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What changed in UNIVEST FINANCIAL Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of UNIVEST FINANCIAL 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.

+303 added−291 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-26)

Top changes in UNIVEST FINANCIAL Corp's 2024 10-K

303 paragraphs added · 291 removed · 249 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

50 edited+8 added−11 removed60 unchanged
Biggest changeThe operations of the Bank are further subject to the: • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; 8 Table of Contents • Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and consumer customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services; • Check Clearing for the 21st Century Act (also known as "Check 21"), which gives "substitute checks," such as digital check images and copies made from that image, the same legal standing as the original paper checks; • Regulations of the Office of Foreign Assets Control that enforce economic and trade sanctions programs based on United States foreign policy and national security goals; and • Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
Biggest changeOther Laws and Regulations The Bank's operations are also subject to federal laws and regulations applicable to credit transactions, such as the: • Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected; • Truth in Savings Act; • Laws and regulations prohibiting unfair or deceptive acts or practices; and • other regulations of the various federal agencies charged with the responsibility of implementing such federal laws. 8 Table of Contents The operations of the Bank are further subject to the: • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and consumer customers' rights and liabilities arising from the use of automated teller machines and other electronic banking services; • Check Clearing for the 21st Century Act (also known as "Check 21"), which gives "substitute checks," such as digital check images and copies made from that image, the same legal standing as the original paper checks; • Regulations of the Office of Foreign Assets Control that enforce economic and trade sanctions programs based on United States foreign policy and national security goals; and • Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
The discussion below is only a brief summary of some of the significant laws and regulations that affect the Bank and the Corporation, and is not intended to be a complete description of all such laws.
The discussion below is only a brief summary of some of the significant laws and regulations that affect the Bank and the Corporation, and is not intended to be a complete description of all such laws and regulations.
Univest's diversity initiatives are applicable, but not limited to: our practices and policies on recruitment and selection; compensation and benefits; professional development and training; promotions; transfers; social and recreational programs; layoffs; terminations; and the ongoing development of a work environment built on the premise of gender and diversity equity that encourages and enforces: • Respectful communication and cooperation between all employees; • Teamwork and employee participation, fostering representation of all groups and perspectives; and • Employer and employee contributions to the communities we serve to promote a greater understanding and respect for diversity.
Univest's inclusivity initiatives are applicable, but not limited to: our practices and policies on recruitment and selection; compensation and benefits; professional development and training; promotions; transfers; social and recreational programs; layoffs; terminations; and the ongoing development of a work environment built on the premise of gender and diversity equity that encourages and enforces: • Respectful communication and cooperation between all employees; • Teamwork and employee participation, fostering representation of all groups and perspectives; and • Employer and employee contributions to the communities we serve to promote a greater understanding and respect for inclusivity.
The Board's policies also require that a bank holding company serve as a source of financial strength to its subsidiary banks by standing ready to use available resources to provide adequate capital funds to those banks during periods of financial stress or adversity and by maintaining the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks where necessary.
The Board's policies also require that a bank holding company serve as a source of financial and managerial strength to its subsidiary banks by standing ready to use available resources to provide adequate capital funds to those banks during periods of financial stress or adversity and by maintaining the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks where necessary.
Other competitors, including credit unions, consumer finance companies, insurance companies, wealth management providers, leasing companies, financial technology companies, specialty finance companies, technology companies and mutual funds, compete for certain lending and deposit gathering services and insurance and wealth management services offered by the Bank and its operating segments.
Other competitors, including credit unions, consumer finance companies, mortgage companies, insurance companies, wealth management providers, leasing companies, financial technology companies, specialty finance companies, technology companies and mutual funds, compete for certain lending and deposit gathering services and insurance and wealth management services offered by the Bank and its operating segments.
The Corporation will provide at no charge a copy of the SEC Form 10-K annual report for the year 2023 to each shareholder who requests one in writing. Requests should be directed to: Megan Duryea Santana, Corporate Secretary, Univest Financial Corporation, P.O. Box 197, Souderton, PA 18964.
The Corporation will provide at no charge a copy of the SEC Form 10-K annual report for the year 2024 to each shareholder who requests one in writing. Requests should be directed to: Megan Duryea Santana, Corporate Secretary, Univest Financial Corporation, P.O. Box 197, Souderton, PA 18964.
Insurance of Deposit Accounts The Bank's deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Deposit insurance per account owner is $250,000 per account ownership category. The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund. Under the FDIC's risk-based assessment system, institutions deemed less risky pay lower assessments.
Insurance of Deposit Accounts The Bank's deposits are insured up to applicable limits by the Deposit Insurance Fund of the FDIC. Deposit insurance per account owner is $250,000 for each account ownership category. The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund. Under the FDIC's risk-based assessment system, institutions deemed less risky pay lower assessments.
Pursuant to Section 404 of SOX ("SOX 404"), management of the Corporation is required to furnish a report on internal control over financial reporting, identify any material weaknesses in its internal controls over financial reporting and assert that such internal controls are effective. The Corporation has continued to be in compliance with SOX 404 during 2023.
Pursuant to Section 404 of SOX ("SOX 404"), management of the Corporation is required to furnish a report on internal control over financial reporting, identify any material weaknesses in its internal controls over financial reporting and assert that such internal controls are effective. The Corporation has continued to be in compliance with SOX 404 during 2024.
The SEC maintains an internet site that contains the Corporation's SEC filings electronically at www.sec.gov . Information about our Executive Officers Name Age Current Primary Positions Current Position Since Jeffrey M. Schweitzer 50 Chair of the Board, President and Chief Executive Officer of the Corporation and Chair of the Board and Chief Executive Officer of the Bank.
The SEC maintains an internet site that contains the Corporation's SEC filings electronically at www.sec.gov . Information about our Executive Officers Name Age Current Primary Positions Current Position Since Jeffrey M. Schweitzer 51 Chair of the Board, President and Chief Executive Officer of the Corporation and Chair of the Board and Chief Executive Officer of the Bank.
We provide in-house training to employees on topics including leadership and professional development, cybersecurity, risk and compliance and technology. In addition, as part of "Univest University," we provide several certification programs including a Skill Builder Certification Program, a Supervisor Certification, a Leadership Certification and an Advanced Leadership Certification.
We provide career pathing and in-house training to employees on topics including leadership and professional development, cybersecurity, risk and compliance and technology. In addition, as part of "Univest University," we provide several certification programs including a Skill Builder Certification Program, a Supervisor Certification, a Leadership Certification and an Advanced Leadership Certification.
(Has been employed by the Bank since 2022 as Executive Vice President and Chief Credit Officer prior to his current position. Prior to joining the Bank, he was Chief Credit Officer at WSFS Bank from 2015-2022). 2023 Eleni S. Monios 59 Executive Vice President and Chief Credit Officer of the Bank.
(Has been employed by the Bank since 2022 as Executive Vice President and Chief Credit Officer prior to his current position. Prior to joining the Bank, he was Chief Credit Officer at WSFS Bank from 2015-2022). 2023 Eleni S. Monios 60 Executive Vice President and Chief Credit Officer of the Bank.
Among other circumstances, under the BHCA, a company has control 9 Table of Contents of a bank or bank holding company if the company owns, controls or has power to vote 25% or more of any class of voting securities of the bank or bank holding company, controls in any manner the election of a majority of directors or trustees of the bank or bank holding company, or the Board has determined, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or bank holding company.
Among other circumstances, under the BHCA, a company has control of a bank or bank holding company if the company owns, controls or has power to vote 25% or more of any class of voting securities of the bank or bank holding company, controls in any manner the election of a majority of directors or trustees of the bank or bank holding company, or the Board has determined, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or bank holding company.
Keim 56 Senior Executive Vice President and Chief Operating Officer of the Corporation, President of the Bank; Director of the Bank (Has been employed by the Corporation since 2008, most recently as Senior Executive Vice President and Chief Financial Officer of the Corporation and Bank, prior to his current position). 2015 Megan D.
Keim 57 Senior Executive Vice President and Chief Operating Officer of the Corporation, President and Director of the Bank (Has been employed by the Corporation since 2008, most recently as Senior Executive Vice President and Chief Financial Officer of the Corporation and Bank, prior to his current position). 2015 Megan D.
Management cannot predict what insurance assessment rates will be in the future. 7 Table of Contents Transactions with Affiliates and Loans to Insiders A state member bank's authority to engage in transactions with its affiliates is generally limited by Sections 23A and 23B of the Federal Reserve Act and by the Act's implementing regulation, Regulation W.
Management cannot predict what insurance assessment rates will be in the future. Transactions with Affiliates and Loans to Insiders A state member bank's authority to engage in transactions with its affiliates is generally limited by Sections 23A and 23B of the Federal Reserve Act and by the Act's implementing regulation, Regulation W.
Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a "large bank." The agencies will evaluate large banks under four performance tests: the Retail 6 Table of Contents Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.
Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a "large bank." The agencies will evaluate large banks under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.
Market Area The Corporation's headquarters and main office is located in Souderton, Montgomery County, Pennsylvania, which is located in Southeastern Pennsylvania, approximately thirty-five miles north of Philadelphia. The Corporation provides banking and financial services to customers in 19 counties in the Southeastern, Central and Western regions of Pennsylvania, three counties in New Jersey and four counties in Maryland.
Market Area The Corporation's headquarters are in Souderton, Montgomery County, Pennsylvania, which is located in Southeastern Pennsylvania, approximately thirty-five miles north of Philadelphia. The Corporation provides banking and financial services to customers in 19 counties in the Southeastern, Central and Western regions of Pennsylvania, three counties in New Jersey and four counties in Maryland.
The CRA requires all FDIC-insured institutions to publicly disclose their rating. The Bank received a "satisfactory" CRA rating in its most recent federal examination. On October 24, 2023, the FDIC, the Board, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the CRA regulations.
The CRA requires all FDIC-insured institutions to publicly disclose their rating. The Bank received a "satisfactory" CRA rating in its most recent federal examination. On October 6 Table of Contents 24, 2023, the FDIC, the Board, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the CRA regulations.
The Bank, as a member of the Federal Home Loan Bank of Pittsburgh ("FHLB"), is required to acquire and hold shares of capital stock in the FHLB. 10 Table of Contents Acquisitions The Corporation, through its business segments, provide financial solutions to individuals, businesses, municipalities and non-profit organizations.
The Bank, as a member of the Federal Home Loan Bank of Pittsburgh ("FHLB"), is required to acquire and hold shares of capital stock in the FHLB. Acquisitions The Corporation, through its business segments, provide financial solutions to individuals, businesses, municipalities and non-profit organizations.
The Bank Secrecy Act, USA PATRIOT Act, and Anti-Money Laundering Regulations The Bank must comply with the anti-money laundering provisions of the Bank Secrecy Act (the "BSA") as amended by the USA PATRIOT Act, and implementing regulations issued by the Board and the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.
The Bank Secrecy Act, USA PATRIOT Act, and Anti-Money Laundering Regulations The Bank must comply with the anti-money laundering and countering the financing of terrorism provisions of the Bank Secrecy Act (the "BSA") as amended by the USA PATRIOT Act, and implementing regulations issued by the Board and the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.
The Bank is a member of the Federal Home Loan Bank System ("FHLBanks"), which consists of 11 regional FHLBanks, and is subject to supervision and regulation by the Federal Housing Finance Agency. The FHLBanks provide a central credit facility primarily for member institutions.
The Bank is a member of the Federal Home Loan Bank System ("FHLBanks"), which consists of 11 regional FHLBanks, and is subject to supervision and regulation by the Federal Housing Finance Agency. The FHLBanks provide a central credit 10 Table of Contents facility primarily for member institutions.
Retention Employee retention helps us operate efficiently and offers continuity to our customers and the community. We believe our commitment to living our core values, actively prioritizing concern for our employees' well-being, supporting our employees' career goals, offering competitive wages and providing valuable benefits aids in the retention of our employees.
Retention Employee retention helps us operate efficiently and offers continuity to our customers and the community. We believe our commitment to our core values, actively prioritizing concern for our employees' well-being, supporting our employees' career 4 Table of Contents goals, offering competitive wages and providing valuable benefits aids in the retention of our employees.
Competition The Corporation's service areas are characterized by intense competition for banking business among commercial banks, savings institutions and other financial institutions. In competing with other banks, savings institutions and other financial institutions, the Bank seeks to provide personalized services and local decision making through management's knowledge and awareness of its service area, customers and borrowers.
Competition The Corporation's service areas are characterized by intense competition for banking business among commercial banks, savings institutions and other financial institutions. In competing with other banks, savings institutions and other financial institutions, the Bank provides personalized services and local decision making through management's knowledge and awareness of its service area, customers and borrowers.
As of December 31, 2023, 22% of our Senior Leadership Team members were women. Training and Development The training and development of our employees remains a priority. In 2023, we invested more than $736 thousand in tools, training programs and continuing education to help our employees build their knowledge, skills and experience.
As of December 31, 2024, 22% of our Senior Leadership Team members were women. Training and Development The training and development of our employees remains a priority. In 2024, we invested more than $665 thousand in tools, training programs and continuing education to help our employees build their knowledge, skills and experience.
As an integrated full-service financial institution, approximately 66% of our employees are employed through our banking segment, 8% through our wealth management business, 10% through our insurance business and the remaining 16% of our employees serve in shared support functions for each of our three segments.
As an integrated full-service financial institution, approximately 65% of our employees are employed through our banking segment, 9% through our wealth management business, 10% through our insurance business and the remaining 16% of our employees serve in shared support functions for each of our three segments.
The highest concentration of our deposits and loans are in Montgomery, Bucks, Lancaster and Philadelphia counties in Pennsylvania where 28 out of our 39 financial centers are located. The following table details key demographics for our Montgomery, Bucks, Lancaster and Philadelphia markets compared to Pennsylvania and the national average.
The highest concentration of our deposits and loans are in Montgomery, Bucks, Lancaster and Philadelphia counties in Pennsylvania where 27 out of our 38 financial centers are located. The following table details key demographics for our Montgomery, Bucks, Lancaster and Philadelphia markets compared to Pennsylvania and the national average.
In 2023, the Corporation partnered with a financial education innovator to provide more than 7,100 students with access to interactive online courses that educate on critical financial topics, as well as post informative articles and videos on social media channels on financial topics, such as budgeting, saving for retirement and tips for first-time homebuyers.
In 2024, the Corporation partnered with a financial education innovator to provide more than 8,300 students with access to interactive online courses that educate on critical financial topics, as well as post informative articles and videos on social media channels on financial topics, such as budgeting, saving for retirement and tips for first-time homebuyers.
Human Capital Resources At December 31, 2023, we employed 979 individuals, approximately 94% of whom are full-time and of which approximately 56% are women. None of these employees are covered by collective bargaining agreements, and the Corporation believes it enjoys good relations with its personnel.
Human Capital Resources At December 31, 2024, we employed 949 individuals, approximately 94% of whom are full-time and of which approximately 59% are women. None of these employees are covered by collective bargaining agreements, and the Corporation believes it enjoys good relations with its personnel.
These programs include courses that address communication skills, customer service, managing conflict, alternative management styles, business ethics and emotional intelligence. Additionally, the Corporation introduced a Women in Business program, Business Ethics for Leaders training, and piloted a mentorship program. During the year ended December 31, 2023, we provided approximately 28,000 training hours to our employees.
These programs include courses that address communication skills, customer service, managing conflict, alternative management styles, business ethics and emotional intelligence. The Corporation offers a Women in Business program, Business Ethics for Leaders training, and a mentorship program. During the year ended December 31, 2024, we provided approximately 29,000 training hours to our employees.
(Has been employed by the Corporation since 2007). 2024 Brian J. Richardson 41 Senior Executive Vice President and Chief Financial Officer of the Corporation and the Bank (Has been employed by the Corporation since 2016, most recently as Director of Finance prior to his current position). 2019 Michael S.
Richardson 42 Senior Executive Vice President and Chief Financial Officer of the Corporation and the Bank (Has been employed by the Corporation since 2016, most recently as Director of Finance prior to his current position). 2019 Michael S.
Santana 48 Senior Executive Vice President, General Counsel and Chief Risk Officer of the Corporation and the Bank (Had been employed by the Corporation since 2016 as General Counsel prior to her current position). 2018 Patrick C. McCormick 46 Senior Executive Vice President and Chief Commercial Banking Officer of the Bank.
Santana 49 Senior Executive Vice President, General Counsel and Chief Risk Officer of the Corporation and the Bank (Has been employed by the Corporation since 2016 as General Counsel prior to her current position). 2018 Patrick C. McCormick 47 Senior Executive Vice President and Chief Commercial Banking Officer of the Bank.
During 2023, the Corporation contributed $2.4 million to non-profit organizations to provide financial support to the communities it serves.
During 2024, the Corporation contributed $2.1 million to non-profit organizations to provide financial support to the communities it serves.
(Most recent available statistics) Montgomery Bucks Lancaster Philadelphia Pennsylvania National Unemployment rate (1) (2) 2.4% 2.5% 2.3% 3.7% 2.9% 3.7% Median Household Income (3) $109,000 $106,000 $82,000 $58,000 $74,000 $76,000 Median Age (3) 42 45 40 36 42 40 Population Growth (2020-2024) (3) 1.7% (0.03)% 1.4% (2.5)% (0.1)% 1.4% (1) Pennsylvania Department of Labor and Industry - Montgomery, Bucks, Lancaster, Philadelphia & Pennsylvania unemployment rates are as of December 2023 (2) Bureau of Labor Statistics - National unemployment rates are as of December 2023, seasonally adjusted (3) S&P Global - Demographic data is provided by Claritas based primarily on US Census data Significant types of employment industries for the aforementioned markets include health care and social assistance, professional, scientific and technical services, retail trade, manufacturing, accommodation and food services, educational services, construction, and public administration.
(Most recent available statistics) Montgomery Bucks Lancaster Philadelphia Pennsylvania National Unemployment rate (1) (2) 2.7% 2.9% 2.6% 4.4% 3.3% 4.1% Median Household Income (3) $113,000 $110,000 $87,000 $57,000 $75,000 $79,000 Median Age (3) 42 45 40 36 41 40 Population Growth (2020-2025) (3) 2.2% 0.1% 1.7% (4.8)% (0.3)% 1.9% (1) Pennsylvania Department of Labor and Industry - Montgomery, Bucks, Lancaster, Philadelphia and Pennsylvania unemployment rates are as of December 2024 (2) Bureau of Labor Statistics - National unemployment rates are as of December 2024, seasonally adjusted (3) S&P Global - Demographic data is provided by Claritas based primarily on US Census data Significant types of employment industries for our markets include health care and social assistance, professional, scientific and technical services, retail trade, manufacturing, accommodation and food services, educational services, construction, and public administration.
In addition, we offer online yoga classes, gym reimbursements, on-demand mindfulness webinars and the ability for our employees to receive a flu shot or a mammogram at our main campus. In 2023, we installed AEDs in all our offices and offered online training and in-person AED classes. Additionally, we provided access to CPR classes for interested employees.
In addition, we offer online yoga classes, gym reimbursements, on-demand mindfulness webinars, the ability for our employees to receive a flu shot or a mammogram at our main campus, as well as provide AEDs in all our offices. Additionally, we provided access to CPR classes for interested employees.
We embrace and encourage our employees' differences in age, color, disability, ethnicity, family or marital status, gender identity or expression, language, national origin, physical and mental ability, political affiliation, race, religion, sexual orientation, socio-economic status, veteran status, and other characteristics that make our employees unique.
Univest United Univest is committed to fostering, cultivating and preserving a culture of inclusivity. We embrace and encourage our employees' differences in age, color, disability, ethnicity, family or marital status, gender identity or expression, language, national origin, physical and mental ability, political affiliation, race, religion, sexual orientation, socio-economic status, veteran status, and other characteristics that make our employees unique.
Our selection and promotion processes are without bias and include the active recruitment of minorities and women. We currently source candidates using various methods, including social media, third party search firms, internal referral programs and connections with local schools. Whenever possible, we seek to fill positions by promotion and transfer within the organization. During 2023, we promoted 131 employees.
Our selection and promotion processes are without bias and based on merit. We currently source candidates using various methods, including social media, third party search firms, internal referral programs and connections with local schools. Whenever possible, we seek to fill positions by promotion and transfer within the organization. During 2024, we promoted 143 employees.
At December 31, 2023, the Corporation had total assets of $7.8 billion, net loans and leases of $6.5 billion, total deposits of $6.4 billion and total shareholders' equity of $839.2 million. The Bank is a Pennsylvania state-chartered bank and trust company.
At December 31, 2024, the Corporation had total assets of $8.1 billion, net loans and leases of $6.7 billion, total deposits of $6.8 billion and total shareholders' equity of $887.3 million. The Bank is a Pennsylvania state-chartered bank and trust company.
As of June 30, 2023 (the latest date for which such information is available), the Corporation ranked fourth out of 32 financial institutions in deposit market share in Montgomery County with 12 financial centers, seventh out of 32 financial institutions in Bucks County with nine financial centers, eighth out of 24 financial institutions in Lancaster County with five financial centers, and thirteenth out of 39 financial institutions in Philadelphia County 3 Table of Contents with five financial centers, with 3.9% of total combined deposit market share in the four counties, according to data provided by Federal Deposit Insurance Corporation ("FDIC") Market Share Data.
As of June 30, 2024 (the latest date for which such information is available), the Corporation ranked fourth out of 32 financial institutions in deposit market share in Montgomery County with 11 financial centers, sixth out of 31 financial institutions in Bucks County with eight financial centers, ninth out of 24 financial institutions in Lancaster County with five financial centers, and thirteenth out of 38 financial institutions in Philadelphia County with five 3 Table of Contents financial centers, with 4.1% of total combined deposit market share in the four counties, according to data provided by Federal Deposit Insurance Corporation ("FDIC") Market Share Data.
There is a rebuttable presumption of control if, immediately after the transaction, the acquiring person will own, control, or hold with power to vote 10% or more of a class of voting stock, and if the holding company involved has its shares registered under the Securities Exchange Act of 1934, or, if no other person will own, control or hold the power to vote a greater percentage of that class of voting stock after the acquisition.
There is a rebuttable presumption of control if, immediately after the transaction, the acquiring person will own, control, or hold with power to vote 10% or more of a class of voting stock, and if (i) the holding company involved has its shares registered under the Securities Exchange Act of 1934, or, (ii) if no other person will own, control or hold the power to vote a greater percentage of that class of voting stock after the acquisition. 9 Table of Contents In addition, the Bank Holding Company Act ("BHCA") prohibits any company from acquiring control of a bank or bank holding company, or ownership or control of any voting shares of any bank or bank holding company if after such acquisition it would own or control, directly or indirectly, more than 5.0% of the voting shares of such bank or bank holding company, without first having obtained the approval of the Board.
The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes.
In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes.
Additionally, we hold quarterly employee webcasts during which senior management presents financial and strategic information and employees have the opportunity to ask questions. We continue to recognize employee milestones and acknowledge these achievements with in-person Service Awards that celebrate employees reaching a 5-year milestone. Our employees are also invited to attend holiday socials at locations across our service area.
We continue to recognize employee milestones and acknowledge these achievements with in-person Service Awards that celebrate employees reaching a 5-year milestone. Our employees are also invited to attend holiday socials at locations across our service area. Community Involvement Our Connecting with Community volunteer initiative is one of the pillars of our philanthropy program.
Univest’s annual turnover rate of 19.6%, adjusted for reduction in force, continues to be below the industry average of 23.5% according to 4 Table of Contents the Bureau of Labor Statistics. At December 31, 2023, 17% of our current staff had been with us for 15 years or more.
Univest’s annual turnover rate of 19.5% continues to be below the industry average of 24.1% according to the Bureau of Labor Statistics. At December 31, 2024, 18% of our current staff had been with us for 15 years or more. Safety, Health and Welfare The safety, health and wellness of our employees is consistently a top priority.
This workshop will continue to be delivered quarterly. 5 Table of Contents Employee Engagement Our Chairman, President and Chief Executive Officer communicates with our entire organization on a weekly basis via email. These emails provide updates on key organizational initiatives, financial performance, as well as industry insights.
Employee Engagement Our Chairman, President and Chief Executive Officer communicates with our entire organization on a weekly basis via email. These emails provide updates on key organizational initiatives, financial performance, as well as industry insights. Additionally, we hold quarterly employee webcasts during which senior management presents financial and strategic information and employees have the opportunity to ask questions.
Safety, Health and Welfare The safety, health and wellness of our employees is consistently a top priority. We offer our employees financial wellness programs, team health challenges, weight management counseling, and behavioral health webinars to support mental health.
We offer our employees financial wellness programs, team health challenges, weight management counseling, and behavioral health webinars to support mental health. We provide our employees, at no cost, with access to the Calm app, which is a highly rated app for sleep, meditation and relaxation.
As a result, effective January 1, 2023, assessment rates for institutions of the Bank's size range from 2.5 to 32 basis points.
As a result, effective January 1, 2023, assessment rates for institutions of the 7 Table of Contents Bank's size range from 2.5 to 32 basis points. Any significant future increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank.
Control, as defined under federal law, means owning, controlling, or holding with power to vote 25% or more of any class of voting stock.
Control, as defined under the Change in Bank Control Act and its implementing regulations, means the power, directly or indirectly, to direct the management or policies of an insured depository institution, or owning, controlling, or holding with power to vote 25% or more of any class of voting stock.
Our DEI Learning & Development Committee created learning sessions that serve as a foundation for increasing awareness on diversity, equity and inclusion topics. All employees have completed this training and it is included as part of new hire orientation to ensure all future employees receive this important information.
All employees have completed this training and it is included as part of new hire orientation to ensure all future employees receive this important information. Our quarterly Inclusive Leadership Workshop for supervisors and hiring managers supports our efforts to create a more inclusive workspace.
In addition to these Connecting with Community opportunities, we encourage our employees to volunteer independently so that they truly bring our community core values to life. In 2023, Univest employees volunteered 13,117 hours. In addition to being generous with their time, our employees also supported our annual fundraiser for the United Way.
In 2024, we provided our employees with 47 Connecting with Community events to choose from in support of local charitable organizations. In addition to these Connecting with Community opportunities, we encourage our employees to volunteer independently so that they truly bring our community core values to life. In 2024, Univest employees volunteered 16,328 hours.
A majority of our employees are offered a hybrid work arrangement (e.g. three days in the office and two days remote per week) which provides flexibility and work-life balance. We provide lower-wage earners with higher insurance subsidies. We also offer an Employee Assistance Program in which employees and members of their families may utilize counseling services freely and confidentially.
Our benefits package includes health care coverage, retirement benefits, life and disability insurance, wellness programs, paid time-off and leave policies. We also provide our lower-wage earners with higher insurance subsidies. We also offer an Employee Assistance Program in which employees and members of their families may utilize counseling services freely and confidentially.
Progress on our Diversity, Equity and Inclusion Strategic Plan is reported to the Board of Directors on a quarterly basis. Our DEI Manager works to cultivate a supportive and inclusive work environment and implement inclusion programs. Regular employee communications, including a DEI newsletter, Univest United, were shared throughout the year to help drive awareness.
Our Univest United Committee was established to ensure that our workplace is a supportive environment with equal opportunities for everyone. Progress on our culture of inclusivity is reported to the Board of Directors on a quarterly basis. Our Director of Inclusive Culture works to cultivate a supportive and inclusive work environment and implement inclusion programs.
Benefits On an ongoing basis, we further promote the health and wellness of our employees by strongly encouraging work-life balance. Our benefits package includes health care coverage, retirement benefits, life and disability insurance, wellness programs, paid time off and leave policies.
Our new Inclusive Conversations series includes five sessions aimed at creating a safe space to discuss meaningful topics from navigating difficult conversations to the impact of seasonal affective disorder. Benefits On an ongoing basis, we further promote the health and wellness of our employees by strongly encouraging work-life balance.
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We provide our employees, at no cost, with access to the Calm app, which is a highly rated app for sleep, meditation and relaxation. We also provide our employees with memberships to Care.com to assist employees with finding suitable care for members of their household.
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In addition, enhancements were made to our Summer Internship Program in 2024 to include additional opportunities for networking and professional development and a group volunteer project.
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Diversity, Equity and Inclusion Univest is committed to fostering, cultivating and preserving a culture of diversity, equity and inclusion.
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Regular employee communications, including a Univest United newsletter, are shared throughout the year to help drive awareness. The newsletter, among other things, serves to spotlight employees and their diverse backgrounds through their own personal stories. Our Univest United Learning & Development Committee created learning sessions that serve as a foundation for increasing awareness on inclusion topics.
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All employees are also required to complete annual diversity awareness training to enhance their knowledge in order to fulfill this responsibility. Our Diversity, Equity and Inclusion ("DEI") Committee was established to ensure that our workplace is a supportive environment with equal opportunities for everyone.
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In 2024, we introduced Employee Resource Groups ("ERGs") to help foster an inclusive and supportive environment, providing a platform for employees to connect, share experiences, and drive positive change within the organization. RISE , the Women's ERG, and EMBRACE , the People of Color ERG, are at the forefront of these efforts.
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The newsletter, among other things, serves to spotlight employees and their diverse backgrounds through their own personal stories. The Corporation also employs a DEI liaison who is responsible for developing and creating content for the newsletter, as well as participating in local and/or national peer DEI networks and staying current on DEI developments.
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During 2024, the Corporation hosted in-person networking events, offered volunteer opportunities and provided virtual sessions. Additionally, in 2024, we 5 Table of Contents also introduced our new Inclusive Conversations series. These virtual sessions are aimed at creating a safe space to discuss meaningful topics from navigating difficult conversations to the impact of seasonal affective disorder.
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In 2023, we introduced an Inclusive Leadership Workshop for supervisors and hiring managers. The Senior Leadership Team and approximately 200 supervisors attended in-person sessions to support our efforts to create a more inclusive and diverse workspace.
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In addition to being generous with their time, our employees also supported our annual fundraiser for the United Way. Through voluntary payroll deductions, Univest employees contributed more than $68 thousand.
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Community Involvement Our Connecting with Community volunteer initiative is one of the pillars of our philanthropy program. In 2023, we provided our employees with 30 Connecting with Community events to choose from in support of local charitable organizations.
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The applicability date for the majority of the provisions under the CRA regulations is January 1, 2026, and additional requirements under the regulations are applicable on January 1, 2027.
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Through voluntary payroll deductions, Univest employees contributed more than $69 thousand.
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On March 29, 2024, a federal court in the Northern District of Texas issued a preliminary injunction of the new CRA regulations, enjoining the federal banking agencies from enforcing the regulations against the plaintiff bank industry trade groups, and extending the regulations' implementation dates day-for-day for each day the injunction is in place.
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In addition, in 2023, the FDIC issued a special assessment for banks with total consolidated assets of $5 billion or more in order to recover losses sustained by the Deposit Insurance Fund as a result of the March 2023 failures of Silicon Valley Bank and Signature Bank.
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(Has been employed by the Corporation since 2007, previously holding the roles of Chief Operating Officer and Chief Financial Officer of the Corporation). 2024 Brian J.
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Any significant future increase in insurance premiums would likely have an adverse effect on the operating expenses and results of operations of the Bank.
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Other Laws and Regulations The Bank's operations are also subject to federal laws and regulations applicable to credit transactions, such as the: • Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected; • Truth in Savings Act; • Laws and regulations prohibiting unfair or deceptive acts or practices; and • other regulations of the various federal agencies charged with the responsibility of implementing such federal laws.
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In addition, the Bank Holding Company Act ("BHCA") prohibits any company from acquiring control of a bank or bank holding company, or ownership or control of any voting shares of any bank or bank holding company if after such acquisition it would own or control, directly or indirectly, more than 5.0% of the voting shares of such bank or bank holding company, without first having obtained the approval of the Board.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe limited liquidity of our common stock may limit your ability to trade our shares and may impact the value of our common stock. While the Corporation's common stock is traded on the NASDAQ Global Select Market, the trading volume has historically been less than that of larger financial services companies.
Biggest changeWhile the Corporation's common stock is traded on the NASDAQ Global Select Market, the trading volume has historically been less than that of larger financial services companies. Stock price volatility may make it more difficult for investors to sell their common stock when they want and at prices they find attractive.
Numerous factors, including the lack of liquidity for resales of certain investment securities, the absence of reliable pricing information for investment securities, adverse changes in the business climate, adverse regulatory actions, any changes to the rating of the security by a rating agency, unanticipated changes in the competitive environment, changes in market interest rates and limited investor demand, could have a negative effect on our investment portfolio.
Numerous factors, including changes in market interest rates, the lack of liquidity for resales of certain investment securities, the absence of reliable pricing information for investment securities, adverse changes in the business climate, adverse regulatory actions, any changes to the rating of the security by a rating agency, unanticipated changes in the competitive environment and limited investor demand, could have a negative effect on our investment portfolio.
Stockholders' equity is increased or decreased by the amount of the change in the unrealized gain or loss (difference between the estimated fair value and the amortized cost) of the available-for-sale debt securities portfolio, net of the related tax expense or benefit, under the category of accumulated other comprehensive income (loss).
Stockholders' equity is increased or decreased by the amount of the change in the unrealized gain or loss (the difference between the estimated fair value and the amortized cost) of the available-for-sale debt securities portfolio, net of the related tax expense or benefit, under the category of accumulated other comprehensive income (loss).
Weakness in the market areas 13 Table of Contents we serve could depress our earnings as customers may not demand our products or services, borrowers may not be able to repay their loans, the value of the collateral securing our loans to borrowers may decline and/or the quality of our loan portfolio may decline.
Weakness in the market areas we serve could depress our earnings as customers may not demand our products or services, borrowers may not be able to repay their loans, the value of the collateral securing our loans to borrowers may decline and/or 13 Table of Contents the quality of our loan portfolio may decline.
Anti-takeover provisions could negatively impact our shareholders. Certain provisions in the Corporation's Articles of Incorporation and Bylaws, as well as federal banking laws, regulatory approval requirements, and Pennsylvania law, could make it more difficult for a third party to acquire the Corporation, even if doing so would be perceived to be beneficial to the Corporation's shareholders.
Anti-takeover provisions could negatively impact our shareholders. Certain provisions in the Corporation's Articles of Incorporation and Bylaws, as well as federal banking laws, regulatory approval requirements, and Pennsylvania law, could make it more difficult for a third party to acquire the Corporation, even if doing so would be perceived to be beneficial to our shareholders.
Negative changes in these general business and economic conditions could have the following consequences, any of which could have a material adverse effect on the business, financial condition, liquidity and results of operations: • demand for the products and services may decline; • we may increase our allowance for credit losses; • loan delinquencies, problem assets, and foreclosures may increase; • increase in our funding costs and noninterest expenses; • collateral for loans, especially real estate, may decline in value, thereby reducing customers' borrowing power, and reducing the value of assets and collateral associated with existing loans; and • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments.
Negative changes in these general business and economic conditions could have the following consequences, any of which could have a material adverse effect on the business, financial condition, liquidity and results of operations: • demand for the products and services may decline; • our allowance for credit losses may increase; • loan delinquencies, problem assets, and foreclosures may increase; • our funding costs and noninterest expenses may increase; • collateral for loans, especially real estate, may decline in value, thereby reducing customers' borrowing power, and reducing the value of assets and collateral associated with existing loans; and • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments.
Our management and board review and update the Corporation's internal controls over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Our management and board review and update our internal controls over financial reporting, disclosure controls and procedures, and corporate governance policies and procedures. Any system of controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Not all directors of the Corporation or members of the Enterprise-Wide Risk Management Committee have significant experience in cybersecurity risk management in other business entities comparable to the Corporation, and directors rely on the Chief Risk Officer, the Chief Information Security Officer and consultants for cybersecurity guidance.
Not all of our directors or members of the Enterprise-Wide Risk Management Committee have significant experience in cybersecurity risk management in other business entities comparable to the Corporation, and directors rely on the Chief Risk Officer, the Chief Information Security Officer and consultants for cybersecurity guidance.
The concentration and mix of our assets could increase the potential for significant credit losses. In the ordinary course of business, we may have heightened credit exposure to a particular industry, geography, asset class or financial market.
The concentration and mix of our assets could increase the potential for credit losses. In the ordinary course of business, we may have heightened credit exposure to a particular industry, geography, asset class or financial market.
The Board of Directors has established an Enterprise-Wide Risk Management Committee, consisting of a minimum of four directors, at least three are independent directors. The Chief Risk Officer is the primary management liaison to the Enterprise-Wide Risk Management Committee.
The Board of Directors has established an Enterprise-Wide Risk Management Committee, consisting of a minimum of four directors, at least three of which are independent directors. The Chief Risk Officer is the primary management liaison to the Enterprise-Wide Risk Management Committee.
Net interest income may decline in a particular period if: • in a declining interest rate environment, more interest-earning assets than interest-bearing liabilities re-price or mature, or • in a rising interest rate environment, more interest-bearing liabilities than interest-earning assets re-price or mature.
Net interest income may decline in a particular period if: • in a declining interest rate environment, more interest-earning assets than interest-bearing liabilities reprice or mature, or • in a rising interest rate environment, more interest-bearing liabilities than interest-earning assets re-price or mature.
The Corporation may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination or the release of hazardous or toxic substances at a property. Our policies and procedures require environmental factors to be considered during the loan application process.
We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination or the release of hazardous or toxic substances at a property. Our policies and procedures require environmental factors to be considered during the loan application process.
An environmental review is performed before initiating any commercial foreclosure action; however, these reviews may not be sufficient to detect all potential environmental hazards. Possible remediation costs and liabilities could have a material adverse effect on our financial condition. Risks Related to Our Operations The Corporation's controls and procedures may fail or be circumvented.
An environmental review is performed before initiating any commercial foreclosure action; however, these reviews may not be sufficient to detect all potential environmental hazards. Possible remediation costs and liabilities could have a material adverse effect on our financial condition. Risks Related to Our Operations Our controls and procedures may fail or be circumvented.
We have established disaster recovery policies and procedures that are expected to mitigate events related to natural or man-made disasters; however, the occurrence of any such event and the impact of an overall economic decline resulting from such a disaster could have a material adverse effect on the Corporation's financial condition and results of operations.
We have established disaster recovery policies and procedures that are expected to mitigate events related to natural or man-made disasters; however, the occurrence of any such event and the impact of an overall economic decline resulting from such a disaster could have a material adverse effect on our financial condition and results of operations.
An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations. Potential acquisitions may disrupt the Corporation's business and dilute shareholder value. We regularly evaluate opportunities to acquire and invest in banks and in other complementary businesses.
An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations. Potential acquisitions may disrupt our business and dilute shareholder value. We regularly evaluate opportunities to acquire and invest in banks and in other complementary businesses.
Our competitors, including commercial banks, community banks, savings institutions, credit unions, consumer finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds and other financial technology and financial institutions, compete with us for loans and deposits and insurance and wealth management services offered by us.
Our competitors, including commercial banks, community banks, savings institutions, credit unions, consumer finance companies, insurance companies, securities dealers, brokers, mortgage bankers, investment advisors, money market mutual funds and other financial technology and financial institutions, compete with us for loans and deposits and insurance and wealth management services.
The occurrence of any system failures, interruptions, or breaches in security could expose the Corporation to reputation risk, litigation, regulatory scrutiny and possible financial liability that could have a material adverse effect on our financial condition and results of operations.
The occurrence of any system failures, interruptions, or breaches in security could expose us to reputation risk, litigation, regulatory scrutiny and possible financial liability that could have a material adverse effect on our financial condition and results of operations.
A key component of our business strategy is to rely on our reputation for customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas.
A key component of our business strategy is to rely on our reputation for integrity, reliability, customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and prospective customers in our market area and contiguous areas.
For example, an increase in unemployment, an increase in inflation, potential recessionary conditions, a decrease in real estate values or changes in interest rates, as well as other factors, could weaken the economies of the communities we serve.
For example, an increase in unemployment, an increase in inflation, potential recessionary conditions, the imposition of tariffs, a decrease in real estate values or changes in interest rates, as well as other factors, could weaken the economies of the communities we serve.
Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities, the emergence of widespread health emergencies or pandemics and other adverse external events could have a significant impact on the Corporation's ability to conduct business.
Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities, the emergence of widespread health emergencies or pandemics and other adverse external events could have a significant impact on our ability to conduct business.
These lenders could reduce the percentages loaned against various collateral categories, could eliminate certain types of collateral and could otherwise modify or even terminate their loan programs, particularly to the extent they are required to do so, because of capital adequacy or other balance sheet concerns about us.
These lenders could reduce the percentages loaned against various collateral categories, could eliminate certain types of collateral and could otherwise modify or even terminate their loan programs, particularly to the extent they are required to do so, because of capital adequacy or other balance sheet 16 Table of Contents concerns about us.
Although the Corporation has developed, and continues to invest in, 15 Table of Contents systems and processes that are designed to detect and prevent security breaches and cyber-attacks, a breach of its systems and global payments infrastructure or those of our fintech partners and processors could result in: losses to the Corporation and its customers; loss of business and/or customers; damage to its reputation; the incurrence of additional expenses (including the cost of investigation and remediation and the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to its business; an inability to grow its online services or other businesses; additional regulatory scrutiny or penalties; and/or exposure to civil litigation and possible financial liability - any of which could have a material adverse effect on the Corporation’s reputation, business, financial condition and results of operations.
Although we have developed, and continue to invest in, systems and processes that are designed to detect and prevent security breaches and cyber-attacks, a breach of our systems and global payments infrastructure or those of our fintech partners and processors could result in: losses to us and our customers; loss of business and/or customers; damage to its reputation; the incurrence of additional expenses (including the cost of investigation and remediation and the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to our business; an inability to grow our online services or other businesses; additional regulatory scrutiny, investigation or penalties; and/or exposure to civil litigation and possible financial liability - any of which could have a material adverse effect on our reputation, 15 Table of Contents business, financial condition and results of operations.
As a result, the Corporation may need to seek other sources of funds that may be more expensive to obtain, which could increase the cost of funds and decrease profitability.
As a result, we may need to seek other sources of funds that may be more expensive to obtain, which could increase the cost of funds and decrease profitability.
Although the Corporation takes protective measures to maintain the confidentiality, integrity and availability of information, its computer systems, software and networks may be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact.
Although we take protective measures to maintain the confidentiality, integrity and availability of information, its computer systems, software and networks may be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact.
Risks Related to Our Common Stock The Corporation's stock price can be volatile. The Corporation's stock price can fluctuate in response to a variety of factors, some of which are not under our control.
Risks Related to Our Common Stock Our stock price can be volatile. Our stock price can fluctuate in response to a variety of factors, some of which are not under our control.
The Corporation's access to funding sources in amounts adequate to finance or capitalize its activities, or on terms that are acceptable, could be impaired by factors that affect the Corporation directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry, a decrease in the level of the Corporation's business activity as a result of a downturn in markets or by one or more adverse regulatory actions against the Corporation or the financial sector in general.
Our access to funding sources in amounts adequate to finance or capitalize our activities, or on terms that are acceptable, could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry, a decrease in the level of our business activity as a result of a downturn in markets or by one or more adverse regulatory actions against us or the financial sector in general.
Furthermore, the Corporation may not be able to ensure that all of its clients, suppliers, counterparties and other third parties have appropriate controls in place to protect themselves from cyber-attacks or to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means.
Furthermore, we may not be able to ensure that all of our clients, suppliers, counterparties and other third parties have appropriate controls in place to protect themselves from cyber-attacks or to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means.
Any failure to follow or circumvention of these controls, policies and procedures could have a material adverse impact on our financial condition and results of operations. The Corporation may not be able to attract and retain skilled people.
Any failure to follow or circumvention of these controls, policies and procedures could have a material adverse impact on our financial condition and results of operations. We may not be able to attract and retain skilled people.
Credit loss charges would negatively impact our earnings and regulatory capital ratios. The Corporation is subject to interest rate risk. Our profitability is dependent to a large extent on our net interest income. Like most financial institutions, we are affected by changes in general interest rate levels and by other economic factors beyond our control.
Credit loss charges would negatively impact our earnings and regulatory capital ratios. We are subject to interest rate risk. Our profitability is dependent to a large extent on our net interest income. Like most financial institutions, we are affected by changes in general interest rates and by other economic factors beyond our control.
As discussed above under “Risks Related to Market Interest Rates – The Corporation is subject to interest rate risk,” as inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.
As discussed above under “Risks Related to Market Interest Rates – We are subject to interest rate risk,” as inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.
The Corporation's allowance for credit losses on loans and leases may be insufficient, and an increase in the allowance would reduce earnings. We maintain an allowance for credit losses on loans and leases.
Our allowance for credit losses on loans and leases may be insufficient, and an increase in the allowance would reduce earnings. We maintain an allowance for credit losses on loans and leases.
Any decline in available funding could adversely impact the Corporation's ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as meeting deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition and results of operations.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
While the Corporation has policies and procedures designed to prevent or limit the impact of any failure, interruption, or breach in its security systems (including cyber-attacks), there can be no assurance that such events will not occur or if they do occur, that they will be adequately addressed.
While we have policies and procedures designed to prevent or limit the impact of any failure, interruption, or breach in its security systems (including cyber-attacks), there can be no assurance that such events will not occur or if they do occur, that they will be adequately addressed.
Our growth initiatives require us to recruit experienced personnel. The failure to 19 Table of Contents retain such personnel would place significant limitations on our ability to successfully execute our growth strategy. In addition, as we expand our lending beyond our current market areas, we could incur additional risk related to those new market areas.
Our growth initiatives require us to recruit experienced personnel. The failure to retain such personnel would place significant limitations on our ability to successfully execute our growth strategy. In addition, as we expand our lending beyond our current market areas, we could incur additional risk related to those new market areas.
The Corporation is subject to environmental liability risk associated with lending activities. In the course of our business, we may foreclose and take title to real estate and could be subject to environmental liabilities with respect to these properties.
We are subject to environmental liability risk associated with lending activities. In the course of our business, we may foreclose and take title to real estate and could be subject to environmental liabilities with respect to these properties.
If we are unable to successfully achieve this objective, the anticipated benefits of these initiatives may not be realized fully, or at all, or may take longer to realize than expected.
If we are unable to successfully achieve these objectives, the anticipated benefits of these initiatives may not be realized fully, or at all, or may take longer to realize than expected.
This report is qualified in its entirety by these risk factors. 11 Table of Contents Risks Related to Market Interest Rates Our results of operations may be adversely affected by credit losses relating to our investment portfolio. The Corporation maintains an investment portfolio, including available-for-sale and held-to-maturity securities.
This report is qualified in its entirety by these risk factors. 11 Table of Contents Risks Related to Market Interest Rates Our results of operations may be adversely affected by credit losses relating to our investment portfolio. We maintain an investment portfolio, including available-for-sale and held-to-maturity securities.
In addition, such events could affect the stability of the Corporation's deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause the Corporation to incur additional expenses.
In addition, such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause us to incur additional expenses.
Any change or termination of our borrowings from the FHLB, the Federal Reserve or correspondent banks would have an adverse effect on our liquidity and profitability. 16 Table of Contents Other Risks Related to Our Business Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities and other external events could negatively impact the Corporation.
Any change or termination of our borrowings from the FHLB, the Federal Reserve or correspondent banks would have an adverse effect on our liquidity and profitability. Other Risks Related to Our Business Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities and other external events could negatively impact us.
Commercial real estate loans may be affected to a greater extent than residential 12 Table of Contents loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers' ability to repay their loans depends on successful development of their properties and the successful operation of the borrower's business, as well as the factors affecting residential real estate borrowers.
Commercial real estate loans may be affected to a greater extent than residential 12 Table of Contents loans by adverse conditions in real estate markets or the economy because commercial real estate borrowers' ability to repay their loans depends on successful development of their properties and the successful operation of the borrower's business.
The Corporation's operations and profitability are impacted by general business and economic conditions, including long-term and short-term interest rates, the shape of the interest rate curve, inflation, money supply, supply chain issues, political issues, legislative, tax, accounting and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, values of real estate and other collateral and the strength of the U.S. economy and the local economies in which we operate, all of which are beyond our control.
Our operations and profitability are impacted by general business and economic conditions, including long-term and short-term interest rates, the shape of the interest rate curve, inflation, the imposition of tariffs or other domestic or international governmental policies, money supply, supply chain issues, political issues, legislative, tax, accounting and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, values of real estate and other collateral and the strength of the U.S. economy and the local economies in which we operate, all of which are beyond our control.
If the yield curve inversion continues or worsens, the difference between rates paid on deposits and received on loans could narrow significantly resulting in a decrease in net interest income and our profitability. Changes in the estimated fair value of debt securities may reduce stockholders' equity and net income .
If the yield curve inversion re-occurs, the difference between rates paid on deposits and received on loans could narrow significantly resulting in a decrease in net interest income and our profitability. Changes in the estimated fair value of debt securities may reduce stockholders' equity .
Various laws and regulations also affect our lending activities, and failure to comply with such applicable laws and regulations could subject the Corporation to enforcement actions and civil monetary penalties.
Various laws and regulations also affect our lending activities, and failure to comply with such applicable laws and regulations could subject us to enforcement actions and civil monetary penalties.
The factors that could cause the Corporation's stock price to decrease include, but are not limited to: • Our past and future dividend practice; • Our financial condition, performance, creditworthiness and prospects; • Variations in our operating results or the quality of our assets; • General investor sentiment regarding the banking industry; 20 Table of Contents • Operating results that vary from the expectations of management, securities analysts and investors; • Changes in expectations as to our future financial performance; • Changes in financial markets related to market valuations of financial industry companies; • The operating and securities price performance of other companies that investors believe are comparable to us; • Future sales of our equity or equity-related securities; • The credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; and • Changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, inflation, recessionary conditions, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events.
The factors that could cause our stock price to decrease include, but are not limited to: • Our past and future dividend practice; • Our financial condition, performance, creditworthiness and prospects; • Variations in our operating results or the quality of our assets; • General investor sentiment regarding the banking industry; • Operating results that vary from the expectations of management, securities analysts and investors; • Changes in expectations as to our future financial performance; • Changes in financial markets related to market valuations of financial industry companies; • The operating and securities price performance of other companies that investors believe are comparable to us; • Future sales of our equity or equity-related securities; • The credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; and • Changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, inflation, recessionary conditions, stock, commodity or real estate valuations or volatility and other geopolitical, regulatory or judicial events. 21 Table of Contents The limited liquidity of our common stock may limit your ability to trade our shares and may impact the value of our common stock.
Accordingly, we may need to raise additional capital in the future to provide us with sufficient capital resources to meet our commitments and business needs. We may also need to raise additional capital to support our continued growth.
Accordingly, we may need to raise additional 20 Table of Contents capital in the future to provide us with sufficient capital resources to meet our commitments and business needs. We may also need to raise additional capital to support our continued growth.
The Corporation's profitability is affected by economic conditions in Pennsylvania and New Jersey markets. Unlike larger regional banks that operate in large geographies, the Corporation provides banking and financial services to customers primarily in 19 counties in the Southeastern, Central and Western regions of Pennsylvania, three counties in New Jersey and four counties in Maryland.
Our profitability is affected by economic conditions in our markets. Unlike larger regional banks that operate in large geographies, we provide banking and financial services to customers primarily in 19 counties in the Southeastern, Central and Western regions of Pennsylvania, three counties in New Jersey and four counties in Maryland.
The decrease will occur even though the securities are not sold. Risks Related to Our Lending Activities The Corporation is subject to lending risk.
The decrease will occur even though the securities are not sold. Risks Related to Our Lending Activities We are subject to lending risk.
The Corporation's most important source of funds is its deposits. Deposit balances can decrease when customers perceive alternative investments as providing a better risk adjusted return, which are strongly influenced by such external factors as the direction of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments.
Our most 14 Table of Contents important source of funds is our deposits. Deposit balances can decrease when customers perceive alternative investments as providing a better risk adjusted return, which are strongly influenced by such external factors as the direction and level of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments.
The Corporation relies on its ability to generate deposits and effectively manage the repayment of its liabilities to ensure that there is adequate liquidity to fund operations. An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity.
Liquidity is essential to our business. We rely on its ability to generate deposits and effectively manage the repayment of its liabilities to ensure that there is adequate liquidity to fund operations. An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity.
During the year ended December 31, 2023, we incurred other comprehensive gains of $5.7 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio. A decline in the estimated fair value of this portfolio will result in a decline in stockholders' equity, as well as book value per common share.
During the year ended December 31, 2024, we incurred other comprehensive losses of $796 thousand related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio. A decline in the estimated fair value of this portfolio will result in a decline in stockholders' equity, as well as book value per common share.
At December 31, 2023, approximately 79.2% of our loan and lease portfolio consisted of commercial, financial and agricultural, commercial real estate and construction loans and leases, which are generally perceived as having more risk of default than residential real estate loans.
At December 31, 2024, approximately 78.8% of our loan and lease portfolio consisted of commercial, financial and agricultural, commercial real estate and construction loans and leases, which are generally perceived as having more risk of default than residential real estate loans.
Risks Related to Economic Conditions Inflation can have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
Risks Related to Economic Conditions Inflation can have an adverse impact on our business and on our customers. Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The FRB had raised certain benchmark interest rates to combat inflation.
Additionally, these competitors may offer higher interest rates than the Corporation, which could decrease the deposits that the Corporation attracts or require the Corporation to increase its rates to retain existing deposits or attract new deposits. Increased deposit competition could adversely affect the Corporation’s ability to generate the funds necessary for lending operations.
Additionally, these competitors may offer higher interest rates than we do, which could decrease the deposits that we attract or require us to increase our rates to retain existing deposits or attract new deposits. Increased deposit competition could adversely affect our ability to generate the funds necessary for lending operations.
The allowance is based upon a number of factors, including the size and composition of the loan and lease portfolio, asset classifications, economic trends, industry experience and trends, industry and geographic concentrations, collateral values, management's assessment of the current expected credit losses in the portfolio, historical loan and lease loss experience and loan underwriting policies.
The allowance is based upon a number of factors, including the size and composition of the loan and lease portfolio, asset classifications, economic trends, industry loss experience and trends, industry and geographic concentrations, collateral values, historical loan and lease loss experience and loan underwriting policies.
In that regard, the Chief Information Security Officer provides information security updates to the Enterprise-Wide Risk Management Committee at each Enterprise-Wide Risk Management Committee meeting. The Corporation also engages outside consultants to support its cybersecurity efforts.
In that regard, the Chief Information Security Officer provides information security updates to the Enterprise-Wide Risk Management Committee at each Enterprise-Wide Risk Management Committee meeting. We also engage outside consultants to support our cybersecurity efforts.
Accordingly, the Corporation may be required to expend additional resources to enhance its protective measures or to investigate and remediate any information security vulnerabilities or exposures.
Accordingly, we may be required to expend additional resources to enhance our protective measures or to investigate and remediate any information security vulnerabilities or exposures.
At December 31, 2023, the Corporation maintained a debt securities portfolio of $497.3 million, of which $351.6 million was classified as available-for-sale. The estimated fair value of the available-for-sale debt securities portfolio may change depending on the credit quality of the underlying issuer, market liquidity, changes in interest rates and other factors.
At December 31, 2024, the Corporation maintained a debt securities portfolio of $491.5 million, of which $357.4 million was classified as available-for-sale. The estimated fair value of the available-for-sale debt securities portfolio may change depending on changes in interest rates, the credit quality of the underlying issuer, market liquidity and other factors.
The schedule on page 39 provides a break-out of our loan portfolio by certain loan and industry types. The Corporation depends on the accuracy and completeness of information about customers and counterparties.
The schedule on page 42 provides a break-out of our loan portfolio by certain loan and industry types. We depend on the accuracy and completeness of information about customers and counterparties.
If the Bank is not permitted to pay cash dividends to the Corporation, it is unlikely that we would be able to pay cash dividends on our common stock.
If the Bank is not permitted to pay cash dividends to the Corporation, it is unlikely that we would be able to pay cash dividends on our common stock. Item 1B. Unresolved Staff Comments None.
The Corporation's earnings are impacted by general business and economic conditions.
Our earnings are impacted by general business and economic conditions.
We are subject to extensive regulation, supervision, and examination by our primary regulators, the Pennsylvania Department of Banking and Securities and the Federal Reserve Bank of Philadelphia, and by the FDIC, the regulating authority that insures customer deposits.
We are subject to extensive regulation, supervision, and examination by our primary regulators, the Pennsylvania Department of Banking and Securities and the Federal Reserve Bank of Philadelphia, and by the FDIC, the regulating authority that insures customer deposits. The Bank also must comply with applicable regulations of the Federal Housing Finance Agency and the FHLB.
Failure to keep pace with technological change could potentially have an adverse effect on our business operations and financial condition and results of operations. Our Board of Directors relies on management and outside consultants in overseeing cybersecurity risk management.
We have been required, and may be required in the future, to expend additional resources to employ the latest technologies. Failure to keep pace with technological change could potentially have an adverse effect on our business operations and financial condition and results of operations. Our Board of Directors relies on management and outside consultants in overseeing cybersecurity risk management.
Changes in such regulation and oversight, whether in the form of regulatory or enforcement policy, new regulations, legislation or supervisory action, may have a material impact on our operations. Further, compliance with such regulation may increase our costs and limit our ability to pursue business opportunities.
Changes in such regulation and oversight, whether in the form of regulatory or enforcement policy, new regulations, legislation or supervisory action, may have a material impact on our operations.
The imposition of any such penalties or orders could have a 18 Table of Contents material adverse effect on the wealth management segment's operating results and financial condition. The wealth management business also may be adversely affected as a result of new or revised legislation or regulations.
The imposition of any such penalties or orders could have a material adverse effect on the wealth management segment's operating results and financial condition. The wealth management business also may be adversely affected as a result of new or revised legislation or regulations. Regulatory changes have imposed and may continue to impose additional costs, which could adversely impact our profitability.
The Bank's activities are also regulated under consumer protection laws applicable to our lending, deposit, and other activities. A material claim against the Bank under these laws or an enforcement action by our regulators could have a material adverse effect on our financial condition and results of operations.
A material claim against the Bank under these laws or an enforcement action by our regulators could have a material adverse effect on our financial condition and results of operations.
Loans secured by properties where repayment is dependent upon payment of rent by third party tenants or the sale of the property may be impacted by loss of tenants, lower lease rates needed to attract new tenants. Commercial business loans and leases are typically affected by the borrowers' ability to repay the loans from the cash flows of their businesses.
Loans secured by properties where repayment is dependent upon payment of rent by third party tenants or the sale of the property may be impacted by loss of tenants or lower lease rates needed to attract new tenants.
Risks Related to Competition The Corporation operates in a highly competitive industry and market area, which could adversely impact its business and results of operations. We face substantial competition from a variety of different competitors.
The reduction of these commission rates, along with general volatility and/or declines in premiums, may adversely impact our profitability. Risks Related to Competition We operate in a highly competitive industry and market area, which could adversely impact its business and results of operations. We face substantial competition from a variety of different competitors.
We have devoted substantial resources to our strategic digital initiatives. The success of these initiatives will depend on, among other things, our ability to upgrade our technology and digital solutions in a manner that improves experiences of customers and employees.
We have devoted substantial time and resources to our strategic digital initiatives. The success of these initiatives will depend on, among other things, whether our upgraded technology and digital solutions are received favorably by our customers and employees and improves their experiences and interactions with us.
Although the impact to date for these type of events has not had a material impact on us, we cannot be sure this will be the case in the future. The failure to maintain current technologies, and the costs to update technology, could negatively impact the Corporation's business and financial results.
Although the impact to date for these types of events has not had a material impact on us, we cannot be sure this will be the case in the future.
If customers move money out of bank deposits and into other investments such as money market funds, the Corporation would lose a relatively low-cost source of funds, which would increase its funding costs and reduce net interest income.
If customers move money out of bank deposits and into other investments such as money market funds, we would lose a relatively low-cost source of funds, which would increase our funding costs and reduce net interest income. Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity.
Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity. Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and/or loans, brokered deposits, borrowings from the FHLB and/or FRB discount window, and unsecured borrowings.
Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and/or loans, brokered deposits, borrowings from the FHLB and/or FRB discount window, and unsecured borrowings. We also may borrow funds from third-party lenders, such as other financial institutions.
The Corporation heavily relies on information technology systems, including the systems of third-party service providers, to conduct its business. Any failure, interruption, or breach in security or operational integrity of these systems could result in failures or disruptions in the Corporation's customer relationship management and general ledger, deposit, loan, and other systems.
Any failure, interruption, or breach in security or operational integrity of these systems could result in failures or disruptions in our customer relationship management and general ledger, deposit, loan, and other systems.
A sluggish local economy could, therefore, result in losses that materially and adversely affect our financial condition and results of operations. Risks Related to Regulation Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.
Changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of operations.
We maintain change in control agreements and grant equity awards with time-based vesting with certain executive officers to aid in our retention of these individuals.
We maintain change in control agreements and grant equity awards with time-based vesting with certain executive officers to aid in our retention of these individuals. Our success depends on our ability to continue to attract, manage, and retain these and other qualified management personnel. A lack of liquidity could adversely affect our financial condition and results of operations.
Risk of loss on a construction loan depends largely upon whether our initial estimate of the property's value at completion of construction equals or exceeds the cost of the property construction (including interest). During the construction phase, a number of factors can result in delays and cost overruns.
If interest rates rise, the borrower's debt service requirement may increase, negatively impacting the borrower's ability to service their debt. Risk of loss on a construction loan depends largely upon whether our initial estimate of the property's value at completion of construction equals or exceeds the cost of the property construction (including interest).
If we were to lose a significant portion of our low-cost deposits, it would negatively impact our liquidity and profitability. The Corporation's information technology systems, and the systems of third parties upon which the Corporation relies, may experience a failure, interruption or breach in security, which could negatively affect our operations and reputation.
Our information technology systems, and the systems of third parties upon which we rely, may experience a failure, interruption or breach in security, which could negatively affect our operations and reputation. We heavily rely on information technology systems, including the systems of third-party service providers, to conduct our business.
Regulatory changes have imposed and may continue to impose additional costs, which could adversely impact our profitability. Risks Related to the Insurance Industry Revenues and profitability from our insurance business may be adversely affected by market conditions, which could reduce insurance commissions and fees earned.
Risks Related to the Insurance Industry Revenues and profitability from our insurance business may be adversely affected by market conditions, which could reduce insurance commissions and fees earned. The revenues of our fee-based insurance business are derived primarily from commissions from the sale of insurance policies, which commissions are generally calculated as a percentage of the policy premium.
When projects move slower than anticipated, the properties may have significantly lower values than when the original underwriting was completed, resulting in lower collateral values to support the loan.
Included in real estate-construction is tract development financing, which has greater risk because of the potential for diminished demand for residential housing and decreases in real estate valuations. When projects move slower than anticipated, the properties may have significantly lower values than when the original underwriting was completed, resulting in lower collateral values to support the loan.
Stock price volatility may make it more difficult for investors to sell their common stock when they want and at prices they find attractive. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time.
A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control.
At December 31, 2023, 23% of our deposit base was comprised of noninterest-bearing deposits, of which 16% consisted of business deposits, which are primarily operating accounts for businesses, and 7% consisted of consumer deposits.
At December 31, 2024, 21% of our deposit base was comprised of noninterest-bearing deposits, of which 14% consisted of business deposits, which are primarily operating accounts for businesses, and 7% consisted of consumer deposits. The competition for these deposits is strong and customers are increasingly seeking investments with higher interest rates that are safe, including the purchase of U.S.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CISO has over 40 years of combined experience in all aspects of information technology ("IT") from field support to software development to management. Prior to joining the Corporation, the CISO has held management roles of increasing responsibility in a variety of regulated industries including food, pharma, and manufacturing.
Biggest changePrior to joining the Corporation, the CISO held management roles of increasing responsibility in a variety of regulated industries including food, pharma, and manufacturing. The CISO holds a Bachelor of Science Degree in Computer Science and has earned a certificate in Cybersecurity Oversight from the National Association of Corporate Directors.
On a quarterly basis, the CISO reports to the Board, directly or through the Enterprise-Wide Risk Management Committee, the overall status of the Information Security Program, including the Corporation's compliance with the Interagency Guidelines for Safeguarding Customer Information.
On a quarterly basis, the CISO reports to the Board, directly or through the Enterprise-Wide Risk Management Committee, on the overall status of the Information Security Program, including the Corporation's compliance with the Interagency Guidelines for Safeguarding Customer Information.
The Third-Party Risk Management Policy applies to any business arrangement between the Corporation and another individual or entity, by contract or otherwise, in compliance with the Interagency Guidance on Third-Party Relationships: Risk Management. The Third-Party Risk Management Program is audited as part of the Corporation's annual Internal Audit Risk Assessment. Employees and Training.
The Third-Party Risk Management Policy applies to any business arrangement between the Corporation and another individual or entity, by contract or otherwise, in compliance with the Interagency Guidance on Third-Party Relationships: Risk Management. The Third-Party Risk Management Program is reviewed as part of the Corporation's annual Internal Audit Risk Assessment. Employees and Training.
For further discussion of risks from cybersecurity threats, see the section captioned "The Corporation's information technology systems, and the systems of third parties upon which the Corporation relies, may experience a failure, interruption or breach in security, which could negatively affect our operations and reputation." in Item 1A. Risk Factors.
For further discussion of risks from cybersecurity threats, see the section captioned "The Corporation's information technology systems, and the systems of third parties upon which the Corporation relies, may experience a failure, interruption or breach in security, which could negatively affect our operations and reputation." in Item 1A. Risk Factors. 24 Table of Contents
Conducting post-incident reviews to gather feedback on information security incident response procedures and address any identified gaps in security measures. 23 Table of Contents d. Providing training and conducting periodic exercises to promote employee and stakeholder preparedness and awareness of the IRP. e.
Conducting post-incident reviews to gather feedback on information security incident response procedures and address any identified gaps in security measures. d. Providing training and conducting periodic exercises to promote employee and stakeholder preparedness and awareness of the IRP. e.
In response to identified risks, management may take certain steps to correct and respond to security vulnerabilities, which may include: a. Eliminating unwarranted risks by applying vendor-provided software fixes, commonly called patches. 22 Table of Contents b. Ensuring that changes to security configurations are documented, approved, and tested. c.
In response to identified risks, management may take certain steps to correct and respond to security vulnerabilities, which may include: a. Eliminating unwarranted risks by applying vendor-provided software fixes, commonly called patches. b. Ensuring that changes to security configurations are documented, approved, and tested. c.
The Information Security Department conducts on-going technology and IT threat meetings to ensure the latest threats are addressed in addition to penetration, business continuity/ disaster recovery testing, and incident response plan testing.
The Information Security Department conducts ongoing technology and IT threat meetings to ensure the latest threats are addressed in addition to penetration, business continuity/ disaster recovery testing, and incident response plan testing.
To date, the Corporation has not, to its knowledge, experienced a cybersecurity incident materially affecting or reasonably likely to materially affect the Corporation. The structure of our information security program is designed around the National Institute of Standards and Technology Cybersecurity Framework, regulatory guidance, and other industry standards.
Through December 31, 2024, the Corporation has not, to its knowledge, experienced a cybersecurity incident materially affecting or reasonably likely to materially affect the Corporation. The structure of our information security program is generally designed around the National Institute of Standards and Technology Cybersecurity Framework, regulatory guidance, and other industry standards.
Employees are the first line of defense against cybersecurity measures. Each employee is responsible for protecting Corporation and client information. Employees are provided training at initial onboarding and thereafter regarding information security and cybersecurity-related policies and procedures applicable to their respective roles within the organization.
Employees are an important defense against cybersecurity threats. Each employee is responsible for protecting Corporation and client information. Employees are provided training at initial onboarding and thereafter regarding information security and cybersecurity-related policies and procedures applicable to their respective roles within the organization.
In addition, independent third-party penetration testing to test the effectiveness of security controls and preparedness measures is conducted at least annually or more often, if warranted by the risk assessment or other external factors. Management determines the scope and objectives of the penetration analysis. Service Providers. Like many companies, the Corporation relies on third-party vendor solutions to support its operations.
In addition, independent third-party 23 Table of Contents penetration testing to test the effectiveness of security controls and preparedness measures is conducted at least annually or more often, if warranted by the risk assessment or other external factors. Management determines the scope and objectives of the penetration analysis. Service Providers.
Additional information security training to the committee is provided through a management Information Security Steering Committee and also through targeted training overseen by the CISO.
The Enterprise-Wide Risk Management Committee provides oversight, from a risk perspective, of information systems security. Additional information security training to employees is provided through a management Information Security Steering Committee and also through targeted training overseen by the CISO.
The CISO holds a Bachelor of Science Degree in Computer Science and has earned a certificate in Cybersecurity Oversight from the National Association of Corporate Directors. The CISO also oversees the Corporation's Information Security Program, which is governed by various information security and cybersecurity, systems development, change control, disaster recovery/business continuity and physical asset classification and control policies.
The CISO also oversees the Corporation's Information Security Program, which is governed by various information security and cybersecurity, systems development, change control, disaster recovery/business continuity and physical asset classification and control policies.
Many of these vendors, especially in the financial services industry, have access to sensitive and proprietary information.
Like many companies, the Corporation relies on third-party vendor solutions to support its operations. Many of these vendors, especially in the financial services industry, have access to sensitive and proprietary information.
This includes employee training, the use of innovative technologies, and the implementation of policies and procedures in the areas of Information Security, Data Governance, Business Continuity and Disaster Recovery, Privacy, Third-Party Risk Management, and Incident Response. the Corporation engages third-party consultants and independent auditors to, among other things, conduct penetration tests and perform cybersecurity risk assessments and audits.
To prepare and respond to incidents, the Corporation has implemented a multi-layered cybersecurity strategy, integrating people, technology, and processes. This includes employee training, the use of innovative technologies, and the implementation of policies and procedures in the areas of Information Security, Data Governance, Business Continuity and Disaster Recovery, Privacy, Third-Party Risk Management, 22 Table of Contents and Incident Response.
The Information Security Department of the Corporation is primarily responsible for identifying, assessing and managing material risks from cybersecurity threats. The Information Security Department is managed by the Board-appointed Chief Information Security Officer (the "CISO") who reports directly to the Corporation's Chief Risk Officer.
The Corporation engages third-party consultants and independent auditors to, among other things, conduct penetration tests and perform cybersecurity risk assessments and audits. The Information Security Department of the Corporation is primarily responsible for identifying, assessing and managing material risks from cybersecurity threats.
Removed
To prepare and respond to incidents, the Corporation has implemented a multi-layered cybersecurity strategy, integrating people, technology, and processes.
Added
The Information Security Department is managed by the Board-appointed Chief Information Security Officer (the "CISO") who reports directly to the Corporation's Chief Risk Officer. The CISO has over 40 years of experience in various aspects of information technology ("IT") from field support to software development to management.
Removed
The Enterprise-Wide Risk Management Committee provides oversight, from a risk perspective, of information systems security. As referenced above, the CISO provides information security updates to the Enterprise-Wide Risk Management Committee at each Enterprise-Wide Risk Management Committee meeting.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table details the Corporation's properties as of December 31, 2023: Property Address County, State Owned/Leased Full Service Branches (Banking Segment): 195 East Butler Ave., Chalfont, PA 18914 Bucks, PA Owned 5871 Lower York Rd., Lahaska, PA 18931 Bucks, PA Owned Route 309 & Line Lexington Rd., Line Lexington, PA 18932 Montgomery, PA Owned 4601 Carlisle Pk., Mechanicsburg, PA 17050 (2) (3) Cumberland, PA Owned 1950 John Fries Highway, Milford Square, PA 18935 Bucks, PA Owned Route 309 & Stump Rd., Montgomeryville, PA 18936 Montgomery, PA Owned 15 Swamp Rd., Newtown, PA 18940 Bucks, PA Owned 921 West Ave., Ocean City, NJ 08226 (3) Cape May, NJ Owned 401 Rhawn St., Philadelphia, PA 19111 Philadelphia, PA Owned Township Line Rd. and Route 113, Schwenksville, PA 19473 Montgomery, PA Owned 10 W.
Biggest changeThe following table details the Corporation's properties as of December 31, 2024: Property Address County, State Owned/Leased Full Service Branches (Banking Segment): 195 East Butler Ave., Chalfont, PA 18914 Bucks, PA Owned 5871 Lower York Rd., Lahaska, PA 18931 Bucks, PA Owned Route 309 & Line Lexington Rd., Line Lexington, PA 18932 Montgomery, PA Owned 4601 Carlisle Pk., Mechanicsburg, PA 17050 (2) (3) Cumberland, PA Owned 1950 John Fries Highway, Milford Square, PA 18935 Bucks, PA Owned Route 309 & Stump Rd., Montgomeryville, PA 18936 Montgomery, PA Owned 15 Swamp Rd., Newtown, PA 18940 Bucks, PA Owned 921 West Ave., Ocean City, NJ 08226 (3) Cape May, NJ Owned 401 Rhawn St., Philadelphia, PA 19111 Philadelphia, PA Owned Township Line Rd. and Route 113, Schwenksville, PA 19473 Montgomery, PA Owned 500 Harleysville Pk., Souderton, PA 18964 Montgomery, PA Owned Routes 113 and Bethlehem Pk., Souderton, PA 18964 Bucks, PA Owned 1041 York Rd., Warminster, PA 18974 Bucks, PA Owned 2901 Whiteford Rd., York, PA 17402 (3) York, PA Owned 175 West Ostend St., Baltimore, MD 21230 (3) Baltimore City, MD Leased 574 Main St., Bethlehem, PA 18018 Northampton, PA Leased 694 DeKalb Pk., Blue Bell, PA 19422 Montgomery, PA Leased 1135 Georgetown Rd., Christiana, PA 17509 Lancaster, PA Leased 51 Dutilh Rd., Cranberry, PA 16066 (3) Butler, PA Leased 1980 S.
Broad St., Philadelphia, PA 19146 Philadelphia, PA Leased 1642 Fairmount Ave., Philadelphia, PA 19130 Philadelphia, PA Leased 3601 Market St., Philadelphia, PA 19104 Philadelphia, PA Leased 7226 Germantown Ave., Philadelphia, PA 19119 Philadelphia, PA Leased 1501 Ardmore Blvd., Pittsburg, PA 15221 (3) Allegheny, PA Leased 1103 Rocky Dr., Reading, PA 19609 (2) (3) Berks, PA Leased 216 Hartman Bridge Rd., Ronks, PA 17572 Lancaster, PA Leased 200 North High St., West Chester, PA 19380 (3) Chester, PA Leased 90 Willow Valley Lakes Dr., Willow Street, PA 17584 Lancaster, PA Leased 5089 Hamilton Blvd., Allentown, PA 18106 Lehigh, PA Land Lease 380 Water Loop Dr., Collegeville, PA 19426 Montgomery, PA Land Lease 1 Heritage Dr., Gordonville, PA 17529 Lancaster, PA Land Lease 2870 Shelly Rd., Harleysville, PA 19438 Montgomery, PA Land Lease 120 Forty Foot Rd., Hatfield, PA 19440 Montgomery, PA Land Lease 940 2nd Street Pk., Richboro, PA 18954 Bucks, PA Land Lease 24 Table of Contents Corporate Headquarters: 14 North Main St., Souderton, PA 18964 (1) (3) Montgomery, PA Owned 15 Washington Ave., Souderton, PA 18964 Montgomery, PA Owned 16 Harbor Pl., Souderton, PA 18964 Montgomery, PA Owned 1715 Sumneytown Pk., Lansdale, PA 19446 Montgomery, PA Leased Subsidiary Offices (Wealth Management Segment) 4600 Broadway, Allentown, PA 18104 (1) (3) Lehigh, PA Leased 5237 Summerlin Commons Blvd., Fort Meyers, FL 33907 Lee, FL Leased 555 Croton Rd., King of Prussia, PA 19406 (3) Montgomery, PA Leased 41 West Broad St., Souderton, PA 18964 Montgomery, PA Owned Subsidiary Offices (Insurance Segment) 6339 Beverly Hills Rd., Coopersburg, PA 18036 Lehigh, PA Owned 3541 Old Philadelphia Pk., Intercourse, PA 17534 Lancaster, PA Owned 521 Main St., Lansdale, PA 19446 Montgomery, PA Owned 9120 Chesapeake Ave., Suite 101, North Beach, MD 20714 Calvert, MD Leased Other Offices: Greenfield Corporate Center, 1869 Charter Ln., Suite 301, Lancaster, PA 17601 (1) (3) Lancaster, PA Leased 312 West Route 38 Ste 105, Moorestown, NJ 08057 (3) Burlington, NJ Leased 2000 Market St., Suite 700, Philadelphia, PA 19103 (3) Philadelphia, PA Leased (1) Banking Segment (2) Wealth Management Segment (3) Corporate banking Additionally, the Bank provides banking services for the residents and employees of 10 retirement home communities and has four off-premise automated teller machines.
Broad St., Philadelphia, PA 19146 Philadelphia, PA Leased 1642 Fairmount Ave., Philadelphia, PA 19130 Philadelphia, PA Leased 3601 Market St., Philadelphia, PA 19104 Philadelphia, PA Leased 7226 Germantown Ave., Philadelphia, PA 19119 Philadelphia, PA Leased 1501 Ardmore Blvd., Pittsburgh, PA 15221 (3) Allegheny, PA Leased 1103 Rocky Dr., Reading, PA 19609 (2) (3) Berks, PA Leased 216 Hartman Bridge Rd., Ronks, PA 17572 Lancaster, PA Leased 200 North High St., West Chester, PA 19380 (3) Chester, PA Leased 90 Willow Valley Lakes Dr., Willow Street, PA 17584 Lancaster, PA Leased 5089 Hamilton Blvd., Allentown, PA 18106 Lehigh, PA Land Lease 380 Water Loop Dr., Collegeville, PA 19426 Montgomery, PA Land Lease 1 Heritage Dr., Gordonville, PA 17529 Lancaster, PA Land Lease 2870 Shelly Rd., Harleysville, PA 19438 Montgomery, PA Land Lease 120 Forty Foot Rd., Hatfield, PA 19440 Montgomery, PA Land Lease 940 2nd Street Pk., Richboro, PA 18954 Bucks, PA Land Lease Corporate Headquarters: 14 North Main St., Souderton, PA 18964 (1) (3) Montgomery, PA Owned 15 Washington Ave., Souderton, PA 18964* (1) Montgomery, PA Owned 16 Harbor Pl., Souderton, PA 18964 Montgomery, PA Owned 1715 Sumneytown Pk., Lansdale, PA 19446 Montgomery, PA Leased Subsidiary Offices (Wealth Management Segment) 4600 Broadway, Allentown, PA 18104 (1) (3) Lehigh, PA Leased 5237 Summerlin Commons Blvd., Fort Meyers, FL 33907 Lee, FL Leased 555 Croton Rd., King of Prussia, PA 19406 (3) Montgomery, PA Leased 25 Table of Contents 41 West Broad St., Souderton, PA 18964 Montgomery, PA Owned Subsidiary Offices (Insurance Segment) 6339 Beverly Hills Rd., Coopersburg, PA 18036 Lehigh, PA Owned 3541 Old Philadelphia Pk., Intercourse, PA 17534 Lancaster, PA Owned 521 Main St., Lansdale, PA 19446 Montgomery, PA Owned 9120 Chesapeake Ave., Suite 101, North Beach, MD 20714 Calvert, MD Leased Other Offices: Greenfield Corporate Center, 1869 Charter Ln., Suite 301, Lancaster, PA 17601 (1) (3) Lancaster, PA Leased 312 West Route 38 Ste 105, Moorestown, NJ 08057 (3) Burlington, NJ Leased 2000 Market St., Suite 700, Philadelphia, PA 19103 (3) Philadelphia, PA Leased *Limited-service drive-through banking and ATM (1) Banking Segment (2) Wealth Management Segment (3) Corporate banking Additionally, the Bank provides banking services for the residents and employees of 10 retirement home communities and has two off-premise automated teller machines.
Item 2. Properties As of December 31, 2023, the Corporation and its subsidiaries occupied 54 properties, most of which are used principally as banking offices.
Item 2. Properties As of December 31, 2024, the Corporation and its subsidiaries occupied 53 properties, most of which are used principally as banking offices.
The Bank provides banking services nationwide through the internet via its website at www.univest.net . The Corporation's website and the information contained therein is not intended to be incorporated into this Annual Report on Form 10-K. On January 5, 2024, the Bank closed the office located at 4250 Oregon Pike, Brownstown, Pennsylvania, located in Lancaster County.
The Bank provides banking services nationwide through the internet via its website at www.univest.net . The Corporation's website and the information contained therein is not intended to be incorporated into this Annual Report on Form 10-K.
Easton Rd., Doylestown, PA 18901 (2) (3) Bucks, PA Leased 321 Main St., East Greenville, PA 18041 Montgomery, PA Leased 10801 Tony Dr., Lutherville, MD 21093 (2) (3) Baltimore, MD Leased 175 West Ostend St., Baltimore, MD 21230 (3) Baltimore City, MD Leased 1536 S.
Easton Rd., Doylestown, PA 18901 (2) (3) Bucks, PA Leased 321 Main St., East Greenville, PA 18041 Montgomery, PA Leased 10801 Tony Dr., Lutherville, MD 21093 (2) (3) Baltimore, MD Leased 689 W. Main St., New Holland, PA 17557 Lancaster, PA Leased 1536 S.
Removed
Broad St., Souderton, PA 18964 Montgomery, PA Owned 500 Harleysville Pk., Souderton, PA 18964 Montgomery, PA Owned Routes 113 and Bethlehem Pk., Souderton, PA 18964 Bucks, PA Owned 1041 York Rd., Warminster, PA 18974 Bucks, PA Owned 2901 Whiteford Rd., York, PA 17402 (3) York, PA Owned 574 Main St., Bethlehem, PA 18018 Northampton, PA Leased 694 DeKalb Pk., Blue Bell, PA 19422 Montgomery, PA Leased 4250 Oregon Pk., Brownstown, PA 17508 Lancaster, PA Leased 1135 Georgetown Rd., Christiana, PA 17509 Lancaster, PA Leased 51 Dutilh Rd., Cranberry, PA 16066 (3) Butler, PA Leased 1980 S.
Added
On February 3 2025, the Bank closed the Corporate Banking office at 312 West Route 38, Suite 105, Moorestown, New Jersey, located in Burlington County.
Removed
On January 11, 2024, the Bank opened an office located at 689 West Main Street, New Holland, Pennsylvania, located in Lancaster County.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBased upon information presently available to the Corporation, it is the Corporation's opinion that any legal and financial responsibility arising from such claims will not have a material adverse effect on the Corporation's results of operations, financial position or cash flows.
Biggest changeItem 3. Legal Proceedings The Corporation is periodically subject to legal actions that involve claims for monetary relief. Based upon information presently available to the Corporation, it is the Corporation's opinion that any legal and financial responsibility arising from such claims will not have a material adverse effect on the Corporation's results of operations, financial position or cash flows.
Removed
Item 3. Legal Proceedings The Corporation is periodically subject to various pending and threatened legal actions that involve claims for monetary relief.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFive Year Cumulative Total Return Summary ($) 2018 2019 2020 2021 2022 2023 Univest Financial Corporation 100.00 128.06 102.26 152.96 138.00 121.32 NASDAQ Bank Index 100.00 124.36 115.19 164.55 137.92 133.26 KBW NASDAQ Bank Index 100.00 136.07 122.26 169.06 133.15 132.05 Russell 2000 Index 100.00 125.46 150.51 176.91 140.80 164.52 26 Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES The following table provides information on repurchases by the Corporation of its common stock during the fourth quarter of 2023, under the Corporation's Board approved program: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2023 — $ — — 1,229,174 November 1 - 30, 2023 26,485 17.43 26,485 1,202,689 December 1 – 31, 2023 — — — 1,202,689 Total 26,485 $ 17.43 26,485 1.
Biggest changeFive Year Cumulative Total Return Summary ($) 2019 2020 2021 2022 2023 2024 Univest Financial Corporation 100.00 79.57 119.04 107.19 94.26 130.73 NASDAQ Bank Index 100.00 89.37 124.84 101.92 95.12 111.03 KBW NASDAQ Bank Index 100.00 89.69 124.06 97.50 96.65 132.60 Russell 2000 Index 100.00 120.28 138.10 109.88 128.48 143.31 27 Table of Contents ISSUER PURCHASES OF EQUITY SECURITIES The following table provides information on repurchases by the Corporation of its common stock during the fourth quarter of 2024, under the Corporation's Board approved program: ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 - 31, 2024 46,882 $ 27.96 46,882 1,492,764 November 1 - 30, 2024 36,892 30.95 36,892 1,455,872 December 1 – 31, 2024 55,718 30.95 55,718 1,400,154 Total 139,492 $ 29.94 139,492 1.
Shares repurchased pursuant to these plans during the three months ended December 31, 2023 were as follows: Period Total Number of Shares Purchased Average Price Paid per Share October 1 - 31, 2023 — $ — November 1 - 30, 2023 — — December 1 – 31, 2023 — — Total — $ — Dividend Reinvestment and Employee Stock Purchase Plans The Univest Dividend Reinvestment Plan allows the issuance of 2,718,750 shares of common stock.
Shares repurchased pursuant to these plans during the three months ended December 31, 2024 were as follows: Period Total Number of Shares Purchased Average Price Paid per Share October 1 - 31, 2024 — $ — November 1 - 30, 2024 — — December 1 – 31, 2024 — — Total — $ — Dividend Reinvestment and Employee Stock Purchase Plans The Univest Dividend Reinvestment Plan allows the issuance of 2,718,750 shares of common stock.
Stock Performance Graph The following chart compares the yearly percentage change in the cumulative shareholder return on the Corporation's common stock during the five years ended December 31, 2023, with the following indices: (1) NASDAQ Bank Index, (2) KBW NASDAQ Bank Index, and (3) Russell 2000 Index.
Stock Performance Graph The following chart compares the yearly percentage change in the cumulative shareholder return on the Corporation's common stock during the five years ended December 31, 2024, with the following indices: (1) NASDAQ Bank Index, (2) KBW NASDAQ Bank Index, and (3) Russell 2000 Index.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Corporation's common stock is traded on the NASDAQ Global Select Market under the symbol "UVSP." At February 9, 2024, the Corporation had 2,362 stockholders of record.
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Corporation's common stock is traded on the NASDAQ Global Select Market under the symbol "UVSP." At February 7, 2025, the Corporation had 2,229 stockholders of record.
This comparison assumes $100.00 was invested on December 31, 2018, in our common stock and the comparison groups and assumes the reinvestment of all cash dividends prior to any tax effect and retention of all stock dividends.
This comparison assumes $100.00 was invested on December 31, 2019 in our common stock and the comparison groups, and assumes the reinvestment of all cash dividends on the ex-dividend date prior to any tax effect and retention of all stock dividends.
During 2023 and 2022, 75,998 and 56,900 shares, respectively, were issued under the dividend reinvestment plan, with 673,357 shares available for future purchase at December 31, 2023. The 1996 Employee Stock Purchase Plan allows the issuance of 984,375 shares of common stock.
During 2024 and 2023, 61,087 and 75,998 shares, respectively, were issued under the dividend reinvestment plan, with 612,270 shares available for future purchase at December 31, 2024. The 1996 Employee Stock Purchase Plan allows the issuance of 984,375 shares of common stock.
During 2023 and 2022, 52,482 and 39,466 shares, respectively, were issued under the employee stock purchase plan, with 422,207 shares available for future issuance at December 31, 2023.
During 2024 and 2023, 37,337 and 52,482 shares, respectively, were issued under the employee stock purchase plan, with 384,870 shares available for future issuance at December 31, 2024.
On May 27, 2015, the Corporation's Board of Directors approved the repurchase of 1,000,000 shares, or approximately 5% of the Corporation's common stock outstanding as of May 27, 2015. On October 26, 2022, the Corporation's Board of Directors approved the repurchase of 1,000,000 additional shares, or approximately 3.4% of the Corporation's common stock outstanding as of September 30, 2022.
Average price paid per share includes stock repurchase excise tax. On October 26, 2022, the Corporation's Board of Directors approved the repurchase of 1,000,000 additional shares, or approximately 3.4% of the Corporation's common stock outstanding as of September 30, 2022.
The stock repurchase plans do not include normal treasury activity such as purchases to fund the dividend reinvestment, employee stock purchase and equity compensation plans. The plans have no scheduled expiration date and the Board of Directors has the right to suspend or discontinue the plans at any time.
The stock repurchase plan has no scheduled expiration date, and the Board of Directors has the right to suspend or discontinue the plan at any time.
Added
On October 23, 2024, the Corporation's Board of Directors approved the repurchase of an additional 1,000,000 additional shares, or approximately 3.4% of the Corporation's common stock outstanding as of September 30, 2024. The stock repurchase plans do not include normal treasury activity such as purchases to fund the dividend reinvestment, employee stock purchase and equity compensation plans.

Item 7. Management's Discussion & Analysis

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

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Biggest changeAt December 31, (Dollars in thousands) 2023 2022 2021 Nonaccrual loans held for sale $ 8 $ — $ — Nonaccrual loans and leases held for investment 20,519 13,353 33,210 Accruing loans and leases, 90 days or more past due 534 875 498 Total nonperforming loans and leases $ 21,061 $ 14,228 $ 33,708 Other real estate owned 19,032 19,258 279 Total nonperforming assets $ 40,093 $ 33,486 $ 33,987 Loans and leases held for investment $ 6,567,214 $ 6,123,230 $ 5,310,017 Allowance for credit losses, loans and leases 85,387 79,004 71,924 Allowance for credit losses, loans and leases / loans and leases held for investment 1.30 % 1.29 % 1.35 % Nonaccrual loans and leases / loans and leases held for investment 0.31 % 0.22 % 0.63 % Allowance for credit losses, loans and leases / nonaccrual loans and leases 415.97 % 591.66 % 216.57 % The following table provides additional information on the Corporation's nonaccrual loans held for investment: At December 31, (Dollars in thousands) 2023 2022 2021 2020 Nonaccrual loans and leases $ 20,519 $ 13,353 $ 33,210 $ 31,692 Nonaccrual loans and leases with partial charge-offs 814 928 1,429 4,227 Life-to-date partial charge-offs on nonaccrual loans and leases 885 448 536 2,377 Reserves on individually analyzed loans 1,787 2,765 11 585 41 Table of Contents Table 7—Loan Portfolio Overview The following table provides summarized detail related to outstanding commercial loan balances segmented by industry description as of December 31, 2023: (Dollars in thousands) December 31, 2023 Industry Description Total Outstanding Balance % of Commercial Loan Portfolio CRE - Retail $ 469,890 9.0 % Animal Production 361,597 6.9 CRE - Multi-family 320,176 6.2 CRE - Office 299,718 5.8 CRE - 1-4 Family Residential Investment 285,559 5.5 CRE - Industrial / Warehouse 248,611 4.8 Hotels & Motels (Accommodation) 190,639 3.7 Specialty Trade Contractors 164,798 3.2 Education 161,325 3.1 Homebuilding (tract developers, remodelers) 153,239 2.9 Nursing and Residential Care Facilities 150,666 2.9 Motor Vehicle and Parts Dealers 138,581 2.7 Merchant Wholesalers, Durable Goods 118,351 2.3 CRE - Mixed-Use - Residential 110,458 2.1 Crop Production 103,285 2.0 Repair and Maintenance 97,682 1.9 Wood Product Manufacturing 85,292 1.6 Real Estate Lenders, Secondary Market Financing 80,755 1.6 Rental and Leasing Services 79,767 1.5 Fabricated Metal Product Manufacturing 73,545 1.4 CRE - Mixed-Use - Commercial 72,685 1.4 Religious Organizations, Advocacy Groups 72,685 1.4 Personal and Laundry Services 72,117 1.4 Administrative and Support Services 70,754 1.4 Amusement, Gambling, and Recreation Industries 70,686 1.4 Merchant Wholesalers, Nondurable Goods 65,491 1.3 Food Services and Drinking Places 65,143 1.3 Private Equity & Special Purpose Entities (except 52592) 63,447 1.2 Miniwarehouse / Self-Storage 61,964 1.2 Food Manufacturing 59,662 1.1 Truck Transportation 53,306 1.0 Industries with >$50 million in outstandings $ 4,421,874 85.0 % Industries with $ 782,111 15.0 % Total Commercial Loans $ 5,203,985 100.0 % Consumer Loans and Lease Financings Total Outstanding Balance Real Estate-Residential Secured for Personal Purpose $ 909,015 Real Estate-Home Equity Secured for Personal Purpose 179,282 Loans to Individuals 27,749 Lease Financings 247,183 Total Consumer Loans and Lease Financings $ 1,363,229 Total $ 6,567,214 42 Table of Contents Table 8—Summary of Loan and Lease Loss Experience The following table presents average loans and leases and loan and lease loss experience for the periods indicated.
Biggest changeAt December 31, (Dollars in thousands) 2024 2023 2022 Nonaccrual loans held for sale $ — $ 8 $ — Nonaccrual loans and leases held for investment 12,667 20,519 13,353 Accruing loans and leases, 90 days or more past due 321 534 875 Total nonperforming loans and leases $ 12,988 $ 21,061 $ 14,228 Other real estate owned 20,141 19,032 19,258 Repossessed assets 76 — — Total nonperforming assets $ 33,205 $ 40,093 $ 33,486 Loans and leases held for investment $ 6,826,583 $ 6,567,214 $ 6,123,230 Allowance for credit losses, loans and leases 87,091 85,387 79,004 Nonaccrual loans and leases with partial charge-offs 273 814 928 Life-to-date partial charge-offs on nonaccrual loans and leases 649 885 448 Reserves on individually analyzed loans 1,945 1,787 2,765 Allowance for credit losses, loans and leases / loans and leases held for investment 1.28 % 1.30 % 1.29 % Nonaccrual loans and leases / loans and leases held for investment 0.19 % 0.31 % 0.22 % Allowance for credit losses, loans and leases / nonaccrual loans and leases 687.54 % 415.97 % 591.66 % 41 Table of Contents Table 7—Loan Portfolio Overview The following table provides summarized detail related to outstanding commercial loan balances segmented by industry description as of December 31, 2024: (Dollars in thousands) December 31, 2024 Industry Description Total Outstanding Balance % of Commercial Loan Portfolio CRE - Retail $ 463,882 8.6 % Animal Production 393,902 7.3 CRE - Multi-family 344,169 6.4 CRE - Office 294,331 5.5 CRE - 1-4 Family Residential Investment 287,690 5.3 CRE - Industrial / Warehouse 255,232 4.7 Hotels & Motels (Accommodation) 198,815 3.7 Specialty Trade Contractors 191,896 3.6 Nursing and Residential Care Facilities 176,130 3.3 Education 170,487 3.2 Motor Vehicle and Parts Dealers 147,580 2.7 Merchant Wholesalers, Durable Goods 138,633 2.6 Repair and Maintenance 132,950 2.5 Homebuilding (tract developers, remodelers) 129,031 2.4 Crop Production 111,628 2.1 CRE - Mixed-Use - Residential 111,590 2.1 Wood Product Manufacturing 98,629 1.8 Food Services and Drinking Places 87,765 1.6 Administrative and Support Services 78,656 1.5 Fabricated Metal Product Manufacturing 76,611 1.4 Religious Organizations, Advocacy Groups 74,011 1.4 Real Estate Lenders, Secondary Market Financing 70,748 1.3 Personal and Laundry Services 70,595 1.3 Amusement, Gambling, and Recreation Industries 68,990 1.3 CRE - Mixed-Use - Commercial 67,187 1.2 Miniwarehouse / Self-Storage 65,018 1.2 Merchant Wholesalers, Nondurable Goods 63,662 1.2 Private Equity & Special Purpose Entities (except 52592) 56,186 1.0 Truck Transportation 55,679 1.0 Food Manufacturing 50,771 0.9 Industries with >$50 million in outstandings $ 4,532,454 84.3 % Industries with $ 846,410 15.7 % Total Commercial Loans $ 5,378,864 100.0 % Consumer Loans and Lease Financings Total Outstanding Balance Real Estate-Residential Secured for Personal Purpose $ 994,972 Real Estate-Home Equity Secured for Personal Purpose 186,836 Loans to Individuals 21,250 Lease Financings 244,661 Total Consumer Loans and Lease Financings $ 1,447,719 Total $ 6,826,583 42 Table of Contents Table 8—Summary of Loan and Lease Loss Experience The following table presents average loans and leases and loan and lease loss experience for the periods indicated.
Management, in order to prepare the Corporation's financial statements in conformity with U.S. generally accepted accounting principles, is required to make estimates and assumptions that affect the amounts reported in the Corporation's financial statements. There are uncertainties inherent in making these estimates and assumptions.
In order to prepare the Corporation's financial statements in conformity with U.S. generally accepted accounting principles, management is required to make estimates and assumptions that affect the amounts reported in the Corporation's financial statements. There are uncertainties inherent in making these estimates and assumptions.
Commercial, financial and agricultural loans are generally secured by the borrower's assets and by personal guarantees. Commercial real estate, construction and residential real estate secured for business purposes loans are originated primarily within the Pennsylvania, Maryland, Delaware and New Jersey market areas at prudent loan-to-value ratios and are often supported by guaranties.
Commercial, financial and agricultural loans are generally secured by the borrower's assets and by personal guarantees. Commercial real estate, construction and residential real estate secured for business purposes loans are originated primarily within the Pennsylvania, Maryland, Delaware and New Jersey market areas at prudent loan-to-value ratios and are often additionally supported by guaranties.
Table 6—Nonaccrual and Past Due Loans and Leases; Other Real Estate Owned; and Related Ratios The following table details information pertaining to the Corporation's nonperforming assets at the dates indicated.
Table 6—Nonaccrual and Past Due Loans and Leases; Other Real Estate Owned; Repossessed Assets; and Related Ratios The following table details information pertaining to the Corporation's nonperforming assets at the dates indicated.
Tax-equivalent amounts for the years ended December 31, 2023, 2022 and 2021 have been calculated using the Corporation's federal applicable rate of 21%. 34 Table of Contents Table 2—Analysis of Changes in Net Interest Income The rate-volume variance analysis set forth in the table below compares changes in tax-equivalent net interest income for the year ended December 31, 2023 compared to 2022 and for the year ended December 31, 2022 compared to 2021, indicated by their rate and volume components.
Tax-equivalent amounts for the years ended December 31, 2024, 2023 and 2022 have been calculated using the Corporation's federal applicable rate of 21%. 34 Table of Contents Table 2—Analysis of Changes in Net Interest Income The rate-volume variance analysis set forth in the table below compares changes in tax-equivalent net interest income for the year ended December 31, 2024 compared to 2023 and for the year ended December 31, 2023 compared to 2022, indicated by their rate and volume components.
The simulations use expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporates company-developed, market-based assumptions regarding growth, pricing, and optionality such as prepayment speeds. As interest rates increase, fixed-rate assets tend to decrease in value; conversely, as interest rates decline, fixed-rate assets tend to increase in value.
The simulations use expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporate company-developed, market-based assumptions regarding growth, pricing, and optionality such as prepayment speeds. As interest rates increase, fixed-rate assets tend to decrease in value; conversely, as interest rates decline, fixed-rate assets tend to increase in value.
This simulation incorporates the same assumptions noted above and assumes a static balance sheet with no incremental growth in interest-earning assets or interest-bearing liabilities over the next twelve months. 47 Table of Contents The changes to net interest income are shown in the below table at December 31, 2023.
This simulation incorporates the same assumptions noted above and assumes a static balance sheet with no incremental growth in interest-earning assets or interest-bearing liabilities over the next twelve months. 47 Table of Contents The changes to net interest income are shown in the below table at December 31, 2024.
In addition, because future events affecting borrowers 28 Table of Contents and collateral cannot be predicted without uncertainty, the existing ACL may not be adequate or increases may be necessary should the quality of any loans or leases deteriorate or if there are changes to the assumptions noted above.
In addition, because future events affecting borrowers 29 Table of Contents and collateral cannot be predicted without uncertainty, the existing ACL may not be adequate or increases may be necessary should the quality of any loans or leases deteriorate or if there are changes to the assumptions noted above.
Table 1 presents the Corporation's average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders' equity on a tax-equivalent basis for the years ended December 31, 2023, 2022 and 2021. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets.
Table 1 presents the Corporation's average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders' equity on a tax-equivalent basis for the years ended December 31, 2024, 2023 and 2022. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets.
Asset/Liability Management The primary functions of Asset/Liability Management are to minimize interest rate risk and to ensure adequate earnings, capital and liquidity while maintaining an appropriate balance between interest-earning assets and interest-bearing liabilities.
Asset/Liability Management The primary functions of Asset/Liability Management are to minimize interest rate risk and to ensure adequate earnings, capital and liquidity while maintaining an appropriate balance between the maturity and rate sensitivity of interest-earning assets and interest-bearing liabilities.
An increase in interest income of $118.8 million, which was driven by increases in asset yields, including loans and investments, due to the rising interest rate environment and increases in average interest-earning assets, was offset by an increase of $117.8 million in the cost of interest-bearing liabilities, due to the 31 Table of Contents rising interest rate environment and increases in the average balance of higher-costing time deposits and money market savings accounts.
An increase in interest income of $118.8 million, which was driven by increases in asset yields, including loans and investments, due to the rising interest rate environment and increases in average interest-earning assets, was offset by an increase of $117.8 million in the cost of interest-bearing liabilities, due to the rising interest rate environment and increases in the average balance of higher-costing time deposits and money market savings accounts.
The Corporation greatly reduces this risk primarily by using $1.00 buyout leases and equipment finance agreements, in which the entire cost of the leased equipment is included in the contractual 48 Table of Contents payments, leaving no residual payment at the end of the lease term for the majority of the lease portfolio.
The Corporation greatly reduces this risk primarily by using $1.00 buyout leases and equipment finance agreements, in which the entire cost of the leased equipment is included in the contractual payments, leaving no residual payment at the end of the lease term for the majority of the lease portfolio.
The Corporation uses a variety of techniques to assist in identifying and evaluating the potential range of risk, including a maturity/repricing gap analysis as well as an Earnings at Risk analysis under various interest rate scenarios. 46 Table of Contents The gap analysis identifies repricing gaps in the Corporation’s balance sheet.
The Corporation uses a variety of techniques to assist in identifying and evaluating the potential range of risk, including a maturity/repricing gap analysis as well as an Earnings at Risk analysis under various interest rate scenarios. The gap analysis identifies repricing gaps in the Corporation’s balance sheet.
Salaries, benefits and commissions increased $4.4 million, or 3.8%, for the year ended December 31, 2023. This increase reflects our expansion into Maryland and Western Pennsylvania, increased medical claims expense and reduced capitalized compensation, driven by lower loan production.
Salaries, benefits and commissions increased $4.4 million, or 3.8%, for the year ended December 31, 2023. This increase reflects our expansion into Maryland and Western Pennsylvania, increased medical claims expense and reduced capitalized 37 Table of Contents compensation, driven by lower loan production.
The amount of the individual reserve needed for these credits could change in future periods subject to changes in facts and judgments related to these credits. Net loan and lease charge-offs for the year ended December 31, 2023 were $5.4 million compared to net loan and lease charge-offs of $3.9 million for the year ended December 31, 2022.
The amount of the individual reserve needed for these credits could change in future periods subject to changes in facts and judgments related to these credits. Net loan and lease charge-offs for the year ended December 31, 2024 were $3.8 million compared to net loan and lease charge-offs of $5.4 million for the year ended December 31, 2023.
Risk also lies in the residual value of the underlying equipment. Residual values are subject to judgments as to the value of the underlying equipment that can be affected by changes in economic and market conditions and the financial viability of the residual guarantors and insurers.
Residual values are subject to judgments as to the value of the underlying equipment that can be affected by changes in economic and market conditions and the financial viability of the residual guarantors and insurers.
Factors considered by management in determining accrual status include payment status, borrower cash flows, collateral value and the probability of collecting scheduled principal and interest payments when due. At December 31, 2023, nonaccrual loans and leases were $20.5 million and had a related allowance for credit losses on loans and leases of $1.8 million.
Factors considered by management in determining accrual status include payment status, borrower cash flows, collateral value and the probability of collecting scheduled principal and interest payments when due. At December 31, 2024, nonaccrual loans and leases were $12.7 million and had a related allowance for credit losses on loans and leases of $1.9 million.
Economic Factors At December 31, 2023 At December 31, 2022 Description of Economic Factors Prepayment rates 12.62 % 13.41 % Average total portfolio rate Curtailment rates 28.97 % 28.71 % Average total portfolio rate Recovery delay 32 months 30 months Average across all pools Economic forecast Moody's downside S2 weighted 70%, Baseline weighted 30% Moody's downside S2 weighted 55%, Baseline weighted 45% Moody's US Macro Forecast Narratives for December 2023 & 2022 Unemployment rates 5.18 % 4.96 % Average of 4 quarter forecast period GDP rates 0.76 % 0.12 % Average of 4 quarter forecast period House price index (1.72) % (3.35) % Average of 4 quarter forecast period Sensitivity Analysis The below table indicates the impact to the allowance for credit losses on loans and leases if the factors described below were adjusted in the Corporation's CECL model.
Economic Factors At December 31, 2024 At December 31, 2023 Description of Economic Factors Prepayment rates 11.58 % 12.62 % Average total portfolio rate Curtailment rates 28.21 % 28.97 % Average total portfolio rate Recovery delay 31 months 32 months Average across all pools Economic forecast Moody's downside S2 weighted 60%, Baseline weighted 40% Moody's downside S2 weighted 70%, Baseline weighted 30% Moody's US Macro Forecast Narratives for December 2023 & 2022 Unemployment rates 5.42 % 5.18 % Average of 4 quarter forecast period GDP rates 1.12 % 0.76 % Average of 4 quarter forecast period House price index (1.62) % (1.72) % Average of 4 quarter forecast period Sensitivity Analysis The below table indicates the impact to the allowance for credit losses on loans and leases if the factors described below were adjusted in the Corporation's CECL model.
At December 31, 2023 and 2022, the Bank had outstanding short-term letters of credit with the FHLB totaling $1.1 billion and $690.5 million, respectively, which were utilized to collateralize public fund deposits and other secured deposits.
At December 31, 2024 and 2023, the Bank had outstanding short-term letters of credit with the FHLB totaling $1.3 billion and $1.1 billion, respectively, which were utilized to collateralize public fund deposits and other secured deposits.
At December 31, 2022, the allowance for credit losses on individually analyzed loans was $2.8 million, or 20.7% of the balance of individually analyzed loans of $13.4 million. Goodwill and Other Intangible Assets Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions.
At December 31, 2023, the allowance for credit losses on individually analyzed loans was $1.8 million, or 8.6% of the balance of individually analyzed loans of $20.7 million. Goodwill and Other Intangible Assets Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions.
At December 31, 2023 and 2022, the Corporation had $187.0 million and $95.0 million, respectively, in time deposits in excess of $250,000 maturing disclosed in the table below. Brokered deposits in the amount of $305.4 million and $35.3 million at December 31, 2023 and December 31, 2022, respectively, are not included in time deposits more than $250,000.
At December 31, 2024 and 2023, the Corporation had $276.0 million and $187.0 million, respectively, in time deposits in excess of $250,000 maturing disclosed in the table below. Brokered deposits in the amount of $360.0 million and $305.4 million at December 31, 2024 and December 31, 2023, respectively, are not included in time deposits more than $250,000.
The growth in gross loans and leases held for investment was primarily due to increases in commercial real estate, residential mortgage loans and lease financings. 39 Table of Contents Table 5—Loan and Lease Maturities and Sensitivity to Changes in Interest Rates The following table presents the maturity schedule of the loan and lease portfolio at December 31, 2023.
The growth in gross loans and leases held for investment was primarily due to increases in commercial, commercial real estate and residential mortgage loans, partially offset by a decrease in construction loans. 39 Table of Contents Table 5—Loan and Lease Maturities and Sensitivity to Changes in Interest Rates The following table presents the maturity schedule of the loan and lease portfolio at December 31, 2024.
See the section of this Management's Discussion and Analysis under the heading "Results of Operations" and "Financial Condition" for a discussion of the key items impacting the Banking Segment. The Wealth Management segment reported pre-tax income of $6.2 million in 2023, $9.2 million in 2022 and $9.3 million in 2021.
See the section of this Management's Discussion and Analysis under the heading "Results of Operations" and "Financial Condition" for a discussion of the key items impacting the Banking Segment. The Wealth Management segment reported pre-tax income of $6.1 million in 2024, $5.0 million in 2023 and $7.9 million in 2022.
Wealth Management assets under management and supervision were $4.7 billion as of December 31, 2023, $4.2 billion as of December 31, 2022 and $4.9 billion as of December 31, 2021.
Wealth Management assets under management and supervision were $5.2 billion as of December 31, 2024, $4.7 billion as of December 31, 2023 and $4.2 billion as of December 31, 2022.
Increase (Decrease) ($) Adjustment Factor Prepayment rates +/- 1,900 If rates were adjusted across all pools by +/-100 basis points Curtailment rates +/- 450 If rates were adjusted across all pools by +/- 100 basis points Recovery delay +/- 3,500 If recovery delays were adjusted by +/- 3 months across all pools Economic forecast (18,800) If Baseline forecasts were used instead of the weighted Downside/Baseline scenarios Economic forecast 8,700 If S2 Downside forecasts were used instead of the weighted Downside/Baseline scenarios Economic forecast 26,500 If S3 Downside forecasts were used instead of the weighted Downside/Baseline scenarios Unemployment rates 14,200 If rates were increased across all pools by 100 basis points Unemployment rates (13,000) If rates were decreased across all pools by 100 basis points GDP rates +/- 830 If the GDP forecast inputs were adjusted by +/- 100 basis points House price index +/- 170 If the HPI forecast inputs were adjusted by +/- 100 basis points Reversion period 30 If the reversion period was increased by 2 quarters across all pools Reversion period (440) If the reversion period was decreased by 2 quarters across all pools Readers of the Corporation’s financial statements should be aware that the estimates and assumptions used in the Corporation’s current financial statements may need to be updated in future financial presentations for changes in circumstances, business or economic conditions in order to fairly represent the condition of the Corporation at that time.
Increase (Decrease) ($) Adjustment Factor Prepayment rates +/- 2,000 If rates were adjusted across all pools by +/-100 basis points Curtailment rates +/- 425 If rates were adjusted across all pools by +/- 100 basis points Recovery delay +/- 3,600 If recovery delays were adjusted by +/- 3 months across all pools Economic forecast (28,500) If Baseline forecasts were used instead of the weighted Downside/Baseline scenarios Economic forecast 21,800 If S2 Downside forecasts were used instead of the weighted Downside/Baseline scenarios Economic forecast 49,000 If S3 Downside forecasts were used instead of the weighted Downside/Baseline scenarios Unemployment rates 20,300 If rates were increased across all pools by 100 basis points Unemployment rates (17,400) If rates were decreased across all pools by 100 basis points GDP rates +/- 2,300 If the GDP forecast inputs were adjusted by +/- 100 basis points House price index +/- 160 If the HPI forecast inputs were adjusted by +/- 100 basis points Reversion period 1,100 If the reversion period was increased by 2 quarters across all pools Reversion period (1,200) If the reversion period was decreased by 2 quarters across all pools Readers of the Corporation’s financial statements should be aware that the estimates and assumptions used in the Corporation’s current financial statements may need to be updated in future financial presentations for changes in circumstances, business or economic conditions in order to fairly represent the condition of the Corporation at that time.
Other credit considerations and compensating factors may warrant higher combined loan-to-value ratios. These loans are included within the portfolio of loans to individuals. The primary risks that are involved with lease financing receivables are credit underwriting and borrower industry concentrations. The Corporation has strict underwriting, review, and monitoring procedures in place to mitigate these risks.
Other credit considerations and compensating factors may warrant higher combined loan-to-value ratios. These loans are included within the portfolio of loans to individuals. The primary risks that are involved with lease financing receivables are credit underwriting and borrower industry concentrations.
The components of risk-based capital for the Corporation are Tier 1 and Tier 2. At December 31, 2023, the Corporation had a Tier 1 risk-based capital ratio of 10.58% and total risk-based capital ratio of 13.90%. At December 31, 2022, the Corporation had a Tier 1 capital ratio of 10.37% and total risk-based capital ratio of 13.67%.
The components of risk-based capital for the Corporation are Tier 1 and Tier 2. At December 31, 2024, the Corporation had a Tier 1 risk-based capital ratio of 10.85% and total risk-based capital ratio of 14.19%. At December 31, 2023, the Corporation had a Tier 1 capital ratio of 10.58% and total risk-based capital ratio of 13.90%.
The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk. 29 Table of Contents Selected Financial Data As of or For the Years Ended December 31, (Dollars in thousands, except per share data) 2023 2022 2021 2020 2019 Earnings Interest income $ 371,730 $ 252,193 $ 209,731 $ 203,945 $ 214,093 Interest expense 151,733 33,896 21,348 29,584 44,861 Net interest income 219,997 218,297 188,383 174,361 169,232 Provision (reversal of provision) for credit losses (1) 10,770 12,198 (10,132) 40,794 8,511 Net interest income after provision for credit losses 209,227 206,099 198,515 133,567 160,721 Noninterest income 76,824 77,885 83,224 78,328 65,422 Noninterest expense 197,362 186,774 167,409 154,998 146,090 Net income before income taxes 88,689 97,210 114,330 56,897 80,053 Income taxes 17,585 19,090 22,529 9,981 14,334 Net income $ 71,104 $ 78,120 $ 91,801 $ 46,916 $ 65,719 Financial Condition at Year End Cash and cash equivalents $ 249,799 $ 152,799 $ 890,150 $ 219,858 $ 125,128 Investment securities, net of allowance for credit losses (2) 500,623 507,562 496,989 373,176 441,599 Net loans and leases held for investment 6,481,827 6,044,226 5,238,093 5,223,797 4,351,505 Assets 7,780,628 7,222,016 7,122,421 6,336,496 5,380,924 Deposits 6,375,781 5,913,526 6,055,124 5,242,715 4,360,075 Borrowings 465,067 440,401 213,980 311,421 263,596 Shareholders' equity 839,208 776,500 773,794 692,472 675,122 Per Common Share Data Average shares outstanding (in thousands) 29,433 29,393 29,403 29,244 29,300 Earnings per share – basic $ 2.42 $ 2.66 $ 3.12 $ 1.60 $ 2.24 Earnings per share – diluted 2.41 2.64 3.11 1.60 2.24 Dividends declared per share 0.84 0.83 0.80 0.60 0.80 Book value (at year-end) 28.44 26.53 26.23 23.64 23.01 Dividends declared to net income 34.8 % 31.2 % 25.6 % 37.4 % 35.7 % Profitability Ratios Return on average assets 0.94 % 1.12 % 1.38 % 0.78 % 1.26 % Return on average equity 8.83 10.13 12.50 7.02 10.07 Average equity to average assets 10.66 11.09 11.04 11.12 12.49 Efficiency ratio 66.0 62.4 60.9 60.6 61.4 Asset Quality Ratios Nonaccrual loans and leases to loans and leases held for investment 0.31 % 0.22 % 0.63 % 0.60 % 0.88 % Nonperforming loans and leases to loans and leases held for investment (3) 0.32 0.23 0.63 0.62 0.88 Nonperforming assets to total assets (3) 0.52 0.46 0.48 0.64 0.73 Net charge-offs to average loans and leases outstanding 0.08 0.07 — 0.10 0.06 Allowance for credit losses, loans and leases to total loans and leases held for investment 1.30 1.29 1.35 1.56 0.81 Allowance for credit losses, loans and leases to nonaccrual loans and leases 415.97 591.66 216.57 262.03 91.58 Allowance for credit losses, loans and leases to nonperforming loans and leases (3) 405.43 555.27 213.37 251.01 91.25 (1) The Corporation adopted CECL effective January 1, 2020.
The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk. 30 Table of Contents Selected Financial Data As of or For the Years Ended December 31, (Dollars in thousands, except per share data) 2024 2023 2022 2021 2020 Results of Operations Interest income $ 412,355 $ 371,730 $ 252,193 $ 209,731 $ 203,945 Interest expense 201,185 151,733 33,896 21,348 29,584 Net interest income 211,170 219,997 218,297 188,383 174,361 Provision (reversal of provision) for credit losses 5,933 10,770 12,198 (10,132) 40,794 Net interest income after provision for credit losses 205,237 209,227 206,099 198,515 133,567 Noninterest income 88,055 76,824 77,885 83,224 78,328 Noninterest expense 197,992 197,362 186,774 167,409 154,998 Net income before income taxes 95,300 88,689 97,210 114,330 56,897 Income taxes 19,369 17,585 19,090 22,529 9,981 Net income $ 75,931 $ 71,104 $ 78,120 $ 91,801 $ 46,916 Financial Condition at Year End Cash and cash equivalents $ 328,844 $ 249,799 $ 152,799 $ 890,150 $ 219,858 Investment securities, net of allowance for credit losses 493,978 500,623 507,562 496,989 373,176 Net loans and leases held for investment 6,739,492 6,481,827 6,044,226 5,238,093 5,223,797 Assets 8,128,417 7,780,628 7,222,016 7,122,421 6,336,496 Deposits 6,759,259 6,375,781 5,913,526 6,055,124 5,242,715 Borrowings 385,442 465,067 440,401 213,980 311,421 Shareholders' equity 887,301 839,208 776,500 773,794 692,472 Per Common Share Data Average shares outstanding (in thousands) 29,215 29,433 29,393 29,403 29,244 Earnings per share – basic $ 2.60 $ 2.42 $ 2.66 $ 3.12 $ 1.60 Earnings per share – diluted 2.58 2.41 2.64 3.11 1.60 Dividends declared per share 0.84 0.84 0.83 0.80 0.60 Book value (at year-end) 30.55 28.44 26.53 26.23 23.64 Dividends declared to net income 32.3 % 34.8 % 31.2 % 25.6 % 37.4 % Profitability Ratios Return on average assets 0.96 % 0.94 % 1.12 % 1.38 % 0.78 % Return on average equity 8.85 8.83 10.13 12.50 7.02 Average equity to average assets 10.86 10.66 11.09 11.04 11.12 Efficiency ratio 65.7 66.0 62.4 60.9 60.6 Asset Quality Ratios Nonaccrual loans and leases to loans and leases held for investment 0.19 % 0.31 % 0.22 % 0.63 % 0.60 % Nonperforming loans and leases to loans and leases held for investment (1) 0.19 0.32 0.23 0.63 0.62 Nonperforming assets to total assets (1) 0.41 0.52 0.46 0.48 0.64 Net charge-offs to average loans and leases outstanding 0.06 0.08 0.07 — 0.10 Allowance for credit losses, loans and leases to total loans and leases held for investment 1.28 1.30 1.29 1.35 1.56 Allowance for credit losses, loans and leases to nonaccrual loans and leases 687.54 415.97 591.66 216.57 262.03 Allowance for credit losses, loans and leases to nonperforming loans and leases (1) 670.55 405.43 555.27 213.37 251.01 (1) The Corporation adopted ASU 2022-02 "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures" effective January 1, 2023, which eliminated the category of troubled debt restructurings.
Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components. 2023 versus 2022 Reported net interest income for the year ended December 31, 2023 was $220.0 million, an increase of $1.7 million, or 0.8%, from the prior year.
Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components. 2024 versus 2023 Reported net interest income for the year ended December 31, 2024 was $211.2 million, a decrease of $8.8 million, or 4.0%, from the prior year.
The Insurance segment reported pre-tax income of $5.1 million in 2023, $3.3 million in 2022 and $3.4 million in 2021, which included noninterest income of $21.5 million in 2023, $19.9 million in 2022 and $17.0 million in 2021.
The Insurance segment reported pre-tax income of $5.7 million in 2024, $5.1 million in 2023 and $3.3 million in 2022, which included noninterest income of $22.5 million in 2024, $21.5 million in 2023 and $19.9 million in 2022.
The Corporation and its subsidiaries also maintained unused uncommitted funding sources from correspondent banks of $369.0 million at December 31, 2023. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will. Sources of Funds Core deposits continue to be the largest significant funding source for the Corporation.
The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $468.0 million at December 31, 2024 and $369.0 million at December 31, 2023. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.
Ratios at December 31, 2022, 2021, 2020, and 2019 were restated to exclude troubled debt restructured loans from nonperforming loans and nonperforming assets. 30 Table of Contents Executive Overview The Corporation's consolidated net income, earnings per share and return on average assets and average equity were as follows: For the Years Ended December 31, Amount of Change Percent Change (Dollars in thousands, except per share data) 2023 2022 2021 2023 to 2022 2022 to 2021 2023 to 2022 2022 to 2021 Net income $ 71,104 $ 78,120 $ 91,801 $ (7,016) $ (13,681) (9.0) % (14.9) % Net income per share: Basic $ 2.42 $ 2.66 $ 3.12 $ (0.24) $ (0.46) (9.0) (14.7) Diluted 2.41 2.64 3.11 (0.23) (0.47) (8.7) (15.1) Return on average assets 0.94 % 1.12 % 1.38 % (18) BP (26) BP (16.1) (18.8) Return on average equity 8.83 % 10.13 % 12.50 % (130) BP (237) BP (12.8) (19.0) 2023 Overview The Corporation reported net income of $71.1 million, or $2.41 diluted earnings per share, for 2023 compared to net income of $78.1 million, or $2.64 diluted earnings per share, for 2022.
Ratios at December 31, 2022, 2021 and 2020 were restated to exclude troubled debt restructured loans from nonperforming loans and nonperforming assets. 31 Table of Contents Executive Overview The Corporation's consolidated net income, earnings per share and return on average assets and average equity were as follows: For the Years Ended December 31, Amount of Change Percent Change (Dollars in thousands, except per share data) 2024 2023 2022 2024 to 2023 2023 to 2022 2024 to 2023 2023 to 2022 Net income $ 75,931 $ 71,104 $ 78,120 $ 4,827 $ (7,016) 6.8 % (9.0) % Net income per share: Basic $ 2.60 $ 2.42 $ 2.66 $ 0.18 $ (0.24) 7.4 (9.0) Diluted 2.58 2.41 2.64 0.17 (0.23) 7.1 (8.7) Return on average assets 0.96 % 0.94 % 1.12 % 2 BP (18) BP 2.1 (16.1) Return on average equity 8.85 % 8.83 % 10.13 % 2 BP (130) BP 0.2 (12.8) 2024 Overview The Corporation reported net income of $75.9 million, or $2.58 diluted earnings per share, for 2024 compared to net income of $71.1 million, or $2.41 diluted earnings per share, for 2023.
Bank owned life insurance increased $11.0 million, or 9.2%, from December 31, 2023, primarily due to $7.9 million of policies purchased during the first quarter of 2023.
Bank owned life insurance increased $8.0 million, or 6.1%, from December 31, 2023, primarily due to $5.7 million of policies purchased during the first quarter of 2024.
Table 10—Deposits The following table summarizes the average amount of deposits for the periods indicated: For the Years Ended December 31, (Dollars in thousands) 2023 2022 2021 Noninterest-bearing deposits $ 1,646,286 $ 2,068,086 $ 1,891,330 Interest-bearing checking deposits 1,034,327 884,656 850,713 Money market savings 1,611,169 1,389,226 1,366,762 Regular savings 871,332 1,056,019 983,752 Time deposits 931,944 443,845 498,638 Total average deposits $ 6,095,058 $ 5,841,832 $ 5,591,195 44 Table of Contents At December 31, 2023 and 2022, the Corporation had $3.0 billion and $3.3 billion, respectively, in uninsured deposits in excess of the FDIC insurance limit of $250,000.
Table 10—Deposits The following table summarizes the average amount of deposits for the periods indicated: For the Years Ended December 31, (Dollars in thousands) 2024 2023 2022 Noninterest-bearing deposits $ 1,380,178 $ 1,646,286 $ 2,068,086 Interest-bearing checking deposits 1,191,634 1,034,327 884,656 Money market savings 1,801,035 1,611,169 1,389,226 Regular savings 740,493 871,332 1,056,019 Time deposits 1,413,589 931,944 443,845 Total average deposits $ 6,526,929 $ 6,095,058 $ 5,841,832 At December 31, 2024 and 2023, the Corporation had $3.2 billion and $3.0 billion, respectively, in uninsured deposits in excess of the FDIC insurance limit of $250,000.
Bank Shares tax expense increased $206 thousand driven by year over year growth of the Bank's Shareholders' Equity. Professional fees decreased $2.2 million, or 23.5%, for the year ended December 31, 2023.
Bank Shares tax expense increased $206 thousand driven by year over year growth of the Bank's Shareholders' Equity. Professional fees decreased $2.2 million, or 23.5%, for the year ended December 31, 2023. In 2022, the Corporation incurred $3.0 million of consulting fees in support of our digital transformation initiative.
Maturities and pay-downs of $45.0 million, sales of $1.2 million, net amortization of purchased premiums and discounts of $1.2 million and calls of $500 thousand were partially offset by purchases of $33.3 million, which were primarily residential mortgage-backed securities, increases in the fair value of available-for-sale investment securities of $7.3 million, and a reversal of provision for credit losses of $409 thousand.
Maturities and pay-downs of $69.8 million, sales of $5.4 million net amortization of purchased premiums and discounts of $1.1 million, decreases in the fair value of available-for-sale investment securities of $1.0 million and a provision for credit losses of $108 thousand were partially offset by purchases of $70.7 million, which were primarily residential mortgage-backed securities.
The financial results for the year ended December 31, 2023 included $1.5 million in restructuring charges, or $0.04 diluted earnings per share, associated with the Corporation's financial service center optimization and expense management strategies deployed in response to macroeconomic headwinds. 2022 Overview The Corporation reported net income of $78.1 million, or $2.64 diluted earnings per share, for 2022 compared to net income of $91.8 million, or $3.11 diluted earnings per share, for 2021.
The financial results for the year ended December 31, 2023 included $1.5 million in restructuring charges, or $0.04 diluted earnings per share, associated with the Corporation's financial service center optimization and expense management strategies deployed in response to macroeconomic headwinds.
Cash Requirements The Corporation has cash requirements for various financial obligations, including contractual obligations and commitments that require cash payments. The most significant contractual obligations, in both the under and over one-year time period, are for the Bank to repay certificates of deposit and short- and long-term borrowings.
The most significant contractual obligations, in both the under and over one-year time period, are for the Bank to repay certificates of deposit and short- and long-term borrowings.
The net interest margin increase was attributable to loan growth, the rapid increase in interest rates and the asset sensitivity of the Corporation's balance sheet, offset by an increase in cost of funds. 32 Table of Contents Table 1—Average Balances and Interest Rates—Tax-Equivalent Basis For the Years Ended December 31, 2023 2022 2021 (Dollars in thousands) Average Balance Income/ Expense Average Rate Average Balance Income/ Expense Average Rate Average Balance Income/ Expense Average Rate Assets: Interest-earning deposits with other banks $ 130,309 $ 6,660 5.11 % $ 325,875 $ 1,920 0.59 % $ 476,351 $ 661 0.14 % U.S. government obligations — — — 1,929 40 2.07 6,999 144 2.06 Obligations of states and political subdivisions* 2,282 62 2.72 2,302 71 3.08 5,702 206 3.61 Other debt and equity securities 505,343 14,225 2.81 510,961 11,392 2.23 393,762 5,992 1.52 Federal Home Loan Bank, Federal Reserve Bank and other stock 40,092 2,869 7.16 27,784 1,627 5.86 26,844 1,417 5.28 Total interest-earning deposits, investments and other interest-earning assets 678,026 23,816 3.51 868,851 15,050 1.73 909,658 8,420 0.93 Commercial, financial and agricultural loans 991,505 67,487 6.81 963,755 43,861 4.55 1,121,617 43,174 3.85 Real estate—commercial and construction loans 3,483,576 188,644 5.42 3,060,689 127,906 4.18 2,734,259 101,692 3.72 Real estate—residential loans 1,505,799 70,349 4.67 1,219,275 47,472 3.89 1,077,952 40,045 3.71 Loans to individuals 27,063 2,011 7.43 26,642 1,325 4.97 26,062 1,018 3.91 Municipal loans and leases* 232,501 9,597 4.13 236,858 9,703 4.10 247,396 10,147 4.10 Lease financings 178,220 11,025 6.19 144,046 8,791 6.10 115,189 7,363 6.39 Gross loans and leases 6,418,664 349,113 5.44 5,651,265 239,058 4.23 5,322,475 203,439 3.82 Total interest-earning assets 7,096,690 372,929 5.25 6,520,116 254,108 3.90 6,232,133 211,859 3.40 Cash and due from banks 58,593 57,196 55,724 Allowance for credit losses, loans and leases (82,474) (72,069) (74,943) Premises and equipment, net 51,921 51,362 55,875 Operating lease right-of-use asset 31,351 30,443 32,758 Other assets 400,977 369,244 353,896 Total assets $ 7,557,058 $ 6,956,292 $ 6,655,443 Liabilities: Interest-bearing checking deposits $ 1,034,327 $ 23,668 2.29 % $ 884,656 $ 5,010 0.57 % $ 850,713 $ 2,007 0.24 % Money market savings 1,611,169 64,153 3.98 1,389,226 13,835 1.00 1,366,762 3,574 0.26 Regular savings 871,332 3,249 0.37 1,056,019 1,269 0.12 983,752 1,114 0.11 Time deposits 931,944 34,979 3.75 443,845 5,308 1.20 498,638 6,178 1.24 Total time and interest-bearing deposits 4,448,772 126,049 2.83 3,773,746 25,422 0.67 3,699,865 12,873 0.35 Short-term borrowings 148,776 7,095 4.77 60,468 1,389 2.30 16,552 8 0.05 Long-term debt 263,877 9,464 3.59 95,000 1,287 1.35 96,562 1,318 1.36 Subordinated notes 148,507 9,125 6.14 105,356 5,798 5.50 137,896 7,149 5.18 Total borrowings 561,160 25,684 4.58 260,824 8,474 3.25 251,010 8,475 3.38 Total interest-bearing liabilities 5,009,932 151,733 3.03 4,034,570 33,896 0.84 3,950,875 21,348 0.54 Noninterest-bearing deposits 1,646,286 2,068,086 1,891,330 Operating lease liabilities 34,474 33,508 36,001 Accrued expenses and other liabilities 60,699 48,629 42,781 Total liabilities 6,751,391 6,184,793 1,970,112 Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,656,218 2.28 6,102,656 0.56 5,842,205 0.37 Shareholders' Equity: Common stock 157,784 157,784 157,784 Additional paid-in capital 299,804 299,121 297,189 Retained earnings and other equity 348,079 314,594 279,483 Total shareholders' equity 805,667 771,499 734,456 Total liabilities and shareholders' equity $ 7,557,058 $ 6,956,292 $ 6,655,443 Net interest income $ 221,196 $ 220,212 $ 190,511 Net interest spread 2.22 3.06 2.86 Effect of net interest-free funding sources 0.90 0.32 0.20 Net interest margin 3.12 % 3.38 % 3.06 % Ratio of average interest-earning assets to average interest-bearing liabilities 141.65 % 161.61 % 157.74 % *Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.
The net interest margin decrease was attributable to the increase in interest rates and the liability sensitivity of the Corporation's balance sheet, offset by an increase in the yield and average balance of interest-earning assets. 33 Table of Contents Table 1—Average Balances and Interest Rates—Tax-Equivalent Basis For the Years Ended December 31, 2024 2023 2022 (Dollars in thousands) Average Balance Income/ Expense Average Rate Average Balance Income/ Expense Average Rate Average Balance Income/ Expense Average Rate Assets: Interest-earning deposits with other banks $ 220,356 $ 11,193 5.08 % $ 130,309 $ 6,660 5.11 % $ 325,875 $ 1,920 0.59 % U.S. government obligations — — — — — — 1,929 40 2.07 Obligations of states and political subdivisions* 1,447 33 2.28 2,282 62 2.72 2,302 71 3.08 Other debt and equity securities 495,604 14,909 3.01 505,343 14,225 2.81 510,961 11,392 2.23 Federal Home Loan Bank, Federal Reserve Bank and other stock 38,647 2,912 7.53 40,092 2,869 7.16 27,784 1,627 5.86 Total interest-earning deposits, investments and other interest-earning assets 756,054 29,047 3.84 678,026 23,816 3.51 868,851 15,050 1.73 Commercial, financial and agricultural loans 972,213 69,921 7.19 991,505 67,487 6.81 963,755 43,861 4.55 Real estate—commercial and construction loans 3,587,147 207,053 5.77 3,483,576 188,644 5.42 3,060,689 127,906 4.18 Real estate—residential loans 1,670,126 82,344 4.93 1,505,799 70,349 4.67 1,219,275 47,472 3.89 Loans to individuals 26,646 2,161 8.11 27,063 2,011 7.43 26,642 1,325 4.97 Tax-exempt loans and leases 232,020 10,157 4.38 232,501 9,597 4.13 236,858 9,703 4.10 Lease financings 189,054 12,845 6.79 178,220 11,025 6.19 144,046 8,791 6.10 Gross loans and leases 6,677,206 384,481 5.76 6,418,664 349,113 5.44 5,651,265 239,058 4.23 Total interest-earning assets 7,433,260 413,528 5.56 7,096,690 372,929 5.25 6,520,116 254,108 3.90 Cash and due from banks 57,799 58,593 57,196 Allowance for credit losses, loans and leases (86,530) (82,474) (72,069) Premises and equipment, net 48,610 51,921 51,362 Operating lease right-of-use asset 29,990 31,351 30,443 Other assets 414,578 400,977 369,244 Total assets $ 7,897,707 $ 7,557,058 $ 6,956,292 Liabilities: Interest-bearing checking deposits $ 1,191,634 $ 32,857 2.76 % $ 1,034,327 $ 23,668 2.29 % $ 884,656 $ 5,010 0.57 % Money market savings 1,801,035 80,217 4.45 1,611,169 64,153 3.98 1,389,226 13,835 1.00 Regular savings 740,493 3,529 0.48 871,332 3,249 0.37 1,056,019 1,269 0.12 Time deposits 1,413,589 64,266 4.55 931,944 34,979 3.75 443,845 5,308 1.20 Total time and interest-bearing deposits 5,146,751 180,869 3.51 4,448,772 126,049 2.83 3,773,746 25,422 0.67 Short-term borrowings 13,703 249 1.82 148,776 7,095 4.77 60,468 1,389 2.30 Long-term debt 253,733 10,942 4.31 263,877 9,464 3.59 95,000 1,287 1.35 Subordinated notes 149,007 9,125 6.12 148,507 9,125 6.14 105,356 5,798 5.50 Total borrowings 416,443 20,316 4.88 561,160 25,684 4.58 260,824 8,474 3.25 Total interest-bearing liabilities 5,563,194 201,185 3.62 5,009,932 151,733 3.03 4,034,570 33,896 0.84 Noninterest-bearing deposits 1,380,178 1,646,286 2,068,086 Operating lease liabilities 33,006 34,474 33,508 Accrued expenses and other liabilities 63,310 60,699 48,629 Total liabilities 7,039,688 6,751,391 2,150,223 Total interest-bearing liabilities and noninterest-bearing deposits ("Cost of Funds") 6,943,372 2.90 6,656,218 2.28 6,102,656 0.56 Shareholders' Equity: Common stock 157,784 157,784 157,784 Additional paid-in capital 300,644 299,804 299,121 Retained earnings and other equity 399,591 348,079 314,594 Total shareholders' equity 858,019 805,667 771,499 Total liabilities and shareholders' equity $ 7,897,707 $ 7,557,058 $ 6,956,292 Net interest income $ 212,343 $ 221,196 $ 220,212 Net interest spread 1.94 2.22 3.06 Effect of net interest-free funding sources 0.92 0.90 0.32 Net interest margin 2.86 % 3.12 % 3.38 % Ratio of average interest-earning assets to average interest-bearing liabilities 133.61 % 141.65 % 161.61 % *Obligations of states and political subdivisions are tax-exempt earning assets.
For the Years Ended December 31, 2023 2022 2021 (Dollars in thousands) Average Loans Net Charge-offs (Recoveries) Net Charge-offs (Recoveries) to Average Loans Average Loans Net Charge-offs (Recoveries) Net Charge-offs (Recoveries) to Average Loans Average Loans Net Charge-offs (Recoveries) Net Charge-offs (Recoveries) to Average Loans Commercial, financial and agricultural $ 1,056,025 $ 4,510 0.43 % $ 1,034,106 $ 323 0.03 % $ 1,191,166 $ 16 — % Real estate-commercial 3,182,965 37 — 2,863,580 3,276 0.11 2,589,585 (204) (0.01) Real estate-construction 414,567 206 0.05 312,024 — — 264,951 — — Real estate-residential secured for business purpose 505,240 (135) (0.03) 427,849 (55) (0.01) 399,926 147 0.04 Real estate-residential secured for personal purpose 826,943 — — 626,102 — — 521,240 — — Real estate-home equity secured for personal purpose 175,395 2 — 168,289 (38) (0.02) 160,176 (64) (0.04) Loans to individuals 27,063 426 1.57 26,642 179 0.67 26,048 135 0.52 Lease financings 230,466 351 0.15 192,673 210 0.11 169,383 183 0.11 Total $ 6,418,664 $ 5,397 0.08 % $ 5,651,265 $ 3,895 0.07 % $ 5,322,475 $ 213 — % During the year ended December 31, 2023, the Corporation recorded charge-offs of $2.4 million related to two nonaccrual commercial loans to one borrower totaling $5.9 million.
For the Years Ended December 31, 2024 2023 2022 (Dollars in thousands) Average Loans Net Charge-offs (Recoveries) Net Charge-offs (Recoveries) to Average Loans Average Loans Net Charge-offs (Recoveries) Net Charge-offs (Recoveries) to Average Loans Average Loans Net Charge-offs (Recoveries) Net Charge-offs (Recoveries) to Average Loans Commercial, financial and agricultural $ 1,035,684 $ 2,329 0.22 % $ 1,056,025 $ 4,510 0.43 % $ 1,034,106 $ 323 0.03 % Real estate-commercial 3,367,837 21 — 3,182,965 37 — 2,863,580 3,276 0.11 Real estate-construction 329,218 500 0.15 414,567 206 0.05 312,024 — — Real estate-residential secured for business purpose 528,631 (235) (0.04) 505,240 (135) (0.03) 427,849 (55) (0.01) Real estate-residential secured for personal purpose 960,915 (134) (0.01) 826,943 — — 626,102 — — Real estate-home equity secured for personal purpose 180,579 (46) (0.03) 175,395 2 — 168,289 (38) (0.02) Loans to individuals 26,645 828 3.11 27,063 426 1.57 26,642 179 0.67 Lease financings 247,697 539 0.22 230,466 351 0.15 192,673 210 0.11 Total $ 6,677,206 $ 3,802 0.06 % $ 6,418,664 $ 5,397 0.08 % $ 5,651,265 $ 3,895 0.07 % During the year ended December 31, 2023, the Corporation recorded charge-offs of $2.4 million related to two nonaccrual commercial loans to one borrower totaling $5.9 million.
The following table demonstrates the anticipated impact of an instantaneous and parallel interest rate shift, or "shock," to the yield curve on the Corporation's net interest income over the next twelve months.
Table 12—Net Interest Income - Summary of Earnings at Risk Simulation Management also performs a simulation of net interest income to measure interest rate exposure. The following table demonstrates the anticipated impact of an instantaneous and parallel interest rate shift, or "shock," to the yield curve on the Corporation's net interest income over the next twelve months.
Noninterest Expense The following table presents noninterest expense for the years ended December 31, 2023, 2022 and 2021: For the Years Ended December 31, $ Change % Change (Dollars in thousands) 2023 2022 2021 2023 to 2022 2022 to 2021 2023 to 2022 2022 to 2021 Salaries, benefits and commissions $ 120,188 $ 115,806 $ 104,191 $ 4,382 $ 11,615 3.8 % 11.1 % Net occupancy 10,686 10,193 10,397 493 (204) 4.8 (2.0) Equipment 4,132 3,904 3,899 228 5 5.8 0.1 Data processing 16,799 15,215 12,743 1,584 2,472 10.4 19.4 Professional fees 7,141 9,332 7,687 (2,191) 1,645 (23.5) 21.4 Marketing and advertising 2,180 2,462 2,063 (282) 399 (11.5) 19.3 Deposit insurance premiums 4,825 3,075 2,712 1,750 363 56.9 13.4 Intangible expenses 938 1,293 979 (355) 314 (27.5) 32.1 Restructuring charges 1,519 184 — 1,335 184 725.5 N/M Other expense 28,954 25,310 22,738 3,644 2,572 14.4 11.3 Total noninterest expense $ 197,362 $ 186,774 $ 167,409 $ 10,588 $ 19,365 5.7 % 11.6 % 2023 versus 2022 Noninterest expense for the year ended December 31, 2023 was $197.4 million, an increase of $10.6 million, or 5.7%, compared to 2022.
Noninterest Expense The following table presents noninterest expense for the years ended December 31, 2024, 2023 and 2022: For the Years Ended December 31, $ Change % Change (Dollars in thousands) 2024 2023 2022 2024 to 2023 2023 to 2022 2024 to 2023 2023 to 2022 Salaries, benefits and commissions $ 123,745 $ 120,188 $ 115,806 $ 3,557 $ 4,382 3.0 % 3.8 % Net occupancy 11,025 10,686 10,193 339 493 3.2 4.8 Equipment 4,453 4,132 3,904 321 228 7.8 5.8 Data processing 16,956 16,799 15,215 157 1,584 0.9 10.4 Professional fees 6,402 7,141 9,332 (739) (2,191) (10.3) (23.5) Marketing and advertising 2,173 2,180 2,462 (7) (282) (0.3) (11.5) Deposit insurance premiums 4,432 4,825 3,075 (393) 1,750 (8.1) 56.9 Intangible expenses 694 938 1,293 (244) (355) (26.0) (27.5) Restructuring charges — 1,519 184 (1,519) 1,335 N/M 725.5 Other expense 28,112 28,954 25,310 (842) 3,644 (2.9) 14.4 Total noninterest expense $ 197,992 $ 197,362 $ 186,774 $ 630 $ 10,588 0.3 % 5.7 % 2024 versus 2023 Noninterest expense for the year ended December 31, 2024 was $198.0 million, an increase of $630 thousand, or 0.3%, compared to 2023.
Net interest income includes net deferred (costs)/fees (amortization)/accretion of $(2.1) million, $(1.8) million and $8.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. 33 Table of Contents Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances.
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments. Net interest income includes net deferred costs amortization of $2.7 million, $2.1 million and $1.8 million for the years ended December 31, 2024, 2023 and 2022, respectively. Nonaccrual loans and leases have been included in the average loan and lease balances.
At December 31, (Dollars in thousands) 2023 2022 2021 U.S. government corporations and agencies $ — $ — $ 6,999 State and political subdivisions 2,301 2,285 2,333 Residential mortgage-backed securities 410,329 418,115 391,089 Collateralized mortgage obligations 2,001 2,322 3,278 Corporate bonds 82,699 82,261 90,291 Equity securities 3,293 2,579 2,999 Total investment securities $ 500,623 $ 507,562 $ 496,989 Table 4—Investment Securities (Yields) The following table shows the maturity distribution and weighted average yields of investment securities at amortized cost at December 31, 2023.
At December 31, (Dollars in thousands) 2024 2023 2022 State and political subdivisions $ 1,295 $ 2,301 $ 2,285 Residential mortgage-backed securities 417,492 410,329 418,115 Collateralized mortgage obligations 1,685 2,001 2,322 Corporate bonds 71,000 82,699 82,261 Equity securities 2,506 3,293 2,579 Total investment securities $ 493,978 $ 500,623 $ 507,562 Table 4—Investment Securities (Yields) The following table shows the maturity distribution and weighted average yields of investment securities at amortized cost at December 31, 2024.
Loans and Leases Gross loans and leases held for investment at December 31, 2023 increased $444.0 million, or 7.3%, from December 31, 2022.
Loans and Leases Gross loans and leases held for investment at December 31, 2024 increased $259.4 million, or 3.9%, from December 31, 2023.
The Corporation has a contingency funding plan in place to address liquidity needs in the event of an institution-specific or a systemic financial crisis. The Corporation and its subsidiaries maintain ample ability to meet the liquidity needs of its customers. Our most liquid asset, unencumbered cash and cash equivalents, were $241.5 million at December 31, 2023.
The Corporation has a contingency funding plan in place to address liquidity needs in the event of an institution-specific or a systemic financial crisis. The Corporation and its subsidiaries maintain ample ability to meet the liquidity needs of its customers.
At December 31, (Dollars in thousands) 2023 2022 2021 Allowance for credit losses, loans and leases $ 85,387 $ 79,004 $ 71,924 Loans and leases held for investment 6,567,214 6,123,230 5,310,017 Allowance for credit losses, loans and leases / loans and leases held for investment 1.30 % 1.29 % 1.35 % Noninterest Income The following table presents noninterest income for the years ended December 31, 2023, 2022 and 2021: For the Years Ended December 31, $ Change % Change (Dollars in thousands) 2023 2022 2021 2023 to 2022 2022 to 2021 2023 to 2022 2022 to 2021 Trust fee income $ 7,732 $ 7,743 $ 8,403 $ (11) $ (660) (0.1) % (7.9) % Service charges on deposit accounts 7,048 6,175 5,504 873 671 14.1 12.2 Investment advisory commission and fee income 18,864 19,748 18,936 (884) 812 (4.5) 4.3 Insurance commission and fee income 21,043 19,065 16,357 1,978 2,708 10.4 16.6 Other service fee income 12,381 12,425 10,275 (44) 2,150 (0.4) 20.9 Bank owned life insurance income 3,185 3,787 3,981 (602) (194) (15.9) (4.9) Net gain on sales of investment securities — 30 145 (30) (115) N/M (79.3) Net gain on mortgage banking activities 3,689 4,412 15,141 (723) (10,729) (16.4) (70.9) Other income 2,882 4,500 4,482 (1,618) 18 (36.0) 0.4 Total noninterest income $ 76,824 $ 77,885 $ 83,224 $ (1,061) $ (5,339) (1.4) % (6.4) % 2023 versus 2022 Noninterest income for the year ended December 31, 2023 was $76.8 million, a decrease of $1.1 million, or 1.4%, compared to 2022.
At December 31, (Dollars in thousands) 2024 2023 2022 Allowance for credit losses, loans and leases $ 87,091 $ 85,387 $ 79,004 Loans and leases held for investment 6,826,583 6,567,214 6,123,230 Allowance for credit losses, loans and leases / loans and leases held for investment 1.28 % 1.30 % 1.29 % Noninterest Income The following table presents noninterest income for the years ended December 31, 2024, 2023 and 2022: For the Years Ended December 31, $ Change % Change (Dollars in thousands) 2024 2023 2022 2024 to 2023 2023 to 2022 2024 to 2023 2023 to 2022 Trust fee income $ 8,491 $ 7,732 $ 7,743 $ 759 $ (11) 9.8 % (0.1) % Service charges on deposit accounts 8,082 7,048 6,175 1,034 873 14.7 14.1 Investment advisory commission and fee income 21,208 18,864 19,748 2,344 (884) 12.4 (4.5) Insurance commission and fee income 22,349 21,043 19,065 1,306 1,978 6.2 10.4 Other service fee income 14,747 12,381 12,425 2,366 (44) 19.1 (0.4) Bank owned life insurance income 3,861 3,185 3,787 676 (602) 21.2 (15.9) Net gain on sales of investment securities 18 — 30 18 (30) N/M N/M Net gain on mortgage banking activities 5,265 3,689 4,412 1,576 (723) 42.7 (16.4) Other income 4,034 2,882 4,500 1,152 (1,618) 40.0 (36.0) Total noninterest income $ 88,055 $ 76,824 $ 77,885 $ 11,231 $ (1,061) 14.6 % (1.4) % 2024 versus 2023 Noninterest income for the year ended December 31, 2024 was $88.1 million, an increase of $11.2 million, or 14.6%, compared to 2023.
Commitments to extend credit are the Bank's most significant commitment in both the under and over one-year time periods. These commitments do not necessarily represent future cash requirements in that these commitments often expire without being drawn upon. Recent Accounting Pronouncements For information regarding recent accounting pronouncements, refer to Note 1, "Summary of Significant Accounting Policies" of this Form 10-K.
These commitments do not necessarily represent future cash requirements in that these commitments often expire without being drawn upon. 49 Table of Contents Recent Accounting Pronouncements For information regarding recent accounting pronouncements, refer to Note 1, "Summary of Significant Accounting Policies" of this Form 10-K.
The results suggest the Corporation's year-end balance sheet is liability sensitive due to the current levels of deposit customer sensitivity and funding costs. Actual results will likely be different than modeled due to numerous factors, including interest rates earned on new loans and investments as well as rates paid on new and existing deposits and new borrowings.
The results suggest the Corporation's year-end balance sheet is asset sensitive as net interest income is projected to increase in a rising rate environment. Actual results will likely be different than modeled due to numerous factors, including interest rates earned on new loans and investments as well as rates paid on new and existing deposits and new borrowings.
Unencumbered securities classified as available-for-sale, which provide additional sources of liquidity, totaled $23.3 million at December 31, 2023. Further, the Corporation and its subsidiaries had committed borrowing capacity from the Federal Home Loan Bank and Federal Reserve Bank of $3.4 billion at December 31, 2023, of which $1.9 billion was available.
Further, the Corporation and its subsidiaries had committed borrowing capacity from the Federal Home Loan Bank and Federal Reserve Bank of $3.7 billion and $3.4 billion at December 31, 2024 and December 31, 2023, respectively, of which $2.1 billion and $1.9 billion was available as of December 31, 2024 and December 31, 2023, respectively.
At December 31, 2023 2022 (Dollars in thousands) ACL % of ACL to Total ACL % of Loans to Total Loans ACL % of ACL to Total ACL % of Loans to Total Loans Commercial, financial and agricultural $ 13,699 16.0 % 15.1 % $ 16,920 21.4 % 17.7 % Real estate-commercial 45,849 53.7 50.3 41,673 52.7 49.5 Real estate-construction 6,543 7.7 6.0 4,952 6.3 6.2 Real estate-residential secured for business purpose 8,692 10.2 7.9 7,054 8.9 7.8 Real estate-residential secured for personal purpose 6,349 7.4 13.8 3,685 4.7 11.9 Real estate-home equity secured for personal purpose 1,289 1.5 2.7 1,287 1.6 2.9 Loans to individuals 392 0.5 0.4 351 0.4 0.5 Lease financings 2,574 3.0 3.8 3,082 3.9 3.5 Unallocated — — N/A — — N/A Total $ 85,387 100.0 % 100.0 % $ 79,004 100.0 % 100.0 % At December 31, 2023, the allowance for credit losses on individually analyzed loans was $1.8 million, or 8.6% of the balance of individually analyzed loans of $20.7 million.
At December 31, 2024 2023 (Dollars in thousands) ACL % of ACL to Total ACL % of Loans to Total Loans ACL % of ACL to Total ACL % of Loans to Total Loans Commercial, financial and agricultural $ 16,079 18.5 % 15.2 % $ 13,699 16.0 % 15.1 % Real estate-commercial 46,867 53.8 51.7 45,849 53.7 50.3 Real estate-construction 4,924 5.7 4.0 6,543 7.7 6.0 Real estate-residential secured for business purpose 7,491 8.6 7.9 8,692 10.2 7.9 Real estate-residential secured for personal purpose 7,222 8.3 14.6 6,349 7.4 13.8 Real estate-home equity secured for personal purpose 1,706 2.0 2.7 1,289 1.5 2.7 Loans to individuals 342 0.4 0.3 392 0.5 0.4 Lease financings 2,460 2.8 3.6 2,574 3.0 3.8 Total $ 87,091 100.0 % 100.0 % $ 85,387 100.0 % 100.0 % At December 31, 2024, the allowance for credit losses on individually analyzed loans was $1.9 million, or 16.1% of the balance of individually analyzed loans of $12.1 million.
There can be no assurance that future impairment assessments or tests will not result in a charge to earnings. 43 Table of Contents Bank Owned Life Insurance The Bank currently purchases bank owned life insurance to protect itself against the loss of key employees due to death and to offset or finance the Corporation's future costs and obligations to employees under its benefits plans.
Bank Owned Life Insurance The Bank purchases bank owned life insurance to protect itself against the loss of key employees due to death and to offset 43 Table of Contents or finance the Corporation's future costs and obligations to employees under its benefits plans.
The net interest margin decrease was attributable to the increase in interest rates and the liability sensitivity of the Corporation's balance sheet, offset by an increase in the yield and average balance of interest-earning assets. 2022 versus 2021 Reported net interest income for the year ended December 31, 2022 was $218.3 million, an increase of $29.9 million, or 15.9%, from the prior year.
The net interest margin decrease was attributable to the increase in interest rates and the liability sensitivity of the Corporation's balance sheet. 2023 versus 2022 Reported net interest income for the year ended December 31, 2023 was $220.0 million, an increase of $1.7 million, or 0.8%, from the prior year.
Detailed segment information appears in Note 23, "Segment Reporting" included in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K. The Banking segment reported pre-tax income of $89.1 million in 2023, $92.2 million in 2022 and $112.2 million in 2021.
Discussion of Segments The Corporation has three operating segments: Banking, Wealth Management and Insurance. Detailed segment information appears in Note 23, "Segment Reporting" included in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K. The Banking segment reported pre-tax income of $96.1 million in 2024, $90.3 million in 2023 and $93.5 million in 2022.
During 2021, there was a reversal of provision for credit losses of $10.1 million. Net loan and lease charge-offs for the years ended December 31, 2023, 2022, and 2021 were $5.4 million, $3.9 million and $213 thousand, respectively. The increase in charge-offs in 2023 was due to $2.4 million in charge-offs related to two nonaccrual commercial loans to one borrower.
Net loan and lease charge-offs for the years ended December 31, 2024, 2023, and 2022 were $3.8 million, $5.4 million and $3.9 million, respectively. The year ended December 31, 2023 included $2.4 million in charge-offs related to two nonaccrual commercial loans to one borrower.
SHAREHOLDERS' EQUITY The following table presents total shareholders' equity at the dates indicated: At December 31, (Dollars in thousands) 2023 2022 $ Change % Change Common stock $ 157,784 $ 157,784 $ — — % Additional paid-in capital 301,066 300,808 258 0.1 Retained earnings 474,691 428,637 46,054 10.7 Accumulated other comprehensive loss (50,646) (62,104) 11,458 (18.4) Treasury stock (43,687) (48,625) 4,938 (10.2) Total shareholders' equity $ 839,208 $ 776,500 $ 62,708 8.1 % The increase in shareholders' equity at December 31, 2023 of $62.7 million from December 31, 2022 was primarily related to an increase in retained earnings of $46.1 million.
SHAREHOLDERS' EQUITY The following table presents total shareholders' equity at the dates indicated: At December 31, (Dollars in thousands) 2024 2023 $ Change % Change Common stock $ 157,784 $ 157,784 $ — — % Additional paid-in capital 302,829 301,066 1,763 0.6 Retained earnings 525,780 474,691 51,089 10.8 Accumulated other comprehensive loss (43,992) (50,646) 6,654 (13.1) Treasury stock (55,100) (43,687) (11,413) 26.1 Total shareholders' equity $ 887,301 $ 839,208 $ 48,093 5.7 % The increase in shareholders' equity at December 31, 2024 of $48.1 million from December 31, 2023 was primarily related to an increase in retained earnings of $51.1 million.
For the Years Ended December 31, 2023 Versus 2022 For the Years Ended December 31, 2022 Versus 2021 (Dollars in thousands) Volume Change Rate Change Total Volume Change Rate Change Total Interest income: Interest-earning deposits with other banks $ (1,796) $ 6,536 $ 4,740 $ (271) $ 1,530 $ 1,259 U.S. government obligations (40) — (40) (105) 1 (104) Obligations of states and political subdivisions (1) (8) (9) (109) (26) (135) Other debt and equity securities (125) 2,958 2,833 2,101 3,299 5,400 Federal Home Loan Bank, Federal Reserve Bank and other stock 828 414 1,242 51 159 210 Interest on deposits, investments and other interest-earning assets (1,134) 9,900 8,766 1,667 4,963 6,630 Commercial, financial and agricultural loans 1,295 22,331 23,626 (6,552) 7,239 687 Real estate—commercial and construction loans 19,300 41,438 60,738 12,876 13,338 26,214 Real estate—residential loans 12,344 10,533 22,877 5,421 2,006 7,427 Loans to individuals 21 665 686 24 283 307 Municipal loans and leases (178) 72 (106) (444) — (444) Lease financings 2,103 131 2,234 1,775 (347) 1,428 Interest and fees on loans and leases 34,885 75,170 110,055 13,100 22,519 35,619 Total interest income 33,751 85,070 118,821 14,767 27,482 42,249 Interest expense: Interest-bearing checking deposits 990 17,668 18,658 84 2,919 3,003 Money market savings 2,560 47,758 50,318 59 10,202 10,261 Regular savings (256) 2,236 1,980 69 86 155 Time deposits 10,118 19,553 29,671 (673) (197) (870) Total time and interest-bearing deposits 13,412 87,215 100,627 (461) 13,010 12,549 Short-term borrowings 3,288 2,418 5,706 77 1,304 1,381 Long-term debt 4,229 3,948 8,177 (21) (10) (31) Subordinated notes 2,591 736 3,327 (1,770) 419 (1,351) Interest on borrowings 10,108 7,102 17,210 (1,714) 1,713 (1) Total interest expense 23,520 94,317 117,837 (2,175) 14,723 12,548 Net interest income $ 10,231 $ (9,247) $ 984 $ 16,942 $ 12,759 $ 29,701 35 Table of Contents Provision for Credit Losses The provision for credit losses for the years ended December 31, 2023 and 2022 was $10.8 million and $12.2 million, respectively.
For the Years Ended December 31, 2024 Versus 2023 For the Years Ended December 31, 2023 Versus 2022 (Dollars in thousands) Volume Change Rate Change Total Volume Change Rate Change Total Interest income: Interest-earning deposits with other banks $ 4,572 $ (39) $ 4,533 $ (1,796) $ 6,536 $ 4,740 U.S. government obligations — — — (40) — (40) Obligations of states and political subdivisions (20) (9) (29) (1) (8) (9) Other debt and equity securities (285) 969 684 (125) 2,958 2,833 Federal Home Loan Bank, Federal Reserve Bank and other stock (104) 147 43 828 414 1,242 Interest on deposits, investments and other interest-earning assets 4,163 1,068 5,231 (1,134) 9,900 8,766 Commercial, financial and agricultural loans (1,319) 3,753 2,434 1,295 22,331 23,626 Real estate—commercial and construction loans 5,804 12,605 18,409 19,300 41,438 60,738 Real estate—residential loans 7,943 4,052 11,995 12,344 10,533 22,877 Loans to individuals (31) 181 150 21 665 686 Tax-exempt loans and leases (20) 580 560 (178) 72 (106) Lease financings 702 1,118 1,820 2,103 131 2,234 Interest and fees on loans and leases 13,079 22,289 35,368 34,885 75,170 110,055 Total interest income 17,242 23,357 40,599 33,751 85,070 118,821 Interest expense: Interest-bearing checking deposits 3,911 5,278 9,189 990 17,668 18,658 Money market savings 8,024 8,040 16,064 2,560 47,758 50,318 Regular savings (549) 829 280 (256) 2,236 1,980 Time deposits 20,730 8,557 29,287 10,118 19,553 29,671 Total time and interest-bearing deposits 32,116 22,704 54,820 13,412 87,215 100,627 Short-term borrowings (4,072) (2,774) (6,846) 3,288 2,418 5,706 Long-term debt (373) 1,851 1,478 4,229 3,948 8,177 Subordinated notes — — — 2,591 736 3,327 Interest on borrowings (4,445) (923) (5,368) 10,108 7,102 17,210 Total interest expense 27,671 21,781 49,452 23,520 94,317 117,837 Net interest income $ (10,429) $ 1,576 $ (8,853) $ 10,231 $ (9,247) $ 984 35 Table of Contents Provision for Credit Losses The provision for credit losses for the years ended December 31, 2024, 2023 and 2022 was $5.9 million, $10.8 million and $12.2 million, respectively.
The financial results for the year ended December 31, 2022 included bank owned life insurance ("BOLI") death benefit claims of $977 thousand, or $0.03 diluted earnings per share.
Additionally, the financial results for the year ended December 31, 2024 included bank owned life insurance ("BOLI") death benefit claims of $241 thousand, or $0.01 diluted earnings per share. 2023 Overview The Corporation reported net income of $71.1 million, or $2.41 diluted earnings per share, for 2023 compared to net income of $78.1 million, or $2.64 diluted earnings per share, for 2022.
The effective tax rates reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases. Excluding this impact, the effective tax rate was 21.7% for the year ended December 31, 2023 and 21.3% for the years ended December 31, 2022 and 2021.
Tax Provision The provision for income taxes was $19.4 million, $17.6 million and $19.1 million for the years ended December 31, 2024, 2023 and 2022, respectively, at effective rates of 20.3%, 19.8% and 19.6%, respectively. The effective tax rates reflected the benefits of tax-exempt income from investments in municipal securities and loans and leases.
At December 31, 2023, noninterest bearing deposits represented 23.0% of total deposits, down from 34.6% at December 31, 2022. At December 31, 2023, unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, represented 23.3% of total deposits, down from 31.0% at December 31, 2022.
At December 31, 2024, noninterest-bearing deposits totaled $1.4 billion and represented 20.9% of total deposits, compared to $1.5 billion representing 23.0% at December 31, 2023. Unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, totaled $1.5 billion at December 31, 2024 and 2023.
Financial Condition ASSETS The following table presents assets at the dates indicated: At December 31, (Dollars in thousands) 2023 2022 $ Change % Change Cash and cash equivalents $ 249,799 $ 152,799 $ 97,000 63.5 % Investment securities, net of allowance for credit losses 500,623 507,562 (6,939) (1.4) Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost 40,499 33,841 6,658 19.7 Loans held for sale 11,637 5,037 6,600 131.0 Loans and leases held for investment 6,567,214 6,123,230 443,984 7.3 Allowance for credit losses, loans and leases (85,387) (79,004) (6,383) 8.1 Premises and equipment, net 51,441 50,939 502 1.0 Operating lease right-of-use asset 31,795 30,059 1,736 5.8 Goodwill and other intangibles, net 186,460 186,894 (434) (0.2) Bank owned life insurance 131,344 120,297 11,047 9.2 Accrued interest receivable and other assets 95,203 90,362 4,841 5.4 Total assets $ 7,780,628 $ 7,222,016 $ 558,612 7.7 % 38 Table of Contents Cash and Interest-Earning Deposits Cash and interest-earning deposits increased $97.0 million, or 63.5%, from December 31, 2022, primarily due to increased interest earning deposits at the Federal Reserve Bank of $112.4 million due to increases in deposits and borrowings outpacing loan fundings.
Financial Condition ASSETS The following table presents assets at the dates indicated: At December 31, (Dollars in thousands) 2024 2023 $ Change % Change Cash and cash equivalents $ 328,844 $ 249,799 $ 79,045 31.6 % Investment securities, net of allowance for credit losses 493,978 500,623 (6,645) (1.3) Federal Home Loan Bank, Federal Reserve Bank and other stock, at cost 38,980 40,499 (1,519) (3.8) Loans held for sale 16,653 11,637 5,016 43.1 Loans and leases held for investment 6,826,583 6,567,214 259,369 3.9 Allowance for credit losses, loans and leases (87,091) (85,387) (1,704) 2.0 Premises and equipment, net 46,671 51,441 (4,770) (9.3) Operating lease right-of-use asset 28,531 31,795 (3,264) (10.3) Goodwill and other intangibles, net 183,819 186,460 (2,641) (1.4) Bank owned life insurance 139,351 131,344 8,007 6.1 Accrued interest receivable and other assets 112,098 95,203 16,895 17.7 Total assets $ 8,128,417 $ 7,780,628 $ 347,789 4.5 % Cash and Interest-Earning Deposits Cash and interest-earning deposits increased $79.0 million, or 31.6%, from December 31, 2023, primarily due to increased interest-earning deposits at the Federal Reserve Bank of $82.5 million due to increases in deposits outpacing loan growth, partially offset by the repayment of long-term debt. 38 Table of Contents Investment Securities Total investment securities at December 31, 2024 decreased $6.6 million, or 1.3%, from December 31, 2023.
Net interest income, on a tax-equivalent basis, for the year ended December 31, 2022 was $220.2 million, an increase of $29.7 million, or 15.6%, from the prior year.
Net interest income, on a tax-equivalent basis, for the year ended December 31, 2024 was $212.3 million, a decrease of $8.9 million, or 4.0%, from the prior year.
At December 31, 2022, nonaccrual loans and leases were $13.4 million and had a related allowance for credit losses on loans and leases of $2.8 million. During the fourth quarter of 2023, a $6.1 million construction loan relationship was placed on nonaccrual status with an individual reserve of $1.1 million.
At December 31, 2023, nonaccrual loans and leases were $20.5 million and had a related allowance for credit losses on loans and leases of $1.8 million. During the year, two nonaccrual modified construction loans to one borrower totaling $6.1 million were paid-off. At December 31, 2023, these loans had an individual reserve of $1.1 million.
The pre-tax income decrease from 2022 was due to a $1.2 million adjustment recorded in 2022 for previously unrecorded revenue, an increase in employee salary expense as we continue to invest in revenue producing positions, and increases in data processing expense and consulting fees. Pre-tax income was relatively flat in 2022 as compared to 2021.
The pre-tax income increase from 2023 was primarily due to new customer relationships and appreciation of assets under management and supervision. The pre-tax income decrease in 2023 as compared to 2022 was primarily due to an increase in employee salary expense as we continued to invest in revenue producing positions, and increases in data processing expense and consulting fees.
Held-to-maturity and available-for-sale portfolios are combined, net of allowance for credit losses. 1 Year or less After 1 Year to 5 Years After 5 Years to 10 Years After 10 Years (Dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield State and political subdivisions $ 1,030 3.02 % $ 1,298 2.10 % $ — — % $ — — % Residential mortgage-backed securities — — 2,438 2.47 25,700 2.70 417,487 2.46 Collateralized mortgage obligations — — — — 241 2.67 1,960 1.63 Corporate bonds 18,011 3.60 13,339 2.08 60,000 4.17 — — Total held-to- maturity and available-for-sale investment securities $ 19,041 3.57 % $ 17,075 2.14 % $ 85,941 3.73 % $ 419,447 2.45 % At December 31, 2023, the Corporation had no reportable investments in any single issuer representing more than 10% of shareholders' equity.
Held-to-maturity and available-for-sale portfolios are combined, net of allowance for credit losses. 1 Year or less After 1 Year to 5 Years After 5 Years to 10 Years After 10 Years (Dollars in thousands) Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield Amortized Cost Weighted Average Yield State and political subdivisions $ 1,300 2.10 % $ — — % $ — — % $ — — % Residential mortgage-backed securities 20 2.81 1,412 2.46 21,469 2.71 433,914 2.80 Collateralized mortgage obligations — — 155 2.62 — — 1,663 1.60 Corporate bonds 5,905 2.68 10,924 2.68 60,000 3.94 — — Total held-to- maturity and available-for-sale investment securities $ 7,225 2.58 % $ 12,491 2.66 % $ 81,469 3.62 % $ 435,577 2.80 % At December 31, 2024, the Corporation had no reportable investments in any single issuer representing more than 10% of shareholders' equity.
The increase in noninterest income in 2023 compared to 2022 was primarily due to increases in revenue from commercial lines of $1.0 million and contingent commission income of $600 thousand. The increase in noninterest income in 2022 compared to 2021 was driven by incremental revenue attributable to the insurance agency the Corporation acquired in the fourth quarter of 2021.
The increase in noninterest income in 2024 compared to 2023 was primarily due to increases in revenue from commercial lines of $1.0 million.
These assumptions are based upon historic behavior; however, they are inherently uncertain and thus cannot precisely predict the impact of changes in interest rates. While actual results will differ from simulated results due to customer behavioral change and/or market and regulatory influences, the following models are important tools to guide management.
These assumptions are based upon historic behavior; however, they are inherently uncertain and thus cannot precisely predict the impact of changes in interest rates.
As part of its diversified funding strategy, the Corporation also utilizes a mix of short-term and long-term wholesale funding providers. Wholesale funding includes federal funds purchases from correspondent banks, secured borrowing lines from the Federal Home Loan Bank of Pittsburgh, the Federal Reserve Bank of Philadelphia and brokered deposits and other similar sources.
Wholesale funding includes federal funds purchases from correspondent banks, secured borrowing lines from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia, and brokered deposits and other similar sources. Cash Requirements The Corporation has cash requirements for various financial obligations, including contractual obligations and commitments that require cash payments.
LIABILITIES The following table presents liabilities at the dates indicated: At December 31, (Dollars in thousands) 2023 2022 $ Change % Change Deposits $ 6,375,781 $ 5,913,526 $ 462,255 7.8 % Short-term borrowings 6,306 197,141 (190,835) (96.8) Long-term debt 310,000 95,000 215,000 226.3 Subordinated notes 148,761 148,260 501 0.3 Operating lease liabilities 34,851 33,153 1,698 5.1 Accrued interest payable and other liabilities 65,721 58,436 7,285 12.5 Total liabilities $ 6,941,420 $ 6,445,516 $ 495,904 7.7 % Deposits Total deposits increased $462.3 million, or 7.8%, from December 31, 2022, primarily due to increases in public fund and brokered deposits, partially offset by decreases in commercial and consumer deposits.
LIABILITIES The following table presents liabilities at the dates indicated: At December 31, (Dollars in thousands) 2024 2023 $ Change % Change Deposits $ 6,759,259 $ 6,375,781 $ 383,478 6.0 % Short-term borrowings 11,181 6,306 4,875 77.3 Long-term debt 225,000 310,000 (85,000) (27.4) Subordinated notes 149,261 148,761 500 0.3 Operating lease liabilities 31,485 34,851 (3,366) (9.7) Accrued interest payable and other liabilities 64,930 65,721 (791) (1.2) Total liabilities $ 7,241,116 $ 6,941,420 $ 299,696 4.3 % Deposits Total deposits increased $383.5 million, or 6.0%, from December 31, 2023, primarily due to increases in consumer, commercial, brokered and public funds deposits.
The increase in charge-offs for the year ended December 31, 2023 was primarily due to $2.4 million charge-offs recorded against two existing nonaccrual commercial loans to one borrower in the first quarter of 2023.
Net charge-offs for the year ended December 31, 2023 included $2.4 million of charge-offs recorded against two nonaccrual commercial loans to one borrower. 40 Table of Contents Other real estate owned was $20.1 million at December 31, 2024, compared to $19.0 million at December 31, 2023.
These deposits are primarily generated from individuals, businesses, municipalities and non-profit customers located in our primary service areas. The Corporation faces increased competition for these deposits from a large array of financial market participants, including banks, credit unions, savings institutions, mutual funds, security dealers and others.
The Corporation faces increased competition for these deposits from a large array of financial market participants, including banks, credit unions, savings institutions, mutual funds, security dealers and others. As part of its diversified funding strategy, the Corporation also utilizes a mix of short-term and long-term wholesale funding providers.
Short-term borrowings at December 31, 2023 included $6.3 million of customer repurchase agreements. Long-term debt at December 31, 2023 included $310.0 million of FHLB advances and $148.8 million of subordinated notes.
These borrowings were replaced with lower cost deposits during the year. Short-term borrowings at December 31, 2024 consisted of $11.2 million of customer repurchase agreements. Long-term debt at December 31, 2024 consisted of $225.0 million of FHLB advances and $149.3 million of subordinated notes.
(Dollars in thousands) For the Years Ended December, 31 Maturity Period 2023 2022 Due Three Months or Less $ 40,475 $ 18,689 Due Over Three Months to Six Months 30,090 24,285 Due Over Six Months to Twelve Months 47,709 33,119 Due Over Twelve Months 68,681 18,899 Total $ 186,955 $ 94,992 Borrowings Total borrowings increased $24.7 million from December 31, 2022 due to increases of $215.0 million in long-term debt, partially offset by decreases of $125.0 million in short-term FHLB overnight borrowings and $60.0 million in federal funds purchased.
(Dollars in thousands) For the Years Ended December 31, Maturity Period 2024 2023 Due Three Months or Less $ 76,621 $ 40,475 Due Over Three Months to Six Months 94,290 30,090 Due Over Six Months to Twelve Months 81,338 47,709 Due Over Twelve Months 23,734 68,681 Total $ 275,983 $ 186,955 44 Table of Contents Borrowings Total borrowings decreased $79.6 million from December 31, 2023, primarily due to pay-downs of $85.0 million in long-term debt, partially offset by an increase of $4.9 million in customer repurchase agreements.
However, this table and analysis is limited as it does not take into account the magnitude of repricing due to rate changes. Table 12—Net Interest Income - Summary of Earnings at Risk Simulation Management also performs a simulation of net interest income to measure interest rate exposure.
This table is limited as it does not take into consideration the magnitude of the repricing change in relation to interest rate changes.
Retained earnings was impacted by net income of $71.1 million, partially offset by $24.7 million of cash dividends paid during the year.
Retained earnings was impacted by net income of $75.9 million, partially offset by $24.6 million in cash dividends paid during the year. Accumulated other comprehensive loss decreased by $6.7 million, which was primarily attributable to an increase in unrecognized actuarial losses related to the Corporation's pension plan of $6.7 million, net of tax.
The decrease in pre-tax income in 2022 compared to 2021 was primarily due to increases in salary expense as we continue to invest in revenue producing positions and increases in intangible expense amortization related to the previously referenced insurance agency acquisition. Capital Adequacy Capital guidelines assign minimum capital requirements for categories of assets depending on their assigned risks.
The increase in noninterest income in 2023 compared to 2022 was primarily due to increases in revenue from commercial lines of $1.0 million and contingent commission income of $600 thousand. 45 Table of Contents Capital Adequacy Capital guidelines assign minimum capital requirements for categories of assets depending on their assigned risks.
Estimated Change in Net Interest Income Over Next 12 Months (Dollars in thousands) Amount Percent Rate shock - Change in interest rates +300 basis points $ (2,680) (1.25 %) +200 basis points (2,769) (1.29) +100 basis points (197) (0.09) -100 basis points (1,802) (0.84) -200 basis points (5,195) (2.43) -300 basis points (11,389) (5.32) Credit Risk Originating loans exposes the Corporation to credit risk, which is the risk that the principal balance of a loan and any related interest will not be collected due to the inability of the borrower to repay the loan.
Credit Risk Originating loans exposes the Corporation to credit risk, which is the risk that the principal balance of a loan and any related interest will not be collected due to the inability of the borrower to repay the loan.
Service charge on deposits accounts increased $873 thousand, or 14.1%, for the year ended December 31, 2023, primarily due to an increase of $962 thousand in treasury management fees. 2022 versus 2021 Noninterest income for the year ended December 31, 2022 was $77.9 million, a decrease of $5.3 million, or 6.4%, compared to 2021. 36 Table of Contents Net gain on mortgage banking activities decreased $10.7 million, or 70.9%, for the year ended December 31, 2022, primarily due to a decrease in loan sales due to the higher interest rate environment and a contraction of gain on sale margins.
Gains on the sale of Small Business Administration loans increased $1.9 million due to increased sale volume, partially offset by a $605 thousand decrease in interest rate swap income due to decreased demand. 36 Table of Contents 2023 versus 2022 Noninterest income for the year ended December 31, 2023 was $76.8 million, a decrease of $1.1 million, or 1.4%, compared to 2022.
These increases were offset by an increase of $12.5 million in the cost of interest-bearing deposits, due to the rising interest rate environment. The net interest margin on a tax-equivalent basis for the year ended December 31, 2022 was 3.38% compared to 3.06% for 2021.
The net interest margin on a tax-equivalent basis for the year ended 32 Table of Contents December 31, 2024 was 2.86% compared to 3.12% for 2023.
Insurance commission and fee income increased $2.7 million, or 16.6%, for the year ended December 31, 2022, primarily due to incremental revenue attributable to the acquisition of the Paul I. Sheaffer insurance agency in the fourth quarter of 2021. Other service fee income increased $2.2 million, or 20.9%, for the year ended December 31, 2022, from the prior year.
Insurance commission and fee income increased $1.3 million, or 6.2%, for the year ended December 31, 2024, primarily due to increases of $1.0 million in premiums for commercial lines and $435 thousand in contingent commission income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn the normal course of its business activities including lending, investing, receiving deposits and borrowing funds, the Corporation is subject to changes in the 49 Table of Contents economic value and/or earnings potential of the assets and liabilities due to changes in interest rates.
Biggest changeIn the normal course of its business activities including lending, investing, receiving deposits and borrowing funds, the Corporation is subject to changes in the economic value and/or earnings potential of the assets and liabilities due to changes in interest rates.

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