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What changed in NORWOOD FINANCIAL CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NORWOOD FINANCIAL CORP's 2024 and 2025 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 2025 report.

+139 added−138 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-14)

Top changes in NORWOOD FINANCIAL CORP's 2025 10-K

139 paragraphs added · 138 removed · 129 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

34 edited+2 added−1 removed91 unchanged
Biggest changeRegulation Set forth below is a brief description of certain laws which relate to the regulation of the Company and the Bank. The description does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations. Regulation of the Company General.
Biggest changeThe description does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations. Regulation of the Company General. The Company, as a bank holding company registered under the Bank Holding Company Act of 1956, as amended (“BHCA”), is subject to regulation and supervision by the Federal Reserve.
In October 2023, the Nasdaq, adopted listing standards requiring listed companies to adopt policies providing for the recovery or “clawback” of excess incentive-based compensation earned by current or former executive officers during the three fiscal years preceding the date the listed company determines an accounting restatement is required.
In October 2023, Nasdaq adopted listing standards requiring listed companies to adopt policies providing for the recovery or “clawback” of excess incentive-based compensation earned by current or former executive officers during the three fiscal years preceding the date the listed company determines an accounting restatement is required.
The final rule also requires bank service providers to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for four or more hours Incentive Compensation .
The final rule also requires bank service providers to notify any affected bank to or on behalf of which the service provider provides services “as soon as possible” after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for four or more hours 7 Incentive Compensation .
At the effective time of the Merger, each outstanding share of the common stock of Delaware was converted, at the election of the holder but subject to the limitations and allocation and proration provisions set forth in the Delaware Agreement, into either $16.68 in cash or 0.6221 of a share of the Company’s 2 common stock, par value $0.10 per share (the “Common Stock”).
At the effective time of the Merger, each outstanding share of the common stock of Delaware was converted, at the election of the holder but subject to the limitations and allocation and proration provisions set forth in the Delaware Agreement, into either $16.68 in cash or 0.6221 of a share of the Company’s common stock, par value $0.10 per share (the “Common Stock”).
As long as their bank subsidiaries are well capitalized, such bank holding companies need only maintain a pro forma debt to equity ratio of less than 1.0 in order to pay dividends and repurchase stock and to be eligible for expedited treatment on applications. 4 Regulation of the Bank General.
As long as their bank subsidiaries are well capitalized, such bank holding companies need only maintain a pro forma debt to equity ratio of less than 1.0 in order to pay dividends and repurchase stock and to be eligible for expedited treatment on applications. Regulation of the Bank General.
Risk weightings range from 0% for cash to 100% for property acquired through foreclosure, commercial loans, and certain other assets to 150% for exposures that are more than 90 days past due or are on nonaccrual status and certain commercial real estate facilities that finance the acquisition, development or construction of real property.
Risk weightings range from 0% for cash to 100% for property acquired through foreclosure, commercial loans, 5 and certain other assets to 150% for exposures that are more than 90 days past due or are on nonaccrual status and certain commercial real estate facilities that finance the acquisition, development or construction of real property.
In the aggregate, the merger consideration paid to Delaware shareholders consisted of approximately $3,860,000 in cash and 431,605 shares of the Common Stock. North Penn Bancorp, Inc. On May 31, 2011, the Company completed the acquisition of North Penn Bancorp, Inc. (“North Penn”) and its wholly owned subsidiary, North Penn Bank.
In the aggregate, the merger consideration paid to Delaware shareholders consisted of approximately $3,860,000 in cash and 431,605 shares of the Common Stock. 2 North Penn Bancorp, Inc. On May 31, 2011, the Company completed the acquisition of North Penn Bancorp, Inc. (“North Penn”) and its wholly owned subsidiary, North Penn Bank.
Further, loans and other extensions of credit generally are required to be secured by eligible collateral in specified amounts. Transactions with non-affiliates may be treated 6 as transactions with an affiliate to the extent that proceeds from the transaction are used to benefit the affiliate.
Further, loans and other extensions of credit generally are required to be secured by eligible collateral in specified amounts. Transactions with non-affiliates may be treated as transactions with an affiliate to the extent that proceeds from the transaction are used to benefit the affiliate.
The federal and state laws and regulations applicable to banks regulate, among other things, the scope of their business, their investments, the reserves required to be kept against deposits, the timing of the availability of deposited funds and the nature and amount of and collateral for certain loans.
The federal and state laws and regulations applicable to banks regulate, among other things, the scope of their business, their investments, the reserves required to be kept against deposits, the timing of the availability of deposited 4 funds and the nature and amount of and collateral for certain loans.
The Bank’s deposits are currently insured to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”) and the Bank is a member of the Federal Home Loan Bank (“FHLB”) of Pittsburgh. The Bank is regulated and examined by the Pennsylvania Department of Banking and Securities (“Department”) and the FDIC.
The Bank’s deposits are insured to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”) and the Bank is a member of the Federal Home Loan Bank (“FHLB”) of Pittsburgh. The Bank is regulated and examined by the Pennsylvania Department of Banking and Securities (“Department”) and the FDIC.
In addition, provisions of the USA PATRIOT Act require the federal bank regulatory agencies to consider the effectiveness of a bank’s anti-money laundering activities when reviewing mergers and acquisitions. 7 Privacy Regulations and Cybersecurity.
In addition, provisions of the USA PATRIOT Act require the federal bank regulatory agencies to consider the effectiveness of a bank’s anti-money laundering activities when reviewing mergers and acquisitions. Privacy Regulations and Cybersecurity.
WCB Realty Corp., a Pennsylvania corporation, is a wholly owned real estate subsidiary of the Bank whose principal asset is the administrative offices of the Company, which also includes the Main Office of the Bank. 3 WTRO Properties Inc.
WCB Realty Corp., a Pennsylvania corporation, is a wholly owned real estate subsidiary of the Bank whose principal asset is the administrative offices of the Company, which also includes the Main Office of the Bank. WTRO Properties Inc.
Accordingly, the additional operating authority provided to the Bank by the Banking Code is significantly restricted by the FDIA. Interstate Banking. Wayne Bank operates branches in Pennsylvania and New York.
Accordingly, the additional operating authority provided to the Bank by the Banking Code is significantly restricted by the FDIA. Interstate Banking. The Bank operates branches in Pennsylvania and New York.
The Bank primarily serves the northeastern Pennsylvania counties of Wayne, Pike, Monroe, Lackawanna and Luzerne and, to a much lesser extent, Susquehanna County in addition to the New York counties of Delaware, Sullivan, Ontario, Otsego and Yates. In addition, the Bank operates automated teller machines at thirty branch facilities plus one machine at an off-site location.
The Bank primarily serves the northeastern Pennsylvania counties of Wayne, Pike, Monroe, Lackawanna and Luzerne and, to a much lesser extent, Susquehanna County in addition to the New York counties of Delaware, Sullivan, Ontario, Otsego and Yates. In addition, the Bank operates automated teller machines at 29 branch facilities plus one machine at an off-site location.
In addition, the Department has the supervisory discretion to require higher leverage ratio for any institutions based on the institution’s substandard performance in any of a number of areas. The Bank was in compliance with both the FDIC and the Pennsylvania capital requirements in effect as of December 31, 2024. Prompt Corrective Regulatory Action .
In addition, the Department has the supervisory discretion to require higher leverage ratio for any institutions based on the institution’s substandard performance in any of a number of areas. The Bank was in compliance with both the FDIC and the Pennsylvania capital requirements in effect as of December 31, 2025. Prompt Corrective Regulatory Action .
At December 31, 2024, the Bank was in compliance with this requirement. Restrictions on Dividends . The Pennsylvania Banking Code states, in part, that dividends may be declared and paid only out of accumulated net earnings and may not be declared or paid unless surplus (retained earnings) is at least equal to contributed capital.
At December 31, 2025, the Bank was in compliance with this requirement. Restrictions on Dividends . The Pennsylvania Banking Code states, in part, that dividends may be declared and paid only out of accumulated net earnings and may not be declared or paid unless surplus (retained earnings) is at least equal to contributed capital.
The increase reflects growth and improved market valuations during 2024, such as stock market performance which can affect the value of a customer’s investment portfolio. Subsidiary Activities The Bank, a Pennsylvania chartered bank, is the only wholly owned subsidiary of the Company. Norwood Investment Corp.
The increase reflects growth and improved market valuations during 2025, such as stock market performance which can affect the value of a customer’s investment portfolio. Subsidiary Activities The Bank, a Pennsylvania chartered bank, is the only wholly owned subsidiary of the Company. Norwood Investment Corp.
At December 31, 2024, the Bank qualified as “well capitalized” under the prompt corrective action rules. Affiliate Transaction Restrictions. Federal laws strictly limit the ability of banks to engage in transactions with their affiliates, including their bank holding companies.
At December 31, 2025, the Bank qualified as “well capitalized” under the prompt corrective action rules. Affiliate Transaction Restrictions. Federal laws strictly limit the ability of banks to engage in transactions with their affiliates, including their bank holding companies.
The Bank is an independent community bank with sixteen offices in Northeastern Pennsylvania and fourteen offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York.
The Bank is an independent community bank with fifteen offices in Northeastern Pennsylvania and fourteen offices in Delaware, Sullivan, Ontario, Otsego and Yates Counties, New York.
Loan competition varies depending upon market conditions and comes from other insured financial institutions such as commercial banks, thrift institutions, credit unions, multi-state regional banks, and mortgage bankers. Personnel As of December 31, 2024, the Bank had 264 full - time and seven part - time employees. None of the Bank’s employees are represented by a collective bargaining group.
Loan competition varies depending upon market conditions and comes from other insured financial institutions such as commercial banks, thrift institutions, credit unions, multi-state regional banks, and mortgage bankers. Personnel As of December 31, 2025, the Bank had 275 full - time and six part - time employees. None of the Bank’s employees are represented by a collective bargaining group.
As of December 31, 2024, the Bank’s loans-to-one-borrower limitation was $35.4 million and the Bank was in compliance with such limitation. Federal Home Loan Bank System. The Bank is a member of the FHLB of Pittsburgh, which is one of 11 regional FHLBs. Each FHLB serves as a reserve or central bank for its members within its assigned region.
As of December 31, 2025, the Bank’s loans-to-one-borrower limitation was $34.3 million and the Bank was in compliance with such limitation. Federal Home Loan Bank System. The Bank is a member of the FHLB of Pittsburgh, which is one of 11 regional FHLBs. Each FHLB serves as a reserve or central bank for its members within its assigned region.
Trust Activities The Bank operates a Wealth Management/Trust Department which provides estate planning, investment management and financial planning to customers for which it is generally compensated based on a percentage of assets under management. As of December 31, 2024, the Bank had $205.1 million of assets under management compared to $192.4 million as of December 31, 2023.
Trust Activities The Bank operates a Wealth Management/Trust Department which provides estate planning, investment management and financial planning to customers for which it is generally compensated based on a percentage of assets under management. As of December 31, 2025, the Bank had $213.9 million of assets under management compared to $205.1 million as of December 31, 2024.
The Bank received a “satisfactory” CRA rating in its most recent CRA performance evaluation by the FDIC in July 2022.
The Bank received a “satisfactory” CRA rating in its most recent CRA performance evaluation by the FDIC in August 2025.
This regulation and oversight is generally intended to ensure that the Company limits its activities to those allowed by law and that it operates in a safe and sound manner without endangering the financial health of its subsidiary bank.
The Company is required to file periodic reports of its operations with, and is subject to examination by, the Federal Reserve. This regulation and oversight is generally intended to ensure that the Company limits its activities to those allowed by law and that it operates in a safe and sound manner without endangering the financial health of its subsidiary bank.
As a member, the Bank is required to purchase and maintain restricted stock in the FHLB of Pittsburgh in an amount equal to the greater of 1% of its aggregate unpaid residential mortgage loans, home purchase contracts or similar obligations at the beginning of each year or 5% of the Bank’s outstanding advances from the FHLB.
It makes loans to members (i.e., advances) in accordance with policies and procedures established by the Board of Directors of the FHLB. 6 As a member, the Bank is required to purchase and maintain restricted stock in the FHLB of Pittsburgh in an amount equal to the greater of 1% of its aggregate unpaid residential mortgage loans, home purchase contracts or similar obligations at the beginning of each year or 5% of the Bank’s outstanding advances from the FHLB.
As of December 31, 2024, the Company had total consolidated assets of $2.317 billion, consolidated deposits of $1.859 billion, and consolidated stockholders’ equity of $213.5 million. The Company’s ratio of average equity to average assets was 8.26%, 8.14%, and 8.87% for fiscal years 2024, 2023 and 2022, respectively.
As of December 31, 2025, the Company had total consolidated assets of $2.425 billion, consolidated deposits of $2.183 billion, and consolidated stockholders’ equity of $242.2 million. The Company’s ratio of average equity to average assets was 9.59%, 8.26%, and 8.14% for fiscal years 2025, 2024 and 2023, respectively.
Based on data compiled by the FDIC as of June 30, 2024 (the latest date for which such data is available), the Bank had the third largest share of FDIC-insured deposits in Wayne County with approximately 21.54%, the second largest share in Pike County with 18.85%, seventh largest share in Monroe County with 3.64%, the eleventh largest share in Lackawanna County with 1.17% and the seventeenth largest share in Luzerne County with 0.33%.
Based on data compiled by the FDIC as of June 30, 2025 (the latest date for which such data is available), the Bank had the third largest share of FDIC-insured deposits in Wayne County with approximately 22.50%, the second largest share in Pike County with 17.76%, sixth largest share in Monroe County with 3.89%, the tenth largest share in Lackawanna County with 1.19% and the sixteenth largest share in Luzerne County with 0.42%.
The Basel III Capital Rules apply to all depository institutions as well as to all top-tier bank and savings and loan holding companies that are not subject to the Federal Reserve Small Bank Holding Company Policy Statement. 5 Under the Basel III Capital Rules, banks are required to meet four minimum capital standards: (1) a “Tier 1” or “core” capital leverage ratio equal to at least 4% of total adjusted assets; (2) a common equity Tier 1 capital ratio equal to 4.5% of risk-weighted assets; (3) a Tier 1 risk-based ratio equal to 6% of risk-weighted assets; and (4) a total capital ratio equal to 8% of total risk-weighted assets.
Under the Basel III Capital Rules, banks are required to meet four minimum capital standards: (1) a “Tier 1” or “core” capital leverage ratio equal to at least 4% of total adjusted assets; (2) a common equity Tier 1 capital ratio equal to 4.5% of risk-weighted assets; (3) a Tier 1 risk-based ratio equal to 6% of risk-weighted assets; and (4) a total capital ratio equal to 8% of total risk-weighted assets.
(“WTRO”), a Pennsylvania corporation, is a wholly owned real estate subsidiary of the Bank established to hold title to certain real estate upon which the Bank has foreclosed. As of December 31, 2024 and 2023, the outstanding balance of foreclosed properties on which WTRO held title totaled $0 and $0, respectively.
(“WTRO”), a Pennsylvania corporation, is a wholly owned real estate subsidiary of the Bank established to hold title to certain real estate upon which the Bank has foreclosed.
LPL is a registered broker/dealer and a member of FINRA and the SIPC. NIC generated gross revenues for the Company of $407,000 and $296,000 in 2024 and 2023, respectively, which is included in Other Income.
Effective February 16, 2018, the broker/dealer relationship transitioned to LPL Financial LLC (“LPL”) as a result of the sale of Invest to LPL in 2017. LPL is a registered broker/dealer and a member of FINRA and the SIPC. NIC generated gross revenues for the Company of $708,000 and $407,000 in 2025 and 2024, respectively, which is included in Other Income.
At June 30, 2024, the Bank had the largest share of FDIC-insured deposits in Delaware County, New York, with 32.0% and the fourth largest share in Sullivan County, New York, with 9.53%. The Bank’s market share in Ontario, Otsego and Yates Counties were 3.82%, 17.36% and 13.21%, respectively.
At June 30, 2025, the Bank had the largest share of FDIC-insured deposits in Delaware County, New York, with 31.39% and the fourth largest share in Sullivan County, New York, with 12.45%. The Bank’s market share in Ontario, Otsego and Yates Counties were 5.87%, 14.87% and 18.52%, respectively.
It is funded primarily from funds deposited by member institutions and proceeds from the sale of consolidated obligations of the FHLB System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the Board of Directors of the FHLB.
It is funded primarily from funds deposited by member institutions and proceeds from the sale of consolidated obligations of the FHLB System.
(“NIC”), a Pennsylvania corporation incorporated in 1996 and a Pennsylvania licensed insurance agency, is a wholly owned subsidiary of the Bank. NIC’s business is annuity and mutual fund sales and discount brokerage activities primarily to customers of the Bank. The annuities, mutual funds and other investment products are not insured by the FDIC or any other government agency.
(“NIC”), a Pennsylvania corporation incorporated in 1996 and a Pennsylvania licensed insurance agency, is a wholly owned subsidiary of the Bank. NIC’s business is brokerage activities including stocks, bonds, mutual funds, exchange traded funds and advisory services, as well as annuity and insurance products, primarily to customers of the Bank.
They are not deposits, obligations of, or guaranteed by any bank. Until February 16, 2018, securities were offered through Invest Financial, a registered broker/dealer. Effective February 16, 2018, the broker/dealer relationship transitioned to LPL Financial LLC (“LPL”) as a result of the sale of Invest to LPL in 2017.
The annuities, mutual funds and other investment products are not insured by the FDIC or any other government agency. They are not deposits, obligations of, or guaranteed by any bank. Until February 16, 2018, securities were offered through Invest Financial, a registered broker/dealer.
Removed
The Company, as a bank holding company registered under the Bank Holding Company Act of 1956, as amended (“BHCA”), is subject to regulation and supervision by the Federal Reserve. The Company is required to file periodic reports of its operations with, and is subject to examination by, the Federal Reserve.
Added
As of December 31, 2025 and 2024, the outstanding balance of foreclosed properties on which WTRO held title totaled $0 and $0, respectively. 3 Regulation Set forth below is a brief description of certain laws which relate to the regulation of the Company and the Bank.
Added
The Basel III Capital Rules apply to all depository institutions as well as to all top-tier bank and savings and loan holding companies that are not subject to the Federal Reserve Small Bank Holding Company Policy Statement.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed7 unchanged
Biggest changeIn the post-incident phase, the Bank analyzes the root cause of the incident, identifies any changes that need to be made to policies, procedures, training, documentation, and technology to protect against similar incidents in the future, and institutes a plan to implement them.
Biggest changeThis phase also involves communication as needed with employees, customers, partners and service providers, legal representatives, insurance provider, law-enforcement authorities, and regulatory bodies as necessary and appropriate. 8 In the post-incident phase, the Bank analyzes the root cause of the incident, identifies any changes that need to be made to policies, procedures, training, documentation, and technology to protect against similar incidents in the future, and institutes a plan to implement them.
The Board of Directors reviews the Report each month and, if warranted, directs senior management of the Company to take necessary and appropriate actions in accordance with the IR Policy (as defined below). 8 Wayne Bank has adopted an Incident Response Policy (the “IR Policy”) for responding to cybersecurity incidents. This IR Policy applies to both potential and actual incidents.
The Board of Directors reviews the Report each month and, if warranted, directs senior management of the Company to take necessary and appropriate actions in accordance with the IR Policy (as defined below). The Bank has adopted an Incident Response Policy (the “IR Policy”) for responding to cybersecurity incidents. This IR Policy applies to both potential and actual incidents.
During the fiscal year ended December 31, 2024, the risks from cybersecurity threats, including as a result of any previous cybersecurity incidents , have not materially affected the Company, its business strategy, results of operations, or financial condition .
During the fiscal year ended December 31, 2025, the risks from cybersecurity threats, including as a result of any previous cybersecurity incidents , have not materially affected the Company, its business strategy, results of operations, or financial condition .
Detection and analysis continue during this phase as necessary to ensure that this phase has been successfully executed. This phase also involves communication as needed with employees, customers, partners and service providers, legal representatives, insurance provider, law-enforcement authorities, and regulatory bodies as necessary and appropriate.
Detection and analysis continue during this phase as necessary to ensure that this phase has been successfully executed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. The Bank operates from its main office located at 717 Main Street, Honesdale, Pennsylvania and twenty-nine additional branch offices in Northeastern Pennsylvania and upstate New York. The Bank’s total investment in office property and equipment is $41.3 million with a net book value of $19.7 million as of December 31, 2024.
Biggest changeItem 2. Properties. The Bank operates from its main office located at 717 Main Street, Honesdale, Pennsylvania and twenty-eight additional branch offices in Northeastern Pennsylvania and upstate New York. The Bank’s total investment in office property and equipment is $45.9 million with a net book value of $23.0 million as of December 31, 2025.
The Bank currently operates automated teller machines at all of its community office facilities, as well as one off-site ATM. The Bank leases nine of its locations.
The Bank currently operates automated teller machines at all of its community office facilities, as well as one off-site ATM. The Bank leases eight of its locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed10 unchanged
Biggest changeOn December 12, 2024, Judge Burroughs denied the defendants’ Rule 12(b)(1) motion in large part. The Court has ordered that a bellwether process be used to test claims and defenses. Because Wayne Bank is not a bellwether defendant, its obligations will be much lessened but will include, among other things, modest discovery.
Biggest changeOn December 12, 2024, the Court denied the defendants’ Rule 12(b)(1) motion in large part. The Court has ordered that a bellwether process be used to test claims and defenses. Because Wayne Bank is not a bellwether defendant, its obligations will be much lessened but will include, among other things, modest discovery.
While we continue to measure the impact of this cyber-incident, including certain remediation expenses 9 and other potential liabilities, we do not currently believe this incident will have a material adverse effect on our business, operations, or financial results.
While we continue to measure the impact of this cyber-incident, including certain remediation expenses and other potential liabilities, we do not currently believe this incident will have a material adverse effect on our business, operations, or financial results.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed4 unchanged
Biggest changeSet forth below is information regarding the Company’s stock repurchases during the fourth quarter of the fiscal year ended December 31, 2024. 10 Issuer Purchases of Equity Securities Total Number of Shares (or Units) Purchased Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs * Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs October 1 – 31, 2024 — $ — — 257,905 November 1 – 30, 2024 — — — 257,905 December 1 – 31, 2024 — — — 257,905 Total — $ — — 257,905
Biggest changeIssuer Purchases of Equity Securities Total Number of Shares (or Units) Purchased Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs * Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs October 1 – 31, 2025 — $ — — 244,234 November 1 – 30, 2025 — — — 244,234 December 1 – 31, 2025 — — — 244,234 Total — $ — — 244,234 Item 6. [Reserved] 10
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . (a) Market Information STOCK LISTING Norwood Financial Corp stock is traded on the Nasdaq Global Market under the symbol NWFL. As of December 31, 2024, there were approximately 1,220 registered stockholders based on the records of our transfer agent.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . (a) Market Information STOCK LISTING Norwood Financial Corp stock is traded on the Nasdaq Global Market under the symbol NWFL. As of December 31, 2025, there were approximately 1,235 registered stockholders based on the records of our transfer agent.
Certain shares of the Company are held in “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
Certain shares of the Company are held in “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. 9 TRANSFER AGENT Computershare provides Transfer Agent services for the Company.
Removed
The following firms are known to make a market in the Company’s stock: Janney Montgomery Scott, LLC ‎ Philadelphia, PA 19103 215-665-6566 RBC Capital Markets Philadelphia, PA 19103 215-832-1500 Stifel Nicolaus St,. Louis, MO 63102 314-342-2000 TRANSFER AGENT Computershare provides Transfer Agent services for the Company.
Added
(c) Issuer Purchases of Equity Securities . On March 30, 2021, the Company authorized a repurchase plan of up to approximately 5% of its issue share capital. Set forth below is information regarding the Company’s stock repurchases during the fourth quarter of the fiscal year ended December 31, 2025.

Item 7. Management's Discussion & Analysis

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

69 edited+7 added−7 removed60 unchanged
Biggest changeThe following table reconciles net interest income to net interest income on a fully taxable-equivalent basis: (dollars in thousands) Years ended December 31, 2024 2023 Net interest income $ 62,191 $ 62,067 Tax-equivalent basis adjustment using a 21% marginal tax rate 819 749 Net interest income on a fully taxable equivalent basis $ 63,010 $ 62,816 24 The following table provides a reconciliation between certain GAAP financial measures (net interest income and other expense) and the related non-GAAP measures to derive the efficiency ratio measure: (dollars in thousands) Years ended December 31, 2024 2023 Net interest income $ 62,191 $ 62,067 Other income (11,151) 8,124 Add back net realized (losses) gains on sales of securities (19,962) 209 Total adjusted revenue $ 71,002 $ 69,982 Other Expenses $ 48,625 $ 43,497 Efficiency ratio 68.48% 62.15% 25 CONSOLIDATED AVERAGE BALANCE SHEETS WITH RESULTANT INTEREST AND RATES (Tax-Equivalent Basis, dollars in thousands) Year Ended December 31 2024 2023 Average Average Average Average Balance Interest Rate Balance Interest Rate (2) (1) (1) (2) (1) (1) ASSETS Interest-earning assets: Interest-bearing deposits with banks $ 51,433 $ 2,768 5.38 % $ 7,537 $ 409 5.43 % Securities available for sale: Taxable 400,050 8,948 2.24 411,633 8,390 2.04 Tax-exempt (1) 68,041 1,868 2.75 70,598 1,940 2.75 Total securities available for sale 468,091 10,816 2.31 482,231 10,330 2.14 Loans receivable (1)(3)(4) 1,646,128 99,815 6.06 1,565,665 85,550 5.46 Total interest-earning assets 2,165,652 113,399 5.24 2,055,433 96,289 4.68 Noninterest earning assets: Cash and due from banks 26,629 26,633 Allowance for credit losses (18,450) (18,122) Other assets 76,340 64,626 Total noninterest earning assets 84,519 73,137 TOTAL ASSETS $ 2,250,171 $ 2,128,570 LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Interest-bearing demand and money market $ 476,106 10,506 2.21 $ 466,329 5,824 1.25 Savings 220,190 711 0.32 248,629 378 0.15 Time 744,895 31,117 4.18 610,726 19,827 3.25 Total interest-bearing deposits 1,441,191 42,334 2.94 1,325,684 26,029 1.96 Short-term borrowings 54,867 1,363 2.48 93,455 3,048 3.26 Other borrowings 146,195 6,692 4.58 94,931 4,396 4.63 Total interest-bearing liabilities 1,642,253 50,389 3.07 1,514,070 33,473 2.21 Noninterest-bearing liabilities: Noninterest-bearing demand deposits 393,616 418,631 Other liabilities 28,350 22,595 Total noninterest-bearing liabilities 421,966 441,226 Stockholders’ equity 185,952 173,274 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,250,171 $ 2,128,570 Net Interest Income/spread (tax equivalent basis) 63,010 2.17 % 62,816 2.47 % Tax-equivalent basis adjustment (819) (749) Net Interest Income $ 62,191 $ 62,067 Net interest margin (tax equivalent basis) 2.91 % 3.06 % (1) Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.
Biggest changeThe following table reconciles net interest income to net interest income on a fully taxable-equivalent basis: (dollars in thousands) Years ended December 31, 2025 2024 Net interest income $ 78,324 $ 62,191 Tax-equivalent basis adjustment using a 21% marginal tax rate 775 819 Net interest income on a fully taxable equivalent basis $ 79,099 $ 63,010 22 The following table provides a reconciliation between certain GAAP financial measures (net interest income and other expense) and the related non-GAAP measures to derive the efficiency ratio measure: (dollars in thousands) Years ended December 31, 2025 2024 Net interest income $ 78,324 $ 62,191 Other income 9,617 (11,151) Add back net realized (losses) gains on sales of securities — (19,962) Total adjusted revenue $ 87,941 $ 71,002 Other Expenses 51,149 48,625 Efficiency ratio 58.16% 68.48% 23 CONSOLIDATED AVERAGE BALANCE SHEETS WITH RESULTANT INTEREST AND RATES (Tax-Equivalent Basis, dollars in thousands) Year Ended December 31 2025 2024 Average Average Average Average Balance Interest Rate Balance Interest Rate (2) (1) (1) (2) (1) (1) ASSETS Interest-earning assets: Interest-bearing deposits with banks $ 24,822 $ 1,064 4.29 % $ 51,433 $ 2,768 5.38 % Securities available for sale: Taxable 402,976 14,563 3.61 400,050 8,948 2.24 Tax-exempt (1) 44,294 1,254 2.83 68,041 1,868 2.75 Total securities available for sale 447,270 15,817 3.54 468,091 10,816 2.31 Loans receivable (1)(3)(4) 1,791,569 110,422 6.16 1,646,128 99,815 6.06 Total interest-earning assets 2,263,661 127,303 5.62 2,165,652 113,399 5.24 Noninterest earning assets: Cash and due from banks 30,376 26,629 Allowance for credit losses (20,523) (18,450) Other assets 96,136 76,340 Total noninterest earning assets 105,989 84,519 TOTAL ASSETS $ 2,369,650 $ 2,250,171 LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Interest-bearing demand and money market $ 585,289 11,912 2.04 $ 476,106 10,506 2.21 Savings 203,765 480 0.24 220,190 711 0.32 Time 821,710 31,289 3.81 744,895 31,117 4.18 Total interest-bearing deposits 1,610,764 43,681 2.71 1,441,191 42,334 2.94 Short-term borrowings 18,173 798 4.39 54,867 1,363 2.48 Other borrowings 84,543 3,725 4.41 146,195 6,692 4.58 Total interest-bearing liabilities 1,713,480 48,204 2.81 1,642,253 50,389 3.07 Noninterest-bearing liabilities: Noninterest-bearing demand deposits 399,948 393,616 Other liabilities 29,062 28,350 Total noninterest-bearing liabilities 429,010 421,966 Stockholders’ equity 227,160 185,952 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,369,650 $ 2,250,171 Net Interest Income/spread (tax equivalent basis) 79,099 2.81 % 63,010 2.17 % Tax-equivalent basis adjustment (775) (819) Net Interest Income $ 78,324 $ 62,191 Net interest margin (tax equivalent basis) 3.49 % 2.91 % (1) Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.
Other services the Bank offers its customers include IntraFi CDARS and ICS, cash management, direct deposit, Remote Deposit Capture, mobile deposit capture, Zelle and Automated Clearing House (ACH) activity. The Bank operates thirty automated teller machines and is affiliated with the MoneyPass® ATM network. Internet banking including bill-pay is offered through the website at www.wayne.bank.
Other services the Bank offers its customers include IntraFi CDARS and ICS, cash management, direct deposit, Remote Deposit Capture, mobile deposit capture, Zelle and Automated Clearing House (ACH) activity. The Bank operates thirty automated teller machines and is affiliated with the MoneyPass® ATM network. Internet banking including bill-pay is offered through the website at wayne.bank.
The remaining deficiency is usually turned over to a collection agency. There are additional risks associated with indirect lending since we must rely on the dealer to provide accurate information to us and accurate disclosures to the borrowers. These loans are principally done on a non-recourse basis.
The remaining deficiency is usually turned over to a collection agency. 13 There are additional risks associated with indirect lending since we must rely on the dealer to provide accurate information to us and accurate disclosures to the borrowers. These loans are principally done on a non-recourse basis.
Commercial lending activities include lines of credit, revolving credit, term loans, mortgages, various forms of secured lending and a limited amount of letter of credit facilities. The rate structure may be fixed, immediately repricing tied to the prime rate or adjustable at set intervals.
Commercial lending activities include lines of credit, revolving credit, term loans, mortgages, various forms of secured 12 lending and a limited amount of letter of credit facilities. The rate structure may be fixed, immediately repricing tied to the prime rate or adjustable at set intervals.
Revenue obligations are backed solely by revenues generated by the project financed and repayment may be affected by the success of the project. 14 Due to the type and nature of the collateral, consumer lending generally involves more credit risk when compared with residential real estate lending.
Revenue obligations are backed solely by revenues generated by the project financed and repayment may be affected by the success of the project. Due to the type and nature of the collateral, consumer lending generally involves more credit risk when compared with residential real estate lending.
The Company 20 also completed an underwritten public offering and sale of 1,150,000 shares of its common stock at $26.00 per share, resulting in net proceeds to the Company of approximately $28 million in December 2024 in connection with these repositioning activities. DEPOSITS The Bank provides a full range of deposit products to its retail, business and municipal customers.
The Company also completed an underwritten public offering and sale of 1,150,000 shares of its common stock at $26.00 per share, resulting in net proceeds to the Company of approximately $28 million in December 2024 in connection with these repositioning activities. 18 DEPOSITS The Bank provides a full range of deposit products to its retail, business and municipal customers.
The Company did not recognize any credit losses on the available-for-sale debt securities for the twelve months ended December 31, 2024 and 2023. In December 2024, the Company repositioned its available-for-sale debt securities portfolio. The repositioning was accomplished by the sale of debt securities with an amortized cost basis of approximately $175 million and an average yield of 1.98%.
The Company did not recognize any credit losses on the available-for-sale debt securities for the twelve months ended December 31, 2025 and 2024. In December 2024, the Company repositioned its available-for-sale debt securities portfolio. The repositioning was accomplished by the sale of debt securities with an amortized cost basis of approximately $175 million and an average yield of 1.98%.
The following table sets forth certain information regarding securities not carried at fair value through earnings, weighted average yields, and maturities of the Company’s securities portfolio as of December 31, 2024. Yields on tax-exempt securities are stated on a fully taxable equivalent basis using a Federal tax rate of 21%.
The following table sets forth certain information regarding securities not carried at fair value through earnings, weighted average yields, and maturities of the Company’s securities portfolio as of December 31, 2025. Yields on tax-exempt securities are stated on a fully taxable equivalent basis using a Federal tax rate of 21%.
Securities classified as HTM are those in which the Company has the ability and the intent to hold the security until contractual maturity. As of December 31, 2024, there were no securities carried in the HTM portfolio. Securities classified as AFS are eligible to be sold due to liquidity needs or interest rate risk management.
Securities classified as HTM are those in which the Company has the ability and the intent to hold the security until contractual maturity. As of December 31, 2025, there were no securities carried in the HTM portfolio. Securities classified as AFS are eligible to be sold due to liquidity needs or interest rate risk management.
These include interest-bearing and noninterest bearing transaction accounts, statement savings and money market accounts. Certificate of deposit terms range up to five years for retail instruments. As of December 31, 2024, the Bank did not have any brokered deposits obtained through internet listing services.
These include interest-bearing and noninterest bearing transaction accounts, statement savings and money market accounts. Certificate of deposit terms range up to five years for retail instruments. As of December 31, 2025, the Bank did not have any brokered deposits obtained through internet listing services.
The portfolio contained no private label mortgage-backed securities, collateralized debt obligations (CDOs), or trust preferred securities, and no off-balance sheet derivatives were in use. As of December 31, 2024, the portfolio did not contain any step-up bonds.
The portfolio contained no private label mortgage-backed securities, collateralized debt obligations (CDOs), or trust preferred securities, and no off-balance sheet derivatives were in use. As of December 31, 2025, the portfolio did not contain any step-up bonds.
(4) Loan yields include the effect of amortization of purchased credit marks and deferred fees net of costs. ‎ 26 RATE/VOLUME ANALYSIS The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense.
(4) Loan yields include the effect of amortization of purchased credit marks and deferred fees net of costs. ‎ 24 RATE/VOLUME ANALYSIS The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense.
Introduction This Management’s Discussion and Analysis and related financial data are presented to assist in the understanding and evaluation of the financial condition and results of operations for the Company and the Bank, as of December 31, 2024 and 2023, and for the years ended December 31, 2024 and 2023.
Introduction This Management’s Discussion and Analysis and related financial data are presented to assist in the understanding and evaluation of the financial condition and results of operations for the Company and the Bank, as of December 31, 2025 and 2024, and for the years ended December 31, 2025 and 2024.
The borrower must provide proof of fire, flood (if applicable) and casualty insurance on the property serving as collateral and title insurance, and these applicable insurances must be maintained during the full term of the loan. 15 The following table sets forth maturities and interest rate sensitivity for selected categories of loans as of December 31, 2024.
The borrower must provide proof of fire, flood (if applicable) and casualty insurance on the property serving as collateral and title insurance, and these applicable insurances must be maintained during the full term of the loan. The following table sets forth maturities and interest rate sensitivity for selected categories of loans as of December 31, 2025.
At December 31, 2024, the Company had no concentrations of loans in any one industry exceeding 10% of its total loan portfolio.
At December 31, 2025, the Company had no concentrations of loans in any one industry exceeding 10% of its total loan portfolio.
As of December 31, 2024, broker deposits that were secured through Cede & Co totaled $20.0 million. The Bank participates in the Jumbo CD ($250,000 and over) markets with local municipalities and school districts which are typically priced on a competitive bid basis.
As of December 31, 2025, broker deposits that were secured through Cede & Co totaled $33.2 million. The Bank participates in the Jumbo CD ($250,000 and over) markets with local municipalities and school districts which are typically priced on a competitive bid basis.
The effective tax rate in 2024 was 38.0% compared to 20.7% in 2023.
The effective tax rate in 2025 was 20.7% compared to 38.0% in 2024.
At December 31, 2024, there were $293.0 million of indirect loans in the consumer loan portfolio. 13 Commercial loans and commercial mortgages are provided to local small and mid-sized businesses at a variety of terms and rate structures.
At December 31, 2025, there were $328.0 million of indirect loans in the consumer loan portfolio. Commercial loans and commercial mortgages are provided to local small and mid-sized businesses at a variety of terms and rate structures.
Net charge-offs for 2024 totaled $1,671,000 and represented 0.10% of average loans compared to $6,078,000 and 0.39% of average loans in 2023. Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for credit losses.
Net charge-offs for 2025 totaled $1,890,000 and represented 0.11% of average loans compared to $1,671,000 and 0.10% of average loans in 2024. Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for credit losses.
Net realized losses on sales of securities increased $19,753,000 to $19,962,000 during the year ended December 31, 2024, primarily as a result of the repositioning of the securities portfolio in December 2024, while gains on the sale of foreclosed real estate owned and gains on sale of loans increased $84,000 in aggregate.
Net realized losses on sales of securities decreased $19,962,000 during the year ended December 31, 2025, primarily as a result of the repositioning of the securities portfolio in December 2024, while gains on the sale of foreclosed real estate owned and gains on sale of loans increased $99,000 in aggregate.
The provision for credit losses decreased to $2,673,000 for the twelve months ended December 31, 2024, compared to $5,548,000 for the twelve months ended December 31, 2023. The following table sets forth the allocation of the Bank’s allowance for credit losses by loan category and the percent of loans in each category to total loans at the date indicated.
The provision for credit losses decreased to $1,773,000 for the twelve months ended December 31, 2025, compared to $2,673,000 for the twelve months ended December 31, 2024. 16 The following table sets forth the allocation of the Bank’s allowance for credit losses by loan category and the percent of loans in each category to total loans at the date indicated.
As of December 31, 2024, $397.8 million of securities were so classified and carried at their fair value, with unrealized losses, net of tax, of $33.5 million included in accumulated other comprehensive income (loss) as a component of stockholders’ equity. The Company considers its investment portfolio a source of earnings and liquidity.
As of December 31, 2025, $408.8 million of securities were so classified and carried at their fair value, with unrealized losses, net of tax, of $21.9 million included in accumulated other comprehensive income (loss) as a component of stockholders’ equity. The Company considers its investment portfolio a source of earnings and liquidity.
As of December 31, 2024, the Company held 215 investment securities in a loss position, which had a combined unrealized loss of $42.6 million. Management believes that these losses are principally due to changes in interest rates and concluded that the decline in the value of these securities was not indicative of a credit loss.
As of December 31, 2025, the Company held 189 investment securities in a loss position, which had a combined unrealized loss of $30.7 million. Management believes that these losses are principally due to changes in interest rates and concluded that the decline in the value of these securities was not indicative of a credit loss.
As of December 31, 2024, the total of U.S. time deposits in excess of the Federal Deposit Insurance Corporation insurance limits were $272,968,000. Time deposits over $250,000, which consist principally of school district funds, other public funds and short-term deposits from large commercial customers with maturities are generally less than one year.
As of December 31, 2025, the total of U.S. time deposits in excess of the FDIC insurance limits were $289,851,000. Time deposits over $250,000, which consist principally of school district funds, other public funds and short-term deposits from large commercial customers, with maturities are generally less than one year.
Interest expense was $50,389,000 for the year ended December 31, 2024, which resulted in an average cost of interest-bearing liabilities of 3.07% compared to total interest expense of $33,473,000 during the year ended December 31, 2023, with an average cost of 2.21%.
Interest expense was $48,204,000 for the year ended December 31, 2025, which resulted in an average cost of interest-bearing liabilities of 2.81% compared to total interest expense of $50,389,000 during the year ended December 31, 2024, with an average cost of 3.07%.
Cash management accounts in the form of securities sold under agreements to repurchase included in short-term borrowings, totaled $36.3 million at December 31, 2024 compared to $54.1 million as of December 31, 2023. These balances represent commercial and municipal customers’ funds invested in overnight securities. The Company considers these accounts as a source of core funding.
Cash management accounts in the form of securities sold under agreements to repurchase included in short-term borrowings, totaled $0 at December 31, 2025 compared to $36.3 million as of December 31, 2024. These balances represent commercial and municipal customers’ funds invested in overnight securities.
As of December 31, 2024 the Company had a leverage capital ratio of 9.36%, a Tier 1 risk-based capital ratio and a common equity Tier 1 risk-based capital ratio of 12.35%, and a total risk-based capital ratio of 13.45%, compared to 9.00%, 11.99% and 13.06%, respectively, at December 31, 2023.
As of December 31, 2025 the Company had a leverage capital ratio of 9.65%, a Tier 1 risk-based capital ratio and a common equity Tier 1 risk-based capital ratio of 12.37%, and a total risk-based capital ratio of 13.41%, compared to 9.36%, 12.35% and 13.45%, respectively, at December 31, 2024.
As of December 31, 2024, the Company had $19,070,000 million of junior lien home equity loans. For the year ended December 31, 2024, there were $0 of charge-offs in this portfolio, with recoveries of $41,000 in 2024.
As of December 31, 2025, the Company had $21,122,000 of junior lien home equity loans. For the year ended December 31, 2025, there were $0 of charge-offs in this portfolio, with recoveries of $0.
For the year ended December 31, 2024, the Company recognized charge offs of $0 on commercial rentals and $0 on residential rentals.
For the year ended December 31, 2025, the Company recognized charge offs of $0 on commercial rentals and $0 on hotels/motels.
PROVISION FOR CREDIT LOSSES The provision for credit losses was $2,673,000 in 2024 compared to $5,548,000 in 2023. Net charge-offs for the year ended December 31, 2024 decreased to $1,671,000 from net charge-offs of $6,078,000 for the year ended December 31, 2023.
PROVISION FOR CREDIT LOSSES The provision for credit losses was $1,773,000 in 2025 compared to $2,673,000 in 2024. Net charge-offs for the year ended December 31, 2025 decreased to $1,890,000 from net charge-offs of $1,671,000 for the year ended December 31, 2024.
Goodwill is tested annually and deemed impaired when the carrying value of goodwill exceeds its implied fair value. 12 OVERVIEW The following table provides an overview of selected financial data: For the years ended December 31, 2024 2023 2022 Net interest income $62,191 $62,067 $68,397 Provision for credit losses 2,673 5,548 900 Other income before (losses) gains on sales of loans and investments 8,616 8,270 9,926 Net realized (losses) gains on sales of loans and securities (19,767) (146) 6 Other expenses 48,625 43,497 41,044 (Loss) Income before income taxes (258) 21,146 36,385 Income tax (benefit) expense (98) 4,387 7,152 NET (LOSS) INCOME (160) 16,759 29,233 Net (loss) income per share-Basic ($0.02) $2.08 $3.59 -Diluted ($0.02) $2.07 $3.58 Cash dividends paid 9,719 9,417 9,159 Dividend pay-out ratio -6074.38% 56.19% 31.33% Return on average assets -0.01% 0.79% 1.43% Return on average equity -0.09% 9.67% 16.11% BALANCES AT YEAR-END Total assets 2,317,462 2,201,079 2,047,070 Loans receivable 1,713,638 1,603,618 1,473,945 Allowance for credit losses 19,843 18,968 16,999 Total deposits 1,859,163 1,795,159 1,727,727 Stockholders’ equity 213,508 181,070 167,085 Trust assets under management 205,097 192,374 184,855 Book value per share $23.02 $22.33 $20.86 Tier 1 Capital to risk-adjusted assets 12.35% 11.99% 12.49% Total Capital to risk-adjusted assets 13.45% 13.06% 13.58% Allowance for credit losses to total loans 1.16% 1.18% 1.15% Non-performing assets to total assets 0.34% 0.35% 0.07% FINANCIAL CONDITION Total Assets Total assets as of December 31, 2024 were $2.317 billion compared to $2.201 billion as of year-end 2023, an increase of $116.4 million.
Goodwill is tested annually and deemed impaired when the carrying value of goodwill exceeds its implied fair value. 11 OVERVIEW The following table provides an overview of selected financial data: For the years ended December 31, (Dollars in thousands, except per share data) 2025 2024 2023 Net interest income $78,324 $62,191 $62,067 Provision for credit losses 1,773 2,673 5,548 Other income before (losses) gains on sales of loans and investments 9,291 8,616 8,270 Net realized gains (losses) on sales of loans and securities 326 (19,767) (146) Other expenses 51,149 48,625 43,497 Income (loss) before income taxes 35,019 (258) 21,146 Income tax expense (benefit) 7,264 (98) 4,387 NET INCOME (LOSS) 27,755 (160) 16,759 Net income (loss) per share-Basic $3.01 ($0.02) $2.08 -Diluted $3.01 ($0.02) $2.07 Cash dividends paid 11,489 9,719 9,417 Dividend pay-out ratio 41.39% -6074.38% 56.19% Return on average assets 1.17% -0.01% 0.79% Return on average equity 12.22% -0.09% 9.67% BALANCES AT YEAR-END Total assets 2,424,842 2,317,462 2,201,079 Loans receivable 1,853,422 1,713,638 1,603,618 Allowance for credit losses 19,882 19,843 18,968 Total deposits 2,078,645 1,859,163 1,795,159 Stockholders’ equity 242,157 213,508 181,070 Trust assets under management 213,912 205,097 192,374 Book value per share $26.06 $23.02 $22.33 Tier 1 Capital to risk-adjusted assets 12.37% 12.35% 11.99% Total Capital to risk-adjusted assets 13.41% 13.45% 13.06% Allowance for credit losses to total loans 1.07% 1.16% 1.18% Non-performing assets to total assets 0.29% 0.34% 0.35% FINANCIAL CONDITION Total Assets Total assets as of December 31, 2025 were $2.425 billion compared to $2.317 billion as of year-end 2024, an increase of $107.4 million.
The fte yield on average earning assets was 5.24%, increasing 56 basis points from the 4.68% reported last year. The tax-equivalent yield on total loans was 6.06% in 2024, increasing from 5.46% in 2023, while average loans outstanding increased $80.5 million, resulting in an increase in interest income (fte) from loans of $14.3 million.
The fte yield on average earning assets was 5.62%, increasing 38 basis points from the 5.24% reported last year. The tax-equivalent yield on total loans was 6.16% in 2025, increasing from 6.06% in 2024, while average loans outstanding increased $145.4 million, resulting in an increase in interest income (fte) from loans of $10.6 million.
Other Income (dollars in thousands) For the year ended December 31 The following table shows total other income: 2024 2023 Service charges and fees $ 5,959 $ 5,613 Income from fiduciary activities 943 898 Net realized (losses) gains on sales of securities (19,962) (209) Net gain on sale of loans 195 63 Net gain on sale of foreclosed real estate owned 32 80 Earnings and proceeds on life insurance policies 1,056 1,012 Other 626 667 Total $ (11,151) $ 8,124 OTHER EXPENSES Other expenses totaled $48,625,000 for the year ended December 31, 2024, compared to $43,497,000 in the 2023 fiscal year.
Other Income (dollars in thousands) For the year ended December 31 The following table shows total other income: 2025 2024 Service charges and fees $ 6,421 $ 5,959 Income from fiduciary activities 1,033 943 Net realized (losses) gains on sales of securities — (19,962) Net gain on sale of loans 326 195 Net gain on sale of foreclosed real estate owned — 32 Earnings and proceeds on life insurance policies 1,088 1,056 Other 749 626 Total $ 9,617 $ (11,151) OTHER EXPENSES Other expenses totaled $51,149,000 for the year ended December 31, 2025, compared to $48,625,000 in the 2024 fiscal year.
The Bank has limited its exposure to land loans but may expand its lending on raw land, as market conditions allow, to qualified borrowers experienced in the development and sale of raw land.
The substantial majority of land loans have a loan-to-value ratio not exceeding 75%. The Bank has limited its exposure to land loans but may expand its lending on raw land, as market conditions allow, to qualified borrowers experienced in the development and sale of raw land.
Investment securities may also be pledged to secure public deposits and customer repurchase agreements. As of December 31, 2024, the average life of the portfolio was 7.1 years. Purchases for the year totaled $208.1 million, while maturities and principal reductions totaled $58.7 million and proceeds from sales were $155.4 million.
Investment securities may also be pledged to secure public deposits and customer repurchase agreements. As of December 31, 2025, the average life of the portfolio was 6.0 years. Purchases for the year totaled $63.3 million, while maturities and principal reductions totaled $67.8 million and proceeds from sales were $0 million.
As of December 31, 2024 2023 Allowance % of % of Allowance % of % of for Credit ACL Loans for Credit ACL Loans Losses on to Total to Total Losses on to Total to Total Loans ACL Loans Loans ACL Loans (dollars in thousands) Real estate – residential $ 1,146 5.8 % 19.3 % $ 1,351 7.1 % 19.7 Real estate – commercial 11,406 57.5 41.8 11,871 62.6 42.1 Real estate – agricultural 48 0.2 3.7 58 0.3 4.0 Real estate – construction 884 4.5 3.1 933 4.9 3.2 Commercial 1,732 8.7 12.4 1,207 6.4 12.5 Other agricultural loans 162 0.8 1.7 94 0.5 2.0 Consumer 4,465 22.5 18.0 3,454 18.2 16.5 Total $ 19,843 100 % 100 % $ 18,968 100 % 100 Non-Performing Assets Non-performing assets consist of non-performing loans and real estate owned as a result of foreclosure, which is held for sale.
As of December 31, 2025 2024 Allowance % of % of Allowance % of % of for Credit ACL Loans for Credit ACL Loans Losses on to Total to Total Losses on to Total to Total Loans ACL Loans Loans ACL Loans (dollars in thousands) Real estate – residential $ 2,271 11.5 % 19.0 % $ 1,146 5.8 % 19.3 Real estate – commercial 7,534 37.9 40.5 11,406 57.5 41.8 Real estate – agricultural 395 2.0 3.2 48 0.2 3.7 Real estate – construction 1,471 7.4 4.6 884 4.5 3.1 Commercial 3,011 15.1 12.4 1,732 8.7 12.4 Other agricultural loans 282 1.4 1.4 162 0.8 1.7 Consumer 4,918 24.7 18.9 4,465 22.5 18.0 Total $ 19,882 100 % 100 % $ 19,843 100 % 100 Non-Performing Assets Non-performing assets consist of non-performing loans and real estate owned as a result of foreclosure, which is held for sale.
The resulting fte net interest spread and net interest margin were 2.17% and 2.91%, respectively, in 2024 compared to 2.47% and 3.06%, respectively, in 2023. Interest income (fte) for the year ended December 31, 2024 totaled $113,399,000 compared to $96,289,000 in 2023.
The resulting fte net interest spread and net interest margin were 2.81% and 3.49%, respectively, in 2025 compared to 2.17% and 2.91%, respectively, in 2024. 20 Interest income (fte) for the year ended December 31, 2025 totaled $127,303,000 compared to $113,399,000 in 2024.
The increase in cost was due primarily to time certificates of deposit that repriced to current market rates upon maturity, resulting in an increase in the interest rate paid from 3.25% in 2023 to 4.18% in 2024, along with an increase in the interest-bearing demand and money market from 1.25% in 2023 to 2.21% in 2024.
The decrease in cost was due primarily to time certificates of deposit that repriced to current market rates upon maturity, resulting in a decrease in the interest rate paid from 4.18% in 2024 to 3.81% in 2025, along with a decrease in the interest-bearing demand and money market from 2.21% in 2024 to 2.04% in 2025, and a decrease in savings from 0.32% in 2024 to 0.24% in 2025.
During the year ended December 31, 2024, average interest-bearing deposits increased $115.5 million, which contributed to an increase in interest expense of $16.3 million. The cost of borrowed funds increased $611,000 in 2024, compared to the prior year due to an increase in borrowings.
During the year ended December 31, 2025, average interest-bearing deposits increased $169.6 million, which contributed to an increase in interest expense of $1.3 million. The cost of borrowed funds decreased $3.5 million in 2025, compared to the prior year due to a decrease in borrowings.
RESULTS OF OPERATIONS Summary Net loss for the Company for the year ended December 31, 2024 was $160,000, compared to the net income of $16,759,000 earned in the year ended December 31, 2023. Losses per share on a fully diluted basis were $0.02 for 2024 compared to earnings per share on fully diluted basis of $2.07 in 2023.
Summary Net income for the Company for the year ended December 31, 2025 was $27,755,000, compared to the net loss of $160,000 in the year ended December 31, 2024. Earnings per share on a fully diluted basis were $3.01 for 2025 compared to losses per share on fully diluted basis of $0.02 in 2024.
As of December 31, 2024, the Company had $53.0 million of construction loans, which represented 3.1% of total loans outstanding and 24.4% of regulatory capital requirements. 16 As of December 31, 2024 and 2023, the Company considered its concentration of credit risk to be acceptable.
As of December 31, 2025, the Company had $85.4 million of construction loans, which represented 4.6% of total loans outstanding and 36.5% of regulatory capital requirements. As of December 31, 2025 and 2024, the Company considered its concentration of credit risk to be acceptable.
The following table sets forth information regarding non-performing loans and real estate as of December 31, 2024 and 2023: As of December 31, 2024 2023 (dollars in thousands) Non-accrual loans: Real Estate loans Residential $ 940 $ 432 Commercial 5,743 2,211 Agricultural — — Construction — — Commercial 127 4,264 Other agricultural loans — — Consumer loans 910 715 Total non-accrual loans* 7,720 7,622 Accruing loans which are contractually past-due 90 days or more 154 — Total non-performing loans 7,874 7,622 Foreclosed real estate — 97 Total non-performing assets $ 7,874 $ 7,719 19 Securities The securities portfolio consists of U.S.
The following table sets forth information regarding non-performing loans and real estate as of December 31, 2025 and 2024: As of December 31, 2025 2024 (dollars in thousands) Non-accrual loans: Real Estate loans Residential $ 919 $ 940 Commercial 4,064 5,743 Agricultural — — Construction 34 — Commercial 68 127 Other agricultural loans — — Consumer loans 1,131 910 Total non-accrual loans* 6,216 7,720 Accruing loans which are contractually past-due 90 days or more 123 154 Total non-performing loans 6,339 7,874 Foreclosed real estate 771 — Total non-performing assets $ 7,110 $ 7,874 17 Securities The securities portfolio consists of U.S.
The repositioning of the Company’s Available-for-Sale securities portfolio during the year ended December 31, 2024, impacted the fair value of the portfolio, and contributed to $14.2 million increase in accumulated other comprehensive income.
Fluctuations in interest rates during the year ended December 31, 2025, impacted the fair value of the Company’s Available-for-Sale securities, and contributed to $11.8 million increase in accumulated other comprehensive income.
During the year ended December 31, 2024, all other operating expenses increased $2,000,000, net. The Company’s efficiency ratio, which measures total other expenses as a percentage of net interest income (fte) plus other income excluding losses on securities sales was 68.5% in 2024 compared to 62.1% in 2023.
The Company’s efficiency ratio, which measures total other expenses as a percentage of net interest income (fte) plus other income excluding losses on securities sales was 58.2% in 2025 compared to 68.5% in 2024.
All loans for the construction of speculative sale homes have a loan-to-value ratio of not more than 80%. For both commercial and single-family projects, loan proceeds are disbursed during the construction phase according to a draw schedule based on the stage of completion. Construction projects are inspected by contracted inspectors or bank personnel.
For both commercial and single-family projects, loan proceeds are disbursed during the construction phase according to a draw schedule based on the stage of completion. Construction projects are inspected by contracted inspectors or bank personnel. Construction loans are underwritten on the basis of the estimated value of the property as completed.
Management strives to operate within the thresholds set forth above. As of December 31, 2024, the Company had $716.9 million of commercial real estate loans, which represented 41.8% of total loans outstanding. Non-owner occupied commercial real estate loans totaled $189.8 million, or 11.1% of total loans outstanding and 87.2% of regulatory capital requirements.
Management strives to operate within the thresholds set forth above. As of December 31, 2025, the Company had $750.2 million of commercial real estate loans, which represented 40.5% of total loans outstanding. Non-owner occupied commercial real estate loans totaled $186.3 million, or 10.1% of total loans outstanding and 79.6% of regulatory capital requirements.
As of December 31, 2024, the highest concentrations are in commercial rentals and the residential rentals category, with loans outstanding of $156.2 million, or 9.1% of loans outstanding, to commercial rentals, and $114.7 million, or 6.7% of loans outstanding, to residential rentals.
As of December 31, 2025, the highest concentrations are in commercial rentals and the hotels/motels category, with loans outstanding of $178.7 million, or 9.7% of loans outstanding, to commercial rentals, and $125.1 million, or 6.8% of loans outstanding, to hotels/motels.
The return on average assets for the year ended December 31, 2024, was (0.01)%, and the return on average equity was (0.09)%, compared to 0.79% and 9.67%, respectively, for the year ended December 31, 2023. Net interest income increased $124,000 for the year ended December 31, 2024.
The return on average assets for the year ended December 31, 2025, was 1.17%, and the return on average equity was 12.22%, compared to (0.01)% and (0.09)%, respectively, for the year ended December 31, 2024. Net interest income increased $16,133,000 for the year ended December 31, 2025.
Earnings and proceeds on life insurance policies increased $44,000 in 2024 compared to 2023, while all other items of other income increased $350,000, net, in 2024. During the year ended December 31 ,2024, other expenses were $48,625,000, compared to $43,497,000 for the same period in 2023, an increase of $5,128,000.
Earnings and proceeds on life insurance policies increased $32,000 in 2025 compared to 2024, while all other items of other income increased $675,000, net, in 2025. During the year ended December 31, 2025, other expenses were $51,149,000, compared to $48,625,000 for the year ended December 31, 2024, an increase of $2,524,000.
Total interest-bearing deposits cost was 2.94% for the year ended December 31, 2024, which was an increase of 98 basis points over the 2023 fiscal year ended.
Total interest-bearing deposits cost was 2.71% for the year ended December 31, 2025, which was a decrease of 23 basis points over the 2024 fiscal year ended.
Net realized losses on sales of securities increased $19,753,000 to $19,962,000 during the year ended December 31, 2024, primarily as a result of the repositioning of the securities portfolio in December 2024.
Net realized losses on sales of securities decreased $19,962,000 to $0 during the year ended December 31, 2025, primarily as a result of the repositioning of the securities portfolio in December 2024. Service charges and fees increased $462,000 and gains on sale of loans increased $131,000.
For the year ended December 31, 2024, fully taxable equivalent (“fte”) net interest income totaled $63,010,000, an increase of $194,000 from the year ended December 31, 2023 total. Average loans outstanding increased $80.5 million in 2024, which contributed to an increase in interest income (fte) of $14.3 million.
For the year ended December 31, 2025, fully taxable equivalent (“fte”) net interest income totaled $79,099,000, an increase of $16,089,000 from the year ended December 31, 2024 total. Average loans outstanding increased $145.4 million in 2025, which contributed to an increase in interest income (fte) of $10.6 million.
During the year ended December 31, 2024, the resulting net interest spread (fte) decreased to 2.17% compared to 2.47% at December 31, 2023, as a 0.56% increase in the yield earned was offset by a 0.86% increase in the cost of funds.
During the year ended December 31, 2025, the resulting net interest spread (fte) decreased to 2.81% compared to 2.17% at December 31, 2024, due to a 0.38% increase in the yield earned, and a 0.26% decrease in the cost of funds.
The Company recognized charge offs of $6,000 on commercial rentals and $44,000 on residential rentals in 2023. 17 The following table sets forth information with respect to the Bank’s allowance for credit losses as of December 31, 2024 and 2023: As of December 31, 2024 2023 (dollars in thousands) Total loans receivable, net of deferred fees $ 1,713,638 $ 1,603,618 Allowance balance at beginning of period $ 18,968 $ 16,999 Net (charge-offs) recoveries: Real Estate-Residential 41 (28) Real Estate-Commercial 110 (139) Real Estate-Agricultural — — Real Estate-Construction — — Commercial loans (100) (4,932) Other agricultural loans — — Consumer (1,722) (979) Total (1,671) (6,078) Impact of Adopting ASC 326 — 2,466 Provision Expense 2,546 5,581 Allowance balance at end of period $ 19,843 $ 18,968 Average loans receivable: Real Estate-Residential $ 319,984 $ 306,404 Real Estate-Commercial 691,673 692,681 Real Estate-Agricultural 62,802 67,367 Real Estate-Construction 49,542 38,017 Commercial loans 204,876 197,598 Other agricultural loans 30,988 33,859 Consumer 286,263 229,739 Total average loans outstanding $ 1,646,128 $ 1,565,665 Net (charge-offs) recoveries as a percent of average loans outstanding Real Estate-Residential 0.01 % (0.01) % Real Estate-Commercial 0.02 (0.02) Real Estate-Agricultural - - Real Estate-Construction - - Commercial loans (0.05) (2.50) Other agricultural loans - - Consumer (0.60) (0.43) Total net charge-offs (0.10) % (0.39) % Credit Quality Ratios: As a percent of year-end loans, net of unearned income: Allowance for credit losses 1.16% 1.18% Nonaccrual loans 0.45% 0.48% Nonperforming loans 0.46% 0.48% Allowance for credit losses to nonaccrual loans 257.03% 248.86% Allowance for credit losses to nonperforming loans 252.01% 248.86% 18 During the twelve month period ended December 31, 2024, the Bank recognized charge-offs in the amount of $1,671,000 compared to the $6,078,000 of net charge-offs reported for the twelve months ended December 31, 2023.
The Company recognized charge offs of $0 on commercial rentals and $0 on residential rentals in 2024, the highest concentrations in 2024. 15 The following table sets forth information with respect to the Bank’s allowance for credit losses as of December 31, 2025 and 2024: As of December 31, 2025 2024 (dollars in thousands) Total loans receivable, net of deferred fees $ 1,853,422 $ 1,713,638 Allowance balance at beginning of period $ 19,843 $ 18,968 Net (charge-offs) recoveries: Real Estate-Residential (60) 41 Real Estate-Commercial (51) 110 Real Estate-Agricultural — — Real Estate-Construction — — Commercial loans (43) (100) Other agricultural loans (48) — Consumer (1,688) (1,722) Total (1,890) (1,671) Provision Expense 1,929 2,546 Allowance balance at end of period $ 19,882 $ 19,843 Average loans receivable: Real Estate-Residential $ 337,223 $ 319,984 Real Estate-Commercial 736,961 691,673 Real Estate-Agricultural 61,732 62,802 Real Estate-Construction 68,993 49,542 Commercial loans 225,592 204,876 Other agricultural loans 27,507 30,988 Consumer 333,561 286,263 Total average loans outstanding $ 1,791,569 $ 1,646,128 Net (charge-offs) recoveries as a percent of average loans outstanding Real Estate-Residential (0.02) % 0.01 % Real Estate-Commercial (0.01) 0.02 Real Estate-Agricultural - - Real Estate-Construction - - Commercial loans (0.02) (0.05) Other agricultural loans (0.17) - Consumer (0.51) (0.60) Total net charge-offs (0.11) % (0.10) % Credit Quality Ratios: As a percent of year-end loans, net of unearned income: Allowance for credit losses 1.07% 1.16% Nonaccrual loans 0.34% 0.45% Nonperforming loans 0.34% 0.46% Allowance for credit losses to nonaccrual loans 319.85% 257.03% Allowance for credit losses to nonperforming loans 313.65% 252.01% During the twelve month period ended December 31, 2025, the Bank recognized net charge-offs in the amount of $1,890,000 compared to the $1,671,000 of net charge-offs reported for the twelve months ended December 31, 2024.
Other Expenses (dollars in thousands) For the year ended December 31 The following table shows total other expenses: 2024 2023 Salaries $ 15,447 $ 14,514 Employee benefits 9,571 9,051 Occupancy 3,928 3,864 Furniture and equipment 1,121 1,219 Data processing and related operations 4,520 3,342 Federal Deposit Insurance Corporation insurance assessment 1,344 985 Advertising 930 630 Professional fees 2,173 1,676 Postage and telephone 1,090 981 Taxes, other than income 615 566 Foreclosed real estate 54 129 Amortization of intangible assets 69 85 Other 7,763 6,455 Total $ 48,625 $ 43,497 INCOME TAXES Income tax benefit for the year ended December 31, 2024 totaled $98,000, which resulted in an effective tax rate of 38.0%, compared to an income tax expense of $4,387,000 and 20.7% for 2023.
Please see “Non-GAAP Financial Measures” later in this discussion for more information on this Non-GAAP Financial Measure. 21 Other Expenses (dollars in thousands) For the year ended December 31 The following table shows total other expenses: 2025 2024 Salaries $ 16,054 $ 15,447 Employee benefits 10,874 9,571 Occupancy 4,073 3,928 Furniture and equipment 1,405 1,121 Data processing and related operations 4,563 4,520 Federal Deposit Insurance Corporation insurance assessment 1,552 1,344 Advertising 742 930 Professional fees 1,913 2,173 Postage and telephone 1,311 1,090 Taxes, other than income 770 615 Foreclosed real estate 142 54 Amortization of intangible assets 54 69 Merger related 1,238 — Other 6,458 7,763 Total $ 51,149 $ 48,625 INCOME TAXES Income tax expense for the year ended December 31, 2025 totaled $7,264,000, which resulted in an effective tax rate of 20.7%, compared to an income tax benefit of $98,000 and 38.0% for 2024.
Years Ended December 31, 2024 2023 Average Average Balance Rate Paid Balance Rate Paid (dollars in thousands) Noninterest-bearing demand $ 393,616 — % $ 418,631 — % Interest-bearing demand 279,231 2.25 228,909 1.13 Money Market 196,875 2.15 237,421 1.37 Savings 220,190 0.32 248,629 0.15 Time 744,895 4.18 610,725 3.25 Total $ 1,834,807 $ 1,744,315 As of December 31, 2024 and 2023, the total of uninsured deposits of the Company was $698,357,000 and $644,486,000, respectively.
Years Ended December 31, 2025 2024 Average Average Balance Rate Paid Balance Rate Paid (dollars in thousands) Noninterest-bearing demand $ 399,948 — % $ 393,616 — % Interest-bearing demand 397,801 2.09 279,231 2.25 Money Market 187,488 1.92 196,875 2.15 Savings 203,765 0.24 220,190 0.32 Time 821,710 3.81 744,895 4.18 Total $ 2,010,712 $ 1,834,807 As of December 31, 2025 and 2024, the total of uninsured deposits of the Company was $833,097,000 and $698,357,000, respectively.
Total other income was a loss of $11,151,000 for the year ended December 31, 2024, compared to income of $8,124,000 in the prior year, a decrease of $19,275,000.
Total other income was $9,617,000 for the year ended December 31, 2025, compared to a loss of $11,151,000 in the prior year, an increase of $20,768,000.
OTHER INCOME Total other income was a loss of $11,151,000 for the year ended December 31, 2024, compared to income of $8,124,000 for the year ended December 31, 2023, a decrease of $19,275,000.
OTHER INCOME Total other income was $9,617,000 for the year ended December 31, 2025, compared to a loss of other income of $11,151,000 for the year ended December 31, 2024, an increase of $20,768,000.
The following table sets forth changes in net income (loss) (in thousands): Net income 2023 $ 16,759 Net interest income 124 Provision for credit losses 2,875 Net gains on sales of loans and securities (19,621) Net gains on sales of foreclosed real estate (48) Other income 394 Salaries and employee benefits (1,453) Occupancy, furniture and equipment 34 Data processing and related operations (1,178) Advertising (300) FDIC insurance assessment (359) Indirect dealer fees (426) Shares tax expense (49) Other expenses (1,397) Income tax expense 4,485 Net loss 2024 $ (160) 22 NET INTEREST INCOME Net interest income (fte) totaled $63,010,000 for the year ended December 31, 2024 compared to $62,816,000 for 2023, an increase of $194,000.
The following table sets forth changes in net income (loss) (in thousands): Net loss 2024 $ (160) Net interest income 16,133 Provision for credit losses 900 Net gains on sales of loans and securities 20,093 Net gains on sales of foreclosed real estate (32) Other income 707 Salaries and employee benefits (1,910) Occupancy, furniture and equipment (429) Data processing and related operations (43) Advertising 188 FDIC insurance assessment (208) Indirect dealer fees (559) Shares tax expense (155) Merger related (1,238) Other expenses 1,830 Income tax expense (7,362) Net income 2025 $ 27,755 NET INTEREST INCOME Net interest income (fte) totaled $79,099,000 for the year ended December 31, 2025 compared to $63,010,000 for 2024, an increase of $16,089,000.
The yield on securities increased 17 basis points in 2024 due primarily to higher yields on new securities purchased during the year ended December 31, 2024. During the year ended December 31, 2024, while average securities outstanding decreased $14.1 million, interest income (fte) from securities outstanding, increased $486,000 from the year ended December 31, 2023.
The yield on securities increased 123 basis points in 2025 due primarily to the repositioning of the portfolio in December 2024. During the year ended December 31, 2025, while average securities outstanding decreased $20.8 million, interest income (fte) from securities outstanding, increased $5.0 million from the year ended December 31, 2024.
The following table indicates the amount of time deposits that are uninsured by time remaining until maturity as of December 31, 2024: Amount (in thousands) Three months or less $ 63,145 Over 3 through 6 months 115,304 Over 6 months through 12 months 84,683 Over 12 months 9,836 $ 272,968 Total deposits as of December 31, 2024, were $1.859 billion, an increase of $64.0 million from December 31, 2023.
The following table indicates the amount of time deposits that are uninsured by time remaining until maturity as of December 31, 2025: Amount (in thousands) Three months or less $ 90,190 Over 3 through 6 months 107,098 Over 6 months through 12 months 61,312 Over 12 months 31,251 $ 289,851 Total deposits as of December 31, 2025, were $2.079 billion, an increase of $219.5 million from December 31, 2024.
Salaries and benefits costs increased $1,453,000 in 2024, while data processing costs increased $1,178,000. Professional fees increased $497,000. All other operating expenses increased $2,000,000, net, in 2024. Income tax benefit for the 2024 year totaled $98,000, compared to income tax expense of $4,387,000 from the 2023 year ended.
Salaries and benefits costs increased $1,910,000 in 2025, while merger related expenses increased $1,238,000, and furniture and equipment expenses increased $284,000. All other operating expenses decreased $908,000, net, in 2025. Income tax expense for the 2025 year totaled $7,264,000, compared to an income tax benefit of $98,000 from the 2024 year ended.
Construction loans are underwritten on the basis of the estimated value of the property as completed. For commercial projects, the Bank typically also provides the permanent financing after the construction period, as a commercial mortgage. The Bank also, from time to time, originates loans secured by undeveloped land.
For commercial projects, the Bank typically also provides the permanent financing after the construction period, as a commercial mortgage. The Bank also, from time to time, originates loans secured by undeveloped land. Land loans granted to individuals have a term of up to five years. Land loans granted to developers may have an interest only period during development.
At December 31, 2024, the Bank had approximately $156.2 million in loans on commercial rentals, as well as $114.7 million of loans outstanding on residential rentals, which are its largest lending concentrations. The Bank’s construction lending has primarily involved lending for commercial construction projects and for single-family residences.
At December 31, 2025, the Bank had approximately $178.7 million in loans on commercial rentals, as well as $116.6 million of loans outstanding on residential rentals. The Bank’s construction lending has primarily involved lending for commercial construction projects and for single-family residences. All loans for the construction of speculative sale homes have a loan-to-value ratio of not more than 80%.
Non-maturity interest-bearing deposits increased $23.7 million in 2024, while non-interest bearing demand deposits decreased $18.1 million. Time deposits increased $58.4 million during 2024 primarily as a result of higher market interest rates. 21 As of December 31, 2024, non-interest bearing demand deposits totaled $381.5 million compared to $399.5 million at December 31, 2023.
Non-maturity interest-bearing deposits increased $83.6 million in 2025, while non-interest bearing demand deposits increased $38.1 million. Time deposits increased $97.8 million during 2025. As of December 31, 2025, non-interest bearing demand deposits totaled $419.6 million compared to $381.5 million at December 31, 2024.
The increase in total assets was primarily attributable to a $109.1 million increase in loans receivable.
The increase in total assets was primarily attributable to a $139.8 million increase in loans receivable, offset by a $27.9 million decrease in cash and cash equivalents.
Loans Receivable As of December 31, 2024, loans receivable totaled $1.714 billion compared to $1.604 billion as of year-end 2023, an increase of $110.2 million due primarily to a $43.5 million increase in consumer loans and an increase of $41.7 million in commercial real estate loans. Residential real estate loans increased $14.3 million during the year ended December 31, 2024.
Loans Receivable As of December 31, 2025, loans receivable totaled $1.853 billion compared to $1.714 billion as of year-end 2024, an increase of $139.8 million due primarily to a $42.6 million increase in consumer loans, an increase of $33.4 million in commercial real estate loans, and an increase of $32.4 million in construction loans.
CAPITAL AND DIVIDENDS Total stockholders’ equity as of December 31, 2024, was $213.5 million, compared to $181.1 million as of December 31, 2023. The increase in stockholders’ equity was primarily due to the receipt of approximately $28.1 million in net proceeds from the Offering, partially offset by $10.2 million in cash dividends declared.
CAPITAL AND DIVIDENDS Total stockholders’ equity as of December 31, 2025 was $242.2 million, compared to $213.5 million as of December 31, 2024. Earnings retention, net of an $11.6 million reduction resulting from cash dividends declared, contributed to the increase.
Increase/(Decrease) (dollars in thousands) 2024 compared to 2023 Variance due to Volume Rate Net INTEREST-EARNING ASSETS: Interest-bearing deposits $ 2,385 $ (26) $ 2,359 Securities available for sale: Taxable (255) 813 558 Tax-exempt securities (72) — (72) Total securities available for sale (327) 813 486 Loans receivable 4,715 9,550 14,265 Total interest-earning assets 6,773 10,337 17,110 INTEREST-BEARING LIABILITIES Interest-bearing demand and money market 211 4,471 4,682 Savings (81) 414 333 Time 5,051 6,239 11,290 Total interest-bearing deposits 5,181 11,124 16,305 Short-term borrowings (1,164) (521) (1,685) Other borrowings 2,368 (72) 2,296 Total interest-bearing liabilities 6,385 10,531 16,916 Net interest income (tax-equivalent basis) $ 388 $ (194) $ 194 Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated proportionately to changes in volume and changes in rate.
Increase/(Decrease) (dollars in thousands) 2025 compared to 2024 Variance due to Volume Rate Net INTEREST-EARNING ASSETS: Interest-bearing deposits $ (1,376) $ (328) $ (1,704) Securities available for sale: Taxable 105 5,511 5,616 Tax-exempt securities (653) 39 (614) Total securities available for sale (548) 5,550 5,002 Loans receivable 8,843 1,764 10,607 Total interest-earning assets 6,919 6,986 13,905 INTEREST-BEARING LIABILITIES Interest-bearing demand and money market 2,351 (945) 1,406 Savings (42) (189) (231) Time 3,064 (2,892) 172 Total interest-bearing deposits 5,373 (4,026) 1,347 Short-term borrowings (1,035) 471 (564) Other borrowings (2,817) (150) (2,967) Total interest-bearing liabilities 1,521 (3,705) (2,184) Net interest income (tax-equivalent basis) $ 5,398 $ 10,691 $ 16,089 Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated proportionately to changes in volume and changes in rate.
Removed
Land loans granted to individuals have a term of up to five years. Land loans granted to developers may have an interest only period during development. The substantial majority of land loans have a loan-to-value ratio not exceeding 75%.
Added
One Year or Less After One to Five Years After Five Years Through 15 years After 15 years Total (dollars in thousands) Real Estate: Residential $ 50,454 $ 131,698 $ 111,148 $ 59,042 $ 352,342 Commercial 74,502 213,701 371,910 90,136 750,249 Agricultural 6,065 13,427 31,977 7,733 59,202 Construction 2,208 27,201 21,807 34,177 85,393 Commercial loans 97,024 109,628 22,552 645 229,849 Other agricultural loans 11,398 12,832 2,152 48 26,430 Consumer loans 137,846 196,528 14,844 1,192 350,410 Total $ 379,497 $ 705,015 $ 576,390 $ 192,973 $ 1,853,875 Loans with fixed rates $ 27,359 $ 235,304 $ 419,018 $ 213,882 $ 895,563 Loans with floating rates 457,935 447,618 52,759 - 958,312 Total $ 485,294 $ 682,922 $ 471,777 $ 213,882 $ 1,853,875 14 allowance for CREDIT Losses The allowance for credit losses totaled $19,882,000 as of December 31, 2025, and represented 1.07% of total loans receivable compared to $19,843,000 and 1.16% of total loans as of year-end 2024.
Removed
One Year or Less After One to Five Years After Five Years Through 15 years After 15 years Total (dollars in thousands) Real Estate: Residential $ 45,731 $ 125,677 $ 110,616 $ 48,832 $ 330,856 Commercial 68,382 197,248 356,144 95,101 716,875 Agricultural 4,155 16,602 33,498 9,233 63,488 Construction 3,897 4,658 17,308 27,157 53,020 Commercial loans 85,943 98,012 27,645 391 211,991 Other agricultural loans 13,560 13,992 2,364 161 30,077 Consumer loans 115,497 177,486 13,828 964 307,775 Total $ 337,165 $ 633,675 $ 561,403 $ 181,839 $ 1,714,082 Loans with fixed rates $ 22,488 $ 203,286 $ 406,970 $ 227,036 $ 859,780 Loans with floating rates 345,796 459,836 48,670 - 854,302 Total $ 368,284 $ 663,122 $ 455,640 $ 227,036 $ 1,714,082 allowance for CREDIT Losses The allowance for credit losses totaled $19,843,000 as of December 31, 2024, and represented 1.16% of total loans receivable compared to $18,968,000 and 1.18% of total loans as of year-end 2023.
Added
Treasury securities $ 3,988 4.10 % $ 16,870 3.56 % $ — — % $ — — % $ 20,858 3.66 % U.S.
Removed
Treasury securities $ 19,598 3.41 % $ — — % $ — — % $ — — % $ 19,598 3.41 % U.S.
Added
Government agencies — — 1,912 0.85 5,763 3.49 — — 7,675 2.82 State and political subdivision 1,830 3.64 — — 54,289 2.06 36,381 2.48 92,500 2.25 Corporate Securities — — 1,971 7.44 11,580 6.35 — — 13,551 6.38 Mortgage-backed securities - government sponsored entities 130 2.25 757 2.94 5,993 3.87 267,319 3.78 274,199 3.78 Total Investment Securities $ 5,948 3.92 % $ 21,510 3.64 % $ 77,625 2.86 % $ 303,700 3.55 % $ 408,783 3.42 % The portfolio had 8 adjustable-rate instrument as of December 31, 2025 and one adjustable-rate instrument as of December 31, 2024.
Removed
Government agencies — — 5,814 3.65 5,550 3.49 — — 11,364 3.56 State and political subdivision — — 460 2.77 47,813 2.01 39,001 2.50 87,274 2.23 Mortgage-backed securities - government sponsored entities 110 2.23 627 2.06 2,021 2.52 276,852 3.72 279,610 3.71 Total Investment Securities $ 19,708 3.40 % $ 6,901 3.49 % $ 55,384 2.16 % $ 315,853 3.60 % $ 397,846 3.37 % The portfolio had one adjustable-rate instrument as of December 31, 2024 and no adjustable-rate instruments as of December 31, 2023.
Added
The Company considers these accounts as a source of core funding. 19 RESULTS OF OPERATIONS This Annual Report contains or references fully taxable-equivalent interest income and net interest income, which are non-GAAP financial measures. Tax-equivalent interest income and net interest income are derived from GAAP interest income and net interest income using a marginal tax rate of 21%.
Removed
The increase in losses on sales of securities was partially offset by an increase of $145,000 in loan related service fees, an increase in gains on sale of loans of $132,000, and an increase in commission on mutual funds and annuities of $111,000. All other items of other income increased $90,000 during the year ended December 31, 2024.
Added
All other items of other income increased $213,000, net, during the year ended December 31, 2025.
Removed
For the year ended December 31, 2024, salaries and employee benefits increased $1,453,000 to $25,018,000, while data processing costs increased $1,178,000 million to $4,520,000, as compared to the year ended December 31, 2023. Professional fees increased 23 $497,000 to $2,173,000 during the year ended December 31, 2024, compared to $1,676,000 for the year ended December 31, 2023.

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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 changeThe following table reflects our net interest income sensitivity analysis at December 31,2024 and December 31, 2023 (dollars in thousands): December 31, 2024 Potential Change in Future Net Changes in Interest Interest Income Rates in Basis Points Year 1 Year 2 (Dollars in thousands) $ Change % Change $ Change % Change +300 (6,364) -7.9% (4,164) -4.5% +200 (4,131) -5.1% (2,500) -2.7% +100 (1,963) -2.4% (1,043) -1.1% Static - 0.0% - 0.0% (100) 1,438 1.8% (380) -0.4% (200) 1,441 1.8% (4,472) -4.8% December 31, 2023 Potential Change in Future Net Changes in Interest Interest Income Rates in Basis Points Year 1 Year 2 (Dollars in thousands) $ Change % Change $ Change % Change +300 (4,363) -6.8% (3,847) -5.1% +200 (2,788) -4.4% (2,371) -3.1% +100 (1,310) -2.0% (1,049) -1.4% Static - 0.0% - 0.0% (100) 931 1.5% 169 0.2% (200) 1,166 1.8% (1,420) -1.9% As noted in the table above, a 200-basis point increase in interest rates is projected to decrease net interest income by 5.1% in year 1 and decrease net interest income by 2.7% in year 2.
Biggest changeThe following table reflects our net interest income sensitivity analysis at December 31,2025 and December 31, 2024 (dollars in thousands): December 31, 2025 Potential Change in Future Net Changes in Interest Interest Income Rates in Basis Points Year 1 Year 2 (Dollars in thousands) $ Change % Change $ Change % Change +300 (6,467) -6.9% (194) -0.2% +200 (4,159) -4.4% 319 0.3% +100 (1,993) -2.0% 448 0.4% Static - 0.0% - 0.0% -100 1,415 1.5% (1,987) -2.0% -200 1,125 1.2% (7,003) -6.9% December 31, 2024 Potential Change in Future Net Changes in Interest Interest Income Rates in Basis Points Year 1 Year 2 (Dollars in thousands) $ Change % Change $ Change % Change +300 (6,364) -7.9% (4,164) -4.5% +200 (4,131) -5.1% (2,500) -2.7% +100 (1,963) -2.4% (1,043) -1.1% Static - 0.0% - 0.0% -100 1,438 1.8% (380) -0.4% -200 1,441 1.8% (4,472) -4.8% As noted in the table above, as of December 31, 2025, a 200-basis point increase in interest rates is projected to decrease net interest income by 4.4% in year 1 and increase net interest income by 0.3% in year 2.
Additionally, increases in interest rates may result in decreasing loan prepayments with respect to fixed rate loans (and therefore an increase in the average life of such loans), may result in a decrease in loan demand, and may make it more difficult for borrowers to repay adjustable rate loans.
Additionally, increases in interest rates may result in decreasing loan prepayments with respect to fixed rate loans (and therefore an increase in the 25 average life of such loans), may result in a decrease in loan demand, and may make it more difficult for borrowers to repay adjustable rate loans.
In periods of decreasing interest rates, the average life of loans and securities we hold may be shortened to the extent increased prepayment activity occurs during such periods which, in turn, may result in the investment of funds from such 27 prepayments in lower yielding assets.
In periods of decreasing interest rates, the average life of loans and securities we hold may be shortened to the extent increased prepayment activity occurs during such periods which, in turn, may result in the investment of funds from such prepayments in lower yielding assets.
Overall, our strategy has been to proactively take advantage of the drop in short-term by aggressively lowering deposit costs, ultimately dampening the effect of variable and adjustable-rate loan repricing and additional fixed rate loan refinancing.
Overall, our strategy has been to proactively take advantage of the drop in short-term by aggressively lowering deposit and borrowing costs, ultimately dampening the effect of variable and adjustable-rate loan repricing and additional fixed rate loan refinancing.
The total available credit under all lines was $192.0 million, which consists of $25.0 million with the Federal Reserve Bank, $150.0 million with the Federal Home Loan Bank of Pittsburgh, $7.0 million with the Atlantic Community Bankers Bank, and $10.0 million with PNC Bank.
The total available credit under all lines was $168.8 million, which consists of $1.8 million with the Federal Reserve Bank, $150.0 million with the Federal Home Loan Bank of Pittsburgh, $7.0 million with the Atlantic Community Bankers Bank, and $10.0 million with PNC Bank.
Over the intervening year, the effective duration (a measure of price sensitivity to interest rates) of the bond portfolio remained steady at 5.5 years at December 31, 2023 and December 31, 2024. The preceding sensitivity analysis does not represent a Company forecast and should not be relied on as being indicative of expected operating results.
Over the intervening year, the effective duration (a measure of price sensitivity to interest rates) of the bond portfolio declined to 4.6 years at December 31, 2025 from 5.5 at December 31, 2024. 26 The preceding sensitivity analysis does not represent a Company forecast and should not be relied on as being indicative of expected operating results.
As of December 31, 2024, the Company had $20.0 million of term borrowings from the Federal Reserve Bank under the Bank Term Funding Program, and $158.5 million in borrowings from the FHLB, compared to $30.0 and $114.2 million, respectively, at December 31, 2023.
As of December 31, 2025, the Company had $0 million of term borrowings from the Federal Reserve Bank under the Bank Term Funding Program, and $74.1 million in total borrowings from the FHLB, compared to $20.0 and $158.5 million, respectively, at December 31, 2024.
As of December 31, 2024, the Company had cash and cash equivalents of $72.3 million in the form of cash, due from banks, balances with the Federal Reserve Bank, and short-term deposits with other institutions. In addition, at December 31, 2024, the Company had securities available for sale of $397.8 million, which could be used for liquidity needs.
As of December 31, 2025, the Company had cash and cash equivalents of $44.4 million in the form of cash, due from banks, balances with the Federal Reserve Bank, and short-term deposits with other institutions. In addition, at December 31, 2025, the Company had total non-pledged securities available for sale of $146.4 million, which could be used for liquidity needs.
Outstanding Letters of Credit to secure public funds totaled $147.0 million and $136.6 million at December 31, 2024 and 2023, respectively. 29
Outstanding Letters of Credit to secure public funds totaled $155.5 million and $147.0 million at December 31, 2025 and 2024, respectively.
Treasury 5-year notes increased 54 basis points from 3.84% to 4.38%, while the yield on 3-month Treasury bills decreased 103 basis points from 5.40% to 4.37%. The 3-month/5-year Treasury spread increased from a negative 156 basis points at December 31, 2023 to a positive 1 basis point at December 31, 2024.
Treasury 5-year notes decreased 65 basis points from 4.38% to 3.73%, while the yield on 3-month Treasury bills decreased 70 basis points from 4.37% to 3.67%. The 3-month/5-year Treasury spread increased from a positive 1 basis point at December 31, 2024 to a negative 7 basis points at December 31, 2025.
Our balance sheet sensitivity to such a move in interest rates at December 28 31, 2024 increased as compared to December 31, 2023 (which was a decrease of 4.4% in net interest income over a twelve-month period). This decrease is the result of a higher portion of our liabilities repricing higher.
Our balance sheet sensitivity to such a move in interest rates at December 31, 2025 decreased as compared to December 31, 2024 (which was a decrease of 5.1% in net interest income over a twelve-month period). This decrease in sensitivity is the result of a decrease in the balance of borrowed funds over the twelve month period.
This results in the Company having total liquidity at December 31, 2024 of $470.1 million, or 20.3% of total assets as, of December 31, 2024, compared to total liquidity of $472.4 million, or 21.5% of total assets as of December 31, 2023. The Company also monitors other liquidity measures for compliance with Company policy guidelines.
This results in the Company having total liquidity at December 31, 2025 of $190.8 million, or 7.9% of total assets as of December 31, 2025, compared to total liquidity of $161.5 million, or 7.0% of total assets as of December 31, 2024. The Company also monitors other liquidity measures for compliance with Company policy guidelines.
In addition to the above scenarios, we consider other non-parallel rate shifts that would also exert pressure on earnings. Since the fourth quarter of 2023 the U.S. Treasury yield curve has transitioned from being inverted to a more normalized positive slope. During the twelve months ended December 31, 2024, the yield on U.S.
In addition to the above scenarios, we consider other non-parallel rate shifts that would also exert pressure on earnings. During the three months ended December 31, 2025, the U.S. Treasury yield curve has flattened slightly. During 2025, the yield on U.S.
A continued increase in the spread between short-term and long-term rates would be beneficial for the Company’s net interest margin. However, there is no certainty on the direction of interest rates. The Federal Reserve Open Market Committee has indicated that it will take a measured stance toward further lowering short-term rates.
A continued flattening or inversion in the yield curve may adversely affect net interest income as reinvestment of cash flows may be at lower rates. However, there is no certainty on the direction of interest rates. The Federal Reserve Open Market Committee has indicated that it will take a measured stance toward further lowering short-term rates.
As of December 31, 2024 and December 31, 2023, there was $178.5 million and $124.2 million outstanding respectively. The maximum borrowing capacity from FHLB at December 31, 2024 was $654.8 million.
As of December 31, 2025 and December 31, 2024, there was $14.7 million and $76.7 million outstanding respectively on these lines of credit. The maximum borrowing capacity from FHLB at December 31, 2025 was $677.6 million.

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