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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2025

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________to________________

 

Commission file No. 000-19028

 

MUNCY COLUMBIA FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

  pennsylvania 23-2254643  
  (State or other jurisdiction of (I.R.S. Employer  
  incorporation or organization)  Identification No.)  
       
  232 East Street, Bloomsburg, Pennsylvania 17815  
  (Address of principal executive offices)  (Zip Code)  

 

Registrant’s telephone number, including area code: (570) 784-4400

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol   Name of Each Exchange on Which Registered
None   None   None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer ☐   Accelerated filer ☐
  Non-accelerated filer   ☒   Smaller reporting company 
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:

Common stock, $1.25 par value, 3,533,966 shares outstanding as of May 9, 2025.

 

 

 

 

 

 

Muncy Columbia Financial Corporation

Index to Quarterly Report on Form 10-Q

 

  Page
Number
Part I. Financial Information  
   
Item 1. Financial Statements (unaudited)  
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Changes in Stockholders’ Equity 6
Consolidated Statements of Cash Flows 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24
Item 3. Quantitative and Qualitative Disclosure About Market Risk 40
Item 4. Controls and Procedures 40
   
Part II. Other Information  
   
Item 1. Legal Proceedings 40
Item 1A. Risk Factors 40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 41
Item 3. Defaults Upon Senior Securities 41
Item 4. Mine Safety Disclosures 41
Item 5. Other Information 41
Item 6. Exhibits 41
     
Signatures 42

 

2 

 

 

PART I Financial Information

Item 1. Financial Statements

 

Muncy Columbia Financial Corporation

Consolidated Balance Sheets

 

(In Thousands, Except Share and Per Share Data) (Unaudited)  March 31,
2025
   December 31,
2024
 
ASSETS          
Cash and due from banks  $13,781   $11,200 
Interest-bearing deposits in other banks   9,978    6,180 
Total cash and cash equivalents   23,759    17,380 
           
Available-for-sale debt securities, at fair value   307,459    323,248 
Marketable equity securities, at fair value   1,321    1,355 
Restricted investment in bank stocks, at cost   6,480    7,095 
Loans held for sale   1,782    1,691 
           
Loans receivable   1,144,184    1,125,937 
Allowance for credit losses   (9,985)   (9,858)
Loans, net   1,134,199    1,116,079 
           
Premises and equipment, net   26,644    26,484 
Foreclosed assets held for sale   70    70 
Accrued interest receivable   4,948    4,850 
Bank-owned life insurance   41,204    40,953 
Investment in limited partnerships   4,905    5,092 
Deferred tax asset, net   9,213    10,012 
Goodwill   25,609    25,609 
Other intangible assets, net   9,555    10,047 
Other assets   5,188    5,993 
TOTAL ASSETS  $1,602,336   $1,595,958 
           
LIABILITIES          
Interest-bearing deposits  $1,064,852   $1,032,729 
Noninterest-bearing deposits   273,783    259,700 
 Total deposits   1,338,635    1,292,429 
           
Short-term borrowings   27,682    68,388 
Long-term borrowings   50,384    55,536 
Accrued interest payable   1,864    1,857 
Other liabilities   12,371    11,338 
TOTAL LIABILITIES   1,430,936    1,429,548 
           
STOCKHOLDERS’ EQUITY          
Common stock, par value $1.25 per share; 15,000,000 shares authorized; issued 3,842,691 and outstanding 3,533,966 at March 31, 2025; issued 3,841,438 and outstanding 3,532,713 at December 31, 2024   4,804    4,802 
Additional paid-in capital   83,594    83,543 
Retained earnings   106,023    103,268 
Accumulated other comprehensive loss   (11,714)   (13,896)
Treasury stock, at cost; 308,725 shares at March 31, 2025 and December 31, 2024   (11,307)   (11,307)
TOTAL STOCKHOLDERS’ EQUITY   171,400    166,410 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $1,602,336   $1,595,958 

 

See accompanying notes to the unaudited consolidated financial statements.

 

3 

 

 

Muncy Columbia Financial Corporation

Consolidated Statements of Income

 

               
   For the Three Months Ended 
   March 31, 
(In Thousands, Except Share and Per Share Data) (Unaudited)  2025   2024 
INTEREST AND DIVIDEND INCOME          
Interest and fees on loans:          
Taxable  $18,284   $17,256 
Tax-exempt   398    353 
Interest and dividends on investment securities:          
Taxable   1,097    1,161 
Tax-exempt   860    830 
Dividend and other interest income   168    223 
Deposits in other banks   34    66 
TOTAL INTEREST AND DIVIDEND INCOME   20,841    19,889 
           
INTEREST EXPENSE          
Deposits   5,801    4,610 
Short-term borrowings   543    2,497 
Long-term borrowings   629    847 
TOTAL INTEREST EXPENSE   6,973    7,954 
           
NET INTEREST INCOME   13,868    11,935 
           
PROVISION FOR CREDIT LOSSES   110    90 
           
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES   13,758    11,845 
           
NON-INTEREST INCOME          
Service charges and fees   722    615 
Interchange fees   623    619 
Gain on sale of loans   83    76 
Earnings on bank-owned life insurance   231    227 
Brokerage   233    224 
Trust   238    206 
Losses on marketable equity securities   (34)   (117)
Realized losses on available-for-sale debt securities, net       (8)
Other non-interest income   349    690 
TOTAL NON-INTEREST INCOME   2,445    2,532 
           
NON-INTEREST EXPENSE          
Salaries and employee benefits   6,320    4,802 
Occupancy   720    618 
Furniture and equipment   426    406 
Pennsylvania shares tax   301    210 
Professional fees   448    457 
Director’s fees   153    134 
Federal deposit insurance   218    220 
Data processing and telecommunications   839    920 
Automated teller machine and interchange   264    262 
Merger-related expenses       96 
Amortization of intangibles   510    549 
Other non-interest expense   892    972 
TOTAL NON-INTEREST EXPENSE   11,091    9,646 
           
INCOME BEFORE INCOME TAX PROVISION   5,112    4,731 
INCOME TAX PROVISION   767    695 
NET INCOME  $4,345   $4,036 
           
EARNINGS PER SHARE - BASIC AND DILUTED  $1.23   $1.13 
WEIGHTED AVERAGE SHARES OUTSTANDING   3,532,727    3,570,342 

 

See accompanying notes to the unaudited consolidated financial statements.

 

4 

 

 

Muncy Columbia Financial Corporation

Consolidated Statements of Comprehensive Income

 

               
   For the Three Months Ended 
   March 31, 
(In Thousands) (Unaudited)  2025   2024 
Net Income  $4,345   $4,036 
Other comprehensive income (loss):          
Unrealized holding gains (losses) on available-for-sale debt securities   2,761    (1,893)
Tax effect   (579)   397 
Net realized losses included in net income       8 
Tax effect       (2)
Other comprehensive income (loss), net   2,182    (1,490)
Comprehensive income  $6,527   $2,546 

 

See accompanying notes to the unaudited consolidated financial statements.

 

5 

 

 

Muncy Columbia Financial Corporation

Consolidated Statements of Changes in Stockholders’ Equity

 

                   Accumulated         
(In Thousands Except Share and Per Share Data)  Common
Stock
   Additional
Paid-In
   Retained   Other
Comprehensive
   Treasury   Total
Stockholders’
 
(Unaudited)  Shares   Amount   Capital   Earnings   Loss   Stock   Equity 
Balance, December 31, 2024   3,841,438   $4,802   $83,543   $103,268   $(13,896)  $(11,307)  $166,410 
                                    
Net income               4,345            4,345 
Other comprehensive income                   2,182        2,182 
Common stock issuance under employee stock purchase plan   1,253    2    46                48 
Recognition of employee stock purchase plan expense           5                5 
Cash dividends ($0.45 per share)               (1,590)           (1,590)
                                    
Balance, March 31, 2025   3,842,691   $4,804   $83,594   $106,023   $(11,714)  $(11,307)  $171,400 
                                    
Balance, December 31, 2023   3,834,976   $4,794   $83,343   $90,514   $(15,036)  $(9,790)  $153,825 
                                    
Net income               4,036            4,036 
Other comprehensive loss                   (1,490)       (1,490)
Common stock issuance under employee stock purchase plan   2,012    2    54                56 
Recognition of employee stock purchase plan expense           6                6 
Cash dividends ($0.44 per share)               (1,570)           (1,570)
                                    
Balance, March 31, 2024   3,836,988   $4,796   $83,403   $92,980   $(16,526)  $(9,790)  $154,863 

 

See accompanying notes to the unaudited consolidated financial statements.

 

6 

 

 

Muncy Columbia Financial Corporation

Consolidated Statements of Cash Flows

 

               
   For the Three Months Ended 
   March 31, 
(In Thousands) (Unaudited)  2025   2024 
OPERATING ACTIVITIES          
Net Income  $4,345   $4,036 
Adjustments to reconcile net income to net cash provided by operating activities:          
Provision for credit losses   110    90 
Depreciation and amortization of premises and equipment   370    370 
Accretion of loan fair value adjustments, net   (2,497)   (2,789)
Amortization of deposit fair value adjustments, net   97    481 
Losses on marketable equity securities   34    117 
Realized losses on available-for-sale debt securities, net       8 
Accretion of investment securities, net   (221)   (184)
Losses on disposal of premises and equipment, net   51     
Deferred income taxes   220    1,284 
Gain on sale of loans   (83)   (76)
Earnings on bank-owned life insurance   (231)   (227)
Proceeds from sale of mortgage loans   3,675    2,257 
Originations of mortgage loans held for resale   (3,683)   (2,429)
Amortization of intangibles   510    549 
Amortization of investment in limited partnerships   187    187 
Decrease (increase) in accrued interest receivable and other assets   707    (1,030)
Increase in accrued interest payable and other liabilities   1,040    1,166 
Other, net   72    68 
Net cash provided by operating activities   4,703    3,878 
INVESTING ACTIVITIES          
Available-for-sale debt securities:          
Proceeds from sales       50,311 
Proceeds from paydowns, calls and maturities   18,771    21,688 
Proceeds from maturities of interest-bearing time deposits       248 
Purchase of bank-owned life insurance   (20)   (20)
Proceeds from redemption of restricted investment in bank stocks   2,228    4,232 
Purchase of restricted investment in bank stocks   (1,613)   (1,851)
Net increase in loans   (15,733)   (9,735)
Acquisition of customer relationship intangibles   (18)    
Acquisition of premises and equipment   (576)   (113)
Net cash provided by investing activities   3,039    64,760 
FINANCING ACTIVITIES          
Net increase in deposits   46,109    62,350 
Net decrease in short-term borrowings   (40,706)   (126,619)
Repayment of long-term borrowings   (5,224)   (5,001)
Proceeds from issuance of common stock   48    56 
Cash dividends paid   (1,590)   (1,570)
 Net cash used for financing activities   (1,363)   (70,784)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   6,379    (2,146)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   17,380    18,377 
CASH AND CASH EQUIVALENTS, END OF PERIOD  $23,759   $16,231 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
           
Interest paid  $6,966   $8,031 
Loans transferred to foreclosed assets held for sale       165 

 

See accompanying notes to the unaudited consolidated financial statements.

 

7 

 

 

MUNCY COLUMBIA FINANCIAL CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

PRINCIPLES OF CONSOLIDATION

 

The consolidated financial statements include the accounts of Muncy Columbia Financial Corporation (the “Corporation”) and its wholly-owned subsidiary, Journey Bank (the “Bank”). All significant inter-company balances and transactions have been eliminated in consolidation.

 

BASIS OF PRESENTATION

 

The consolidated financial information included herein, except the consolidated balance sheet dated December 31, 2024, is unaudited. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. Prior period amounts have been reclassified when necessary to conform to the current period’s presentation. Such reclassifications did not have an impact on the operating results or financial position of the Corporation. Operating results for the three months ended March 31, 2025, are not necessarily indicative of the results for the year ending December 31, 2025.

 

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s audited financial statements, included in the Annual Report filed on Form 10-K as of and for the year ended December 31, 2024.

 

SEGMENT REPORTING

 

Management has determined that the Corporation has one reportable segment, “Community Banking.” All of the Corporation’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Corporation supports the others.

 

The Corporation’s chief operating decision maker is the Chief Executive Officer. The Chief Executive Officer assesses performance for the Community Banking segment and decides how to allocate resources based on net income that is reported on the Consolidated Statements of Income. The measure of segment assets is reported on the Consolidated Balance Sheets as total assets. There have been no changes in the basis of segmentation or in the basis of measurement of segment profit or loss since the Annual Report filed on Form 10-K as of and for the year ended December 31, 2024.

 

RECENTLY ISSUED BUT NOT YET EFFECTIVE ACCOUNTING PRONOUNCEMENTS

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU No. 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024. The ASU may be adopted on a prospective or retrospective basis and early adoption is permitted. The Corporation is currently evaluating the impact the new guidance will have on disclosures related to income taxes.

 

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures, which clarifies the effective date of ASU 2024-03, which is effective for public business entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Corporation is currently evaluating the impact the new guidance will have on relevant disclosures.

 

 

8 

 

 

2. SECURITIES

 

The amortized cost, related estimated fair value, and unrealized gains and losses of available-for-sale debt securities were as follows at March 31, 2025 and December 31, 2024:

 

   March 31, 2025 
       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
(In Thousands)  Cost   Gains   Losses   Value 
Obligation of U.S.Government Corporations and Agencies:                
Mortgage-backed  $124,633   $112   $(12,333)  $112,412 
Collateralized mortgage obligations   6,515    408        6,923 
Other   109,500        (2,881)   106,619 
Obligations of state and political subdivisions   81,363    960    (1,101)   81,222 
Other debt securites   276    7        283 
Total available-for-sale debt securities  $322,287   $1,487   $(16,315)  $307,459 

 

   December 31, 2024 
       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
(In Thousands)  Cost   Gains   Losses   Value 
Obligation of U.S.Government Corporations and Agencies:                
Mortgage-backed  $128,631   $65   $(14,989)  $113,707 
Collateralized mortgage obligations   6,752    294        7,046 
Other   123,500        (4,046)   119,454 
Obligations of state and political subdivisions   81,680    1,666    (584)   82,762 
Other debt securites   274    5        279 
Total available-for-sale debt securities  $340,837   $2,030   $(19,619)  $323,248 

 

Securities available-for-sale with an aggregate fair value of $153,283,000 and $176,016,000 at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and other balances as required by law.

 

The amortized cost and estimated fair value of investment securities, by expected maturity, are shown below at March 31, 2025. Expected maturities on debt securities will differ from contractual maturities, because some borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

   Amortized     
(In Thousands)  Cost   Fair Value 
Due in one year or less  $49,434   $48,850 
Due after one year to five years   67,376    65,078 
Due after five years to ten years   29,497    29,110 
Due after ten years   44,832    45,086 
Sub-total   191,139    188,124 
           
Mortgage-backed securities   124,633    112,412 
Collateralized mortgage obligations   6,515    6,923 
Total debt securities  $322,287   $307,459 

 

The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in one period.

 

9 

 

 

The following table presents the gross proceeds received, and gross realized gains and losses, on sales of available-for-sale debt securities for the three months ended March 31, 2025 and 2024. Gains and losses realized on sales of available-for-sale debt securities are included in non-interest income in the Consolidated Statements of Income.

 

               
   For the Three Months Ended March 31, 
(In Thousands)  2025   2024 
Gross proceeds received on sales  $   $50,311 
Gross realized gains       595 
Gross realized losses       (603)

 

The following summary shows the gross unrealized losses and fair value, aggregated by investment category of those individual securities for which an allowance for credit losses has not been recorded that have been in a continuous unrealized loss position for less than or more than 12 months as of March 31, 2025 and December 31, 2024:

 

   March 31, 2025 
   Less than Twelve Months   Twelve Months or Greater   Total 
       Gross       Gross       Gross 
   Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
(In Thousands)  Value   Losses   Value   Losses   Value   Losses 
Obligations of U.S. Government Corporations and Agencies:                        
Mortgage-backed  $9,661   $(75)  $96,077   $(12,258)  $105,738   $(12,333)
Other           106,619    (2,881)   106,619    (2,881)
Obligations of state and political subdivisions   42,565    (920)   2,673    (181)   45,238    (1,101)
Total  $52,226   $(995)  $205,369   $(15,320)  $257,595   $(16,315)

 

   December 31, 2024 
   Less than Twelve Months   Twelve Months or Greater   Total 
       Gross       Gross       Gross 
   Fair   Unrealized   Fair   Unrealized   Fair   Unrealized 
(In Thousands)  Value   Losses   Value   Losses   Value   Losses 
Obligations of U.S. Government Corporations and Agencies:                        
Mortgage-backed  $14,456   $(332)  $97,308   $(14,657)  $111,764   $(14,989)
Other           119,454    (4,046)   119,454    (4,046)
Obligations of state and political subdivisions   31,646    (475)   3,138    (109)   34,784    (584)
Total  $46,102   $(807)  $219,900   $(18,812)  $266,002   $(19,619)

 

At March 31, 2025, the Corporation had a total of 125 debt securities that have been in a gross unrealized loss position for less than twelve months with depreciation of 1.9% from the Corporation’s amortized cost basis.

 

At March 31, 2025, the Corporation had a total of 116 debt securities that have been in a gross unrealized loss position for greater than twelve months with depreciation of 7.5% from the Corporation’s amortized cost basis.

 

At March 31, 2025, unrealized losses on debt securities have not been recognized into income because the issuers bonds are of high credit quality (rated BBB or higher), management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The fair value is expected to recover as the bonds approach maturity.

 

As of March 31, 2025 and December 31, 2024, no allowance for credit loss (“ACL”) was required for debt securities. The Bank does not have the intent to sell and does not believe it will be more likely than not to be required to sell any of these securities prior to a recovery of their fair value to amortized cost, which may be at maturity.

 

As of March 31, 2025, all debt securities were rated above investment grade. Based on the payment status, rating and management’s evaluation of these securities, no ACL was required for the debt securities as of March 31, 2025. As of March 31, 2025, the underlying issuers continue to make timely principal and interest payments on the securities.

 

10 

 

 

Equity securities with a readily determinable fair value are stated at fair value with realized and unrealized gains and losses reported in income. At March 31, 2025 and December 31, 2024, the Corporation held $1,321,000 and $1,355,000, respectively, in marketable equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on marketable equity securities during the three months ended March 31, 2025 and 2024:

 

   For the Three Months 
   Ended March 31, 
(In Thousands)  2025   2024 
Net losses recognized during the period on marketable equity securities  $(34)  $(117)
           
Less: Net losses recognized during the period on marketable equity securities sold during the period        
           
Unrealized losses recognized during the period on marketable equity securities still held at the reporting date  $(34)  $(117)

 

 

3. LOANS AND ALLOWANCE FOR CREDIT LOSSES

 

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at their outstanding unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment to yield (interest income) over the life of the loan. Deferred fees and costs amounted to $777,000 at March 31, 2025 and $790,000 at December 31, 2024 and are netted against the outstanding unpaid principal balances.

 

The segments of the Corporation’s loan portfolio are disaggregated into classes that allow management to monitor risk and performance. The loan classes used are consistent with the internal reports evaluated by the Corporation’s management and Board of Directors to monitor risk and performance within the various segments of its loan portfolio.

 

Major classifications of loans at March 31, 2025 and December 31, 2024 consisted of:

 

(In Thousands)  March 31, 2025   December 31, 2024 
Commercial and industrial  $93,932   $93,445 
Commercial real estate:          
Commercial mortgages   332,339    325,882 
Student housing   45,538    45,808 
Residential real estate   651,539    638,952 
Consumer and other   20,836    21,850 
Gross loans  $1,144,184   $1,125,937 

 

Allowance for Credit Losses and Recorded Investment in Financial Receivables

 

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Corporation has aligned our segmentation to internal loan reports. The Corporation has identified the following portfolio segments:

Commercial and Industrial
Commercial Real Estate
Residential Real Estate
Consumer and other

 

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2025 and 2024:

 

                                       
   For the Three Months Ended March 31, 2025 
       Commercial   Residential         
   Commercial and   Real   Real   Consumer     
(In Thousands)  Industrial   Estate   Estate   and Other   Total 
Balance, December 31, 2024  $931   $6,869   $1,850   $208   $9,858 
Provision (credit) for credit losses on loans   460    (462)   164    (52)   110 
Loans charged off               (1)   (1)
Recoveries   11    2        5    18 
Balance, March 31, 2025  $1,402   $6,409   $2,014   $160   $9,985 

 

11 

 

 

                                       
   For the Three Months Ended March 31, 2024 
       Commercial   Residential         
   Commercial and   Real   Real   Consumer     
(In Thousands)  Industrial   Estate   Estate   and Other   Total 
Balance, December 31, 2023  $801   $6,847   $1,474   $180   $9,302 
(Credit) provision for credit losses on loans (a)   (90)   319    (368)   240    101 
Loans charged off           (45)   (11)   (56)
Recoveries   1        1    2    4 
Balance, March 31, 2024  $712   $7,166   $1,062   $411   $9,351 

 

(a)Amount does not include the release of credit losses related to off balance sheet credit exposures of $11,000 for the three months ended March 31, 2024.

 

The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Corporation’s historical loss experience. As of March 31, 2025, the Corporation expects that the markets in which it operates will experience no significant changes in economic conditions based primarily on housing indexes, interest rate stabilization, and a steady unemployment rate. Management adjusts historical loss experience as needed based upon economic expectations. No reversion adjustments were necessary, as the starting point for the Corporation’s estimate was a cumulative loss rate covering the expected contractual term of the loan portfolio.

 

For the three months ended March 31, 2025, the Corporation recorded a $110,000 provision for credit losses on loans compared to $101,000 for the same period in 2024. The provision amounts for the three months ended March 31, 2025 and 2024 primarily reflect an increase in volume in the loan portfolio, increases in non-accrual loans which impacted probability of default calculations and changes in qualitative factors related to the nature of the loan portfolio, volume and severity of past due loans, loan grade migration, changes in lending staff, changes in lending policies and procedures and forecasted economic conditions.

 

Historical credit loss experience is the basis for the estimation of expected credit losses. The Corporation applies historical loss rates to pools of loans with similar risk characteristics. After consideration of the historic loss calculation, management can apply qualitative adjustments to reflect the current conditions and reasonable and supportive forecasts not already captured in the historical loss information at the balance sheet date.

 

In accordance with Accounting Standards Codification (“ASC”) 326, the Corporation will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. Loans will not be included in both collective and individual analysis. The individual analysis will establish a specific reserve for loans in scope.

 

Specific reserves are established based on the following three acceptable methods for measuring the ACL:1) the present value of expected future cash flows discounted at the loan’s original interest rate; 2) the loan’s observable market price; 3) the fair value of the collateral when the loan is collateral dependent. The method is selected on a loan-by-loan basis with the evaluation of the need and amount of a specific allocation of the allowance being made on a quarterly basis.

 

The need for an updated appraisal on collateral dependent loans is determined on a case-by-case basis. The useful life of an appraisal or evaluation will vary depending upon the circumstances of the property and the economic conditions in the marketplace. A new appraisal is not required if there is an existing appraisal which, along with other information, is sufficient to determine a reasonable value for the property and to support an appropriate and adequate allowance for credit losses. At a minimum, annual documented reevaluation of the property is completed by the Bank’s Chief Credit Officer to support the value of the property.

 

When receiving an appraisal associated with an existing real estate collateral dependent transaction, the Bank’s Chief Credit Officer must determine if there have been material changes to the underlying assumptions in the appraisal which affect the original estimate of value. Some of the factors that could cause material changes to reported values include:

the passage of time;
the volatility of the local market;

the availability of financing;

natural disasters;

the inventory of competing properties;

new improvements to, or lack of maintenance of, the subject property or competing properties upon physical inspection by the Bank;

changes in underlying economic and market assumptions, such as material changes in current and projected vacancy, absorption rates, capitalization rates, lease terms, rental rates, sales prices, concessions, construction overruns and delays, zoning changes, etc.; and/or

environmental contamination.

 

12 

 

The value of the property is adjusted to appropriately reflect the above listed factors and the value is discounted to reflect the value impact of a forced distressed sale, any outstanding senior liens, any outstanding unpaid real estate taxes, transfer taxes and closing costs that would occur with sale of the real estate. If the Chief Credit Officer determines that a reasonable value cannot be derived based on the available information, a new appraisal is ordered. The determination of the need for a new appraisal rests with the Chief Credit Officer and not the originating account officer.

 

The following table summarizes the loan portfolio and allowance for credit losses as of March 31, 2025 and December 31, 2024:

 

                                       
   March 31, 2025 
(In Thousands)  Commercial and
Industrial
   Commercial
Real
Estate
   Residential
Real
Estate
   Consumer
and Other
   Total 
Loans:                    
Individually evaluated  $   $12,698   $2,313   $   $15,011 
Collectively evaluated   93,932    365,179    649,226    20,836    1,129,173 
Total loans  $93,932   $377,877   $651,539   $20,836   $1,144,184 
                          
Allowance for credit losses:                         
Individually evaluated  $   $3,896   $157   $   $4,053 
Collectively evaluated   1,402    2,513    1,857    160    5,932 
Total allowance for credit losses  $1,402   $6,409   $2,014   $160   $9,985 

 

                                       
   December 31, 2024 
(In Thousands)  Commercial and
Industrial
   Commercial
Real
Estate
   Residential
Real
Estate
   Consumer
and Other
   Total 
Loans:                    
Individually evaluated  $   $12,712   $2,046   $   $14,758 
Collectively evaluated   93,445    358,978    636,906    21,850    1,111,179 
Total loans  $93,445   $371,690   $638,952   $21,850   $1,125,937 
                          
Allowance for credit losses:                         
Individually evaluated  $   $4,011   $133   $   $4,144 
Collectively evaluated   931    2,858    1,717    208    5,714 
Total allowance for credit losses  $931   $6,869   $1,850   $208   $9,858 

 

As of March 31, 2025 and December 31, 2024, the amortized cost basis of individually evaluated loans that were deemed to be collateral dependent was $3,293,000 and $2,925,000, respectively. As of March 31, 2025 and December 31, 2024, the amortized cost basis of collateral dependent loans classified as Residential Real Estate were $2,313,000 and $2,046,000, respectively, and were collateralized by residential real estate properties. As of March 31, 2025 and December 31, 2024, the amortized cost basis of collateral dependent loans classified as Commercial Real Estate were $980,000 and $879,000, respectively, and were collateralized by commercial real estate properties.

 

13

 

 

Age Analysis of Past-Due Loans Receivable

 

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past-due status as of March 31, 2025 and December 31, 2024:

 

                                               
   March 31, 2025 
(In Thousands)  Current   30-59
Days
Past Due
   60-89
Days
Past Due
   90+ Days
Past Due
   Total
Past Due
   Total
Loans
 
Commercial and Industrial  $93,070   $26   $   $836   $862   $93,932 
Commercial Real Estate   373,177    1,864    123    2,713    4,700    377,877 
Residential Real Estate   636,775    9,797    1,933    3,034    14,764    651,539 
Consumer and other   20,488    140    126    82    348    20,836 
   $1,123,510   $11,827   $2,182   $6,665   $20,674   $1,144,184 

 

                                               
   December 31, 2024 
(In Thousands)  Current   30-59
Days
Past Due
   60-89
Days
Past Due
   90+ Days
Past Due
   Total
Past Due
   Total
Loans
 
Commercial and Industrial  $92,690   $43   $111   $601   $755   $93,445 
Commercial Real Estate   367,171    2,139    1,115    1,265    4,519    371,690 
Residential Real Estate   625,201    7,163    2,326    4,262    13,751    638,952 
Consumer and other   21,532    123    128    67    318    21,850 
 Gross loans  $1,106,594   $9,468   $3,680   $6,195   $19,343   $1,125,937 

 

Non-performing Loans

 

The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of March 31, 2025 and December 31, 2024:

 

                                       
   March 31, 2025 
(In Thousands)  Nonaccrual
with no
ACL
   Nonaccrual
with
ACL
   Total
Nonaccrual
   Loans Past
Due over 90 Days
Still Accruing
   Total
Nonperforming
 
Commercial and Industrial  $   $1,211   $1,211   $   $1,211 
Commercial Real Estate   247    3,597    3,844        3,844 
Residential Real Estate   1,696    5,254    6,950        6,950 
Consumer and other       225    225        225 
Total  $1,943   $10,287   $12,230   $   $12,230 

 

                                       
   December 31, 2024 
(In Thousands)  Nonaccrual
with no
ACL
   Nonaccrual
with
ACL
   Total
Nonaccrual
   Loans Past
Due over 90 Days
Still Accruing
   Total
Nonperforming
 
Commercial and Industrial  $   $734   $734   $   $734 
Commercial Real Estate   139    2,069    2,208        2,208 
Residential Real Estate   1,458    5,478    6,936        6,936 
Consumer and other       169    169        169 
Total  $1,597   $8,450   $10,047   $   $10,047 

 

14

 

 

Credit Quality Indicators

 

The Bank categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Bank analyzes loans individually to classify the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial real estate, commercial construction, and commercial and industrial loans. This analysis is performed on a quarterly basis. The Bank uses the following definitions for risk ratings:

 

Pass. Loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

 

Special Mention. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

 

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

 

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

 

Based on the most recent analysis performed, the following table presents the recorded investment in non-homogenous loans by internal risk rating system as of March 31, 2025 and December 31, 2024:

 

                                                               
   March 31, 2025 
                           Revolving     
                           Loans     
   Term Loans Amortized Cost Basis by Origination Period   Amortized     
(In Thousands)  2025   2024   2023   2022   2021   Prior   Cost Basis   Total 
Commercial and Industrial                                        
Risk Rating                                        
Pass  $3,788   $12,549   $8,694   $13,124   $12,804   $23,374   $14,574   $88,907 
Special Mention                           25    25 
Substandard       101    237    187    158    1,048    3,269    5,000 
Doubtful                                
Total  $3,788   $12,650   $8,931   $13,311   $12,962   $24,422   $17,868   $93,932 
Current period gross charge-offs  $   $   $   $   $   $   $   $ 
                                         
Commercial Real Estate                                        
Risk Rating                                        
Pass  $20,519   $43,639   $52,577   $57,482   $58,484   $111,646   $16,448   $360,795 
Special Mention               2,519        3,263    71    5,853 
Substandard           1,118    2,121    2,369    4,948    673    11,229 
Doubtful                                
Total  $20,519   $43,639   $53,695   $62,122   $60,853   $119,857   $17,192   $377,877 
Current period gross charge-offs  $   $   $   $   $   $   $   $ 
                                         
Total                                        
Risk Rating                                        
Pass  $24,307   $56,188   $61,271   $70,606   $71,288   $135,020   $31,022   $449,702 
Special Mention               2,519        3,263    96    5,878 
Substandard       101    1,355    2,308    2,527    5,996    3,942    16,229 
Doubtful                                
Total  $24,307   $56,289   $62,626   $75,433   $73,815   $144,279   $35,060   $471,809 
Current period gross charge-offs  $   $   $   $   $   $   $   $ 

 

15

 

 

                                                               
   December 31, 2024 
                           Revolving     
                           Loans     
   Term Loans Amortized Cost Basis by Origination Period   Amortized     
(In Thousands)  2024   2023   2022   2021   2020   Prior   Cost Basis   Total 
Commercial and Industrial                                        
Risk Rating                                        
Pass  $13,008   $9,194   $13,658   $13,394   $7,057   $17,194   $14,898   $88,402 
Special Mention       97    32    6    348    117    332    932 
Substandard   103    174    171    164    91    505    2,902    4,111 
Doubtful                                
Total  $13,111   $9,465   $13,861   $13,564   $7,496   $17,816   $18,133   $93,445 
Current period gross charge-offs  $   $   $   $   $   $   $   $ 
                                         
Commercial Real Estate                                        
Risk Rating                                        
Pass  $44,854   $53,940   $59,313   $59,533   $20,624   $102,581   $15,025   $355,870 
Special Mention           2,757        272    3,276    199    6,504 
Substandard       389    1,250    2,396    521    4,064    696    9,316 
Doubtful                                
Total  $44,854   $54,329   $63,320   $61,930   $21,417   $109,921   $15,920   $371,690 
Current period gross charge-offs  $   $   $   $   $   $   $   $ 
                                         
Total                                        
Risk Rating                                        
Pass  $57,862   $63,134   $72,971   $72,927   $27,680   $119,775   $29,923   $444,272 
Special Mention       97    2,789    6    620    3,393    532    7,436 
Substandard   103    563    1,421    2,560    612    4,569    3,598    13,427 
Doubtful                                
Total  $57,965   $63,794   $77,181   $75,493   $28,913   $127,737   $34,053   $465,135 
Current period gross charge-offs  $   $   $   $   $   $   $   $ 

 

16

 

 

The Bank monitors the credit risk profile by payment activity for residential real estate, consumer, and other loan classes. Loans past due 90 days or more and loans on nonaccrual status are considered non-performing. Non-performing loans are reviewed quarterly. The following table presents the amortized cost in residential real estate, and consumer and other loans based on payment activity as of March 31, 2025 and December 31, 2024:

 

                                 
   March 31, 2025 
                           Revolving     
                           Loans     
   Term Loans Amortized Cost Basis by Origination Period   Amortized     
(In Thousands)  2025   2024   2023   2022   2021   Prior   Cost Basis   Total 
Residential Real Estate                                        
Payment Performance                                        
Performing  $25,150   $87,316   $79,589   $100,825   $76,314   $201,655   $73,740   $644,589 
Nonperforming       288    545    839    1,405    3,145    728    6,950 
Total  $25,150   $87,604   $80,134   $101,664   $77,719   $204,800   $74,468   $651,539 
Current period gross charge-offs  $   $   $   $   $   $   $   $ 
                                         
Consumer and Other                                        
Payment Performance                                        
Performing  $1,022   $2,188   $3,135   $7,867   $1,053   $1,413   $3,933   $20,611 
Nonperforming       21    42    67    7    16    72    225 
Total  $1,022   $2,209   $3,177   $7,934   $1,060   $1,429   $4,005   $20,836 
Current period gross charge-offs  $   $   $   $   $   $   $1   $1 
                                         
Total                                        
Payment Performance                                        
Performing  $26,172   $89,504   $82,724   $108,692   $77,367   $203,068   $77,673   $665,200 
Nonperforming       309    587    906    1,412    3,161    800    7,175 
Total  $26,172   $89,813   $83,311   $109,598   $78,779   $206,229   $78,473   $672,375 
Current period gross charge-offs  $   $   $   $   $   $   $1   $1 

 

                                 
   December 31, 2024 
                           Revolving     
                           Loans     
   Term Loans Amortized Cost Basis by Origination Period   Amortized     
(In Thousands)  2024   2023   2022   2021   2020   Prior   Cost Basis   Total 
Residential Real Estate                                        
Payment Performance                                        
Performing  $87,826   $81,836   $103,749   $77,766   $55,360   $153,775   $71,705   $632,017 
Nonperforming   295    480    959    1,506    501    2,219    976    6,936 
Total  $88,121   $82,316   $104,708   $79,272   $55,861   $155,993   $72,681   $638,952 
Current period gross charge-offs  $   $   $   $   $   $45   $   $45 
                                         
Consumer and Other                                        
Payment Performance                                        
Performing  $2,893   $3,558   $8,322   $1,263   $490   $1,060   $4,096   $21,681 
Nonperforming   21    25    63    8        9    42    169 
Total  $2,914   $3,584   $8,385   $1,270   $490   $1,069   $4,138   $21,850 
Current period gross charge-offs  $   $7   $   $   $   $4   $   $11 
                                         
Total                                        
Payment Performance                                        
Performing  $90,719   $85,394   $112,071   $79,028   $55,851   $154,834   $75,800   $653,698 
Nonperforming   316    505    1,022    1,514    501    2,228    1,018    7,105 
Total  $91,035   $85,899   $113,093   $80,542   $56,352   $157,063   $76,818   $660,802 
Current period gross charge-offs  $   $7   $   $   $   $49   $   $56 

 

17

 

 

Modifications to Borrowers Experiencing Financial Difficulty

 

Occasionally, the Bank may consider modifying loans to borrowers in financial distress by providing term extension, other-than-significant payment delay or interest rate reduction. In some cases, the Bank provides multiple types of concessions on one loan. Typically, one type of concession, such as an interest rate reduction, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as term extension, may be granted.

 

For the three months ended March 31, 2025 and 2024, the Bank did not grant any loan modifications to borrowers experiencing financial difficulty.

 

The carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession were $70,000 at both March 31, 2025 and December 31, 2024. The recorded investment of consumer mortgage loans secured by residential real properties for which formal foreclosure proceedings were in process were $1,607,000 and $1,846,000 at March 31, 2025 and December 31, 2024, respectively.

 

Concentrations of Credit Risk

 

Most of the Corporation’s lending activity occurs within the Bank’s primary market area which encompasses Clinton, Columbia, Lycoming, Montour and Eastern Northumberland counties in Northcentral Pennsylvania. The majority of the Corporation’s loan portfolio consists of commercial and consumer real estate loans. As of March 31, 2025 and December 31, 2024, there were no concentrations of loans related to any single industry in excess of 10% of total loans.

 

4. DEPOSITS

 

Major classifications of deposits at March 31, 2025 and December 31, 2024 consisted of:

 

(In Thousands)  March 31, 2025   December 31, 2024 
Demand deposits  $273,783   $259,700 
Interest-bearing demand deposits   406,330    380,801 
Savings   195,748    194,958 
Money market   103,759    108,263 
Time deposits   359,015    348,707 
Total deposits  $1,338,635  $1,292,429 

 

Time deposits of $250,000 or more amounted to $104,351,000 and $100,287,000 as of March 31, 2025 and December 31, 2024, respectively.

 

5. BORROWED FUNDS

 

Short-Term Borrowings

 

Short-term borrowings include repurchase agreements with customers and advances from the FHLB. As of March 31, 2025, the Bank was approved by the FHLB for borrowings of up to $571,508,000 of which $50,985,000 was outstanding in the form of advances and the FHLB had issued letters of credit on the Bank’s behalf totaling $20,000,000 against its borrowing capacity. Advances from the FHLB are secured by qualifying assets of the Bank. In addition to the outstanding balances noted below, the Bank also has additional lines of credit totaling $19,466,000 available from correspondent banks other than the FHLB. The outstanding balances and related information for short-term borrowings are summarized as follows as of March 31, 2025 and December 31, 2024:

 

             
   March 31, 2025 
(In Thousands)  Ending
Balance
   Maximum
Month End
Balance
   Weighted
Average Rate
At Period End
 
Securities sold under agreements to repurchase  $27,682   $39,810    3.92%
Other short-term borrowings       22,210    4.69%
Total  $27,682   $62,020    3.92%

 

18

 

 

             
   December 31, 2024 
(In Thousands)  Ending
Balance
   Maximum
Month End
Balance
   Weighted
Average Rate
At Period End
 
Securities sold under agreements to repurchase  $49,806   $185,680    3.76%
Other short-term borrowings   18,582    34,000    4.71%
Total  $68,388   $219,680    4.02%

 

The Corporation utilizes securities sold under agreements to repurchase to facilitate the needs of our customers and to facilitate secured short-term funding needs. Securities sold under agreements to repurchase are stated at the amount of cash received in connection with the transaction. We monitor collateral levels on a continuous basis. We may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with our safekeeping agents.

 

The remaining contractual maturity of repurchase agreements in the Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 is presented in the following tables:

 

                                         
   Remaining Contractual Maturity of the Agreements 
(In Thousands)  Overnight and
Continuous
   Up to 30 Days   30-90 Days   Greater than 90
Days
   Total 
March 31, 2025                    
Securities sold under agreements to repurchase:                         
Obligation of U.S. Government Corporations and Agencies:                         
Mortgage-backed  $20,759   $   $   $   $20,759 
Collateralized mortgage obligations   414                414 
Other       1,579        3,158    4,737 
Obligation of state and political subdivisions   1,772                1,772 
Total borrowings  $22,945   $1,579   $   $3,158   $27,682 
                          
Gross amount of recognized liabilities for repurchase agreements  $27,682 
Amounts related to agreements not included in offsetting disclosure above  $ 

 

                                         
   Remaining Contractual Maturity of the Agreements 
(In Thousands)  Overnight and
Continuous
   Up to 30 Days   30-90 Days   Greater than 90
Days
   Total 
December 31, 2024                    
Securities sold under agreements to repurchase:                         
Obligation of U.S. Government Corporations and Agencies:                         
Mortgage-backed  $37,385   $   $   $   $37,385 
Collateralized mortgage obligations   628                628 
Other   4,511    600        4,088    9,199 
Obligation of state and political subdivisions   2,594                2,594 
Total borrowings  $45,118   $600   $   $4,088   $49,806 
                          
Gross amount of recognized liabilities for repurchase agreements  $49,806 
Amounts related to agreements not included in offsetting disclosure above  $ 

 

The fair value of securities pledged to secure repurchase agreements may decline. The Corporation manages this risk by having a policy to pledge securities valued at 110% of the gross outstanding balance of repurchase agreements. Securities sold under agreements to repurchase are secured by securities with a carrying amount of $36,399,000 and $60,099,000 at March 31, 2025 and December 31, 2024, respectively.

 

19

 

 

Long-Term Borrowings

 

Long-term FHLB borrowings consisted of the following at March 31, 2025 and December 31, 2024:

 

(In Thousands)  March 31, 2025   December 31, 2024 
Loans maturing in 2025 with a weighted-average rate of 4.66%  $10,000   $15,208 
Loans maturing in 2026 with a weighted-average rate of 4.05%   15,359    15,359 
Loans maturing in 2027 with a weighted-average rate of 3.93%   15,417    15,417 
Loans maturing in 2028 with a weighted-average rate of 3.85%   10,209    10,225 
Total long-term FHLB borrowings; weighted average rate of 4.09%   50,985    56,209 
Unamortized fair value adjustments   (601)   (673)
Total long-term borrowings  $50,384   $55,536 

 

Note: Weighted-average rates are presented as of March 31, 2025.

 

6. FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

 

The Corporation establishes a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring assets and liabilities at fair value. The standard describes three levels of inputs that may be used to measure fair values:

 

Level I:  Quoted prices are available in active markets for identical assets or liabilities as of the reported date.
    
Level II:  Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments of which can be directly observed.
    
Level III:  Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgement or estimation.

 

This hierarchy requires the use of observable market data available.

 

The following table presents the assets reported on the Consolidated Balance Sheets at their fair value on a recurring basis as of March 31, 2025 and December 31, 2024, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

                               
   March 31, 2025 
(In Thousands)  Level I   Level II   Level III   Total 
Obligation of US Government Corporations and Agencies                
Mortgage-backed  $   $112,412   $   $112,412 
Collateralized mortgage obligations       6,923        6,923 
Other       106,619        106,619 
Obligations of state and political subdivisions       81,222        81,222 
Other debt securities       283        283 
Total available-for-sale debt securities  $   $307,459   $   $307,459 
                     
Marketable equity securities  $1,321   $   $   $1,321 
                     
Real estate loans held for sale  $   $1,782   $   $1,782 

 

20

 

 

                               
   December 31, 2024 
(In Thousands)  Level I   Level II   Level III   Total 
Obligation of US Government Corporations and Agencies                
Mortgage-backed  $   $113,707   $   $113,707 
Collateralized mortgage obligations       7,046        7,046 
Other       119,454        119,454 
Obligations of state and political subdivisions       82,762        82,762 
Other debt securities       279        279 
Total available-for-sale debt securities  $   $323,248   $   $323,248 
                     
Marketable equity securities  $1,355   $   $   $1,355 
                     
Real estate loans held for sale  $   $1,691   $   $1,691 

 

The fair values of equity securities classified as Level I are derived from quoted market prices in active markets; these assets consist entirely of stocks held in other banks. The fair values of all debt securities classified as Level II are obtained from nationally-recognized third-party pricing agencies. The fair values are derived primarily from cash flow models, which include assumptions for interest rates, credit losses, and prepayment speeds. The significant inputs utilized in the cash flow models are based on market data obtained from sources independent of the Corporation (observable inputs) and are therefore classified as Level II within the fair value hierarchy. The fair values of real estate loans held for sale classified as Level II are derived from observable pricing inputs for similar assets in active markets.

 

The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of March 31, 2025 and December 31, 2024, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

                               
   March 31, 2025 
(In Thousands)  Level I   Level II   Level III   Total 
Assets Measured on a Non-recurring Basis:                    
Loans individually evaluated for credit loss  $   $   $7,412   $7,412 
Foreclosed assets held for sale           70    70 
Total nonrecurring fair value measurements  $   $   $7,482   $7,482 

 

                               
   December 31, 2024 
(In Thousands)  Level I   Level II   Level III   Total 
Assets Measured on a Non-recurring Basis:                    
Loans individually evaluated for credit loss  $   $   $7,398   $7,398 
Foreclosed assets held for sale           70    70 
Total nonrecurring fair value measurements  $   $   $7,468   $7,468 

 

21

 

 

Loans are individually evaluated for credit loss when they do not share similar risk characteristics as similar loans within their loan pool. Foreclosed assets held for sale consist of real estate acquired by foreclosure. Loans individually evaluated for credit loss are reviewed and evaluated on at least a quarterly basis for individual reserve requirements and adjusted accordingly. The following table provides a listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques on a nonrecurring basis as of March 31, 2025 and December 31, 2024:

 

   March 31, 2025 
   Quantitative Information about Level III Fair Value Measurements 
(In Thousands)  Fair Value Estimate   Valuation Technique  Unobservable Input  Range   Weighted Average 
Loans individually evaluated for credit loss:                   
Commercial Real Estate  $6,436   Discounted cash flows  Charge-off rates  0-100%   21.29% 
Commercial Real Estate   515   Sales comparison  Discount to appraised value  25-31%   25.97% 
Residential Real Estate   461   Sales comparison  Discount to appraised value  25-41%   33.63% 
Total loans individually evaluated for credit loss  $7,412               
                    
Foreclosed assets held for sale:                   
Residential Real Estate  $70   Sales comparison  Discount to appraised value  30.69%   N/A 

 

   December 31, 2024 
   Quantitative Information about Level III Fair Value Measurements 
(In Thousands)  Fair Value Estimate   Valuation Technique  Unobservable Input  Range   Weighted Average 
Loans individually evaluated for credit loss:                   
Commercial Real Estate  $6,429   Discounted cash flows  Charge-off rates  0-100%   21.25% 
Commercial Real Estate   513   Sales comparison  Discount to appraised value  26-31%   26.44% 
Residential Real Estate   456   Sales comparison  Discount to appraised value  21-41%   29.40% 
Total loans individually evaluated for credit loss  $7,398               
                    
Foreclosed assets held for sale:                   
Residential Real Estate  $70   Sales comparison  Discount to appraised value  30.69%   N/A 

 

At March 31, 2025 and December 31, 2024, the carrying values and fair values of financial instruments that are not recorded at fair value on the Consolidated Balance Sheets are presented in the table below:

 

                                       
   March 31, 2025 
(In Thousands)  Carrying
Amount
   Fair Value   Level I   Level II   Level III 
Financial assets:                         
Cash and cash equivalents  $23,759   $23,759   $23,759   $   $ 
Restricted investment in bank stocks, at cost   6,480    6,480        6,480     
Loans, net   1,134,199    1,059,169            1,059,169 
Accrued interest receivable   4,948    4,948        4,948      
Mortgage servicing rights   1,693    2,021            2,021 
                          
Financial liabilities:                         
Interest-bearing deposits  $1,064,852   $1,063,047   $   $705,836   $357,211 
Noninterest-bearing deposits   273,783    273,783        273,783     
Short-term borrowings   27,682    27,682        27,682     
Long-term borrowings   50,384    50,201            50,201 
Accrued interest payable   1,864    1,864        1,864     

 

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   December 31, 2024 
(In Thousands)  Carrying
Amount
   Fair Value   Level I   Level II   Level III 
Financial assets:                         
Cash and cash equivalents  $17,380   $17,380   $17,380   $   $ 
Restricted investment in bank stocks, at cost   7,095    7,095        7,095     
Loans, net   1,116,079    1,042,090            1,042,090 
Accrued interest receivable   4,850    4,850        4,850      
Mortgage servicing rights   1,756    2,041            2,041 
                          
Financial liabilities:                         
Interest-bearing deposits  $1,032,729   $1,031,198   $   $684,022   $347,176 
Noninterest-bearing deposits   259,700    259,700        259,700     
Short-term borrowings   68,388    68,388        68,388     
Long-term borrowings   55,536    55,032            55,032 
Accrued interest payable   1,857    1,857        1,857     

 

Fair value is defined as a financial instrument which could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale. If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument, but focuses on the exit price of the asset and liability.

 

If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimate losses, and other factors as determined through various option pricing formulas. As many of these assumptions result from judgments made by management based upon estimates that are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in assumptions on which the estimate fair values are based may have a significant impact on the resulting estimated fair values.

 

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Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, represents an overview of the financial condition and results of operations of the Corporation and should be read in conjunction with the more detailed and comprehensive disclosures included in the Annual Report on Form 10-K for the year ended December 31, 2024. In addition, please read this section in conjunction with the unaudited consolidated financial statements and notes to the unaudited consolidated financial statements contained in Item 1, “Financial Statements” of Part I to this Quarterly Report on Form 10-Q.

 

The Corporation is in the business of providing customary retail, commercial banking and financial services to individuals, businesses and local governments through its 22 branch offices operated by Journey Bank, the Corporation’s wholly-owned subsidiary. The Corporation’s 22 branch offices are operated in Clinton, Columbia, Lycoming, Montour and Northumberland counties in central Pennsylvania.

 

CAUTIONARY STATEMENT

 

Certain statements in this section and elsewhere in this Quarterly Report on Form 10-Q, other periodic reports filed by us under the Securities Exchange Act of 1934, as amended, and any other written or oral statements made by or on behalf of us may include “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 which reflect our current views with respect to future events and financial performance. Such forward looking statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements. These risks, uncertainties and other factors include, but are not limited to:

 

Our business and financial results are affected by business and economic conditions, both generally and specifically in the mostly North Central Pennsylvania market in which we operate.

 

Changes in interest rates and valuations in the debt, equity and other financial markets.

 

Disruptions in the liquidity and other functioning of financial markets, including such disruptions in the market for real estate and other assets commonly securing financial products.

 

Actions by the Federal Reserve Board and other government agencies, including those that impact money supply and market interest rates.

 

Changes in our customers’ and suppliers’ performance in general and their creditworthiness in particular.

 

Changes in customer preferences and behavior, whether as a result of changing business and economic conditions or other factors.

 

A continuation of recent turbulence in significant segments of the United States and global financial markets, particularly if it worsens, could impact our performance, both directly by affecting our revenues and the value of our assets and liabilities and indirectly by affecting our customers and suppliers and the economy generally.

 

Our business and financial performance could be impacted as the financial industry restructures in the current environment by changes in the competitive landscape.

 

Given current economic and financial market conditions, our forward-looking statements are subject to the risk that these conditions will be substantially different than we are currently expecting.

 

Legal and regulatory developments could have an impact on our ability to operate our businesses or our financial condition or results of operations or our competitive position or reputation. Reputational impacts, in turn, could affect matters such as business generation and retention, our ability to attract and retain management, liquidity and funding. These legal and regulatory developments could include: (a) the unfavorable resolution of legal proceedings or regulatory and other governmental inquiries; (b) increased litigation risk from recent regulatory and other governmental developments; (c) the results of the regulatory examination process, and regulators’ future use of supervisory and enforcement tools; (d) legislative and regulatory reforms, including changes to laws and regulations involving tax, pension, education and mortgage lending, the protection of confidential customer information, and other aspects of the financial institution industry; (e) the potential impact of new broad-based tariffs which may cause economic uncertainty and in turn influence profitability and asset quality; and (f) changes in accounting policies and principles.

 

Our business and operating results are affected by our ability to identify and effectively manage risks inherent in our businesses, including, where appropriate, through the effective use of third-party insurance and capital management techniques.

 

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Our ability to anticipate and respond to technological changes can have an impact on our ability to respond to customer needs and to meet competitive demands.

 

Our ability to implement our business initiatives and strategies could affect our financial performance over the next several years.

 

Competition can have an impact on customer acquisition, growth and retention, as well as on our credit spreads and product pricing, which can affect market share, deposits and revenues.

 

Our business and operating results can also be affected by widespread natural disasters, terrorist activities or international hostilities, either as a result of the impact on the economy and capital and other financial markets generally or on us or on our customers and suppliers.

 

The words “believe,” “expect,” “anticipate,” “project” and similar expressions signify forward looking statements. Readers are cautioned not to place undue reliance on any forward looking statements made by or on behalf of us. Any such statement speaks only as of the date the statement was made. We undertake no obligation to update or revise any forward looking statements.

 

The following discussion and analysis should be read in conjunction with the detailed information and consolidated financial statements, including notes thereto, included elsewhere in this report. Our consolidated financial condition and results of operations are essentially those of our subsidiary, Journey Bank. Therefore, the analysis that follows is directed to the performance of the Bank.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

The Corporation’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and conform to general practices within the banking industry. In the preparation of its financial statements, the Corporation is required to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The Corporation’s critical accounting policies are fundamental to understanding this MD&A and are more fully described in Note 1 (“Summary of Significant Accounting Policies”) within the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024.

 

The Corporation defines its critical accounting policies, in accordance with U.S. GAAP. U.S. GAAP requires the Corporation to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on its financial condition and results of operations, as well as the specific manner in which those principles are applied. Application of assumptions different than those used by the Corporation could result in material changes in the Corporation’s financial position or results of operations. The Corporation believes its policies governing the determination of the allowance for credit losses, the fair value of available-for-sale debt securities and the fair values of assets acquired and liabilities assumed in business combinations are critical accounting policies. The Corporation’s management has reviewed and approved these critical accounting policies and has discussed these policies with its Audit Committee. The Corporation believes the critical accounting policies used in the preparation of its financial statements that require significant estimates and judgments are as follows:

 

Allowance for Credit Losses (ACL) – Loans

 

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 326, Financial Instruments – Credit Losses, provides guidance on the accounting for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASC 326 requires consideration of a broad range of reasonable and supportable information to form credit loss estimates in an effort to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit. Commonly referred to as Current Expected Credit Losses (“CECL”), requires a financial asset (or a group of financial assets) to be measured at an amortized cost basis and presented at the net amount expected to be collected. ASC 326 affects financial assets and net investment in leases that are not accounted for at fair value through net income, including such financial assets as loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash.

 

Management evaluates the credit quality of the Corporation’s loan portfolio on an ongoing basis and performs a formal review of the adequacy of the ACL on a quarterly basis. The ACL is established through a provision for credit losses charged to earnings and is maintained at a level that management considers to be an estimate of the lifetime expected credit losses of the portfolio as of the evaluation date. Loans, or portions of loans, determined by management to be uncollectible are charged off against the ACL, while recoveries of amounts previously charged off are credited to the ACL.

 

Determining the amount of the ACL is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows, estimated losses on pools of homogeneous loans based on historical loss experience and reasonable and supportable forecasts, as well as consideration of current economic trends and conditions, all of which may be susceptible to significant change. Banking regulators, as an integral part of their examination of the Corporation, also review the ACL, and may require, based on information available to them at the time of their examination, that certain loan balances be charged off or require that adjustments be made to the ACL. Additionally, the ACL is determined, in part, by the composition and size of the loan portfolio.

 

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The ACL consists of two components, a specific component and a general component. The specific component relates to loans that are individually analyzed for impairment. For such loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the loan is lower than the carrying value of that loan. The general component covers all other loans and is based on historical loss experience as adjusted for qualitative factors. The general reserve component of the ACL is based on pools of performing loans segregated by loan segment. Historical loss factors are applied based on historical losses in each risk rating category to determine the appropriate reserve related to those loans.

 

Although the Corporation’s management uses the best information available, the level of the ACL remains an estimate which is subject to significant judgment and short-term change which could have a significant impact on the Corporation’s financial condition or results of operations. From January 1, 2025 to March 31, 2025, the level of the ACL increased from $9.9 million to $10.0 million and the ACL to total loans decreased from 0.88% to 0.87%. The Corporation’s ACL is highly sensitive to the methods, assumptions and estimates underlying its calculation. See Note 3 “Loans and Allowance for Credit Losses” within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in Part I of this Quarterly Report on Form 10-Q for additional qualitative and quantitative information about the Corporation’s ACL.

 

Fair Value of Available-For-Sale Debt Securities

 

Another material estimate is the calculation of fair values of the Corporation’s debt securities. For the Corporation’s debt securities, the Corporation receives estimated fair values from an independent valuation service, or from brokers. In developing fair values, the valuation service and the brokers compare securities that have similar maturities, coupon rates, and credit ratings. Estimated fair values of debt securities may vary among brokers and other valuation services.

 

Business Combinations

 

Business combinations are accounted for by applying the acquisition method. As of acquisition date, the identifiable assets acquired and liabilities assumed are measured at fair value and recognized separately from goodwill. Results of operations of the acquired entity are included in the consolidated statement of income from the date of acquisition. The calculation of intangible assets including core deposits and the fair value of loans are based on significant judgements. Core deposit intangibles are calculated using a discounted cash flow model based on various factors including discount rate, attrition rate, interest rate, cost of alternative funds and net maintenance costs. Loans acquired in connection with acquisitions are recorded at their acquisition-date fair value. Determining the fair value of the acquired loans involves estimating the principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Management considers a number of factors in evaluating the acquisition-date fair value including the remaining life of the acquired loans, delinquency status, estimated prepayments, payment options and other loan features, internal risk grade, estimated value of the underlying collateral and interest rate environment.

 

FINANCIAL CONDITION

 

Total assets at March 31, 2025, were $1.602 billion, an increase of $6.4 million, or 0.4% from $1.596 billion at December 31, 2024. The change in total assets primarily reflected increases in cash and cash equivalents and loans receivable, partially offset by a decrease in available-for-sale debt securities. Cash and cash equivalents increased $6.4 million and gross loans receivable increased $18.2 million. Available-for-sale debt securities decreased $15.8 million. Total liabilities at March 31, 2025, were $1.431 billion, an increase of $1.4 million, or 0.1% from $1.430 billion at December 31, 2024. Deposit balances increased by $46.2 million, short-term borrowings decreased $40.7 million and long-term borrowings decreased $5.2 million since December 31, 2024.

 

Total average assets increased 0.7% from $1.590 billion for the three months ended March 31, 2024, to $1.601 billion for the three months ended March 31, 2025. Average earning assets were $1.499 billion for the three months ended March 31, 2025 and $1.493 billion for the three months ended March 31, 2024. Average interest-bearing liabilities were $1.154 billion for the three months ended March 31, 2025 and $1.171 billion for the three months ended March 31, 2024.

 

Cash and cash equivalents increased $6.4 million or 36.7% from $17.4 million at December 31, 2024 to $23.8 million at March 31, 2025. This increase is primarily related to increased correspondent bank balances resulting from cash flows from available-for-sale debt securities during the three months ended March 31, 2025.

 

Gross loans receivable not held for sale increased $18.2 million or 1.6% to $1.144 billion at March 31, 2025 from $1.126 billion at December 31, 2024. This increase is related to strong loan demand during the three months ended March 31, 2025.

 

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Available-for-sale debt securities decreased $15.8 million to $307.5 million at March 31, 2025 from $323.2 million at December 31, 2024. The Corporation received proceeds from paydowns, calls and maturities of available-for-sale debt securities of $18.8 million during the three months ended March 31, 2025. Partially offsetting this activity was an increase in fair value of available-for-sale debt securities of $2.8 million for the three months ended March 31, 2025.

 

Interest-bearing deposits increased $32.1 million to $1.065 billion at March 31, 2025 from $1.033 billion at December 31, 2024. Noninterest-bearing deposits increased 5.4% from $259.7 million at December 31, 2024 to $273.8 million at March 31, 2025. The increase in total deposits during the three months ended March 31, 2025 was a result of strong organic deposit growth in combination with a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts.

 

Short-term borrowings decreased $40.7 million to $27.7 million at March 31, 2025 from $68.4 million at December 31, 2024. This change was primarily related to the migration of customer repurchase agreements described above as well as a paydown in short-term FHLB borrowings during the three months ended March 31, 2025.

 

Long-term borrowings were $50.4 million at March 31, 2025 compared to $55.5 million at December 31, 2024. This decrease is primarily related to $5.2 million in repayments on long-term borrowings during the three months ended March 31, 2025.

 

Total stockholder’s equity increased by $5.0 million, or 3.0%, from $166.4 million at December 31, 2024, to $171.4 million at March 31, 2025. This increase is primarily attributable to earnings, net of cash dividends, along with a decrease in accumulated other comprehensive loss due to changes in the fair values of available-for-sale debt securities. Accumulated other comprehensive loss amounted to $11.7 million as of March 31, 2025 and $13.9 million as of December 31, 2024.

 

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio decreased from 86.4% as of December 31, 2024 to 84.7% as of March 31, 2025 due to the asset/liability mix changes noted above, and remains within internal policy limits.

 

It is our opinion that the asset/liability mix and the interest rate risk associated with the balance sheet are within manageable parameters. Constant monitoring using asset/liability reports and interest rate risk scenarios are in place along with quarterly asset/liability management meetings on the committee level by the Bank’s Board of Directors. Additionally, the Bank’s Asset/Liability Committee meets quarterly with an investment consultant and works with independent third parties regularly to review key assumptions and other metrics used in the modeling software.

 

Securities

 

The Corporation’s investment securities portfolio provides a source of liquidity needed to meet expected loan demand and interest income to increase profitability. Additionally, the investment securities portfolio is used to meet pledging requirements to secure public deposits, customer repurchase agreements and for other purposes. Debt securities are classified as either available-for-sale or held-to-maturity at the time of purchase based on management’s intent. Available-for-sale securities are carried at fair value, with unrealized holding gains and losses reported as a component of stockholders’ equity in accumulated other comprehensive income (loss), net of tax, while held-to-maturity securities are carried at amortized cost. At March 31, 2025 and December 31, 2024, all debt securities were classified as available-for-sale. Equity securities with readily determinable fair values are carried at fair value, with gains and losses due to fluctuations in market value included in the Consolidated Statements of Income. Securities with limited marketability and/or restrictions, such as FHLB of Pittsburgh stock, are carried at cost. Decisions to purchase or sell investment securities are based upon management’s current assessment of long- and short-term economic and financial conditions, including the interest rate environment and asset/liability management, liquidity and tax-planning strategies.

 

At March 31, 2025, the investment portfolio was comprised principally of available-for-sale debt securities including, fixed-rate, taxable and tax-exempt obligations of state and political subdivisions and fixed-rate and floating-rate securities issued by U.S. government or U.S. government-sponsored agencies, which include agencies, mortgage-backed securities and collateralized mortgage obligations, or CMOs. Additionally, the Corporation holds equity investments in the stock of certain publicly traded bank holding companies. Except for U.S. government and government-sponsored agencies, there were no securities of any individual issuer that exceeded 10.0% of stockholders’ equity as of March 31, 2025.

 

The majority of the Corporation’s debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security’s value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder’s equity, net of deferred income taxes. At March 31, 2025, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $11.7 million, net of deferred income taxes of $3.1 million, a decrease of $2.2 million compared to the net unrealized holding loss of $13.9 million, net of deferred income taxes of $3.7 million, at December 31, 2024. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation’s regulatory capital ratios.

 

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The following table presents the carrying value of available-for-sale debt securities, at fair value at March 31, 2025 and December 31, 2024:

 

   March 31, 2025   December 31, 2024 
   Amortized   Fair   Amortized   Fair 
(In Thousands)  Cost   Value   Cost   Value 
AVAILABLE-FOR-SALE DEBT SECURITIES:                    
Obligation of U.S.Government Corporations and Agencies:                    
Mortgage-backed  $124,633   $112,412   $128,631   $113,707 
Collateralized mortgage obligations   6,515    6,923    6,752    7,046 
Other   109,500    106,619    123,500    119,454 
Obligations of state and political subdivisions   81,363    81,222    81,680    82,762 
Other debt securites   276    283    274    279 
Total available-for-sale debt securities  $322,287   $307,459   $340,837   $323,248 
                     
Aggregate Unrealized Loss       $(14,828)       $(17,589)
Aggregate Unrealized Loss as a % of Amortized Cost        (4.6%)        (5.2%)

 

The following table presents the weighted-average yields on available-for-sale debt securities by major category and maturity period at March 31, 2025. Yields are calculated on the basis of the amortized cost and weighted for the scheduled maturity of each security. Because mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity date, they are not included in the maturity categories in the following summary.

 

   Within       One-       Five-       After             
   One       Five       Ten       Ten             
(Dollars In Thousands)  Year   Yield   Years   Yield   Years   Yield   Years   Yield   Total   Yield 
AVAILABLE-FOR-SALE DEBT SECURITIES:                                                  
Obligation of U.S.Government Corporations and Agencies:                                                  
Other  $48,000    0.81%  $61,500    1.32%  $       $       $109,500    1.10%
Obligations of state and political subdivisions   1,335    5.03%   5,786    3.82%   29,409    4.15%   44,833    4.67%   81,363    4.43%
Other debt securities   99    5.24%   89    5.78%   88    5.00%           276    5.34%
Sub-total  $49,434    1.12%  $67,375    1.67%  $29,497    4.44%  $44,833    4.67%  $191,139    2.66%
                                                   
Mortgage-backed securities                                           124,633    2.12%
Collateralized mortgage obligations                                           6,515    4.83%
Total                                          $322,287    2.41%

 

Marketable Equity Securities

 

At March 31, 2025 and and December 31, 2024, the Corporation held $1.3 and $1.4 million, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three months ended March 31, 2025 and 2024:

 

   For the Three Months 
   Ended March 31, 
(In Thousands)  2025   2024 
Net losses recognized during the period on marketable equity securities  $(34)  $(117)
           
Less: Net losses recognized during the period on marketable equity securities sold during the period        
           
Unrealized losses recognized during the period on marketable equity securities still held at the reporting date  $(34)  $(117)
           

See Note 2 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding Corporation’s investment portfolio as of March 31, 2025.

 

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Loans

 

Gross loans receivable increased 1.6% from $1.126 billion at December 31, 2024 to $1.144 billion at March 31, 2025. The percentage distribution in the loan portfolio is shown in the tables below:

 

   March 31, 2025   December 31, 2024 
(In Thousands)  Amount   %   Amount   % 
Commercial and industrial  $93,932    8.2%  $93,445    8.3%
Commercial real estate:                    
Commercial mortgages   332,339    29.0%   325,882    28.9%
Student housing   45,538    4.0%   45,808    4.1%
Residential real estate   651,539    56.9%   638,952    56.7%
Consumer and other   20,836    1.8%   21,850    1.9%
Gross loans  $1,144,184    100.0%  $1,125,937    100.0%

 

Loan concentrations are considered to exist when there are amounts loaned to a number of borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. Our lending activity is heavily concentrated in the geographic market areas we serve. This geographic concentration subjects our loan portfolio to the general economic conditions within the state. The risks created by this concentration have been considered by management and are monitored on an ongoing basis. As of March 31, 2025 and December 31, 2024, there were no concentrations of loans exceeding 10% of total loans other than the categories of loans disclosed in the table above. We believe our loan portfolio is diversified relative to industry concentrations across the various loan portfolio categories.

 

Banking regulators have established guidelines of less than 100% of tier 1 capital plus allowance for credit losses in construction lending and less than 300% of tier 1 capital plus allowance for credit losses in commercial real estate lending that management monitors as part of the risk management process. The construction concentration ratio is a percentage of the outstanding construction and land development loans to total tier 1 capital plus allowance for credit losses. The commercial real estate concentration ratio is a percentage of the outstanding balance of non-owner occupied commercial real estate, multifamily, and construction and land development loans to tier 1 capital plus allowance for credit losses. At March 31, 2025 and December 31, 2024, the Bank’s exposure to commercial real estate was well below these guidelines.

 

As of March 31, 2025, commercial real estate loans totaled $377.9 million or 33.0% of total gross loans. Of this amount commercial mortgage loans represented $332.4 million or 29.0% of total gross loans and student housing loans represented $45.5 million or 4.0% of total gross loans. The following table presents the distribution of commercial mortgage loans and related percentage of the total loan portfolio as of March 31, 2025 and December 31, 2024:

 

   March 31, 2025   December 31, 2024 
(In Thousands)  Amount   %   Amount   % 
Commercial mortgages:                    
Commercial construction  $24,123    2.1%  $24,664    2.2%
Multifamily   73,784    6.4%   74,463    6.5%
Owner occupied nonfarm nonresidential   106,743    9.3%   101,697    8.9%
Non-owner occupied nonfarm nonresidential   88,043    7.7%   83,882    7.3%
Other commercial   39,646    3.5%   41,176    3.6%
Total commercial mortgages  $332,339    29.0%  $325,882    28.5%

 

The following table presents the maturity distribution and interest rate information of the loan portfolio by major category as of March 31, 2025:

 

   As of March 31, 2025 
     
   Fixed-Rate Loans   Variable- or Adjustable-Rate Loans   All Loans 
   1 Year   1-5   5-15   >15       1 Year   1-5   5-15   >15          
(In Thousands)  or Less   Years   Years   Years   Total   or Less   Years   Years   Years   Total   Total 
Commercial and industrial  $5,087   $20,471   $14,281   $48   $39,887   $13,162   $3,101   $23,104   $14,678   $54,045   $93,932 
Commercial real estate:                                                       
Commercial mortgages   3,681    3,136    16,126    11,873    34,816    13,146    8,216    67,439    208,722    297,523    332,339 
Student housing   1,592        2,055        3,647    1,609    4,599    16,372    19,311    41,891    45,538 
Residential real estate   6,416    9,033    60,298    42,568    118,315    14,543    4,537    50,893    463,251    533,224    651,539 
Consumer and other   1,302    6,118    2,452    500    10,372    49    247    3,331    6,837    10,464    20,836 
Total  $18,078   $38,758   $95,212   $54,989   $207,037   $42,509   $20,700   $161,139   $712,799   $937,147   $1,144,184 

 

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See Note 3 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s loan portfolio as of March 31, 2025.

 

Asset Quality

 

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at the amount of unpaid principal, net of deferred loan fees and costs, and reduced by the allowance for credit losses. The allowance for credit losses is established through a provision for credit losses charged to earnings.

 

The Corporation has established and consistently applies loan policies and procedures designed to foster sound underwriting and credit monitoring practices. Credit risk is managed through the efforts of loan officers, the Chief Credit Officer, the loan review function, as well as oversight from the Board of Directors. Management continually evaluates its credit risk management practices to ensure problems in the loan portfolio are addressed in a timely manner, although, as is the case with any financial institution, a certain degree of credit risk is dependent in part on local and general economic conditions that are beyond management’s control. Under the Corporation’s risk rating system, loans are rated pass, special mention, substandard, doubtful, or loss, with all categories reviewed regularly as part of the risk management practices.

 

Non-performing loans are monitored on an ongoing basis as part of the Corporation’s loan review process. Additionally, work-outs for non-performing loans and foreclosed assets held for sale are actively monitored through the Bank’s Credit Department. A potential loss on a non-performing asset is generally determined by comparing the outstanding loan balance to the fair market value of the pledged collateral, less estimated cost to sell.

 

Management actively manages non-performing loans in an effort to mitigate loss to the Corporation by working with customers to develop strategies to resolve borrower difficulties, through sale or liquidation of collateral, foreclosure and other appropriate means. In addition, management monitors employment and economic conditions within its market area, as weakening of conditions could result in real estate devaluations and an increase in loan delinquencies, which could negatively impact asset quality and cause an increase in the provision for credit losses.

 

The following table presents information about non-performing assets, as of March 31, 2025 and December 31, 2024:

 

Non-performing Assets

 

   March 31,   December 31, 
(dollars in thousands)  2025   2024 
Non-accrual loans  $12,230   $10,047 
Loans past due 90 days or more and still accruing        
Total non-performing loans   12,230    10,047 
Foreclosed assets held for sale   70    70 
Total non-performing assets  $12,300   $10,117 
           
Non-performing loans as a percentage of total loans, gross   1.07%   0.94%
Non-performing assets as a percentage of total assets   0.77%   0.63%
Allowance for credit losses as a percentange of total loans, gross   0.87%   0.88%
Allowance for credit losses to non-performing assets   81.18%   97.44%

 

Total non-performing assets amounted to $12,300,000, or 0.77% of total assets at March 31, 2025, as compared to $10,117,000, or 0.63% of total assets at December 31, 2024. For the three months ended March 31, 2025, the Corporation experienced increases in non-accrual loans in all major loan classifications, however, the most significant increases were in commercial and industrial and commercial real estate loans which increased $477,000 and $1,636,000, respectively.

 

Residential real estate non-accrual loans are generally related to a homogenous population of well secured loans collateralized by 1-4 family residential properties. With respect to commercial and industrial and commercial real estate non-accrual loans, the Corporation has experienced a limited number of large commercial relationships that have required significant monitoring and workout efforts. As a result, these relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the provision for credit losses and the amount of total charge-offs reported in any one period.

 

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Management believes it has been conservative in its decisions concerning identification of loans requiring individual evaluation for credit loss, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the allowances calculated as of March 31, 2025. Management continues to closely monitor its loan relationships for credit losses and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate.

 

Allowance for Credit Losses

 

The allowance for credit losses was $10.0 million at March 31, 2025, compared to $9.9 million at December 31, 2024. The allowance equaled 0.87% of total loans, net of unearned fees and costs and unamortized fair value adjustments, at March 31, 2025 as compared to 0.88% of total loans at December 31, 2024. The allowance for credit losses is analyzed quarterly and reviewed by the Corporation’s Board of Directors. Regular loan meetings with the Corporation’s Board of Directors reviewed new loans over specified thresholds. Delinquent loans, loan exceptions and certain large loans are addressed by the full Board no less than monthly to determine compliance with policies.

 

The following tables present the allocation of the allowance for credit losses as of March 31, 2025 and December 31, 2024:

 

   March 31, 2025   December 31, 2024 
(dollars in thousands)  Allowance for Credit Losses   Percent of Allowance   Percent of Loans to Gross Loans   Allowance for Credit Losses   Percent of Allowance   Percent of Loans to Gross Loans 
Commercial and industrial  $1,402    14.0%   8.2%  $931    9.4%   8.3%
Commercial real estate   6,409    64.2%   33.0%   6,869    69.7%   33.0%
Residential real estate   2,014    20.2%   56.9%   1,850    18.8%   56.7%
Consumer and other   160    1.6%   1.8%   208    2.1%   1.9%
Total  $9,985    100.0%   100.0%  $9,858    100.0%   100.0%

 

See Note 3 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s allowance for credit losses as of March 31, 2025.

 

Deposits

 

Deposits are the primary source of funds for the Corporation’s lending and investing activities. The Corporation provides a range of deposit services to businesses and individuals, including noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market accounts and time deposits. These accounts generally earn interest at rates the Corporation establishes based on market factors and the anticipated amount and timing of funding needs. The establishment or continuity of a core deposit relationship can be a factor in loan pricing decisions. While the Corporation’s primary focus is on establishing customer relationships to attract core deposits, at times, the Corporation may use brokered deposits and other wholesale deposits to supplement its funding sources. As of March 31, 2025, the Corporation held no brokered deposits.

 

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The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for three months ended March 31, 2025 and 2024, respectively:

 

   For the Three Months Ended         
   March 31, 2025   March 31, 2024         
   Average   Average   Average   Average   Balance Change 
   Balance   Rate   Balance   Rate   Amount   % 
(In Thousands)                        
Non-interest bearing  $264,414    %  $254,129    %  $10,285    4.0%
Savings   193,633    0.03    203,003    0.03    (9,370)   (4.6)
Interest-bearing demand deposits   393,666    2.20    257,791    1.25    135,875    52.7 
Money market deposits   103,600    1.84    104,095    1.87    (495)   (0.5)
Time deposits   354,636    3.64    333,875    3.99    20,761    6.2 
Total deposits  $1,309,949    1.80%  $1,152,893    1.61%  $157,056    13.6%

 

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three months ended March 31, 2025 and 2024, was 2.25% and 2.06%, respectively.

 

At March 31, 2025, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Corporation insurance limit, totaled $350.9 million. Of this amount, $131.0 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $104.4 million at March 31, 2025.

 

See Note 4 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s deposits as of March 31, 2025.

 

Borrowings

 

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 4.7% and 17.3% of total interest-bearing liabilities for the three months ended March 31, 2025 and 2024, respectively. This change was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during 2024 and 2025.

 

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $825.9 million at March 31, 2025. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $591.0 million at March 31, 2025. The unused portion of these lines of credit was $517.0 million at March 31, 2025.

 

See Note 5 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s borrowings as of March 31, 2025.

 

Capital Resources

 

Management believes, as of March 31, 2025, that Journey Bank meets all capital adequacy requirements to which it is subject. Management annually performs stress testing on its regulatory capital levels and expects Journey Bank to maintain capital levels that exceed the regulatory standards for well-capitalized institutions for the next 12 months and for the foreseeable future.

 

Future dividend payments and repurchases of common stock will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. In addition, Journey Bank is subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. Further, although Muncy Columbia Financial Corporation is not subject to the specific consolidated capital requirements, its ability to pay dividends, repurchase stock or engage in other activities may be limited by the Federal Reserve if it fails to hold sufficient capital commensurate with its overall risk profile.

 

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The following table reflects the Bank’s actual capital amounts and ratios at March 31, 2025 and December 31, 2024:

 

   Journey Bank   Minimum Required For Capital Adequacy Purposes   Minimum Required For Capital Adequacy Purposes with Conservation Buffer   Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations 
(Dollars in Thousands)  Amount   Ratio   Ratio   Ratio   Ratio 
March 31, 2025                         
Total capital (to risk-weighted assets)  $156,359    16.13%   8.00%   10.50%   10.00%
                          
Tier I capital (to risk-weighted assets)   146,662    15.13%   6.00%   8.50%   8.00%
                          
Tier I common equity (to risk-weighted assets)   146,662    15.13%   4.50%   7.00%   6.50%
                          
Tier I capital (to average assets)   146,662    9.30%   4.00%   4.00%   5.00%
                          
Total risk-weighted assets   969,511                     
                          
Total average assets   1,577,808                     

 

   Journey Bank   Minimum Required For Capital Adequacy Purposes   Minimum Required For Capital Adequacy Purposes with Conservation Buffer   Minimum Required To Be Well Capitalized Under Prompt Corrective Action Regulations 
(Dollars in Thousands)  Amount   Ratio   Ratio   Ratio   Ratio 
December 31, 2024                         
Total capital (to risk-weighted assets)  $152,703    16.03%   8.00%   10.50%   10.00%
                          
Tier I capital (to risk-weighted assets)   143,417    15.06%   6.00%   8.50%   8.00%
                          
Tier I common equity (to risk-weighted assets)   143,417    15.06%   4.50%   7.00%   6.50%
                          
Tier I capital (to average assets)   143,417    9.10%   4.00%   4.00%   5.00%
                          
Total risk-weighted assets   952,452                     
                          
Total average assets   1,576,746                     

 

RESULTS OF OPERATIONS

 

Net income for the three months ended March 31, 2025 amounted to $4.3 million, or $1.23 per share, an increase of $0.3 million compared to $4.0 million, or $1.13 per share for the three months ended March 31, 2024. The increase in net income for the three months ended March 31, 2025, compared to the same period in 2024, was primarily attributable to a significant increase in net interest income partially offset by an increase in non-interest expense.

 

Net interest income increased $1.9 million, or 16.2% to $13.9 million for the three months ended March 31, 2025, from $11.9 million for the same period in 2024. Non-interest income was $2.4 million for the three months ended March 31, 2025, a decrease of $0.1 million, or 3.4%, from $2.5 million for the same period in 2024, which primarily related to increases in service charges and fees, along with decreases in losses on marketable equity securities and other non-interest income. Non-interest expense was $11.1 million for the three months ended March 31, 2025, an increase of $1.4 million, or 15.0%, from $9.6 million for the same period in 2024, which was primarily related to increases in salaries and employee benefits expenses.

 

The annualized return on average assets was 1.10% for the three months ended March 31, 2025, compared to 1.02% for the same period in 2024. The annualized return on average equity was 10.33% for the three months ended March 31, 2025, compared to 10.52% for the same period in 2024. The Corporation declared and paid dividends to holders of common stock of $0.45 per share during the three months ended March 31, 2025 and $0.44 per share for the same period in 2024.

 

Net Interest Income

 

Net interest income is the difference between (i) interest income, interest and fees on interest-earning assets, and (ii) interest expense, interest paid on deposits and borrowed funds. Net interest income represents the largest component of the Corporation’s operating income and, as such, is the primary determinant of profitability. Net interest income is impacted by variations in the volume, rate and composition of earning assets and interest-bearing liabilities, changes in general market interest rates and the level of non-performing assets. Interest income is shown on a fully tax-equivalent basis using the corporate statutory tax rate of 21.0% in 2025 and 2024.

 

Tax-equivalent net interest income increased $2.0 million, or 16.0%, to $14.2 million for the three months ended March 31, 2025 compared to $12.2 million for the same period in 2024. The increase in tax-equivalent net interest income was due to an increase in tax-equivalent interest income reflecting higher earning asset volumes and yields, along with a decrease in interest expense which resulted primarily from a significant decrease in average borrowings coupled with a decrease in the average rate paid on total interest-bearing liablities. Tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 51 basis points to 3.83% for the three months ended March 31, 2025 compared to 3.32% for the same period of 2024, which was largely caused by increases in yields on earning assets along with a decrease in total in cost of funds. Additionally, interest rate spread, the difference between the average yield on interest-earning assets, shown on a fully tax-equivalent basis, and the average cost of interest-bearing liabilities, increased 57 basis points to 3.27% for the three months ended March 31, 2025 compared to 2.70% for the same period in 2024.

 

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Tax-equivalent interest income increased $1.0 million, or 4.8%, to $21.1 million for the three months ended March 31, 2025 from $20.2 million for the same period in 2024, which was largely caused by growth in average earning assets, coupled with an increase in the tax-equivalent yield on average earning assets. Average earning assets increased $6.0 million, or 0.4%, to $1.499 billion for the three months ended March 31, 2025 from $1.493 billion for the same period in 2024, resulting in a corresponding increase to tax-equivalent interest income of $0.6 million. Specifically, average loans increased $51.4 million, or 4.7%, to $1.107 billion for the three months ended March 31, 2025 from $1.098 billion for the same period in 2024, which reflected strong organic loan growth. Taxable investment securities averaged $266.9 million for the three months ended March 31, 2025, a decrease of $44.2 million, or 14.2%, compared to $311.1 million for the same period in 2024, and tax-exempt securities averaged $79.1 million for the three months ended March 31, 2025, an increase of $0.4 million, or 0.52%, compared to $78.7 million for the same period in 2024, which contributed to a net decrease of $0.2 million in tax-equivalent interest income. The tax-equivalent yield on earning assets increased 29 basis points to 5.72% for the three months ended March 31, 2025 from 5.43% for the same period in 2024, which resulted in a corresponding increase in tax-equivalent interest income of $0.4 million. The Corporation’s tax-equivalent yield on loans increased 15 basis points to 6.63% for the three months ended March 31, 2025 compared to 6.48% for the same period in 2024, resulting in a corresponding increase in tax-equivalent interest income of $0.3 million, due primarily to the continued repricing of existing variable rate loans in the Corporation’s portfolio. Meanwhile, the tax-equivalent yield on investment securities increased 24 basis points to 2.73% for the three months ended March 31, 2025 from 2.48% for the same period in 2024 and caused a corresponding increase to tax-equivalent interest income of $0.1 million.

 

Interest expense decreased $1.0 million, or 12.3%, to $7.0 million for the three months ended March 31, 2025 from $8.0 million for the same period in 2024, which was primarily from a significant decrease in average borrowings, coupled with a lower overall cost of funds. Average borrowed funds, which is largely comprised of customer repurchase agreements and FHLB of Pittsburgh advances, averaged $108.0 million for the three months ended March 31, 2025, a decrease of $164.4 million from $272.5 million for the same period in 2024. Lower volumes of average borrowed funds resulted in a corresponding decrease in interest expense of $2.0 million. Total average interest-bearing deposits increased $146.8 million, or 16.3%, to $1.046 billion for the three months ended March 31, 2025, compared to $898.8 million for the same period in 2024, which resulted in a corresponding increase in interest expense of $0.6 million. For the three months ended March 31, 2025, the Corporation’s cost of funds decreased 28 basis points to 2.45% from 2.73% for the same period in 2024. The average rate paid on total borrowings decreased 53 basis points to 4.40% for the three months ended March 31, 2025 from 4.93% for the same period in 2024, which resulted in a corresponding decrease in interest expense of $0.2 million. The average rate paid on total interest-bearing deposits increased 19 basis points to 2.25% for the three months ended March 31, 2025 from 2.06% for the same period in 2024, which resulted in a corresponding increase in interest expense of $0.6 million.

 

The following Average Balance Sheet and Rate Analysis tables presents the average assets, actual income or expense and the average yield on assets, liabilities and stockholders’ equity for the three months ended March 31, 2025 and 2024.

 

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AVERAGE BALANCE SHEET AND RATE ANALYSIS

THREE MONTHS ENDED MARCH 31,

 

   2025   2024 
(In Thousands)  Average Balance   Interest   Average Rate   Average Balance   Interest   Average Rate 
ASSETS:   (1)             (1)          
Tax-exempt loans  $42,842   $498    4.71%  $41,144   $439    4.29%
All other loans   1,106,657    18,284    6.70%   1,057,005    17,256    6.57%
Total loans(2)(3)(4)   1,149,499    18,782    6.63%   1,098,149    17,695    6.48%
                               
Taxable securities   266,891    1,265    1.92%   311,078    1,384    1.79%
Tax-exempt securitites(3)   79,073    1,064    5.46%   78,666    1,024    5.24%
Total securities   345,964    2,329    2.73%   389,744    2,408    2.48%
                               
Interest-bearing deposits in other banks   3,568    34    3.86%   5,106    66    5.20%
                               
Total interest-earning assets   1,499,031    21,145    5.72%   1,492,999    20,169    5.43%
                               
Other assets   102,340              97,327           
                               
TOTAL ASSETS  $1,601,371             $1,590,326           
                               
LIABILITIES:                              
Savings  $193,633    14    0.03%  $203,003    16    0.03%
Now deposits   393,666    2,139    2.20%   257,791    800    1.25%
Money market deposits   103,600    469    1.84%   104,095    485    1.87%
Time deposits   354,636    3,179    3.64%   333,875    3,309    3.99%
Total interest-bearing deposits   1,045,535    5,801    2.25%   898,764    4,610    2.06%
                               
Short-term borrowings   54,210    543    4.06%   202,653    2,497    4.96%
Long-term borrowings   53,769    629    4.74%   69,882    847    4.87%
Total borrowings   107,979    1,172    4.40%   272,535    3,344    4.93%
                               
Total interest-bearing liabilities   1,153,514    6,973    2.45%   1,171,299    7,954    2.73%
                               
Noninterest-bearing deposits   264,414              254,129           
Other liabilities   12,801              10,585           
Stockholders’ equity   170,642              154,313           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $1,601,371             $1,590,326           
                               
Interest rate spread(6)             3.27%             2.70%
Net interest income/margin(5)       $14,172    3.83%       $12,215    3.32%

 

(1)Average volume information was compared using daily averages for interest-earning and bearing accounts.
(2)Interest on loans includes loan fee income.
(3)Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal income tax rate of 21 percent for 2025 and 2024.
(4)Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.
(5)Net interest margin is computed by dividing annualized tax-equivalent net interest income by total interest earning assets.
(6)Interest rate spread represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities.

 

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Reconcilement of Taxable Equivalent Net Interest Income
   For the Three Months
Ended March 31,
 
   2025   2024 
(In Thousands)        
Total interest income  $20,841   $19,889 
Total interest expense   6,973    7,954 
           
Net interest income   13,868    11,935 
Tax equivalent adjustment   304    280 
           
Net interest income          
(fully taxable equivalent)  $14,172   $12,215 

 

Rate/Volume Analysis

 

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the Consolidated Balance Sheets as it pertains to net interest income, the table below reflects these changes for the three months ended March 31, 2025 versus March 31, 2024:

 

   Three Months Ended March 31, 
   2025 vs 2024 
   Increase (Decrease) 
   Due to  
(In Thousands)   Volume    Rate     Net 
Interest income:               
Loans, tax-exempt  $18   $41   $59 
Loans   804    224    1,028 
Taxable investment securities   (195)   76    (119)
Tax-exempt investment securities   5    35    40 
Interest bearing deposits   (20)   (12)   (32)
Total interest-earning assets   612    364    976 
                
Interest expense:               
Savings   (1)   (1)   (2)
NOW deposits   418    921    1,339 
Money market deposits   (2)   (14)   (16)
Time deposits   204    (334)   (130)
Short-term borrowings   (1,814)   (140)   (1,954)
Long-term borrowings, FHLB   (194)   (24)   (218)
Total interest-bearing liabilities   (1,389)   408    (981)
Change in net interest income  $2,001   $(44)  $1,957 

 

Provision for Credit Losses - Loans

 

For the three months ended March 31, 2025, the Corporation recorded a $110,000 provision for credit losses on loans compared to $101,000 for the same period in 2024. The provision amounts for the three months ended March 31, 2025 and 2024 primarily reflect an increase in volume in the loan portfolio, increases in non-accrual loans which impacted probability of default calculations and changes in qualitative factors related to the nature of the loan portfolio, volume and severity of past due loans, loan grade migration, changes in lending staff, changes in lending policies and procedures, and forecasted economic conditions.

 

See Note 3 within the Corporation’s Notes to the Unaudited Consolidated Financial Statements which are included in this Quarterly Report on Form 10-Q for more information regarding the Corporation’s allowance for credit losses as of March 31, 2025.

 

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Non-interest Income

 

Total non-interest income decreased $87,000 to $2,445,000 for the three months ended March 31, 2025, compared to $2,532,000 for the same period of 2024. Service charges and fees increased $107,000 due primarily to higher overdraft fee income, and losses on marketable equity securities decreased $83,000 due to market value changes comparing the three months ended March 31, 2025 to same period of 2024. Other non-interest income decreased $341,000 due to one-time events in the three months ended March 31, 2024 including incentives received in conjunction with the launch of a debit card reissuance project as well as a governmental grant recorded in conjunction with the completion of a solar energy project.

 

   For the Three Months Ended 
   March 31, 2025   March 31, 2024   Change 
(In Thousands)  Amount   % Total   Amount   % Total   Amount   % 
Service charges and fees  $722    29.5%  $615    24.3%  $107    17.4%
Interchange fees   623    25.5    619    24.4    4    0.6 
Gain on sale of loans   83    3.4    76    3.0    7    9.2 
Earnings on bank-owned life insurance   231    9.4    227    9.0    4    1.8 
Brokerage   233    9.5    224    8.8    9    4.0 
Trust   238    9.7    206    8.1    32    15.5 
Losses on marketable equity securities   (34)   (1.4)   (117)   (4.6)   83    70.9 
Realized losses on available-for-sale debt securities, net           (8)   (0.3)   8    (100.0)
Other non-interest income   349    14.4    690    27.3    (341)   (49.4)
Total non-interest income  $2,445    100.0%  $2,532    100.0%  $(87)   (3.4)%

 

Non-interest Expense

 

Total non-interest expense increased $1,445,000 from $9,646,000 for the three months ended March 31, 2024, to $11,091,000 for the same period of 2025. Salaries and employee benefits expense of $6,320,000 for the three months ended March 31, 2025 increased $1,518,000 from $4,802,000 for the same period of 2024. The Corporation recorded one-time pretax expenses totaling $1,295,000 in conjunction with the retirement of its Executive Chairman during the three months ended March 31, 2025. Additionally, health insurance expenses associated with the Corporation’s partially self-funded health insurance plan were $151,000 higher in the three months ended March 31, 2025 than the same period of 2024.

 

One standard to measure non-interest expense is to express annualized non-interest expense as a percentage of average total assets. For the three months ended March 31, 2025 this percentage was 2.81% compared to 2.44% for the three months ended March 31, 2024.

 

   For the Three Months Ended 
   March 31, 2025   March 31, 2024   Change 
(In Thousands)  Amount   % Total   Amount   % Total   Amount   % 
Salaries and employee benefits  $6,320    57.0%  $4,802    49.8%  $1,518    31.6%
Occupancy   720    6.5    618    6.4    102    16.5 
Furniture and equipment   426    3.8    406    4.2    20    4.9 
Pennsylvania shares tax   301    2.7    210    2.2    91    43.3 
Professional fees   448    4.0    457    4.7    (9)   (2.0)
Director’s fees   153    1.4    134    1.4    19    14.2 
Federal deposit insurance   218    2.0    220    2.3    (2)   (0.9)
Data processing and telecommunications   839    7.6    920    9.5    (81)   (8.8)
Automated teller machine and interchange   264    2.4    262    2.7    2    0.8 
Merger-related expenses           96    1.0    (96)   (100.0)
Amortization of intangibles   510    4.6    549    5.7    (39)   100.0 
Other non-interest expense   892    8.0    972    10.0    (80)   (8.2)
Total non-interest expense  $11,091    100.0%  $9,646    99.9%  $1,445    15.0%

 

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LIQUIDITY

 

The Bank’s liquidity, represented by cash and due from banks, is a product of its operating, investing and financing activities. The Bank’s primary sources of funds are deposits, securities sold under agreements to repurchase, principal repayments of securities and outstanding loans, funds provided from operations, and day-to-day FHLB – Pittsburgh borrowings. In addition, the Bank invests excess funds in short-term interest-earning assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements. While scheduled payments from the amortization of loans and securities and short-term investments are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and repayments on loans and mortgage-backed securities.

 

The Bank strives to maintain sufficient liquidity to fund operations, loan demand and to satisfy fluctuations in deposit levels. The Bank is required to have enough investments that qualify as liquid assets in order to maintain sufficient liquidity to ensure safe and sound banking operations. Liquidity may increase or decrease depending upon the availability of funds and comparative yields on investments in relation to the return on loans. The Bank attempts to maintain adequate but not excessive liquidity, and liquidity management is both a daily and long-term function of its business management. The Bank manages its liquidity in accordance with a board of directors-approved asset liability policy and liquidity contingency plan, which are administered by its asset-liability committee (“ALCO”). ALCO reports interest rate sensitivity, liquidity, capital and investment-related matters on a quarterly basis to the Bank’s board of directors.

 

The Bank reviews cash flow projections regularly and updates them in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and savings withdrawals. While deposits and securities sold under agreements to repurchase are its primary source of funds, when needed it is also able to generate cash through borrowings from the FHLB. At March 31, 2025, the Bank had remaining available capacity with FHLB, subject to certain collateral restrictions, of $498.1 million.

 

Liquidity management is required to ensure that adequate funds will be available to meet anticipated and unanticipated deposit withdrawals, debt service payments, investment commitments, commercial and consumer loan demand, and ongoing operating expenses. Funding sources include principal repayments on loans, sale of assets, growth in time and core deposits, short and long-term borrowings, investment securities coming due, loan prepayments and repurchase agreements. Regular loan payments are a dependable source of funds, while the sale of investment securities, deposit growth and loan prepayments are significantly influenced by general economic conditions and the level of interest rates.

 

The statement of cash flows presents the change in cash and cash equivalents from operating, investing and financing activities. Cash and due from banks and interest-bearing deposits in other banks, which comprise cash and cash equivalents, are the Corporation’s most liquid assets. Cash and cash equivalents totaled $23.8 million at March 31, 2025, an increase of $6.4 million, or 36.7%, from $17.4 million at December 31, 2024, as net cash inflows from operating and investing activities were more than net cash outflows from financing activities.

 

Net cash inflows from investing activities provided $3.0 million of cash and cash equivalents during the three months ended March 31, 2025. Accounting for the majority of the net cash inflows was $18.8 million related to proceeds from sales, paydowns, calls and maturities of available-for-sale debt securities. This was partially offset by a net increase in loans of $15.7 million, which reflected strong loan demand. Financing activities used $1.4 million in net cash, which resulted primarily from a decrease in short-term borrowings, consisting of customer repurchase agreements and short-term FHLB borrowings, of $40.7 million along with a repayment of long-term borrowings of $5.2 million. These outflows were offset by a $46.1 million increase in deposits. Operating activities include net income, adjusted for the effects of non-cash transactions including, among others, depreciation and amortization and the provision for credit losses, and is the primary source of cash flows from operations. For the three months ended March 31, 2025, operating activities provided the Corporation with $4.7 million in net cash, which primarily reflected net income of $4.3 million.

 

The Corporation regularly analyzes its ability to generate adequate amounts of cash to meet its short and long-term cash requirements and plans. As part of its quarterly asset liability management procedures, the Corporation performs liquidity cash flow forecasts in various base level and stress scenarios to monitor future cash needs. As of March 31, 2025, the Corporation is expected to maintain a level cash balance over the next 12 months. The Corporation has not identified any known demands, commitments, events or uncertainties that would result or that are reasonably likely to result in its liquidity position materially increasing or decreasing over the next 12 months. The Corporation’s long-term cash needs are regularly analyzed through its strategic planning process, which includes a detailed review of liquidity and funding needs.

 

We manage liquidity on a daily basis. We believe that our liquidity is sufficient to meet present and future financial obligations and commitments on a timely basis. However, see potential liquidity risk factors at Item 1A – Risk Factors of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024 and refer to the Consolidated Statements of Cash Flows in this Form 10-Q.

 

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INTEREST RATE RISK MANAGEMENT

 

Interest rate risk management involves managing the extent to which interest-sensitive assets and interest-sensitive liabilities are matched. Interest rate sensitivity is the relationship between market interest rates and earnings volatility due to the repricing characteristics of assets and liabilities. The Bank’s net interest income is affected by changes in the level of market interest rates. In order to maintain consistent earnings performance, the Bank seeks to manage, to the extent possible, the repricing characteristics of its assets and liabilities.

 

One major objective of the Bank when managing the rate sensitivity of its assets and liabilities is to stabilize net interest income. The management of and authority to assume interest rate risk is the responsibility of the Bank’s ALCO, which is comprised of senior management and Board members. ALCO meets quarterly to monitor the ratio of interest sensitive assets to interest sensitive liabilities. The process to review interest rate risk is a regular part of management of the Bank. Consistent policies and practices of measuring and reporting interest rate risk exposure, particularly regarding the treatment of noncontractual assets and liabilities, are in effect. In addition, there is an annual process to review the interest rate risk policy with the Board of Directors which includes limits on the impact to earnings from shifts in interest rates.

 

The ratio between assets and liabilities repricing in specific time intervals is referred to as an interest rate sensitivity gap. Interest rate sensitivity gaps can be managed to take advantage of the slope of the yield curve as well as forecasted changes in the level of interest rate changes.

 

To manage the interest sensitivity position, an asset/liability model called “gap analysis” is used to monitor the difference in the volume of the Bank’s interest sensitive assets and liabilities that mature or reprice within given periods. A positive gap (asset sensitive) indicates that more assets reprice during a given period compared to liabilities, while a negative gap (liability sensitive) has the opposite effect. The Bank employs computerized net interest income simulation modeling to assist in quantifying interest rate risk exposure. This process measures and quantifies the impact on net interest income through varying interest rate changes and balance sheet compositions. The use of this model assists the ALCO to gauge the effects of the interest rate changes on interest sensitive assets and liabilities in order to determine what impact these rate changes will have upon our net interest spread. At March 31, 2025, our cumulative gap positions were within the internal risk management guidelines.

 

In addition to gap analysis, the Bank uses net interest income simulations and economic value of equity (“EVE”) simulations as the primary tools in measuring and managing the Bank’s position and considers balance sheet forecasts, the Bank’s liquidity position, the economic environment, anticipated direction of interest rates and the Bank’s earnings sensitivity to changes in these rates in its modeling. In addition, ALCO has established policy tolerance limits for acceptable negative changes in net interest income. Furthermore, as part of its ongoing monitoring, ALCO requires annual back testing of modeling results, which involves after-the-fact comparisons of projections with the Bank’s actual performance to measure the validity of assumptions used in the modeling techniques.

 

The following table illustrates the simulated impact of parallel and instantaneous interest rate shocks of +100, +200, +300, -100, -200, and -300 basis points on net interest income and the change in economic value over a one-year time horizon from the March 31, 2025 levels:

 

   Rates +100   Rates +200   Rates +300   Rates -100   Rates -200   Rates -300 
   Simulation Results   Policy Limit   Simulation Results   Policy Limit   Simulation Results   Policy Limit   Simulation Results   Policy Limit   Simulation Results   Policy Limit   Simulation Results   Policy Limit 
Earnings at risk:                                                            
Percent change in net interest income   4.61%   -10.00%   -0.24%   -15.00%   -5.33%   -20.00%   11.36%   -10.00%   12.46%   -15.00%   13.66%   -20.00%
                                                             
Economic value at risk:                                                            
Percent change in economic value of equity   -6.44%   -15.00%   -14.12%   -25.00%   -22.69%   -30.00%   3.22%   -15.00%   3.88%   -25.00%   4.18%   -30.00%

 

Model results from the simulation at March 31, 2025 indicated that the Bank was projected to see an increase in net interest income over a one-year horizon in any of the rate shock scenarios, with the exception of the +200 and +300 scenarios, which showed 0.24% and 5.33% decreases, respectively. The percent change in EVE is expected to decrease in all rates up scenarios and increase in all rates down scenarios. All modeled exposures to net interest income and EVE for the next twelve-month horizon are within internal ALCO policy guidelines.

 

This analysis does not represent a forecast for the Bank and should not be relied upon as being indicative of expected operating results. These simulations are based on numerous assumptions, including but not limited to, the nature and timing of interest rate levels, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacements of asset and liability cash flows, and other factors. While assumptions reflect current economic and local market conditions, the Bank cannot make any assurances as to the predictive nature of these assumptions, including changes in interest rates, customer preferences, competition and liquidity needs, or what actions ALCO might take in responding to these changes.

 

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It is our opinion that the asset/liability mix and the interest rate risk associated with the balance sheet is within manageable parameters. Additionally, the Bank’s ALCO meets quarterly with an asset liability management consultant.

 

IMPACT OF INFLATION AND CHANGING PRICES

 

The preparation of financial statements in conformity with U.S. GAAP requires management to measure the Corporation’s financial position and operating results primarily in terms of historic dollars. Changes in the relative value of money due to inflation or recession are generally not considered. The effect of inflation on the Corporation’s operations is primarily related to increases in operating expenses. Management considers changes in interest rates to impact our financial condition and results of operations to a far greater degree than changes in prices due to inflation. Although interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. The Corporation manages interest rate risk in several ways. There can be no assurance that the Corporation will not be materially adversely affected by future changes in interest rates, as interest rates are highly sensitive to many factors that are beyond its control. Additionally, inflation may adversely impact the financial condition of the Corporation’s borrowers and could impact their ability to repay their loans, which could negatively affect the Corporation’s asset quality through higher delinquency rates and increased charge-offs. Management will carefully consider the impact of inflation and rising interest rates on the Corporation’s borrowers in managing credit risk related to the loan portfolio.

 

Item 3.Quantitative and Qualitative Disclosure About Market Risk

 

The information called for by this item can be found at Part I Item 2 of this Report on Form 10-Q under the caption “Interest Rate Risk Management” and is incorporated in its entirety by reference under this Item 3.

 

Item 4.Controls and Procedures

 

Our Chief Executive Officer (CEO) and Chief Financial Officer (CFO) have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), based on their evaluation of these controls and procedures as of the end of the period covered by this Report, were effective as of such date at the reasonable assurance level as discussed below to ensure that information required to be disclosed by us in the reports we file under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to our management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Our management, including the CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. In addition, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

 

The CEO and CFO have evaluated the changes to our internal controls over financial reporting that occurred during our fiscal Quarter Ended March 31, 2025, as required by Rules 13a-15(d) and 15d-15(d) under the Securities Exchange Act of 1934, as amended, and have concluded that there were no changes that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

PART II Other Information

 

Item 1.Legal Proceedings

 

At March 31, 2025, the Corporation was not involved in any legal proceedings, other than routine legal proceedings in the ordinary course of business which involve amounts which, in the aggregate, are believed by management to be immaterial to the financial condition of the Corporation. In addition, no material proceedings are pending or are known to be threatened or contemplated against the Corporation by government authorities.

 

Item 1A. Risk Factors

 

There have been no material changes from the risk factors previously disclosed in Item 1A of the Corporation’s Form 10-K filed March 7, 2025.

 

40

 

 

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

 

(a)None

 

(b)Not applicable

 

(c)Effective May 14, 2024, the Corporation’s Board of Directors authorized a new treasury stock repurchase program. Under the program, the Corporation was authorized to repurchase up to 178,614 shares of the Corporation’s common stock. During the first quarter 2025, the Corporation did not repurchase any shares of its common stock.

 

Item 3.Defaults Upon Senior Securities

 

None

 

Item 4.Mine Safety Disclosures

 

Not applicable

 

Item 5.Other Information

 

(a)There was no information the Corporation was required to disclose in a report on Form 8-K during the first quarter of 2025 that was not disclosed.

 

(b)There were no material changes to the procedures by which security holders may recommend nominees to the Corporation’s board of directors during the first quarter of 2025.

 

(c)During the first quarter of 2025, no director or officer of the Corporation adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K.

 

Item 6.Exhibits

 

3.1 Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (filed on November 16, 2023))

 

3.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to Registrant’s Current Report on Form 8-K (filed on December 11, 2024))

 

10.1 Employment Separation Agreement and Release dated February 11, 2025 between Robert J. Glunk, Muncy Columbia Financial Corporation and Journey Bank (incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K (filed on February 12, 2025))

 

10.2 Fourth Amendment to Supplemental Executive Retirement Agreement dated February 11, 2025 between Journey Bank and Robert Glunk (incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K (filed on February 12, 2025))

 

31.1 Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

 

31.2 Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

 

32.1 Section 1350 Certification of Chief Executive Officer

 

32.2 Section 1350 Certification of Chief Financial Officer

 

101 The following materials from the Corporation’s Quarterly Report on Form 10-Q for the period ended March 31, 2025, formatted in XBRL (Extensible Business Reporting Language); (i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Income (unaudited), (iii) the Consolidated Statements of Comprehensive Income (unaudited), (iv) the Consolidated Statements of Changes in Stockholders’ Equity (unaudited), (v) the Consolidated Statements of Cash Flows (unaudited), and (vi) the Notes to Unaudited Consolidated Financial Statements.

 

104 Cover Page for Interactive Data File (embedded with the Inline XBRL document)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Muncy Columbia Financial Corporation

(Registrant)

 

By: /s/ Lance O. Diehl   Date: May 9, 2025
  Lance O. Diehl
President and Chief Executive Officer
(Principal Executive Officer)
   
       
By: /s/ Joseph K. O’Neill, Jr.   Date: May 9, 2025
  Joseph K. O’Neill, Jr.
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
   

 

42