FIRST KEYSTONE CORP
For the period ended Dec 31, 2025. Filed Mar 30, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 30, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-26.
0000737875-25-000012
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-30.
0000737875-26-000009
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 191 previous paragraphs and 193 current paragraphs.
107 unchanged; 64 reworded; 18 added; 16 removed; 4 previous and 4 current paragraphs rearranged.
Tables are not compared: 31 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
Net occupancy, furniture and equipment and computer expense increased $510,000, or 11.7% in 2025 compared to 2024. The increase was mainly due to increased depreciation on furniture and equipment resulting from the replacement of the Corporation’s ATM fleet, an increase in disaster recovery expense as the Corporation put new disaster recovery systems in place in late 2024 and an increase in expense related to various new software systems that were implemented in 2025. Professional services decreased $6,000, or 0.4% in 2025 as compared to 2024.
Current report
Advertising expense decreased $111,000, or 19.8% in 2025 as compared to 2024 as the result of the Corporation utilizing less television and radio advertising during 2025.
Current report
2025, increased promo and underwriting expenses of $76,000 related to loans, $72,000 in additional expenses related to non-accrual loans in 2025 including legal fees and force placed insurance, and increased postage expenses of $102,000 mainly due to increased marketing mailers sent to customers in 2025.
Current report
Total cash and cash equivalents increased by $103,995,000 to $121,249,000 at December 31, 2025 from $17,254,000 at December 31, 2024. The increase was mainly the result of excess cash balances and excess cashflows from activity in the debt securities available-for-sale portfolio which were not reinvested during the year ended December 31, 2025.
Current report
Total debt securities available-for-sale increased $3,938,000 or 1.0% to $394,226,000 as of December 31, 2025. The increase was mainly due to $51,918,000 in securities purchased and an improvement of $10,313,000 in unrealized loss on securities, offset by $58,380,000 in maturities, paydowns, and calls completed during the same period.
Current report
Net loans decreased slightly in 2025 from $940,779,000 to $939,013,000 mainly due to higher balances of principal payments and paydowns which offset the new loan originations for the year.
Current report
Total short-term borrowings as of December 31, 2025 increased by $2,419,000 or 1.8% from 2024 mainly due to an increase of $3,913,000 in the balance of repurchase agreements, offset by a decrease of $1,494,000 in the balance of FHLB overnight borrowings. Balances of both FHLB long-term borrowings and subordinated debentures remained unchanged at December 31, 2025 versus December 31, 2024.
Current report
Total stockholders’ equity increased to $113,060,000 at December 31, 2025, an increase of $6,278,000, primarily due to an improvement of $6,177,000 in accumulated other comprehensive loss as a result of market value improvement in the current interest rate environment.
Current report
Table 11 contains an analysis of the allowance for credit losses indicating charge-offs and recoveries by year. In 2025 and 2024, net charge-offs as a percentage of average loans amounted to 0.31% and 0.10% respectively. Net charge-offs amounted to $2,961,000 in 2025 and $893,000 in 2024. Net charge-offs were higher in 2025 than in 2024, mainly due to a charge-off of $2,000,000 completed on a loan granted to a real estate developer for the purpose of renovating the property into luxury residential rentals. Plans for renovations did not progress as anticipated and the borrower experienced difficulty in making payments as required, ultimately leading to the loan exceeding 90-days past due during the fourth quarter of 2025, at which point the loan was moved to non-accrual status and the charge-off was completed. Additionally, a charge-off in the amount of $500,000 was completed during the fourth quarter of 2025 on a fully drawn revolving commercial and industrial line of credit that was granted to a building contractor. It was determined that the pledged collateral did not support the loan balance and the borrower has become unresponsive to attempted communication from the Corporation regarding the repayment of the principal.
Current report
The post modification recorded investment of loans to borrowers experiencing financial difficulty was $12,671,000 at December 31, 2025, with $12,664,000 classified in the Real Estate portfolio and $7,000 classified in the Commercial and Industrial portfolio. The loan modifications for the year ended December 31, 2025 consisted of five payment modifications and one other modification was classified as “other.”. Four modifications of loans to borrowers experiencing financial difficulty were completed during the fourth quarter of 2025, one on a loan carrying a post modification recorded investment of $1,983,000 which allowed a full payment deferral period of three months, one on a loan carrying a post modification recorded investment of $7,000 which allowed interest-only payments for a period of six months, one on a loan carrying a post modification recorded investment of $9,716,000 for which the modification allowed taxes to be paid by the Corporation on behalf of the borrower and the amount appended on to the principal amount outstanding on the loan, and one on a loan carrying a post modification outstanding recorded investment of $529,000 for which the modification allowed interest-only payments for a period of six months. Two modifications of loans to borrowers experiencing financial difficulty were completed during the second quarter of 2025, one on a loan carrying a post modification recorded investment of $107,000 and one on a loan carrying a post modification recorded investment of $332,000, both of which allowed interest-only payments for periods of eleven and twelve months, respectively. Both loans were subsequently modified again during the fourth quarter of 2025 to allow an extension of interest-only payments on each loan for an additional four months. The post modification recorded investment of loans to borrowers experiencing financial difficulty was $10,183,000 as of December 31, 2024, with $10,009,000 classified in the Real Estate portfolio at $174,000 classified in the Commercial and Industrial portfolio. The loan modifications for the year ended December 31, 2024 consisted of four payment modifications. Two modifications of loans to borrowers experiencing financial difficulty were completed during the fourth quarter of 2024, one on a loan carrying a post modification recorded investment of $174,000 to extend the maturity date of the loan by six months and one on a loan carrying a post modification recorded investment of $434,000 to release a portion of the real estate securing the loan.
Current report
One modification of a loan to a borrower experiencing financial difficulty was completed during the third quarter of 2024 to extend the maturity date of the loan by ten months. The loan carried a post modification recorded investment of $120,000. One modification of a loan to a borrower experiencing financial difficulty was completed during the first quarter of 2024 and allowed a period of interest-only payments of six months. The loan carried a post modification recorded investment of $9,455,000.
Current report
Deposits increased by $91,557,000, or 8.8% for the year ending December 31, 2025 as compared to December 31, 2024. The increase in deposits in 2025 can mainly be attributed to an increase of $135,733,000 in the balance of retail CDs resulting from new higher rate CD promotions offered throughout 2025.
Current report
2025 and $20,000,000 during the year ended December 31, 2024. Dividends paid amounted to $6,051,000 for the year ended December 31, 2025, compared to $5,645,000 for the year ended December 31, 2024.
Current report
The evaluation of the allowance for credit losses is inherently subjective as it requires material estimates based upon management’s judgment regarding the projected credit losses over the contractual lifetime of the loans. The Corporation utilizes the Weighted Average Remaining Maturity (“WARM”) method to calculate the allowance for credit losses which utilizes an average annual charge-off rate containing loss content over several vintages. The average annual charge-off rate is used as a foundation for estimating the credit loss content for loans segmented by homogeneous pools (consistent with the segmentation of the FDIC Bank Call Report), determining a historical charge-off rate for each pool/segment. The methodology used to determine the allowance for credit losses also includes a qualitative component which adjusts loss estimates upward or downward, considering information not already captured in the loss estimation process. See “Allowance for Credit Losses – Loans” under Note 1 – Summary of Significant Accounting Policies for more information.
Current report
Fair Value of Financial Instruments. A fair value hierarchy for valuation inputs is established by the fair value measurement and disclosure guidance and grants highest priority to unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities (Level 1). The next priority in the hierarchy is given to quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full term of the asset or liability (Level 2). Lowest priority is given to prices or valuation techniques that require inputs that are both significant to the fair value measurement and are unobservable or supported by little to no market activity (Level 3).
Current report
Determining fair value measurement for financial instruments may require significant judgment by management in the application of valuation techniques and observable market inputs. The Corporation measures the fair value of certain financial instruments on a recurring basis, which include its available-for-sale investment portfolio and derivative instruments. Measurements related to available-for-sale investments and derivative instruments are primarily based on observable inputs such as interest rates, yield curves, and credit spreads and the majority of the instruments are classified as Level 2 of the fair value hierarchy. While the measurements used to determine fair value for available-for-sale investments and derivative instruments do not involve unobservable inputs, changes in market conditions could impact fair values.
Current report
Particularly for items that fall under Level 3 of the valuation hierarchy, management judgment is a key component in the determination of fair value, as the valuation techniques for these instruments rely on internal assessments and evaluations completed by management. See Note 17 – Fair Value Measurements for additional information.
Current report
Valuation of Deferred Tax Assets. Deferred income tax expense may result from changes in deferred tax assets and liabilities between periods. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, deferred tax assets are reduced by a valuation allowance based on the weight of the evidence available at the time the analysis is performed. Deferred tax assets can only be recognized to the extent that it is probable that future taxable income will be available against which the unused tax credits can be applied; therefore, management’s judgment is required to assess the probability that such probable future taxable income will be available. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers facts, circumstances, and information available at the reporting date and is subject to management’s judgment. See “Income Taxes” under Note 1 – Summary of Significant Accounting Policies for more information.
Removed paragraphs (16)
Previous report
Net occupancy, furniture and equipment and computer expense increased $18,000, or 0.4% in 2024 compared to 2023. Professional services increased $177,000, or 12.3% in 2024 as compared to 2023. The higher expense was the result of increases in annual audit fees and audit expenses relating to the adoption of CECL as well as goodwill impairment.
Previous report
Advertising expense increased $32,000, or 6.1% in 2024 as compared to 2023 as the result of the Corporation marketing the new full-service Bethlehem branch, along with utilizing more television, billboard, digital and social media advertising in 2024.
Previous report
Total debt securities available-for-sale decreased $2,680,000 or 0.7% to $390,288,000 as of December 31, 2024. The decrease was mainly due to $65,459,000 in securities purchased during 2024 as part of the execution of a balance sheet leverage strategy, offset by principal paydowns, maturities, and calls of $69,878,000 completed during the same period.
Previous report
Net loans increased in 2024 from $904,153,000 to $940,779,000, a 4.1% increase. Loan demand grew in 2024 as the Bank has realized an increase in loan originations, primarily commercial real estate loans.
Previous report
The cash surrender value of bank owned life insurance totaled $26,679,000 at December 31, 2024, an increase of $669,000 or 2.6% from 2023. This increase represents tax-free income included in non-interest income on the consolidated statements of income.
Previous report
Investments in low-income housing partnerships were $5,152,000 at year-end 2024, a decrease of 13.6% from year-end 2023. The decrease is mainly the result of $819,000 in amortization recognized during the year ended December 31, 2024 on two low-income housing partnerships in which the Corporation is a limited partner, offset by a final capital contribution payment of $10,000 that was made in 2024 in relation to a new real estate venture in which the Corporation became a limited partner in 2021. Investing in low-income housing real estate ventures enables the Corporation to recognize tax credits and satisfy Community Reinvestment Act initiatives.
Previous report
Total stockholders’ equity decreased to $106,782,000 at December 31, 2024, a decrease of $14,833,000, primarily due to a decrease in retained earnings due to the full goodwill impairment charge.
Previous report
The increase in Real Estate non-pass grades from December 31, 2023 to December 31, 2024 is mainly the result of the downgrade of a loan to the owner of a commercial property which carried a balance of $4,529,000 at December 31, 2024. The loan was downgraded to substandard status during the fourth quarter of 2024 due to the loss of a large tenant.
Previous report
Table 11 contains an analysis of the allowance for credit losses indicating charge-offs and recoveries by year. In 2024 and 2023, net charge-offs as a percentage of average loans amounted to 0.097% and 0.001% respectively. Net charge-offs amounted to $893,000 in 2024 and $13,000 in 2023. Net charge-offs were higher in 2024 than in 2023, mainly due to $741,000 in aggregate charge-offs completed on four loans to a plastic processing company focusing on non-post-consumer recycling that were completed during the third quarter of 2024, as the business ceased operations as a result of financial difficulties. During the fourth quarter of 2024, a charge-off of $67,000 was also completed on an owner-occupied, non-farm, non-residential loan to a non-profit civic organization, as the non-profit no longer uses the property, along with a charge-off of $41,000 on a loan to an individual borrower secured by 1-4 family residential real estate.
Previous report
The outstanding recorded investment of modified loans to borrowers experiencing financial difficulty as of December 31, 2024 amounted to $10,193,000, with $10,019,000 classified in the Real Estate portfolio and $174,000 classified in the Commercial and Industrial portfolio. There were no loan modifications completed with respect to borrowers experiencing financial difficulty during the year ended December 31, 2023. The loan modifications to borrowers experiencing financial difficulty during the year ended December 31, 2024 consisted of term modifications on two loans which allowed an extension of the maturity date for each respective loan, one payment modification which allowed a period of interest only payments on one loan, and one loan experienced the release of a piece of collateral securing the loan.
Previous report
Deposits increased by $65,441,000, or 6.7% for the year ending December 31, 2024 as compared to December 31, 2023. The increase in deposits in 2024 can be attributed to increases in non-interest bearing demand accounts, interest bearing demand accounts and time deposits, while savings accounts decreased. The decrease in savings deposits in 2024 can be attributed to many customers moving money into higher rate CD offerings.
Previous report
Total borrowings were $240,426,000 as of December 31, 2024, compared to $275,468,000 at December 31, 2023. During 2024, long-term borrowings decreased to $106,000,000 from $122,000,000. The decrease in long-term borrowings in 2024 was mainly the result of increased deposits in 2024.
Previous report
Net cash flows provided by operating activities were $8,168,000 and $5,905,000 as of December 31, 2024 and December 31, 2023, respectively. Net loss amounted to $13,203,000 for the year ended December 31, 2024 compared to net income of $5,560,000 for the year ended December 31, 2023. The provision for credit losses resulted in a balance of $1,640,000 for the year ended December 31, 2024 compared to a credit balance of $217,000 for the year ended December 31, 2023. Goodwill impairment amounted to $19,133,000 at December 31, 2024 and $0 at December 31, 2023. During the years ended December 31, 2024 and 2023, net premium amortization on securities amounted to $273,000 and $1,519,000, respectively. Net gains on sales of mortgage loans were $80,000 for the year ended December
Previous report
Allowance for Securities Losses. The allowance for securities losses represents management’s estimate of probable credit losses inherent in the securities portfolio. Management evaluates debt securities for impairment where there has been a decline in fair value below the amortized cost basis of a debt security to determine whether there is a credit loss associated with the decline in fair value. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses on securities.
Previous report
Impairment of Equity Securities. Valuations for the equity securities portfolio are determined using quoted market prices, where available. If quoted market prices are not available, the equity securities valuation is based on cost less any impairment. In addition to valuation, management must assess whether there are any declines in value below the carrying value of the securities that would require an adjustment in carrying value and recognition of the loss in the Corporation’s Consolidated Statements of Income.
Previous report
Goodwill. Goodwill represents the excess purchase consideration over the fair value of net assets acquired in connection with acquisitions. Goodwill is not amortized but is periodically evaluated for impairment. Impairment testing is performed using either a qualitative or quantitative approach. The Corporation has selected December 31 as the date to perform the annual goodwill impairment test. Additionally, a goodwill impairment evaluation is performed on an interim basis when events or circumstances indicate impairment potentially exists. Based on an interim goodwill impairment test completed during the first quarter of 2024 for which a decrease in the Corporation’s stock price was a triggering event, it was determined, more likely than not, that the fair value of the Corporation’s goodwill was less than it’s carrying value. Based on the results of the impairment test, the Corporation recorded a full goodwill impairment charge of $19,133,000 effective March 31, 2024.
Reworded paragraphs (64)
Previous wording
Net income decreased to a net loss of $13,203,000 for the year ended December 31, 2024, as compared to net income of $5,560,000 for the prior year, a decrease of $18,763,000 which was primarily due to the Corporation recognizing a full goodwill impairment charge of $19,133,000 during the first quarter of 2024. Earnings per share, both basic and diluted, for 2024 was $(2.14) as compared to $0.91 in 2023. Dividends per share for 2024 and 2023 were $1.12. The Corporation’s return on average assets was (0.93)% in 2024 and 0.42% in 2023. Return on average equity decreased to (12.04)% in 2024 from 4.55% in 2023. Total interest income in 2024 amounted to $71,422,000, an increase of $14,434,000 or 25.3% from 2023. The increase in interest income is due to increased interest rates, growth in real estate loans secured by commercial properties, and increased interest income earned on securities. Total interest expense of $39,143,000 increased $11,271,000 or 40.4% from 2023. The majority of this increase is related to increases in interest paid to depositors to retain and grow deposit relationships and increases in interest paid on long-term borrowings through the Federal Home Loan Bank due to increases in both average volume and rate of borrowings in 2024 over 2023.
Current wording
Net income increased to $6,152,000 for the year ended December 31, 2025, as compared to a net loss of $13,203,000 for the prior year, an increase of $19,355,000. The net loss in 2024 was primarily due to the Corporation recognizing a full goodwill impairment charge of $19,133,000 during the first quarter of 2024. Earnings per share, both basic and diluted, for 2025 was $0.99 as compared to $(2.14) in 2024. Dividends per share for 2025 and 2024 were $1.12. The Corporation’s return on average assets was 0.41% in 2025 and (0.93)% in 2024. Return on average equity increased to 5.60% in 2025 from (12.04)% in 2024. Total interest income in 2025 amounted to $77,199,000, an increase of $5,777,000 or 8.09% from 2024. The increase in interest income is due to increased interest and fees on loans related to growth in real estate loans. Total interest expense of $39,548,000 increased $405,000 or 1.03% from 2024. The majority of this increase is related to increases in interest paid to depositors to retain and grow deposit relationships offset by a decrease in expenses related to short-term borrowings mainly due to lower average balances of short-term borrowings held in 2025 versus 2024.
Previous wording
Net interest income, as indicated below in Table 2, increased by $3,163,000 or 10.9% to $32,279,000 for the year ended December 31, 2024. The Corporation’s net interest income on a fully tax equivalent basis increased by $2,907,000, or 9.9% to $32,297,000 in 2024 as compared to $29,390,000 in 2023.
Current wording
Net interest income, as indicated below in Table 2, increased by $5,372,000 or 16.6% to $37,651,000 for the year ended December 31, 2025. The Corporation’s net interest income on a fully tax equivalent basis increased by $5,391,000, or 16.7% to $37,689,000 in 2025 as compared to $32,298,000 in 2024.
Previous wording
2 Includes tax equivalent adjustments on tax-free municipal loans of $5,000 and $79,000 for years 2024 and 2023, respectively.
Current wording
2 Includes tax equivalent adjustments on tax-free municipal loans of $12,000 and $5,000 for years 2025 and 2024, respectively.
Previous wording
3 Includes tax equivalent adjustments on tax-free municipal securities of $13,000 and $195,000 for years 2024 and 2023, respectively.
Current wording
3 Includes tax equivalent adjustments on tax-free municipal securities of $26,000 and $13,000 for years 2025 and 2024, respectively.
Previous wording
The yield on earning assets was 5.30% in 2024 and 4.64% in 2023. The rate paid on interest bearing liabilities was 3.56% in 2024 and 2.85% in 2023. This resulted in a decrease in our net interest spread to 1.74% in 2024, as compared to 1.79% in 2023.
Current wording
The yield on earning assets was 5.45% in 2025 and 5.30% in 2024. The rate paid on interest bearing liabilities was 3.42% in 2025 and 3.56% in 2024. This resulted in an increase in our net interest spread to 2.04% in 2025, as compared to 1.74% in 2024.
Previous wording
As Table 3 illustrates, net interest margin, which is interest income less interest expense divided by average earning assets, was 2.40% in 2024 as compared to 2.38% in 2023. Net interest margins are presented on a tax-equivalent basis. In 2024. the yield on earning assets increased by 0.66% and the rate paid on interest bearing liabilities increased by 0.71%. Yields increased for a majority of interest earning assets and interest bearing liabilities during 2024, mainly as a result of the current high interest rate environment. The yield on loans increased from 4.90% in 2023 to 5.55% in 2024 mainly due to loans originating and repricing at higher interest rates during the latter part of 2023 and 2024. The securities portfolio yield increased to 4.65% in 2024 as compared to 3.92% in 2023. The increase was mainly the result of the elevated rate environment impacting variable rate securities and purchases of higher yielding securities in 2024. The average rate paid on short-term borrowings decreased 0.31% from 5.27% in 2023 to 4.96% in 2024. The rate paid on savings, NOW, money market, and interest checking accounts increased 0.31% from 2.10% to 2.41% and the average rate paid on time deposits increased 1.47% from 2.75% to 4.22%. Interest income exempt from federal tax was $1,352,000 in 2024 and $1,570,000 in 2023. Interest income exempt from federal tax decreased due to the maturity of tax-exempt municipal securities in 2024. Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental rate of 21%.
Current wording
As Table 3 illustrates, net interest margin, which is interest income less interest expense divided by average earning assets, was 2.66% in 2025 as compared to 2.40% in 2024. Net interest margins are presented on a tax-equivalent basis. In 2025, the yield on earning assets increased by 0.15% and the rate paid on interest bearing liabilities decreased by 0.14%. The yield on loans increased from 5.55% in 2024 to 5.98% in 2025 mainly due to loans originating and repricing at higher interest rates during the latter part of 2024 and 2025. The securities portfolio yield decreased to 4.30% in 2025 as compared to 4.65% in 2024. The decrease was mainly the result of reduced yield on taxable securities which declined from 4.91% in 2024 to 4.51% in 2025 due to maturities and calls of securities that were reinvested at lower rates. The average rate paid on short-term borrowings decreased 0.24% from 4.96% in 2024 to 4.72% in 2025. The rate paid on savings, NOW, money market, and interest checking accounts decreased 0.35% from 2.41% to 2.06% and the average rate paid on time deposits decreased 0.13% from 4.22% to 4.09%. Interest income exempt from federal tax was $1,354,000 in 2025 and $1,352,000 in 2024. Tax-exempt income has been adjusted to a tax-equivalent basis using an incremental rate of 21%.
Previous wording
The increase in net interest margin at December 31, 2024 compared to December 31, 2023 was primarily due to increased yields on loans and securities in 2024, as compared to 2023. Fully tax equivalent net interest income increased by $2,907,000 or 9.9% to $32,297,000 at December 31, 2024 compared to $29,390,000 at December 31, 2023. During 2024, the Federal Reserve decreased the federal-funds rate by 1.00%, resulting in a target range of 4.25% - 4.50%. The Corporation could experience a decrease in net interest income if market rates remain static or increase, as the Corporation’s net interest income continues to be liability sensitive. To negate the potential impact of a decreasing net interest margin, the Corporation will continue to focus on attracting organic loan growth and core deposits such as checking, savings, and money market accounts, thereby further reducing its dependence on higher priced certificates of deposit and short-term borrowings. The Corporation is actively monitoring and restructuring its portfolios to become more asset sensitive, which will allow for better performance in a static or rates-up environment. The Corporation also entered into four rate swap contracts effective September 20, 2023. Of the four swaps, two were fair value interest rate swaps with a combined notional amount of $50,000,000, hedging fixed-rate debt securities available-for-sale, and two were cash flow interest rate swaps with a combined notional amount of $100,000,000, hedging specific short-term wholesale funding positions. The Corporation entered into one additional swap contract effective September 4, 2024 with a notional amount of $75,000,000, hedging a specified pool of the Bank’s fixed-rate loans. See Note 12 – Derivative Instruments and Hedging Activities on page 92 for further analysis. The Corporation will continue to evaluate the potential impact of short-term rate fluctuations in 2025, as well as the slope and position of the yield curve.
Current wording
The increase in net interest margin at December 31, 2025 compared to December 31, 2024 was primarily due to increased yields on loans and decreased yields related to deposits and short-term borrowings in 2025, as compared to 2024. Fully tax equivalent net interest income increased by $5,391,000 or 16.7% to $37,689,000 at December 31, 2025 compared to $32,298,000 at December 31, 2024. During 2025, the Federal Reserve decreased the federal-funds rate by 0.75%, resulting in a target range of 3.50% - 3.75%. The Corporation could experience a decrease in net interest income if market rates remain static or increase, as the Corporation’s net interest income continues to be liability sensitive. To negate the potential impact of a decreasing net interest margin, the Corporation will continue to focus on attracting organic loan growth and core deposits such as checking, savings, and money market accounts, thereby further reducing its dependence on higher priced certificates of deposit and short-term borrowings. The Corporation is actively monitoring and restructuring its portfolios to become more asset sensitive, which will allow for better performance in a static or rates-up environment. As of December 31, 2025 the Corporation had a total of five fair value interest rate swaps, four with a combined notional amount of $96,646,000 hedging fixed-rate available-for-sale debt securities and one interest rate swap with a notional amount of $75,000,000, hedging a specified pool of the Bank’s fixed-rate loans. The Corporation also had a total of two cash flow interest rate swaps with a combined notional amount of $100,000,000 hedging specific short-term wholesale funding positions as of December 31, 2025. See Note 12 – Derivative Instruments and Hedging Activities on page 99 for further analysis. The Corporation will continue to evaluate the potential impact of short-term rate fluctuations in 2026, as well as the slope and position of the yield curve.
Previous wording
Table 4 sets forth changes in interest income and interest expense for the periods indicated for each category of interest earning assets and interest bearing liabilities. Information is provided on changes attributable to (i) changes in volume (changes in average volume multiplied by prior rate); (ii) changes in rate (changes in average rate multiplied by
Current wording
Table 4 sets forth changes in interest income and interest expense for the periods indicated for each category of interest earning assets and interest bearing liabilities. Information is provided on changes attributable to (i) changes in volume (changes in average volume multiplied by prior rate); (ii) changes in rate (changes in average rate multiplied by prior average volume); and, (iii) changes in rate and volume (changes in average volume multiplied by changes in average rate).
Previous wording
In 2024, the increase in net interest income on a fully tax equivalent basis of $2,907,000 resulted from an increase in volume of $1,911,000 and an increase of $996,000 due to changes in rate.
Current wording
In 2025, the increase in net interest income on a fully tax equivalent basis of $5,457,000 resulted from an increase in volume of $324,000 and an increase of $5,133,000 due to changes in rate.
Previous wording
For the year ended December 31, 2024, the provision for credit losses resulted in a balance of $1,640,000, compared to a credit balance of $217,000 for the year ended December 31, 2023. The increase in the provision for credit losses in 2024 as compared to 2023 resulted from the Corporation’s analysis of the current loan portfolio, including historic losses, past-due trends, current economic conditions, loan portfolio growth, and other relevant factors. The provision for credit losses for the year ended December 31, 2024 is also reflective of management’s assessment of the continued risk associated with the uncertainty surrounding geopolitical and economic concerns. Charge-off and recovery activity in the allowance for credit losses resulted in net charge-offs of $893,000 and $13,000 for the years ended December 31, 2024 and 2023, respectively. See Analysis of Allowance for Credit Losses table on page 37 for further discussion.
Current wording
For the year ended December 31, 2025, the provision for credit losses was $4,701,000 as compared to $1,640,000 for the year ended December 31, 2024. The increase in the provision for credit losses in 2025 as compared to 2024 resulted from the Corporation’s analysis of the current loan portfolio, including historic losses, past-due trends, current economic conditions, loan portfolio growth, and other relevant factors, along with specific, relationship-level credit events identified during the year ended December 31, 2025. Charge-off and recovery activity in the allowance for credit losses resulted in net charge-offs of $2,961,000 and $893,000 for the years ended December 31, 2025 and 2024, respectively. The increase in the provision for credit losses for the year ended December 31, 2025 was mainly the result of a charge-off of $2,000,000 on a commercial real estate loan, a charge-off of $500,000 on a commercial and industrial loan, and the movement to non-accrual of a significant hotel-related commercial real estate loan. The loan moved to non-accrual status was subsequently individually evaluated and a specific allocation of $973,000 was recorded based on the value of the underlying collateral. Aside from these discrete events, credit quality metrics within the remainder of the loan portfolio remained generally stable during the year ended December 31, 2025. See Analysis of Allowance for Credit Losses table on page 39 for additional information.
Previous wording
The allowance for credit losses as a percentage of average loans outstanding was 0.83% as of December 31, 2024 and 0.79% as of December 31, 2023.
Current wording
The allowance for credit losses as a percentage of average loans outstanding was 0.98% as of December 31, 2025 and 0.83% as of December 31, 2024.
Previous wording
Non-interest income through December 31, 2024 was $6,697,000, an increase of 8.8%, or $541,000, from 2023. The increase was due to net securities gains realized in 2024 compared to net securities losses realized in 2023 and increased trust department income in 2024.
Current wording
Non-interest income through December 31, 2025 was $7,323,000, an increase of 9.3%, or $626,000, from 2024. The increase was mainly due to gains on life insurance proceeds received in 2025 related to a death benefit, more service charges and fee income in 2025 and higher net securities gains realized in 2025.
Previous wording
During 2024, net securities gains (losses) increased $223,000 to a net gain of $105,000. The increase was due to the Corporation recognizing $105,000 in net gains on held equity securities in 2024 vs recognizing $217,000 in net losses on held equity securities offset by $99,000 in net gains on sold debt securities in 2023.
Current wording
During 2025, net securities gains increased $119,000 to a net gain of $224,000. The increase was due to the Corporation recognizing $224,000 in net gains on held equity securities in 2025 vs recognizing $105,000 in net gains on held equity securities in 2024 due to improvement in the mark-to-market valuation on the Corporation’s held equity securities.
Previous wording
Gains on sales of mortgage loans amounted to a net gain of $80,000 in 2024 as compared to a net gain of $65,000 in 2023. The increase in net gains on sales of mortgage loans in 2024 was due to more individual loans sold in 2024. The Corporation continues to service the majority of mortgages which are sold, through maturity of the loans. This servicing income provides an additional source of non-interest income on an ongoing basis.
Current wording
Gains on sales of mortgage loans amounted to a net gain of $143,000 in 2025 as compared to a net gain of $80,000 in 2024. The increase in net gains on sales of mortgage loans in 2025 was due to more individual loans sold at a higher average gain in 2025 vs 2024. The Corporation continues to service the majority of mortgages which are sold, through maturity of the loans. This servicing income provides an additional source of non-interest income on an ongoing basis.
Previous wording
ATM fees and debit card income increased by $33,000 or 1.5% in 2024 as compared to 2023 due to increased debit card interchange fees as the result of an increase in debit card transaction volume in 2024. Income related to an increase in cash surrender value of life insurance increased by $48,000 or 7.7% mainly as a result of increased interest rates on the related policies.
Current wording
ATM fees and debit card income increased by $33,000 or 1.5% in 2025 as compared to 2024 due to increased debit card interchange fees as the result of an increase in debit card transaction volume in 2025. Income related to a gain from life insurance proceeds related to a death benefit amounted to $255,000 for 2025 compared to 2024 when there were no gains realized in relation to life insurance proceeds.
Previous wording
Other income, consisting primarily of income from the sale of retail non-deposit investment products, safe deposit box rentals, and miscellaneous fees, increased $60,000, or 23.3% in 2024 as compared to 2023 as the Corporation recognized more income from retail investment annuities in 2024.
Current wording
Other income, consisting primarily of income from the sale of retail non-deposit investment products, safe deposit box rentals, and miscellaneous fees, increased $23,000, or 7.3% in 2025 as compared to 2024 as the Corporation recognized more income from retail investment activity in 2025.
Previous wording
Total non-interest expense amounted to $50,584,000, an increase of $21,339,000, or 73.0% in 2024.
Current wording
Total non-interest expense amounted to $33,908,000, a decrease of $16,670,000, or 33.0% in 2025.
Previous wording
The Company recognized goodwill impairment in the amount of $19,133,000 during the first quarter of 2024. This was the result of goodwill impairment testing performed due to the decrease of the Company’s stock price during the first quarter of 2024 as a triggering event. The goodwill impairment has no impact on regulatory capital ratios, liquidity or the Company’s cash balances.
Current wording
The significant decrease in total non-interest expense for the year ended December 31, 2025 was mainly the result of the full, one-time, goodwill impairment charge in the amount of $19,133,000 that was recorded during the first quarter of 2024. This was the result of goodwill impairment testing performed due to the decrease of the Company’s stock price during the first quarter of 2024 as a triggering event. The goodwill impairment has no impact on regulatory capital ratios, liquidity or the Company’s cash balances.
Previous wording
Aside from the one-time goodwill impairment charge recognized in 2024, expenses associated with employees (salaries and employee benefits) continue to be the largest non-interest expenditure. Salaries and employee benefits amounted to $17,228,000 or 34.1% of total non-interest expense in 2024 and $16,055,000 or 54.9% in 2023. Salaries and employee benefits increased $1,173,000, or 7.3% in 2024. The increase in 2024 was mainly due to a $592,000 increase in salaries in an effort to offer more competitive wages in our various markets, increase retention and support the Corporation’s growth, plus increased costs associated with employee health insurance which were $357,000 greater in 2024. The number of full-time equivalent employees was 209 as of December 31, 2024 and 215 as of December 31, 2023.
Current wording
Aside from the one-time goodwill impairment charge recognized in 2024, expenses associated with employees (salaries and employee benefits) continue to be the largest non-interest expenditure. Salaries and employee benefits amounted to $17,879,000 or 52.7% of total non-interest expense in 2025 and $17,228,000 or 34.1% in 2024. Salaries and employee benefits increased $651,000, or 3.8% in 2025. The increase in 2025 was mainly due to increased costs associated with employee health insurance which were $454,000 higher in 2025 as compared to 2024.
Previous wording
Pennsylvania shares tax expense increased $209,000, or 24.3% in 2024 as compared to 2023. This increase was mainly due to the Corporation recording a true-up for Pennsylvania shares tax expense for the 2023 shares tax return in the third quarter of 2024 which resulted in $70,000 net expense, as compared to receiving a shares tax refund of $52,000 in 2023 for the 2022 tax return, along with a $163,000 expense true up for the 2024 tax year. FDIC insurance expense increased $394,000, or 56.0% in 2024 as compared to 2023. FDIC insurance expense varies with changes in net asset size, risk ratings, and FDIC derived assessment rates.
Current wording
Pennsylvania shares tax expense increased $49,000, or 4.6% in 2025 as compared to 2024. FDIC insurance expense increased $154,000, or 14.0% in 2025 as compared to 2024. FDIC insurance expense varies with changes in net asset size, risk ratings, and FDIC derived assessment rates.
Previous wording
ATM and debit card fees expense decreased $143,000, or 12.5% in 2024 as compared to 2023. The decrease was the result of lower electronic funds transfer expenses, decreased ATM fraud and the application of vendor credits in 2024. Data processing fees decreased $282,000, or 21.6% in 2024 as compared to 2023. This decrease was the result of lower internet banking expenses as the result of a new vendor relationship for online banking and the application of vendor relationship credits in 2024 resulting from contract negotiations, along with implementation fees recognized in 2023.
Current wording
ATM and debit card fees expense increased $205,000, or 20.4% in 2025 as compared to 2024. This increase was a result of higher electronic funds transfer expenses in 2025 as vendor relationship credits resulting from contract negotiations, applied against billings in 2024, were fully utilized and no longer available in 2025. Data processing fees increased $453,000, or 44.3% in 2025 as compared to 2024. The increase was the result of increased internet banking expenses and core system fees due to vendor relationship credits, applied in 2024, which were fully utilized and no longer available in 2025.
Previous wording
Other non-interest expense increased $628,000, or 21.8% in 2024 as compared to 2023. Other non-interest expense was higher in 2024 mainly as the result of monthly amortization of a new low income housing partnership that began in the fourth quarter of 2023.
Current wording
Other non-interest expense increased $558,000, or 15.9% in 2025 as compared to 2024. Other non-interest expense was higher in 2025 mainly as the result of a customer-related write-off of $307,000 during the first quarter of
Previous wording
Income tax resulted in a benefit for the year ended December 31, 2024 of $45,000 as compared to income tax expense of $684,000 for the year ended December 31, 2023. The effective income tax rate was (0.3)% in 2024 and 11.0% in 2023. The decrease in the effective tax rate for 2024 was mainly due to a federal income tax benefit at the statutory 21% rate generated due to the net loss that resulted from the full goodwill impairment charge recorded effective March 31, 2024, along with more low-income housing tax credits, offset by an increase in the effective tax rate to add back the impact of the portion of the full goodwill impairment charge that is non-deductible for tax purposes. The Corporation recognized $840,000 and $484,000 of tax credits from low-income housing partnerships for the years ended December 31, 2024 and 2023, respectively included in tax expense. The Corporation expects to carry forward $328,000 and $0 of low-income housing tax credits as of December 31, 2024 and December 31, 2023, respectively, which will begin to expire in the year 2044.
Current wording
Income tax resulted in expense for the year ended December 31, 2025 of $213,000 as compared to income tax benefit of $45,000 for the year ended December 31, 2024. The effective income tax rate was 3.4% in 2025 and (0.3)% in 2024. The increase in the effective tax rate for 2025 was mainly due to higher overall operating income with minimal change to tax-exempt income. The Corporation recognized $840,000 of tax credits from low-income housing partnerships for the years ended December 31, 2025 and 2024, included in tax expense. The Corporation expects to carry forward $0 and $328,000 of low-income housing tax credits as of December 31, 2025 and December 31, 2024, respectively, which will begin to expire in the year 2045.
Previous wording
Total assets increased to $1,428,583,000 at year-end 2024, an increase of 0.9% from year-end 2023.
Current wording
Total assets increased to $1,530,977,000 at year-end 2025, an increase of 7.2% from year-end 2024.
Previous wording
As of December 31, 2024, total deposits amounted to $1,045,880,000, an increase of 6.7% from 2023. The increase is mainly due to a $40,100,000 increase in CDs as the Corporation has experienced a shift from transactional deposits to term deposits and a $33,899,000 increase in Brokered CDs.
Current wording
As of December 31, 2025, total deposits amounted to $1,137,437,000, an increase of $91,557,000 or 8.8% from 2024. The increase is mainly due to a $135,733,000 increase in retail CDs offset by a $44,554,000 decrease in other retail deposits as the Corporation has experienced a shift from transactional deposits to term deposits.
Previous wording
The Corporation continues to maintain and manage its asset growth. The Corporation’s strong equity capital position provides an opportunity to further leverage its asset growth. Short and long-term borrowings decreased $35,042,000 from $275,468,000 in 2023 to $240,426,000 in 2024 mainly due to the maturity of a $20,000,000 long-term note in the third quarter of 2024, along with increased deposits in 2024.
Current wording
The Corporation continues to maintain and manage its asset growth. The Corporation’s strong equity capital position provides an opportunity to further leverage its asset growth.
Previous wording
Earning assets are defined as those assets that produce interest income. By maintaining a healthy asset utilization rate, i.e., the volume of earning assets as a percentage of total assets, the Corporation maximizes income. The earning asset ratio (average interest earning assets divided by average total assets) equaled 94.6% for 2024 compared to 93.1% for 2023. This indicates that the management of earning assets is a priority and non-earning assets, primarily cash and due from banks, fixed assets and other assets, are maintained at minimal levels. The primary earning assets are loans and securities.
Current wording
Earning assets are defined as those assets that produce interest income. By maintaining a healthy asset utilization rate, i.e., the volume of earning assets as a percentage of total assets, the Corporation maximizes income. The earning asset ratio (average interest earning assets divided by average total assets) equaled 95.3% for 2025 compared to
Previous wording
The securities portfolio consists of debt securities available-for-sale. No securities were established in a trading account. Debt securities available-for-sale decreased $2,680,000 or 0.7% to $390,288,000 in 2024. At December 31, 2024, the net unrealized loss, net of the tax effect, on these securities was $24,454,000 and was included in stockholders’ equity as accumulated other comprehensive loss. Table 7 provides data on the fair value of the Corporation’s securities portfolio on the dates indicated. The vast majority of security purchases are allocated as available-for-sale. This provides the Corporation with increased flexibility should there be a need or desire to liquidate a security.
Current wording
The securities portfolio consists of debt securities available-for-sale. No securities were established in a trading account. Debt securities available-for-sale increased $3,938,000 or 1.0% to $394,226,000 in 2025. At December 31, 2025, the net unrealized loss, net of the tax effect, on these securities was $16,320,000 and was included in stockholders’ equity as accumulated other comprehensive loss. Table 7 provides data on the fair value of the Corporation’s securities portfolio on the dates indicated. The vast majority of security purchases are allocated as available-for-sale. This provides the Corporation with increased flexibility should there be a need or desire to liquidate a security.
Previous wording
Marketable equity securities consist of common stock investments in other commercial banks and bank holding companies. At December 31, 2024 and 2023, the Corporation had $1,587,000 and $1,482,000, respectively, in equity securities recorded at fair value, an increase of $105,000 or 7.1%.
Current wording
Marketable equity securities consist of common stock investments in other commercial banks and bank holding companies. At December 31, 2025 and 2024, the Corporation had $1,810,000 and $1,587,000, respectively, in equity securities recorded at fair value, an increase of $223,000 or 14.1%.
Previous wording
Total loans increased to $948,451,000 as of December 31, 2024, compared to a balance of $911,078,000 as of December 31, 2023. Table 9 provides data relating to the composition of the Corporation’s loan portfolio on the dates indicated. Total loans increased $37,373,000, or 4.1% in 2024 compared to an increase of $52,609,000, or 6.1% in 2023.
Current wording
Total loans decreased to $946,661,000 as of December 31, 2025, compared to a balance of $946,826,000 as of December 31, 2024. Table 9 provides data relating to the composition of the Corporation’s loan portfolio on the dates indicated. Total loans decreased $165,000, or 0.02% in 2025 compared to an increase of $37,373,000, or 4.10% in 2024.
Previous wording
The Real Estate portfolio increased $40,308,000 or 5.0% from $811,493,000 at December 31, 2023 to $851,801,000 at December 31, 2024. The increase in the Real Estate portfolio for the year ended December 31, 2024 was mainly the result of $103,734,000 in new loan originations and an increase of $5,264,000 in utilization of existing real estate lines of credit, which were offset by loan payoffs of $41,336,000, along with regular principal payments and other typical fluctuations in the Real Estate portfolio. The Agricultural portfolio increased $268,000 or 39.9% from $671,000 at December 31, 2023 to $939,000 at December 31, 2024. The increase in the Agricultural portfolio for the year ended December 31, 2024 was mainly the result of four loans totaling $275,000 that were reclassed from the Commercial and Industrial portfolio to the Agricultural portfolio during the year ended December 31, 2024 and an increase of $15,000 in utilization of existing agricultural lines of credit, offset with regular principal payments and other typical fluctuations in the Agricultural portfolio. During the year ended December 31, 2024, there was two new agricultural loans originated with an aggregate balance of $59,000 and one agricultural loan paid off with a balance of $46,000. The Commercial and Industrial portfolio increased $196,000 or 0.3% from $66,909,000 at December 31, 2023 to $67,105,000 at December 31, 2024. The increase was attributable to $8,363,000 in new loan originations, which were offset by a decrease of $5,484,000 in utilization of existing commercial and industrial lines of credit and loan payoffs of $3,292,000, as well as regular principal payments and other typical amortization in the Commercial and Industrial portfolio. The Consumer portfolio increased $635,000 or 10.9% from $5,824,000 at December 31, 2023 to $6,459,000 at
Current wording
The Real Estate portfolio increased $3,012,000 or 0.4% from $850,656,000 at December 31, 2024 to $853,668,000 at December 31, 2025. The increase in the Real Estate portfolio for the year ended December 31, 2025 was mainly the result of $115,827,000 in new loan originations, which were offset by loan payoffs of $71,096,000 and a decrease of $41,679,000 in utilization of existing real estate lines of credit, along with regular principal payments and other typical fluctuations in the Real Estate portfolio. The Agricultural portfolio increased $48,000 or 5.1% from $936,000 at December 31, 2024 to $984,000 at December 31, 2025. The increase in the Agricultural portfolio for the year ended December 31, 2025 consisted of new loan originations in the amount of $30,000 and two loans totaling $219,000 that were reclassed from the Commercial and Industrial portfolio to the Agricultural portfolio during the year ended December 31, 2025, along with an increase of $12,000 in utilization of existing agricultural lines of credit, offset by loan payoffs of $64,000 along with regular principal payments and other typical fluctuations in the Agricultural portfolio. The Commercial and Industrial portfolio increased $218,000 or 0.3% from $66,706,000 at December 31, 2024 to $66,924,000 at December 31, 2025. The increase was attributable to $13,501,000 in new loan originations and an increase of $2,356,000 in utilization of existing commercial and industrial lines of credit, which were offset by loan payments of $6,179,000 and regular principal payments and other typical amortization in the Commercial and Industrial portfolio. The Consumer portfolio decreased $1,437,000 or 22.5% from $6,390,000 at December 31, 2024 to $4,953,000 at December 31, 2025. The decrease is mainly attributable to new loan originations of $1,771,000, offset by loan payoffs
Previous wording
December 31, 2024. The increase is mainly attributable to new loan originations of $3,071,000 and an increase of $10,000 in utilization of existing consumer lines of credit, offset by loan payoffs of $1,078,000 and regular principal payments. The State and Political Subdivisions portfolio decreased $4,034,000 or 15.4% from $26,181,000 at December 31, 2023 to $22,147,000 at December 31, 2024. The decrease is mainly the result of regular principal payments on state and political subdivisions loans and a $1,825,000 payoff on one state and political loan, which were offset by an increase in the balance of an existing state and political subdivision line of credit resulting from draws of $950,000 completed during the year ended December 31, 2024.
Current wording
of $1,587,000, a decrease of $66,000 in utilization of existing consumer lines of credit, and regular principal payments. The State and Political Subdivisions portfolio decreased $2,006,000 or 9.1% from $22,138,000 at December 31, 2024 to $20,132,000 at December 31, 2025. The decrease is mainly the result of new loan originations totaling $3,309,000 and an increase of $105,000 in utilization of existing consumer lines of credit, offset by loan payoffs of $2,593,000 and regular principal payments on state and political subdivisions loans completed during the year ended December 31, 2025.
Previous wording
Overall, the portfolio risk profile as measured by loan grade is considered low risk, as $919,729,000 or 97.1% of gross loans are graded Pass; $1,540,000 or 0.1% are graded Special Mention; $26,294,000 or 2.8% are graded Substandard; and $0 are graded Doubtful. The rating is intended to represent the best assessment of risk available at a given point in time, based upon a review of the borrower’s financial statements, credit analysis, payment history with the Bank, credit history and lender knowledge of the borrower. See Note 3 — Loans and Allowance for Credit Losses for risk grading tables.
Current wording
Overall, the portfolio risk profile as measured by loan grade is considered low risk, as $917,870,000 or 96.9% of gross loans are graded Pass; $4,350,000 or 0.5% are graded Special Mention; $24,441,000 or 2.6% are graded Substandard; and $0 are graded Doubtful. The rating is intended to represent the best assessment of risk available at a given point in time, based upon a review of the borrower’s financial statements, credit analysis, payment history with the Bank, credit history and lender knowledge of the borrower. See Note 3 — Loans and Allowance for Credit Losses for risk grading tables.
Previous wording
Overall, non-pass grades increased to $27,834,000 at December 31, 2024, as compared to $24,092,000 at December 31, 2023. Real Estate non-pass grades increased $3,987,000 or 17.1% to $27,371,000 as of December 31, 2024 compared to $23,384,000 as of December 31, 2023. Commercial and Industrial non-pass grades decreased $193,000 or 29.7% to $457,000 as of December 31, 2024 compared to $650,000 as of December 31, 2023. Consumer non-pass grades decreased $52,000 or 89.7% to $6,000 as of December 31, 2024 compared to $58,000 as of December 31, 2023. There were no Agricultural or State and Political Subdivision non-pass grades as of December 31, 2024 or December 31, 2023.
Current wording
Overall, non-pass grades increased to $28,791,000 at December 31, 2025, as compared to $27,834,000 at December 31, 2024. Real Estate non-pass grades increased $1,087,000 or 4.0% to $28,458,000 as of December 31, 2025 compared to $27,371,000 as of December 31, 2024. Commercial and Industrial non-pass grades decreased $147,000 or 32.2% to $310,000 as of December 31, 2025 compared to $457,000 as of December 31, 2024. Consumer non-pass grades increased $17,000 or 283.3% to $23,000 as of December 31, 2025 compared to $6,000 as of December 31, 2024. There were no Agricultural or State and Political Subdivision non-pass grades as of December 31, 2025 or December 31, 2024.
Previous wording
The allowance for credit losses constitutes the amount available to absorb losses within the loan portfolio. As of December 31, 2024, the allowance for credit losses was $7,672,000 as compared to $6,925,000 as of December 31, 2023. The allowance for credit losses is established through a provision for credit losses charged to expenses. Loans are charged against the allowance for possible credit losses when management believes that the collectability of the principal is unlikely. The risk characteristics of the loan portfolio are managed through various control processes, including credit evaluations of individual borrowers, periodic reviews, and diversification by industry. Risk is further mitigated through the application of lending procedures such as the holding of adequate collateral and the establishment of contractual guarantees.
Current wording
The allowance for credit losses constitutes the amount available to absorb losses within the loan portfolio. As of December 31, 2025, the allowance for credit losses was $9,412,000 as compared to $7,672,000 as of December 31, 2024. The allowance for credit losses is established through a provision for credit losses charged to expenses. Loans are charged against the allowance for possible credit losses when management believes that the collectability of the principal is unlikely. The risk characteristics of the loan portfolio are managed through various control processes, including credit evaluations of individual borrowers, periodic reviews, and diversification by industry. Risk is further mitigated through the application of lending procedures such as the holding of adequate collateral and the establishment of contractual guarantees.
Previous wording
Management considers, based upon its methodology, that the allowance for credit losses is adequate to cover foreseeable future losses. However, there can be no assurance that the allowance for credit losses will be adequate to cover significant losses, if any, that might be incurred in the future. On a quarterly basis, management evaluates the qualitative factors utilized in the calculation of the Corporation’s allowance for credit losses and various adjustments are made to these factors as deemed necessary at the time of evaluation. During the first quarter of 2024, qualitative factors related to delinquency trends were decreased by eight basis points related to loans (a) secured by first liens, (b) secured by owner-occupied, non-farm, non-residential properties, and (c) other revolving credit plans. Qualitative factors related to volume trends were increased by eight basis points related to loans secured by junior liens and decreased by eight basis points related to other revolving credit plans. Qualitative factors related to collateral values were also increased by four basis points related to commercial and industrial loans during the first quarter of 2024. During the second quarter of 2024, qualitative factors related to delinquency trends were increased by four basis points related to (a) loans secured by first liens and (b) loans secured by owner occupied, non-farm, non-residential properties, as well as increased by sixteen basis points related to (c) loans secured by other non-farm, non-residential properties. Qualitative factors related to volume trends were also decreased by four basis points related to (a) other revolving credit plans and (b) automobile loans during the second quarter of 2024. During the third quarter of 2024, qualitative factors related to delinquency trends were increased by four basis points related to (a) revolving open-end loans and (b) other revolving credit plans and increased by eight basis points related to (c) automobile loans. Qualitative factors related to delinquency trends were decreased by four basis points related to (a) loans secured by multifamily residential properties, (b) loans for agricultural production and other loans to farmers, (c) commercial and industrial loans, and (d) other consumer loans. Qualitative factors related to volume trends decreased by four basis points related to (a) loans secured by farmland, (b) loans secured by other non-farm, non-residential properties, (e) other revolving credit plans, and (f) automobile loans. During the fourth quarter of 2024, qualitative factors related to delinquency trends were decreased by eight basis points related to (a) construction land development and other land loans, (b) residential construction loans, (c) loans for agribusiness farmland, or secured by farmland, and (d) loans secured by other non-farm, non-residential properties. Qualitative factors related to delinquency trends were decreased by four basis points related to (a) revolving ope…
Excerpt shortened here; the source contains the full paragraph.
Current wording
Management considers, based upon its methodology, that the allowance for credit losses is adequate to cover foreseeable future losses. However, there can be no assurance that the allowance for credit losses will be adequate to cover significant losses, if any, that might be incurred in the future. On a quarterly basis, management evaluates the qualitative factors utilized in the calculation of the Corporation’s allowance for credit losses and various adjustments are made to these factors as deemed necessary at the time of evaluation. The following table summarizes the qualitative factor adjustments made during the year ended December 31, 2025.
Previous wording
For the year ended December 31, 2024, the provision for credit losses resulted in a balance of $1,640,000, as compared to a credit balance of $217,000 for the year ended December 31, 2023. The net effect of the provision and net charge-offs resulted in the year-end allowance for credit losses of $7,672,000 of which 94.04% was attributed to the Real Estate component, 0.03% was attributed to the Agricultural component, 4.08% was attributed to the Commercial and Industrial component, 1.28% was attributed to the Consumer component, and 0.57% was attributed to the State and Political Subdivisions component (refer to the activity in Note 3 — Loans and Allowance for Credit Losses on page 77.) The Corporation determined that the provision for credit losses made during 2024 was sufficient to maintain the allowance for credit losses at a level necessary for the probable losses inherent in the loan portfolio as of December 31, 2024.
Current wording
For the year ended December 31, 2025, the provision for credit losses resulted in a balance of $4,701,000 compared to $1,640,000 for the year ended December 31, 2024. The net effect of the provision and net charge-offs resulted in the year-end allowance for credit losses of $9,412,000 of which 93.88% was attributed to the Real Estate component, 0.02% was attributed to the Agricultural component, 4.80% was attributed to the Commercial and Industrial component, 0.79% was attributed to the Consumer component, and 0.51% was attributed to the State and Political Subdivisions component (refer to the activity in Note 3 — Loans and Allowance for Credit Losses on page 82.) The Corporation determined that the provision for credit losses made during 2025 was sufficient to maintain the allowance for credit losses at a level necessary for the probable losses inherent in the loan portfolio as of December 31, 2025.
Previous wording
With the Bank’s manageable level of net charge-offs and recoveries along with additions to the reserve from the provision out of operations, the allowance for credit losses as a percentage of average loans amounted to 0.832% in 2024 and 0.793% in 2023.
Current wording
With the Bank’s manageable level of net charge-offs and recoveries along with additions to the reserve from the provision out of operations, the allowance for credit losses as a percentage of average loans amounted to 0.98% in 2025 and 0.83% in 2024.
Previous wording
Table 12 sets forth the allocation of the Corporation’s allowance for credit losses by loan category and the percentage of loans in each category to the total allowance for credit losses at the dates indicated. The portion of the allowance for credit losses allocated to each loan category does not represent the total available for future losses that
Current wording
Table 12 sets forth the allocation of the Corporation’s allowance for credit losses by loan category and the percentage of loans in each category to the total allowance for credit losses at the dates indicated. The portion of the allowance for credit losses allocated to each loan category does not represent the total available for future losses that may occur within the loan category, since the total credit loss allowance is a valuation reserve applicable to the entire loan portfolio.
Previous wording
Total non-performing assets amounted to $4,970,000 as of December 31, 2024, as compared to $5,681,000 as of December 31, 2023. The economic growth for the fourth quarter of 2024 was higher than expected. Consumer spending remains at high levels. The inflation rate rose in December to 2.9%, above the Federal Reserve Board’s desired rate of 2.0%. Business sentiment saw a slight rise as rates were lowered during the fourth quarter. Many economists and influential thinkers still believe that the economy is moving forward in spite of certain forecasts and predictors. The concern of a recession, however, has lessened. Inflation was receding, although it has seen a slight but steady rise in the last few months. This has the Federal Reserve looking very cautiously at their next move. This will all depend on which direction the inflation rate trends and the unemployment landscape. The war between Ukraine and Russia continues to deeply pierce the landscape of the world. The heightened conflict with Israel and Palestine has caused much hostility throughout the world. The continuing dispute over whether to continue US support of Ukraine and Israel in ongoing efforts has been a strain on the economy. Values of new and used homes and automobiles have remained high. Although there would seem to be a dynamic shift in the automobile industry where inventories are increasing and sales are slowing, this may lead to a reduced profit margin. Higher interest rates have added to the curtailed borrowing. Consumer savings is dwindling, and credit balances are growing. Supply chains are back up and running efficiently in many areas. Labor continues to remain costly and unpredictable. These forces have had a direct effect on the Corporation’s non-performing assets. The Corporation is closely monitoring all segments of its loan portfolio because of the current economic environment. Non-accrual loans totaled $4,214,000 as of December 31, 2024 as compared to $4,616,000 as of December 31, 2023. There were no foreclosed assets held for resale as of December 31, 2024 or December 31, 2023. There were six loans past-due 90 days or more and still accruing interest as of December 31, 2024 which carried an aggregate balance of $756,000, compared to December 31, 2023 when there were five loans past-due 90 days or more and still accruing interest totaling $1,065,000. The loans past-due 90 days or more and still accruing interest as of December 31, 2024 consisted of four loans secured by commercial real estate and two loans secured by residential real estate, all of which were well secured and in the process of collection.
Current wording
Total non-performing assets amounted to $16,919,000 as of December 31, 2025, as compared to $4,970,000 as of December 31, 2024. The economic growth for the fourth quarter of 2025 has remained relatively stagnant from the higher-than-expected growth in the first quarter of 2025. Consumer spending remains at high levels. The inflation rate was 2.7% as of December 31, 2025, compared inflation rates of 3.0%, 2.7%, and 2.4% as of September 30, 2025, June 30, 2025, and March 31, 2025, respectively. Inflation rates for all four quarters of 2025 were above the Federal Reserve Board’s desired rate of 2.0%. Inflation had been receding in the middle of 2024, but has seen a rise in 2025, as the currently imposed tariffs and threat of higher tariffs have pushed inflation higher. Additionally, mass layoffs from the federal government increased unemployment levels. Layoffs from large corporations from the public sector have also had an effect. Many economists and influential thinkers still believe that the economy is moving forward despite certain forecasts and predictors. The concern of a recession, although lessened in 2025, is still being discussed. The Federal Reserve is looking very cautiously at their next move, which will depend on which direction inflation and unemployment rates are trending. The war between Ukraine and Russia continues to deeply pierce the landscape of the world. The conflict with Israel and Palestine is moving forward with the cease fire directive, and the world is watching to see if it holds. The new aggression with Venezuela and the continuing objective from Homeland Security, more specifically ICE agents, has fueled increased strife, concern, and strain on the economy. Values of new and used homes and automobiles have remained high. Although, there would seem to be a dynamic shift in the automobile industry where inventories are increasing and sales are slowing, this may lead to a reduced profit margin. Interest rates have come down slightly but remain high and continue to curtail borrowing. Consumer savings is dwindling, and credit balances are growing. Supply chains are back up and running efficiently in many areas. Labor continues to remain costly and unpredictable. These forces have had a direct effect on the Corporation’s non-performing assets. The Corporation is closely monitoring all segments of its loan portfolio because of the current uncertain economic environment. Non-accrual loans totaled $16,773,000 as of December 31, 2025 as compared to $4,214,000 as of December 31, 2024. There were no foreclosed assets held for resale as of December 31, 2025 or December 31, 2024. There was one loan past-due 90 days or more and still accruing interest as of December 31, 2025 which carried a balance of $146,000, compared to December 31, 2024 when there were six loans past-due 90 days or more and still accruing interest which carried an aggregate balance of $756,000. The loan past-due 90 days or more and still accruing interest as of De…
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94.6% for 2024. This indicates that the management of earning assets is a priority and non-earning assets, primarily cash and due from banks, fixed assets and other assets, are maintained at minimal levels. The primary earning assets are securities and loans.
Current report — wording carried from elsewhere
including reactions to inflationary controls enacted, the labor force, the longevity of the wars, the ongoing political landscape, and the looming worldwide discord, and any after-effects of these factors. These factors may not immediately impact the Corporation’s operational and financial performance, as the effects of these factors may lag into the future. The Corporation is also susceptible to the impact of economic and fiscal policy factors that may evolve in the current economic environment.
Current report — wording carried from elsewhere
Table 14 – Remaining Maturities of Time Deposits and Other Time Open Deposits of $100,000 or More
Current report — wording carried from elsewhere
Standards Codification (“ASC”) 320-10,Investments – Debt Securities, changes in the unrealized gains and losses, net of taxes, on debt securities classified as available-for-sale are reflected in the Corporation’s stockholders’ equity. The Corporation does not own any trading assets.
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Previous report — wording carried elsewhere
prior average volume); and, (iii) changes in rate and volume (changes in average volume multiplied by changes in average rate).
Previous report — wording carried elsewhere
may occur within the loan category, since the total credit loss allowance is a valuation reserve applicable to the entire loan portfolio.
Previous report — wording carried elsewhere
Non-performing assets to total loans was 0.52% for December 31, 2024 and 0.62% for December 31, 2023. Non-performing assets to total assets was 0.35% for December 31, 2024 and 0.40% for December 31, 2023. The
Previous report — wording carried elsewhere
was the key part of the Corporation’s decision to utilize targeted long-term borrowings over high-rate short-term borrowings and the decision to take on more brokered CDs in 2023. As a continuation of this strategy, in 2024, the Corporation purchased additional brokered CDs and entered into an additional hedge agreement against a specified pool of the Bank’s loans.