212 ​ 46,462 ​ 44,868 ​ 40,296 ​ Commercial mortgage-backed securities ​ 73,470 ​ 64,501 ​ 76,412 ​ 66,682 ​ 91,388 ​ 79,686 ​ Private label commercial mortgage-backed securities ​ 8,365 ​ 8,374 ​ 8,215 ​ 8,160 ​ 8,070 ​ 8,023 ​ Total Available-for-Sale Debt Securities ​ $ 449,923 ​ $ 402,380 ​ $ 464,968 ​ $ 415,755 ​ $ 561,794 ​ $ 498,033 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate Unrealized Loss ​ ​ ​ ​ $ (47,543) ​ ​ ​ ​ $ (49,213) ​ ​ ​ ​ $ (63,761) ​ Aggregate Unrealized Loss as a % of Amortized Cost ​ ​ ​ ​ ​ (10.6) % ​ ​ ​ ​ (10.6) % ​ ​ ​ ​ (11.3) % Market Yield on 5-Year U.S.
Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the ACL, could change significantly. Fair Value of Available-For-Sale Debt Securities – Another material estimate is the calculation of fair values of the Corporation’s debt securities.
Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the ACL, could change significantly.
Government agencies ​ ​ 11,119 ​ ​ 9,946 ​ ​ 25,938 ​ ​ 23,430 ​ ​ 23,936 ​ ​ 24,091 ​ Bank holding company debt securities ​ ​ 28,952 ​ ​ 23,500 ​ ​ 28,945 ​ ​ 25,386 ​ ​ 18,000 ​ ​ 17,987 ​ Obligations of states and political subdivisions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax-exempt ​ 113,464 ​ 104,199 ​ 146,149 ​ 132,623 ​ 143,427 ​ 148,028 ​ Taxable ​ 58,720 ​ 50,111 ​ 68,488 ​ 56,812 ​ 72,182 ​ 72,765 ​ Mortgage-backed securities issued or guaranteed by U.S.
Government agencies ​ ​ 10,154 ​ ​ 9,025 ​ ​ 11,119 ​ ​ 9,946 ​ ​ 25,938 ​ ​ 23,430 ​ Bank holding company debt securities ​ ​ 28,958 ​ ​ 25,246 ​ ​ 28,952 ​ ​ 23,500 ​ ​ 28,945 ​ ​ 25,386 ​ Obligations of states and political subdivisions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tax-exempt ​ 111,995 ​ 101,302 ​ 113,464 ​ 104,199 ​ 146,149 ​ 132,623 ​ Taxable ​ 51,147 ​ 42,506 ​ 58,720 ​ 50,111 ​ 68,488 ​ 56,812 ​ Mortgage-backed securities issued or guaranteed by U.S.
Management continues to closely monitor its commercial loan relationships for possible credit losses and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate.
Management continues to closely monitor its commercial loan relationships for credit losses and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate. Tables IX through XII present historical data related to loans and the allowance for credit losses.
GAAP ​ $ 80,400 ​ $ 83,128 ​ $ 77,939 ​ $ (2,728) ​ $ 5,189 Add: fully taxable-equivalent interest income adjustment from tax-exempt securities ​ ​ 388 ​ ​ 720 ​ ​ 673 ​ ​ (332) ​ ​ 47 Add: fully taxable-equivalent interest income adjustment from tax-exempt loans ​ ​ 531 ​ ​ 506 ​ ​ 462 ​ ​ 25 ​ ​ 44 Net Interest Income as adjusted to a fully taxable-equivalent basis ​ $ 81,319 ​ $ 84,354 ​ $ 79,074 ​ $ (3,035) ​ $ 5,280 22 Table of Contents TABLE II - ANALYSIS OF AVERAGE DAILY BALANCES AND RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) Year ​ ​ ​ ​ Year ​ ​ ​ ​ Year ​ ​ ​ ​ ​ Ended ​ Rate of ​ ​ Ended ​ Rate of ​ ​ Ended ​ Rate of ​ ​ 12/31/2023 ​ Return/ ​ ​ 12/31/2022 ​ Return/ ​ ​ 12/31/2021 ​ Return/ ​ ​ Average ​ Cost of ​ Average ​ Cost of ​ Average ​ Cost of ​ ​ Balance Funds% ​ Balance Funds% ​ Balance Funds% ​ EARNING ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing due from banks $ 32,709 ​ ​ 4.22 % ​ $ 51,407 ​ ​ 1.25 % ​ $ 156,152 ​ ​ 0.20 % Available-for-sale debt securities, at amortized cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable 389,456 ​ 2.20 % ​ 410,033 ​ 2.04 % ​ 262,880 ​ 1.95 % Tax-exempt 125,920 ​ 2.24 % ​ 148,344 ​ 2.51 % ​ 127,283 ​ 2.64 % Total available-for-sale debt securities 515,376 ​ 2.21 % ​ 558,377 ​ 2.16 % ​ 390,163 ​ 2.17 % Loans receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable 1,703,697 ​ 5.80 % ​ 1,533,417 ​ 5.06 % ​ 1,426,150 ​ 4.77 % Paycheck Protection Program ​ 142 ​ ​ 7.75 % ​ ​ 8,406 ​ ​ 11.40 % ​ ​ 97,652 ​ ​ 6.69 % Tax-exempt 88,310 ​ 3.12 % ​ 86,271 ​ 2.86 % ​ 72,954 ​ 3.06 % Total loans receivable 1,792,149 ​ 5.67 % ​ 1,628,094 ​ 4.98 % ​ 1,596,756 ​ 4.81 % Other earning assets 1,383 ​ 4.63 % ​ 2,321 ​ 3.32 % ​ 2,404 ​ 2.75 % Total Earning Assets 2,341,617 ​ 4.89 % ​ 2,240,199 ​ 4.19 % ​ 2,145,475 ​ 3.99 % Cash 22,108 ​ ​ ​ 22,685 ​ ​ ​ 24,132 ​ ​ Unrealized (loss) gain on securities (63,118) ​ ​ ​ (38,784) ​ ​ ​ 10,676 ​ ​ Allowance for credit losses (18,498) ​ ​ ​ (14,962) ​ ​ ​ (12,354) ​ ​ Bank-owned life insurance ​ 31,808 ​ ​ ​ ​ ​ ​ 30,925 ​ ​ ​ ​ ​ ​ 30,373 ​ ​ ​ ​ Bank premises and equipment 21,330 ​ ​ ​ ​ 21,559 ​ ​ ​ ​ 20,814 ​ ​ ​ Intangible assets 55,176 ​ ​ ​ ​ 55,599 ​ ​ ​ ​ 56,086 ​ ​ ​ Other assets 72,433 ​ ​ ​ ​ 55,567 ​ ​ ​ ​ 44,032 ​ ​ ​ Total Assets $ 2,462,856 ​ ​ ​ ​ ​ $ 2,372,788 ​ ​ ​ ​ ​ $ 2,319,234 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST-BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest checking $ 488,761 ​ ​ 1.57 % ​ $ 443,107 ​ ​ 0.41 % ​ $ 399,130 ​ ​ 0.22 % Money market ​ 347,130 ​ ​ 1.64 % ​ ​ 443,084 ​ ​ 0.47 % ​ ​ 433,508 ​ ​ 0.27 % Savings ​ 238,760 ​ ​ 0.10 % ​ ​ 257,156 ​ ​ 0.10 % ​ ​ 228,411 ​ ​ 0.10 % Time deposits ​ 381,488 ​ ​ 2.79 % ​ ​ 285,264 ​ ​ 0.86 % ​ ​ 327,816 ​ ​ 0.69 % Total interest-bearing deposits 1,456,139 ​ 1.66 % ​ 1,428,611 ​ 0.46 % ​ 1,388,865 ​ 0.33 % Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term 62,926 ​ 5.15 % ​ 21,766 ​ 1.97 % ​ 6,269 ​ 0.37 % Long-term - FHLB advances 110,943 ​ 3.81 % ​ 40,194 ​ 2.23 % ​ 44,026 ​ 0.91 % Senior notes, net ​ 14,798 ​ 3.24 % ​ ​ 14,733 ​ 3.24 % ​ ​ 9,129 ​ 3.21 % Subordinated debt, net 24,662 ​ 3.74 % ​ 27,116 ​ 3.98 % ​ 27,399 ​ 4.78 % Total borrowed funds 213,329 ​ 4.16 % ​ 103,809 ​ 2.78 % ​ 86,823 ​ 2.33 % Total Interest-bearing Liabilities. 1,669,468 ​ 1.98 % ​ 1,532,420 ​ 0.62 % ​ 1,475,688 ​ 0.44 % Demand deposits ​ 515,787 ​ ​ ​ ​ ​ ​ 551,801 ​ ​ ​ ​ ​ ​ 516,535 ​ ​ ​ ​ Other liabilities ​ 29,107 ​ ​ ​ ​ ​ ​ 23,474 ​ ​ ​ ​ ​ ​ 25,785 ​ ​ ​ ​ Total Liabilities ​ 2,214,362 ​ ​ ​ ​ ​ ​ 2,107,695 ​ ​ ​ ​ ​ ​ 2,018,008 ​ ​ ​ ​ Stockholders' equity, excluding accumulated other comprehensive (loss) income ​ 297,894 ​ ​ ​ ​ ​ ​ 295,447 ​ ​ ​ ​ ​ ​ 292,683 ​ ​ ​ ​ Accumulated other comprehensive (loss) income ​ (49,400) ​ ​ ​ ​ ​ ​ (30,354) ​ ​ ​ ​ ​ ​ 8,543 ​ ​ ​ ​ Total Stockholders' Equity ​ 248,494 ​ ​ ​ ​ ​ ​ 265,093 ​ ​ ​ ​ ​ ​ 301,226 ​ ​ ​ ​ Total Liabilities and Stockholders' Equity $ 2,462,856 ​ ​ ​ ​ ​ $ 2,372,788 ​ ​ ​ ​ ​ $ 2,319,234 ​ ​ ​ ​ Interest Rate Spread ​ ​ ​ ​ 2.91 % ​ ​ ​ ​ ​ 3.57 % ​ ​ ​ ​ ​ 3.55 % Net Interest Income/Earning Assets ​ ​ ​ ​ 3.47 % ​ ​ ​ ​ ​ 3.77 % ​ ​ ​ ​ ​ 3.69 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Deposits (Interest-bearing and Demand) $ 1,971,926 ​ ​ ​ ​ ​ $ 1,980,412 ​ ​ ​ ​ ​ $ 1,905,400 ​ ​ ​ ​ (1) Rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.
GAAP ​ $ 79,115 ​ $ 80,400 ​ $ 83,128 ​ $ (1,285) ​ $ (2,728) Add: fully taxable-equivalent interest income adjustment from tax-exempt securities ​ ​ 271 ​ ​ 388 ​ ​ 720 ​ ​ (117) ​ ​ (332) Add: fully taxable-equivalent interest income adjustment from tax-exempt loans ​ ​ 548 ​ ​ 531 ​ ​ 506 ​ ​ 17 ​ ​ 25 Net Interest Income as adjusted to a fully taxable-equivalent basis ​ $ 79,934 ​ $ 81,319 ​ $ 84,354 ​ $ (1,385) ​ $ (3,035) 21 Table of Contents TABLE II - ANALYSIS OF AVERAGE DAILY BALANCES AND RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars In Thousands) Year ​ ​ ​ ​ Year ​ ​ ​ ​ Year ​ ​ ​ ​ ​ Ended ​ Rate of ​ ​ Ended ​ Rate of ​ ​ Ended ​ Rate of ​ ​ 12/31/2024 ​ Return/ ​ ​ 12/31/2023 ​ Return/ ​ ​ 12/31/2022 ​ Return/ ​ ​ Average ​ Cost of ​ Average ​ Cost of ​ Average ​ Cost of ​ ​ Balance Funds% ​ Balance Funds% ​ Balance Funds% ​ EARNING ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing due from banks $ 86,703 ​ ​ 4.97 % ​ $ 32,709 ​ ​ 4.22 % ​ $ 51,407 ​ ​ 1.25 % Available-for-sale debt securities, at amortized cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable 340,339 ​ 2.52 % ​ 389,456 ​ 2.20 % ​ 410,033 ​ 2.04 % Tax-exempt 113,121 ​ 2.24 % ​ 125,920 ​ 2.24 % ​ 148,344 ​ 2.51 % Total available-for-sale debt securities 453,460 ​ 2.45 % ​ 515,376 ​ 2.21 % ​ 558,377 ​ 2.16 % Loans receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable 1,791,187 ​ 6.16 % ​ 1,703,839 ​ 5.80 % ​ 1,541,823 ​ 5.04 % Tax-exempt 89,935 ​ 3.27 % ​ 88,310 ​ 3.12 % ​ 86,271 ​ 2.86 % Total loans receivable 1,881,122 ​ 6.03 % ​ 1,792,149 ​ 5.67 % ​ 1,628,094 ​ 4.98 % Other earning assets 2,198 ​ 5.73 % ​ 1,383 ​ 4.63 % ​ 2,321 ​ 3.32 % Total Earning Assets 2,423,483 ​ 5.32 % ​ 2,341,617 ​ 4.89 % ​ 2,240,199 ​ 4.19 % Cash 22,209 ​ ​ ​ 22,108 ​ ​ ​ 22,685 ​ ​ Unrealized loss on securities (49,520) ​ ​ ​ (63,118) ​ ​ ​ (38,784) ​ ​ Allowance for credit losses (20,294) ​ ​ ​ (18,498) ​ ​ ​ (14,962) ​ ​ Bank-owned life insurance ​ 51,465 ​ ​ ​ ​ ​ ​ 31,808 ​ ​ ​ ​ ​ ​ 30,925 ​ ​ ​ ​ Bank premises and equipment 21,765 ​ ​ ​ ​ 21,330 ​ ​ ​ ​ 21,559 ​ ​ ​ Intangible assets 54,778 ​ ​ ​ ​ 55,176 ​ ​ ​ ​ 55,599 ​ ​ ​ Other assets 79,220 ​ ​ ​ ​ 72,433 ​ ​ ​ ​ 55,567 ​ ​ ​ Total Assets $ 2,583,106 ​ ​ ​ ​ ​ $ 2,462,856 ​ ​ ​ ​ ​ $ 2,372,788 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST-BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest checking $ 537,233 ​ ​ 2.26 % ​ $ 488,761 ​ ​ 1.57 % ​ $ 443,107 ​ ​ 0.41 % Money market ​ 358,274 ​ ​ 2.40 % ​ ​ 347,130 ​ ​ 1.64 % ​ ​ 443,084 ​ ​ 0.47 % Savings ​ 203,129 ​ ​ 0.10 % ​ ​ 238,760 ​ ​ 0.10 % ​ ​ 257,156 ​ ​ 0.10 % Time deposits ​ 465,882 ​ ​ 3.92 % ​ ​ 381,488 ​ ​ 2.79 % ​ ​ 285,264 ​ ​ 0.86 % Total interest-bearing deposits 1,564,518 ​ 2.51 % ​ 1,456,139 ​ 1.66 % ​ 1,428,611 ​ 0.46 % Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term 22,743 ​ 5.14 % ​ 62,926 ​ 5.15 % ​ 21,766 ​ 1.97 % Long-term - FHLB advances 167,181 ​ 4.30 % ​ 110,943 ​ 3.81 % ​ 40,194 ​ 2.23 % Senior notes, net ​ 14,865 ​ 3.24 % ​ ​ 14,798 ​ 3.24 % ​ ​ 14,733 ​ 3.24 % Subordinated debt, net 24,774 ​ 3.74 % ​ 24,662 ​ 3.74 % ​ 27,116 ​ 3.98 % Total borrowed funds 229,563 ​ 4.25 % ​ 213,329 ​ 4.16 % ​ 103,809 ​ 2.78 % Total Interest-bearing Liabilities. 1,794,081 ​ 2.73 % ​ 1,669,468 ​ 1.98 % ​ 1,532,420 ​ 0.62 % Demand deposits ​ 493,052 ​ ​ ​ ​ ​ ​ 515,787 ​ ​ ​ ​ ​ ​ 551,801 ​ ​ ​ ​ Other liabilities ​ 30,089 ​ ​ ​ ​ ​ ​ 29,107 ​ ​ ​ ​ ​ ​ 23,474 ​ ​ ​ ​ Total Liabilities ​ 2,317,222 ​ ​ ​ ​ ​ ​ 2,214,362 ​ ​ ​ ​ ​ ​ 2,107,695 ​ ​ ​ ​ Stockholders' equity, excluding accumulated other comprehensive loss ​ 304,532 ​ ​ ​ ​ ​ ​ 297,894 ​ ​ ​ ​ ​ ​ 295,447 ​ ​ ​ ​ Accumulated other comprehensive loss ​ (38,648) ​ ​ ​ ​ ​ ​ (49,400) ​ ​ ​ ​ ​ ​ (30,354) ​ ​ ​ ​ Total Stockholders' Equity ​ 265,884 ​ ​ ​ ​ ​ ​ 248,494 ​ ​ ​ ​ ​ ​ 265,093 ​ ​ ​ ​ Total Liabilities and Stockholders' Equity $ 2,583,106 ​ ​ ​ ​ ​ $ 2,462,856 ​ ​ ​ ​ ​ $ 2,372,788 ​ ​ ​ ​ Interest Rate Spread ​ ​ ​ ​ 2.59 % ​ ​ ​ ​ ​ 2.91 % ​ ​ ​ ​ ​ 3.57 % Net Interest Income/Earning Assets ​ ​ ​ ​ 3.30 % ​ ​ ​ ​ ​ 3.47 % ​ ​ ​ ​ ​ 3.77 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Deposits (Interest-bearing and Demand) $ 2,057,570 ​ ​ ​ ​ ​ $ 1,971,926 ​ ​ ​ ​ ​ $ 1,980,412 ​ ​ ​ ​ (1) Rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.
Available funding from these sources totaled 183.9% of uninsured deposits and 246.8% of total uninsured and uncollateralized deposits at December 31, 2023. ​ 36 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Uninsured Deposits Information ​ December 31, December 31, ​ ​ 2023 2022 Total Deposits - C&N Bank ​ $ 2,030,909 ​ $ 2,016,666 ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated Total Uninsured Deposits ​ $ 592,206 ​ $ 689,435 ​ Portion of Uninsured Deposits that are ​ ​ ​ ​ ​ ​ ​ Collateralized ​ ​ 151,031 ​ ​ 205,886 ​ Uninsured and Uncollateralized Deposits ​ $ 441,175 ​ $ 483,549 ​ ​ ​ ​ ​ ​ ​ ​ ​ Uninsured and Uncollateralized Deposits as ​ ​ ​ ​ ​ ​ ​ a % of Total Deposits ​ ​ 21.7 % ​ 24.0 % ​ ​ ​ ​ ​ ​ ​ ​ Available Funding from Credit Facilities ​ $ 832,806 ​ $ 807,386 ​ Fair Value of Available-for-sale Debt ​ ​ ​ ​ ​ ​ ​ Securities in Excess of Pledging Obligations ​ ​ 256,058 ​ ​ 272,475 ​ Highly Liquid Available Funding ​ $ 1,088,864 ​ $ 1,079,861 ​ ​ ​ ​ ​ ​ ​ ​ ​ Highly Liquid Available Funding as a % of ​ ​ ​ ​ ​ ​ ​ Uninsured Deposits ​ ​ 183.9 % ​ 156.6 % ​ ​ ​ ​ ​ ​ ​ ​ Highly Liquid Available Funding as a % of ​ ​ ​ ​ ​ ​ ​ Uninsured and Uncollateralized Deposits ​ ​ 246.8 % ​ 223.3 % ​ Despite the reduction in deposits, excluding brokered deposits, in 2023, based on the ample sources of highly liquid funds as described above, management believes the Corporation is well-positioned to meet its short-term and long-term funding obligations.
Available funding from these sources totaled 170.7% of uninsured deposits and 229.4% of total uninsured and uncollateralized deposits at December 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ Uninsured Deposits Information ​ December 31, December 31, ​ ​ 2024 2023 Total Deposits - C&N Bank ​ $ 2,111,547 ​ $ 2,030,909 ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated Total Uninsured Deposits ​ $ 632,804 ​ $ 592,206 ​ Portion of Uninsured Deposits that are ​ ​ ​ ​ ​ ​ ​ Collateralized ​ ​ 161,958 ​ ​ 151,031 ​ Uninsured and Uncollateralized Deposits ​ $ 470,846 ​ $ 441,175 ​ ​ ​ ​ ​ ​ ​ ​ ​ Uninsured and Uncollateralized Deposits as ​ ​ ​ ​ ​ ​ ​ a % of Total Deposits ​ ​ 22.3 % ​ 21.7 % ​ ​ ​ ​ ​ ​ ​ ​ Available Funding from Credit Facilities ​ $ 843,092 ​ $ 832,806 ​ Fair Value of Available-for-sale Debt ​ ​ ​ ​ ​ ​ ​ Securities in Excess of Pledging Obligations ​ ​ 236,945 ​ ​ 256,058 ​ Highly Liquid Available Funding ​ $ 1,080,037 ​ $ 1,088,864 ​ ​ ​ ​ ​ ​ ​ ​ ​ Highly Liquid Available Funding as a % of ​ ​ ​ ​ ​ ​ ​ Uninsured Deposits ​ ​ 170.7 % ​ 183.9 % ​ ​ ​ ​ ​ ​ ​ ​ Highly Liquid Available Funding as a % of ​ ​ ​ ​ ​ ​ ​ Uninsured and Uncollateralized Deposits ​ ​ 229.4 % ​ 246.8 % 35 Table of Contents Based on the ample sources of highly liquid funds as described above, management believes the Corporation is well-positioned to meet its short-term and long-term funding obligations.
As presented in Table II, the Net Interest Margin was 3.77% in 2022, as compared to 3.69% in 2021, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased slightly to 3.57% in 2022 from 3.55% in 2021.
As presented in Table II, the Net Interest Margin was 3.30% in 2024, as compared to 3.47% in 2023, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) decreased to 2.59% in 2024 from 2.91% in 2023.
Partially offsetting the higher effective rate in 2023 was the non-taxable income of $2,100,000 from a one-time enhancement on $30 million purchase of new BOLI. 15 Table of Contents 2022 vs. 2021 Net income for the year ended December 31, 2022 was $26,618,000, or $1.71 per diluted share as compared to 2021 net income of $30,554,000 or $1.92 per share.
The higher effective tax rate in 2023 included the net impact of a tax charge of $950,000 related to the initiated surrender of BOLI, partially offset by the non-taxable income of $2,100,000 from the one-time enhancement on the purchase of BOLI. 2023 vs. 2022 Net income for the year ended December 31, 2023 was $24,148,000, or $1.57 per diluted share, as compared to $26,618,000, or $1.71 per diluted share, for the year ended December 31, 2022.
At December 31, 2022, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $325,677,000, including loans sold through the MPF Xtra program of $155,506,000 and loans sold through the Original program of $170,171,000.
At December 31, 2024, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $329, 766,000, including loans sold through the MPF Xtra program of $158,302,000 and loans sold through the Original program of $171,464,000.
Treasury ​ $ 12,325 ​ $ 11,290 ​ $ 35,166 ​ $ 31,836 ​ $ 25,058 ​ $ 24,912 ​ Obligations of U.S.
Treasury ​ $ 8,067 ​ $ 7,118 ​ $ 12,325 ​ $ 11,290 ​ $ 35,166 ​ $ 31,836 ​ Obligations of U.S.
Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, increased $3,610,000 in 2022 as compared to 2021, as the average balance (at amortized cost) of available-for-sale debt securities increased $168.2 million as indicated in Table II. The average yield on available-for-sale debt securities was 2.16% for 2022, down slightly from 2.17% in 2021.
Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, decreased $246,000 in 2024 as compared to 2023, as the average balance (at amortized cost) of available-for-sale debt securities decreased $61,916,000 as indicated in Table II. The average yield on available-for-sale debt securities was 2.45% for 2024, up from 2.21% in 2023.
Further, the value of the benefit from realization of deferred tax assets would be impacted if income tax rates were changed from currently enacted levels.
Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income, including taxable income in prior carryback years, as well as future taxable income. Further, the value of the benefit from realization of deferred tax assets would be impacted if income tax rates were changed from currently enacted levels.
The average rate on subordinated debt decreased to 3.98% in 2022 from 4.78% in 2021 including the net impact of a new issue of subordinated debt of $24,437,000, net, at an effective rate of 3.74% in May 2021 and the redemption of subordinated notes totaling $8,000,000 in the second quarter 2021 and $8,500,000 in the second quarter 2002. ​ 21 Table of Contents TABLE I - ANALYSIS OF INTEREST INCOME AND EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase/(Decrease) (In Thousands) 2023 2022 ​ 2021 ​ 2023/2022 2022/2021 INTEREST INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing due from banks ​ $ 1,379 ​ $ 645 ​ $ 318 ​ $ 734 ​ $ 327 Available-for-sale debt securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ 8,555 ​ 8,360 ​ 5,114 ​ 195 ​ 3,246 Tax-exempt ​ 2,815 ​ 3,721 ​ 3,357 ​ (906) ​ 364 Total available-for-sale debt securities ​ 11,370 ​ 12,081 ​ 8,471 ​ (711) ​ 3,610 Loans receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ 98,843 ​ 77,641 ​ 68,019 ​ 21,202 ​ 9,622 Paycheck Protection Program ​ ​ 11 ​ ​ 54 ​ ​ 3,476 ​ ​ (43) ​ ​ (3,422) Tax-exempt ​ 2,756 ​ 2,471 ​ 2,232 ​ 285 ​ 239 Total loans receivable ​ 101,610 ​ 81,070 ​ 76,781 ​ 20,540 ​ 4,289 Other earning assets ​ 64 ​ 77 ​ 66 ​ (13) ​ 11 Total Interest Income ​ 114,423 ​ 93,873 ​ 85,636 ​ 20,550 ​ 8,237 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest checking ​ 7,668 ​ 1,833 ​ 897 ​ 5,835 ​ 936 Money market ​ 5,686 ​ 2,088 ​ 1,156 ​ 3,598 ​ 932 Savings ​ 243 ​ 257 ​ 231 ​ (14) ​ 26 Time deposits ​ 10,636 ​ 2,460 ​ 2,254 ​ 8,176 ​ 206 Total interest-bearing deposits ​ 24,233 ​ 6,638 ​ 4,538 ​ 17,595 ​ 2,100 Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term ​ 3,240 ​ 429 ​ 23 ​ 2,811 ​ 406 Long-term - FHLB advances ​ 4,230 ​ 896 ​ 399 ​ 3,334 ​ 497 Senior notes, net ​ ​ 479 ​ ​ 477 ​ ​ 293 ​ ​ 2 ​ ​ 184 Subordinated debt, net ​ 922 ​ 1,079 ​ 1,309 ​ (157) ​ (230) Total borrowed funds ​ 8,871 ​ 2,881 ​ 2,024 ​ 5,990 ​ 857 Total Interest Expense ​ 33,104 ​ 9,519 ​ 6,562 ​ 23,585 ​ 2,957 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 81,319 ​ $ 84,354 ​ $ 79,074 ​ $ (3,035) ​ $ 5,280 ​ (1) Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis (a non-GAAP measure), using the Corporation’s marginal federal income tax rate of 21%.
The average balance of subordinated debt decreased to $24,662,000 in 2023 from $27,116,000 in 2022 and the average rate on subordinated debt decreased to 3.74% in 2023 from 3.98% in 2022 reflecting the repayment of subordinated debt assumed in an acquisition of $8,500,000 in the second quarter 2022. 20 Table of Contents TABLE I - ANALYSIS OF INTEREST INCOME AND EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Increase/(Decrease) (In Thousands) 2024 2023 ​ 2022 ​ 2024/2023 2023/2022 INTEREST INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing due from banks ​ $ 4,307 ​ $ 1,379 ​ $ 645 ​ $ 2,928 ​ $ 734 Available-for-sale debt securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ 8,593 ​ 8,555 ​ 8,360 ​ 38 ​ 195 Tax-exempt ​ 2,531 ​ 2,815 ​ 3,721 ​ (284) ​ (906) Total available-for-sale debt securities ​ 11,124 ​ 11,370 ​ 12,081 ​ (246) ​ (711) Loans receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ 110,396 ​ 98,854 ​ 78,599 ​ 11,542 ​ 20,255 Tax-exempt ​ 2,944 ​ 2,756 ​ 2,471 ​ 188 ​ 285 Total loans receivable ​ 113,340 ​ 101,610 ​ 81,070 ​ 11,730 ​ 20,540 Other earning assets ​ 126 ​ 64 ​ 77 ​ 62 ​ (13) Total Interest Income ​ 128,897 ​ 114,423 ​ 93,873 ​ 14,474 ​ 20,550 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST EXPENSE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest checking ​ 12,151 ​ 7,668 ​ 1,833 ​ 4,483 ​ 5,835 Money market ​ 8,589 ​ 5,686 ​ 2,088 ​ 2,903 ​ 3,598 Savings ​ 207 ​ 243 ​ 257 ​ (36) ​ (14) Time deposits ​ 18,253 ​ 10,636 ​ 2,460 ​ 7,617 ​ 8,176 Total interest-bearing deposits ​ 39,200 ​ 24,233 ​ 6,638 ​ 14,967 ​ 17,595 Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term ​ 1,168 ​ 3,240 ​ 429 ​ (2,072) ​ 2,811 Long-term - FHLB advances ​ 7,188 ​ 4,230 ​ 896 ​ 2,958 ​ 3,334 Senior notes, net ​ ​ 481 ​ ​ 479 ​ ​ 477 ​ ​ 2 ​ ​ 2 Subordinated debt, net ​ 926 ​ 922 ​ 1,079 ​ 4 ​ (157) Total borrowed funds ​ 9,763 ​ 8,871 ​ 2,881 ​ 892 ​ 5,990 Total Interest Expense ​ 48,963 ​ 33,104 ​ 9,519 ​ 15,859 ​ 23,585 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 79,934 ​ $ 81,319 ​ $ 84,354 ​ $ (1,385) ​ $ (3,035) ​ (1) Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis (a non-GAAP measure), using the Corporation’s marginal federal income tax rate of 21%.
Government entities or agencies, is as follows: 27 Table of Contents ● Bank holding company debt securities – All of the Corporation’s holdings of bank holding company debt securities were investment grade and there have been no payment defaults.
Government entities or agencies, is as follows: ● Bank holding company debt securities – All of the Corporation’s holdings of bank holding company debt securities were investment grade and there have been no payment defaults. There were seven securities with face amounts ranging from $3 million to $5 million, including one senior security and six subordinated securities.
The ACL as a percentage of gross loans receivable was 1.04% at December 31, 2023 as compared to 1.08% at January 1, 2023 upon the initial adoption of CECL.
The ACL increased $827,000 to 1.06% as a percentage of gross loans receivable at December 31, 204 as compared to 1.04% at December 31, 2023.
As presented in Table VII, total loans outstanding at December 31, 2023 were $1,848,139,000 which is an increase of $108,099,000 (6.2%) from total loans at December 31, 2022.
At December 31, 2024, commercial loans represented 75% of the portfolio while residential loans totaled 22% of the portfolio. As presented in Table VII, total loans outstanding at December 31, 2024 were $1,895,848,000 which is an increase of $47,709,000 (2.6%) from total loans at December 31, 2023.
Management believes it has been conservative in its decisions concerning identification of loans requiring individual evaluation for credit loss, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the allowances calculated as of December 31, 2023.
As a result, a limited number of relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the provision for credit losses and the amount of total charge-offs reported in any one period. 31 Table of Contents Management believes it has been prudent in its decisions concerning identification of loans requiring individual evaluation for credit loss, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the ACL calculated as of December 31, 2024.
Interest expense on subordinated debt decreased $157,000 to $922,000 in 2023 from $1,079,000 in 2022.
The average rate on long-term borrowings was 3.81% in 2023 compared to 2.23% in 2022. Interest expense on subordinated debt decreased $157,000 to $922,000 in 2023 from $1,079,000 in 2022.
Through December 31, 2023, no shares were repurchased under the new program. The Corporation’s total stockholders’ equity is affected by fluctuations in the fair values of available-for-sale debt securities. The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive loss within stockholders’ equity.
The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive loss within stockholders’ equity. Accumulated other comprehensive loss is excluded from the Bank’s and Corporation’s regulatory capital ratios.
Government agencies or sponsored agencies: ​ ​ ​ ​ ​ ​ ​ Residential pass-through securities ​ ​ ​ ​ ​ ​ ​ ​ 105,549 2.18 % Residential collateralized mortgage obligations ​ ​ ​ ​ ​ ​ ​ ​ 50,212 2.91 % Commercial mortgage-backed securities ​ ​ ​ ​ ​ ​ ​ ​ 76,412 2.03 % Private label commercial mortgage-backed securities ​ ​ ​ ​ ​ ​ ​ ​ 8,215 5.49 % Total ​ ​ ​ ​ ​ ​ ​ ​ $ 464,968 2.42 % ​ The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations.
Government agencies or sponsored agencies: ​ ​ ​ ​ ​ ​ ​ Residential pass-through securities ​ ​ ​ ​ ​ ​ ​ ​ 104,378 2.59 % Residential collateralized mortgage obligations ​ ​ ​ ​ ​ ​ ​ ​ 53,389 3.38 % Commercial mortgage-backed securities ​ ​ ​ ​ ​ ​ ​ ​ 73,470 2.01 % Private label commercial mortgage-backed securities ​ ​ ​ ​ ​ ​ ​ ​ 8,365 5.44 % Total ​ ​ ​ ​ ​ ​ ​ ​ $ 449,923 2.63 % ​ The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations.
In addition, the Corporation and C&N Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. These restrictions are described in Note 17 to the consolidated financial statements.
Future dividend payments and repurchases of common stock will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. In addition, the Corporation and C&N Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities.
(2) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings. ​ ​ ​ 23 Table of Contents TABLE III - ANALYSIS OF VOLUME AND RATE CHANGES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) Year Ended 12/31/2023 vs. 12/31/2022 . ​ Year Ended 12/31/2022 vs. 12/31/2021 ​ Change in ​ Change in ​ Total ​ Change in ​ Change in ​ Total ​ Volume Rate Change ​ Volume Rate Change EARNING ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing due from banks ​ $ (309) ​ $ 1,043 ​ $ 734 ​ ​ $ (339) ​ $ 666 ​ $ 327 Available-for-sale debt securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ (433) ​ 628 ​ 195 ​ ​ 2,989 ​ 257 ​ 3,246 Tax-exempt ​ (527) ​ (379) ​ (906) ​ ​ 534 ​ (170) ​ 364 Total available-for-sale debt securities ​ (960) ​ 249 ​ (711) ​ ​ 3,523 ​ 87 ​ 3,610 Loans receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ 9,165 ​ ​ 12,037 ​ 21,202 ​ ​ 5,289 ​ 4,333 ​ 9,622 Paycheck Protection Program ​ ​ (714) ​ ​ (233) ​ ​ (947) ​ ​ ​ (4,664) ​ ​ 1,242 ​ ​ (3,422) Tax-exempt ​ 59 ​ 226 ​ 285 ​ ​ 388 ​ (149) ​ 239 Total loans receivable ​ 8,510 ​ 12,030 ​ 20,540 ​ ​ (2,756) ​ 7,045 ​ 4,289 Other earning assets ​ (37) ​ ​ 24 ​ (13) ​ ​ (2) ​ 13 ​ 11 Total Interest Income ​ 7,204 ​ 13,346 ​ 20,550 ​ ​ 426 ​ 7,811 ​ 8,237 ​ ​ ​ ​ ​ ​ ​ ​ INTEREST-BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ Interest checking ​ 208 ​ 5,627 ​ 5,835 ​ ​ 109 ​ 827 ​ 936 Money market ​ (542) ​ 4,140 ​ 3,598 ​ ​ 27 ​ 905 ​ 932 Savings ​ (14) ​ 0 ​ (14) ​ ​ 29 ​ (3) ​ 26 Time deposits ​ 1,073 ​ 7,103 ​ 8,176 ​ ​ (318) ​ 524 ​ 206 Total interest-bearing deposits ​ 725 ​ 16,870 ​ 17,595 ​ ​ (153) ​ 2,253 ​ 2,100 Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term ​ 1,517 ​ 1,294 ​ 2,811 ​ ​ 146 ​ 260 ​ 406 Long-term - FHLB advances ​ 2,375 ​ 959 ​ 3,334 ​ ​ (38) ​ 535 ​ 497 Senior notes, net ​ ​ 2 ​ ​ 0 ​ ​ 2 ​ ​ ​ 181 ​ ​ 3 ​ ​ 184 Subordinated debt, net ​ (94) ​ (63) ​ (157) ​ ​ (14) ​ (216) ​ (230) Total borrowed funds ​ 3,800 ​ 2,190 ​ 5,990 ​ ​ 275 ​ 582 ​ 857 Total Interest Expense ​ 4,525 ​ 19,060 ​ 23,585 ​ ​ 122 ​ 2,835 ​ 2,957 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 2,679 ​ $ (5,714) ​ $ (3,035) ​ ​ $ 304 ​ $ 4,976 ​ $ 5,280 (1) Changes in income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.
Year Ended 12/31/2024 vs. 12/31/2023 . ​ Year Ended 12/31/2023 vs. 12/31/2022 ​ Change in ​ Change in ​ Total ​ Change in ​ Change in ​ Total ​ Volume Rate Change ​ Volume Rate Change EARNING ASSETS ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest-bearing due from banks ​ $ 2,642 ​ $ 286 ​ $ 2,928 ​ ​ $ (309) ​ $ 1,043 ​ $ 734 Available-for-sale debt securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ (1,153) ​ 1,191 ​ 38 ​ ​ (433) ​ 628 ​ 195 Tax-exempt ​ (286) ​ 2 ​ (284) ​ ​ (527) ​ (379) ​ (906) Total available-for-sale debt securities ​ (1,439) ​ 1,193 ​ (246) ​ ​ (960) ​ 249 ​ (711) Loans receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Taxable ​ 5,209 ​ ​ 6,333 ​ 11,542 ​ ​ 8,451 ​ ​ 11,804 ​ 20,255 Tax-exempt ​ 52 ​ 136 ​ 188 ​ ​ 59 ​ 226 ​ 285 Total loans receivable ​ 5,261 ​ 6,469 ​ 11,730 ​ ​ 8,510 ​ 12,030 ​ 20,540 Other earning assets ​ 44 ​ ​ 18 ​ 62 ​ ​ (37) ​ ​ 24 ​ (13) Total Interest Income ​ 6,508 ​ 7,966 ​ 14,474 ​ ​ 7,204 ​ 13,346 ​ 20,550 ​ ​ ​ ​ ​ ​ ​ ​ INTEREST-BEARING LIABILITIES ​ ​ ​ ​ ​ ​ ​ Interest-bearing deposits: ​ ​ ​ ​ ​ ​ ​ Interest checking ​ 822 ​ 3,661 ​ 4,483 ​ ​ 208 ​ 5,627 ​ 5,835 Money market ​ 188 ​ 2,715 ​ 2,903 ​ ​ (542) ​ 4,140 ​ 3,598 Savings ​ (36) ​ 0 ​ (36) ​ ​ (14) ​ 0 ​ (14) Time deposits ​ 2,690 ​ 4,927 ​ 7,617 ​ ​ 1,073 ​ 7,103 ​ 8,176 Total interest-bearing deposits ​ 3,664 ​ 11,303 ​ 14,967 ​ ​ 725 ​ 16,870 ​ 17,595 Borrowed funds: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term ​ (2,064) ​ (8) ​ (2,072) ​ ​ 1,517 ​ 1,294 ​ 2,811 Long-term - FHLB advances ​ 2,363 ​ 595 ​ 2,958 ​ ​ 2,375 ​ 959 ​ 3,334 Senior notes, net ​ ​ 2 ​ ​ 0 ​ ​ 2 ​ ​ ​ 2 ​ ​ 0 ​ ​ 2 Subordinated debt, net ​ 4 ​ 0 ​ 4 ​ ​ (94) ​ (63) ​ (157) Total borrowed funds ​ 305 ​ 587 ​ 892 ​ ​ 3,800 ​ 2,190 ​ 5,990 Total Interest Expense ​ 3,969 ​ 11,890 ​ 15,859 ​ ​ 4,525 ​ 19,060 ​ 23,585 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income ​ $ 2,539 ​ $ (3,924) ​ $ (1,385) ​ ​ $ 2,679 ​ $ (5,714) ​ $ (3,035) (1) Changes in income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.
As collateral for the line, the Corporation has pledged available-for-sale securities with a carrying value of $20,829,000 at December 31, 2023. 35 Table of Contents The Corporation’s outstanding, available, and total credit facilities at December 31, 2023 and 2022 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding ​ Available ​ Total Credit (In Thousands) December 31, December 31, December 31, December 31, December 31, December 31, ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 ​ 2023 ​ 2022 Federal Home Loan Bank of Pittsburgh ​ $ 189,021 ​ $ 150,099 ​ $ 737,824 ​ $ 689,279 ​ $ 926,845 ​ $ 839,378 Federal Reserve Bank Discount Window ​ 0 ​ 0 ​ 19,982 ​ 23,107 ​ 19,982 ​ 23,107 Other correspondent banks ​ 0 ​ 0 ​ 75,000 ​ 95,000 ​ 75,000 ​ 95,000 Total credit facilities ​ $ 189,021 ​ $ 150,099 ​ $ 832,806 ​ $ 807,386 ​ $ 1,021,827 ​ $ 957,485 ​ At December 31, 2023, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of overnight and short-term borrowings of $31,500,000, long-term borrowings with par values totaling $138,313,000 and letters of credit totaling $19,208,000.
The Corporation’s outstanding, available, and total credit facilities at December 31, 2024 and 2023 are as follows: ​ 34 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding ​ Available ​ Total Credit (In Thousands) December 31, December 31, December 31, December 31, December 31, December 31, ​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ 2024 ​ 2023 Federal Home Loan Bank of Pittsburgh ​ $ 188,692 ​ $ 189,021 ​ $ 749,999 ​ $ 737,824 ​ $ 938,691 ​ $ 926,845 Federal Reserve Bank Discount Window ​ 0 ​ 0 ​ 18,093 ​ 19,982 ​ 18,093 ​ 19,982 Other correspondent banks ​ 0 ​ 0 ​ 75,000 ​ 75,000 ​ 75,000 ​ 75,000 Total credit facilities ​ $ 188,692 ​ $ 189,021 ​ $ 843,092 ​ $ 832,806 ​ $ 1,031,784 ​ $ 1,021,827 At December 31, 2024, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings with par values totaling $165,451,000 and letters of credit totaling $23,241,000.
In 2023, the fully taxable equivalent yield on loans was 5.67%, up from 4.98% in 2022, reflecting the effects of rising interest rates on the loan portfolio. Average outstanding loans receivable increased $164,055,000 (10.1%) to $1,792,149,000 in 2023 from $1,628,094,000 in 2022.
In 2024, the fully taxable equivalent yield on loans was 6.03%, up from 5.67% in 2023, r eflecting the effects of primarily rising interest rates on new loan originations and floating-rate loans . Average outstanding loans receivable increased $88,973,000 (5.0%) to $1,881,122,000 in 2024 from $1,792,149,000 in 2023.
Residential mortgages originated and sold through the MPF Original program consist primarily of conforming, prime loans sold to the Federal Home Loan Bank of Pittsburgh. The Corporation also may originate and sell larger-balance, nonconforming mortgages under the MPF Direct Program. The Corporation does not retain servicing rights for loans sold under the MPF Direct Program.
The Corporation also may originate and sell larger-balance, nonconforming mortgages under the MPF Direct Program. The Corporation does not retain servicing rights for loans sold under the MPF Direct Program. Through December 31, 2024, the Corporation’s activity under the MPF Direct Program has been minimal.
Partially offsetting the higher effective rate in 2023 was the non-taxable income of $2,100,000 from a one-time enhancement on $30 million purchase of new BOLI. The Corporation’s effective tax rates differed from the federal statutory rate of 21% mainly because of the effects of tax-exempt interest income for 2022 and 2021.
Partially offsetting the higher effective rate in 2023 was the non-taxable income of $2,100,000 from a one-time enhancement on $30 million purchase of new BOLI. More detailed information concerning the Corporation’s earnings results are provided in other sections of Management’s Discussion and Analysis.
In comparison, the net positive impact of purchase accounting-related adjustments was $1,621,000, with a positive impact on the net interest margin of 0.07% in 2022. INTEREST INCOME AND EARNING ASSETS Interest income totaled $114,423,000 in 2023, an increase of $20,550,000, or 21.9%, from 2022. Interest and fees from loans receivable increased $20,540,000 in 2023 as compared to 2022.
INTEREST INCOME AND EARNING ASSETS Interest income totaled $114,423,000 in 2023, an increase of $20,550,000, or 21.9%, from 2022. Interest and fees from loans receivable increased $20,540,000 in 2023 as compared to 2022. In 2023, the fully taxable equivalent yield on loans was 5.67%, up from 4.98% in 2022, reflecting the effects of rising interest rates on the loan portfolio.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−5 removed7 unchanged
Biggest changeIn contrast, most of the Corporation’s other financial instruments, including loans receivable (held for investment), deposits and borrowed funds are carried on the balance sheet at historical cost without adjustment for the impact of changes in interest rates. . ​ ​ ​ ​ ​ ​ ​ 39 Table of Contents ​ TABLE XIII – THE EFFECT OF HYPOTHETICAL CHANGES IN INTEREST RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Period Ending December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Interest ​ ​ Interest ​ ​ Net Interest ​ NII ​ ​ NII ​ Change in Rates ​ ​ Income ​ ​ Expense ​ ​ Income (NII) ​ % Change ​ ​ Risk Limit ​ +400 ​ $ 148,407 ​ $ 81,707 ​ $ 66,700 ​ (21.5) % ​ 25.0 % +300 ​ ​ 143,333 ​ ​ 70,165 ​ ​ 73,168 ​ (13.9) % ​ 20.0 % +200 ​ ​ 138,291 ​ ​ 59,859 ​ ​ 78,432 ​ (7.7) % ​ 15.0 % +100 ​ ​ 133,224 ​ ​ 50,797 ​ ​ 82,427 ​ (3.0) % ​ 10.0 % 0 ​ ​ 127,920 ​ ​ 42,979 ​ ​ 84,941 ​ 0.0 % ​ 0.0 % -100 ​ ​ 122,446 ​ ​ 37,701 ​ ​ 84,745 ​ (0.2) % ​ 10.0 % -200 ​ ​ 116,922 ​ ​ 32,462 ​ ​ 84,460 ​ (0.6) % ​ 15.0 % -300 ​ ​ 110,919 ​ ​ 27,710 ​ ​ 83,209 ​ (2.0) % ​ 20.0 % -400 ​ ​ 104,495 ​ ​ 23,067 ​ ​ 81,428 ​ (4.1) % ​ 25.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity at December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Present ​ ​ Present ​ ​ Present ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Value ​ ​ Value ​ ​ Value ​ ​ ​ ​ ​ ​ Change in Rates ​ ​ Equity ​ ​ % Change ​ ​ Risk Limit ​ ​ ​ ​ ​ ​ +400 ​ $ 330,130 ​ ​ (21.2) % ​ 50.0 % ​ ​ ​ ​ ​ +300 ​ ​ 359,302 ​ ​ (14.3) % ​ 45.0 % ​ ​ ​ ​ ​ +200 ​ ​ 385,045 ​ ​ (8.1) % ​ 35.0 % ​ ​ ​ ​ ​ +100 ​ ​ 405,178 ​ ​ (3.3) % ​ 25.0 % ​ ​ ​ ​ ​ 0 ​ ​ 419,199 ​ ​ 0.0 % ​ 0.0 % ​ ​ ​ ​ ​ -100 ​ ​ 406,957 ​ ​ (2.9) % ​ 25.0 % ​ ​ ​ ​ ​ -200 ​ ​ 406,145 ​ ​ (3.1) % ​ 35.0 % ​ ​ ​ ​ ​ -300 ​ ​ 385,859 ​ ​ (8.0) % ​ 45.0 % ​ ​ ​ ​ ​ -400 ​ ​ 363,763 ​ ​ (13.2) % ​ 50.0 % ​ ​ ​ ​ ​ ​ ​ 40 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Period Ending December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Interest ​ ​ Interest ​ ​ Net Interest ​ NII ​ ​ NII ​ Change in Rates ​ ​ Income ​ ​ Expense ​ ​ Income (NII) ​ % Change ​ ​ Risk Limit ​ +400 ​ $ 131,145 ​ $ 34,767 ​ $ 96,378 ​ 8.9 % ​ 25.0 % +300 ​ ​ 125,127 ​ ​ 30,816 ​ ​ 94,311 ​ 6.6 % ​ 20.0 % +200 ​ ​ 119,561 ​ ​ 26,864 ​ ​ 92,697 ​ 4.8 % ​ 15.0 % +100 ​ ​ 113,703 ​ ​ 22,912 ​ ​ 90,791 ​ 2.6 % ​ 10.0 % 0 ​ ​ 107,451 ​ ​ 18,961 ​ ​ 88,490 ​ 0.0 % ​ 0.0 % -100 ​ ​ 101,048 ​ ​ 15,516 ​ ​ 85,532 ​ (3.3) % ​ 10.0 % -200 ​ ​ 94,854 ​ ​ 13,240 ​ ​ 81,614 ​ (7.8) % ​ 15.0 % -300 ​ ​ 89,405 ​ ​ 11,325 ​ ​ 78,080 ​ (11.8) % ​ 20.0 % -400 ​ ​ 85,076 ​ ​ 9,439 ​ ​ 75,637 ​ (14.5) % ​ 25.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity at December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Present ​ ​ Present ​ ​ Present ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Value ​ ​ Value ​ ​ Value ​ ​ ​ ​ ​ ​ Change in Rates ​ ​ Equity ​ ​ % Change ​ ​ Risk Limit ​ ​ ​ ​ ​ ​ +400 ​ $ 498,368 ​ ​ 0.3 % ​ 50.0 % ​ ​ ​ ​ ​ +300 ​ ​ 496,186 ​ ​ (0.1) % ​ 45.0 % ​ ​ ​ ​ ​ +200 ​ ​ 501,422 ​ ​ 1.0 % ​ 35.0 % ​ ​ ​ ​ ​ +100 ​ ​ 501,991 ​ ​ 1.1 % ​ 25.0 % ​ ​ ​ ​ ​ 0 ​ ​ 496,650 ​ ​ 0.0 % ​ 0.0 % ​ ​ ​ ​ ​ -100 ​ ​ 485,332 ​ ​ (2.3) % ​ 25.0 % ​ ​ ​ ​ ​ -200 ​ ​ 468,195 ​ ​ (5.7) % ​ 35.0 % ​ ​ ​ ​ ​ -300 ​ ​ 445,129 ​ ​ (10.4) % ​ 45.0 % ​ ​ ​ ​ ​ -400 ​ ​ 417,505 ​ ​ (15.9) % ​ 50.0 % ​ ​ ​ ​ ​ ​ ​ ​ 41 Table of Contents
Biggest changeIn contrast, most of the Corporation’s other financial instruments, including loans receivable (held for investment), deposits and borrowed funds are carried on the balance sheet at historical cost without adjustment for the impact of changes in interest rates. ​ TABLE XIII – THE EFFECT OF HYPOTHETICAL CHANGES IN INTEREST RATES ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Period Ending December 31, 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Interest ​ ​ Interest ​ ​ Net Interest ​ NII ​ ​ NII ​ Change in Rates ​ ​ Income ​ ​ Expense ​ ​ Income (NII) ​ % Change ​ ​ Risk Limit ​ +400 ​ $ 157,710 ​ $ 87,489 ​ $ 70,221 ​ (17.4) % ​ 25.0 % +300 ​ ​ 151,610 ​ ​ 75,796 ​ ​ 75,814 ​ (10.8) % ​ 20.0 % +200 ​ ​ 145,458 ​ ​ 65,308 ​ ​ 80,150 ​ (5.7) % ​ 15.0 % +100 ​ ​ 139,233 ​ ​ 56,023 ​ ​ 83,210 ​ (2.1) % ​ 10.0 % 0 ​ ​ 132,939 ​ ​ 47,942 ​ ​ 84,997 ​ 0.0 % ​ 0.0 % -100 ​ ​ 126,757 ​ ​ 42,671 ​ ​ 84,086 ​ (1.1) % ​ 10.0 % -200 ​ ​ 119,814 ​ ​ 37,450 ​ ​ 82,364 ​ (3.1) % ​ 15.0 % -300 ​ ​ 111,964 ​ ​ 32,229 ​ ​ 79,735 ​ (6.2) % ​ 20.0 % -400 ​ ​ 103,390 ​ ​ 27,650 ​ ​ 75,740 ​ (10.9) % ​ 25.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity at December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Present ​ ​ Present ​ ​ Present ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Value ​ ​ Value ​ ​ Value ​ ​ ​ ​ ​ ​ Change in Rates ​ ​ Equity ​ ​ % Change ​ ​ Risk Limit ​ ​ ​ ​ ​ ​ +400 ​ $ 475,112 ​ ​ (16.1) % ​ 50.0 % ​ ​ ​ ​ ​ +300 ​ ​ 507,221 ​ ​ (10.4) % ​ 45.0 % ​ ​ ​ ​ ​ +200 ​ ​ 534,636 ​ ​ (5.6) % ​ 35.0 % ​ ​ ​ ​ ​ +100 ​ ​ 555,058 ​ ​ (2.0) % ​ 25.0 % ​ ​ ​ ​ ​ 0 ​ ​ 566,339 ​ ​ 0.0 % ​ 0.0 % ​ ​ ​ ​ ​ -100 ​ ​ 552,813 ​ ​ (2.4) % ​ 25.0 % ​ ​ ​ ​ ​ -200 ​ ​ 520,196 ​ ​ (8.1) % ​ 35.0 % ​ ​ ​ ​ ​ -300 ​ ​ 470,155 ​ ​ (17.0) % ​ 45.0 % ​ ​ ​ ​ ​ -400 ​ ​ 403,255 ​ ​ (28.8) % ​ 50.0 % ​ ​ ​ ​ ​ 38 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In Thousands) ​ Period Ending December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Interest ​ ​ Interest ​ ​ Net Interest ​ NII ​ ​ NII ​ Change in Rates ​ ​ Income ​ ​ Expense ​ ​ Income (NII) ​ % Change ​ ​ Risk Limit ​ +400 ​ $ 148,407 ​ $ 81,707 ​ $ 66,700 ​ (21.5) % ​ 25.0 % +300 ​ ​ 143,333 ​ ​ 70,165 ​ ​ 73,168 ​ (13.9) % ​ 20.0 % +200 ​ ​ 138,291 ​ ​ 59,859 ​ ​ 78,432 ​ (7.7) % ​ 15.0 % +100 ​ ​ 133,224 ​ ​ 50,797 ​ ​ 82,427 ​ (3.0) % ​ 10.0 % 0 ​ ​ 127,920 ​ ​ 42,979 ​ ​ 84,941 ​ 0.0 % ​ 0.0 % -100 ​ ​ 122,446 ​ ​ 37,701 ​ ​ 84,745 ​ (0.2) % ​ 10.0 % -200 ​ ​ 116,922 ​ ​ 32,462 ​ ​ 84,460 ​ (0.6) % ​ 15.0 % -300 ​ ​ 110,919 ​ ​ 27,710 ​ ​ 83,209 ​ (2.0) % ​ 20.0 % -400 ​ ​ 104,495 ​ ​ 23,067 ​ ​ 81,428 ​ (4.1) % ​ 25.0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity at December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Present ​ ​ Present ​ ​ Present ​ ​ ​ ​ ​ ​ Basis Point ​ ​ Value ​ ​ Value ​ ​ Value ​ ​ ​ ​ ​ ​ Change in Rates ​ ​ Equity ​ ​ % Change ​ ​ Risk Limit ​ ​ ​ ​ ​ ​ +400 ​ $ 330,130 ​ ​ (21.2) % ​ 50.0 % ​ ​ ​ ​ ​ +300 ​ ​ 359,302 ​ ​ (14.3) % ​ 45.0 % ​ ​ ​ ​ ​ +200 ​ ​ 385,045 ​ ​ (8.1) % ​ 35.0 % ​ ​ ​ ​ ​ +100 ​ ​ 405,178 ​ ​ (3.3) % ​ 25.0 % ​ ​ ​ ​ ​ 0 ​ ​ 419,199 ​ ​ 0.0 % ​ 0.0 % ​ ​ ​ ​ ​ -100 ​ ​ 406,957 ​ ​ (2.9) % ​ 25.0 % ​ ​ ​ ​ ​ -200 ​ ​ 406,145 ​ ​ (3.1) % ​ 35.0 % ​ ​ ​ ​ ​ -300 ​ ​ 385,859 ​ ​ (8.0) % ​ 45.0 % ​ ​ ​ ​ ​ -400 ​ ​ 363,763 ​ ​ (13.2) % ​ 50.0 % ​ ​ ​ ​ ​ ​ ​ ​ 39 Table of Contents
The Corporation’s major category of market risk, interest rate risk, is discussed in the following section. 38 Table of Contents INTEREST RATE RISK The Corporation uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest income and the economic value of equity.
The Corporation’s major category of market risk, interest rate risk, is discussed in the following section. INTEREST RATE RISK The Corporation uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest income and the economic value of equity (“EVE”).
For purposes of these calculations, the economic value of equity includes the discounted present values of financial instruments, such as securities, loans, deposits and borrowed funds, and the book values of nonfinancial assets and liabilities, such as premises and equipment and accrued expenses.
For purposes of these calculations, EVE includes the discounted present values of financial instruments, such as securities, loans, deposits and borrowed funds, and the book values of nonfinancial assets and liabilities, such as premises and equipment and accrued expenses.
The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive income (loss) within stockholders’ equity. Increases in interest rates have caused the fair value of the Corporation’s available-for-sale debt securities to decrease, resulting in an accumulated other comprehensive loss of $38.9 million at December 31, 2023.
The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive income (loss) within stockholders’ equity. Increases in interest rates have caused the fair value of the Corporation’s available-for-sale debt securities to decrease, resulting in an accumulated other comprehensive loss of $37.1 million at December 31, 2024.
The policy limits acceptable fluctuations in net interest income from the baseline (flat rates) one-year scenario and variances in the economic value of equity from the baseline values based on current rates. ​ Table XIII, which follows this discussion, is based on the results of calculations performed using the simulation model as of December 31, 2023 and 2022.
The policy limits acceptable fluctuations in net interest income from the baseline (flat rates) one-year scenario and variances in EVE from the baseline values based on current rates. ​ Table XIII, which follows this discussion, is based on the results of calculations performed using the simulation model as of December 31, 2024 and 2023.
Further, the projected results are impacted by assumptions regarding the run-off and the extent of sensitivity to interest rate changes of deposits with no stated maturity (checking, savings and money market accounts).
Further, the projected results are impacted by assumptions regarding the run-off and the extent of sensitivity to interest rate changes of deposits with no stated maturity (checking, savings and money market accounts). Actual results could vary significantly from these estimates, which could result in significant differences in the calculations of projected changes in net interest income and EVE.
Further, results in the downward rate scenarios reflect limitations on the benefit of falling rates on some deposit types due to a 0% assumed floor.
Further, results in the downward rate scenarios reflect limitations on the benefit of falling rates on some deposit types due to a 0% assumed floor. ​ At December 31, 2024 and 2023, EVE is modeled to decrease compared to the 0 basis point scenario in all of the rising and falling rate scenarios.
In the analysis based on December 31, 2023 data, the amounts of net interest income decrease, as compared to the amounts based on current interest rates, in both the upward and downward rate scenarios. Further, the economic value of equity is modeled to decrease in both the rising and falling rate scenarios.
The Table shows that as of the respective dates, the changes in net interest income and changes in EVE were within the policy limits in all scenarios. ​ 37 Table of Contents Based on December 31, 2024 and 2023 data, the amounts of net interest income decrease, as compared to the amounts based on current interest rates, in both the upward and downward rate scenarios.
The Table also shows that as of the respective dates, despite the impact of the modeling changes and changes in deposit mix, the changes in net interest income and changes in economic value were within the policy limits in all scenarios. ​ Under U.S. generally accepted accounting principles, available-for-sale debt securities are carried at fair value as of each balance sheet date.
The increases in EVE also reflect generally higher long-term interest rates used in calculating the present values of nonmaturity deposits at December 31, 2024 as compared to December 31, 2023. ​ Under U.S. generally accepted accounting principles, available-for-sale debt securities are carried at fair value as of each balance sheet date.
Removed
Actual results could vary significantly from these estimates, which could result in significant differences in the calculations of projected changes in net interest income and economic value of equity.
Added
The modeling results reflect the impact of management’s assumptions that the Corporation’s deposit rates would rise in the increasing rate scenarios to a greater extent than they would fall in the decreasing rate scenarios.
Removed
The results based on December 31, 2023 data as presented in Table XIII are significantly different from the results based on the modeling performed using December 31, 2022 data which showed the net interest income profile to be asset-sensitive.
Added
In Table XIII, EVE is higher at December 31, 2024 as compared to December 31, 2023 all of the rate scenarios. The increases in comparative amounts of EVE reflects the impact of an overall increase in the assumed lives of nonmaturity deposits used in the December 31, 2024 analysis based on an updated study completed in the second quarter 2024.
Removed
In the analysis based on December 31, 2023 data, management assumed that, in rising rate scenarios, the average rate to be paid on interest checking, savings and money market accounts would increase by a higher percentage of the baseline scenario as compared to the assumptions used in the December 31, 2022 analysis.
Removed
This change reflects management’s assessment that, in light of significant increases in short-term interest rates that have occurred over the course of 2022 and 2023, the Corporation’s deposit rates would increase to a greater extent if such scenarios would occur.
Removed
The change in results also reflects changes in deposit mix, as the carrying amount of total deposits without stated maturities was $112.0 million lower at December 31, 2023 as compared to December 31, 2022, while time deposits were higher by $129.3 million.

Other CZNC 10-K year-over-year comparisons