10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

OR

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

For the transition period from _______________________ to _______________________

ENB Financial Corp

(Exact name of registrant as specified in its charter)

Pennsylvania	000-53297	51-0661129
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No)
31 E. Main St., Ephrata, PA	17522-0457
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (717) 733-4181

Former name, former address, and former fiscal year, if changed since last report Not Applicable

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None.	N/A	N/A

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 and post such files.)

Yes ☒            No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 1, 2023, the registrant had 5,645,612 shares of $0.10 (par) Common Stock outstanding.

ENB FINANCIAL CORP

INDEX TO FORM 10-Q

June 30, 2023

Part I – FINANCIAL INFORMATION
	Item 1.	Financial Statements
	Consolidated Balance Sheets at June 30, 2023 and 2022, and December 31, 2022 (Unaudited)		3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)		4
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2023 and 2022 (unaudited)		5
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)		6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited)		7
	Notes to the Unaudited Consolidated Interim Financial Statements		8-33
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34-55
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	56-58
	Item 4.	Controls and Procedures	59
Part II – OTHER INFORMATION			60
	Item 1.	Legal Proceedings	60
	Item 1A.	Risk Factors	60
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
	Item 3.	Defaults upon Senior Securities	61
	Item 4.	Mine Safety Disclosures	61
	Item 5.	Other Information	61
	Item 6.	Exhibits	62
SIGNATURE PAGE			63

2 

ENB FINANCIAL CORP

Part I - Financial Information

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

	June 30,			December 31,			June 30,
	2023			2022			2022
	$			$			$
ASSETS
Cash and due from banks		24,672			28,935			22,571
Interest-bearing deposits in other banks		36,409			8,637			32,041
Total cash and cash equivalents		61,081			37,572			54,612
Securities available for sale (at fair value, net of allowance for credit losses of $0)		456,004			529,142			579,018
Equity securities (at fair value)		9,019			9,118			8,895
Loans held for sale		652			5,927			4,763
Loans (net of unearned income)		1,296,502			1,191,117			1,041,440
Less: Allowance for credit losses		16,833			14,151			13,606
Net loans		1,279,669			1,176,966			1,027,834
Premises and equipment		25,381			25,333			24,340
Regulatory stock		7,843			6,670			6,145
Bank owned life insurance		35,197			34,805			35,780
Other assets		28,806			33,183			28,958
Total assets		1,903,652			1,858,716			1,770,345
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing		634,360			672,342			678,472
Interest-bearing		1,021,591			966,616			899,808
Total deposits		1,655,951			1,638,958			1,578,280
Short-term borrowings		—			16,000			20,000
Long-term debt		91,717			58,039			44,206
Subordinated debt		39,476			39,396			19,720
Other liabilities		10,174			8,988			6,738
Total liabilities		1,797,318			1,761,381			1,668,944
Stockholders' equity:
Common stock, par value $0.10
Shares:  Authorized 24,000,000
Issued 5,739,114 and Outstanding 5,654,415 as of 6/30/23, 5,635,533 as of 12/31/22, and 5,610,571 as of 6/30/22		574			574			574
Capital surplus		4,259			4,437			4,502
Retained earnings		144,380			142,677			135,705
Accumulated other comprehensive loss, net of tax		(41,244	)		(48,292	)		(36,816	)
Less: Treasury stock cost on 84,700 shares as of 6/30/23, 103,581 as of 12/31/22, and 128,544 as of 6/30/22		(1,635	)		(2,061	)		(2,564	)
Total stockholders' equity		106,334			97,335			101,401
Total liabilities and stockholders' equity		1,903,652			1,858,716			1,770,345

See Notes to the Unaudited Consolidated Interim Financial Statements

3 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

	Three Months ended June 30,						Six Months ended June 30,
	2023			2022			2023			2022
	$			$			$			$
Interest and dividend income:
Interest and fees on loans		14,951			9,520			28,648			18,335
Interest on securities available for sale
Taxable		2,811			2,007			5,853			3,436
Tax-exempt		740			1,079			1,529			2,108
Interest on deposits at other banks		213			47			247			84
Dividend income		266			106			521			200
Total interest and dividend income		18,981			12,759			36,798			24,163
Interest expense:
Interest on deposits		4,114			308			6,958			560
Interest on borrowings		1,210			477			2,379			908
Total interest expense		5,324			785			9,337			1,468
Net interest income		13,657			11,974			27,461			22,695
Provision for credit losses		815			650			2,072			750
Net interest income after provision for credit losses		12,842			11,324			25,389			21,945
Other income:
Trust and investment services income		674			628			1,459			1,299
Service fees		1,122			684			2,022			1,272
Commissions		917			952			1,812			1,821
(Losses) gains on the sale of debt securities, net		(954	)		—			(1,364	)		139
Losses on equity securities, net		(106	)		(130	)		(302	)		(138	)
Gains on sale of mortgages		204			328			326			1,063
Earnings on bank-owned life insurance		237			235			463			425
Other income		328			322			660			814
Total other income		2,422			3,019			5,076			6,695
Operating expenses:
Salaries and employee benefits		7,901			6,707			15,356			13,219
Occupancy		860			694			1,596			1,412
Equipment		325			336			669			601
Advertising & marketing		412			295			686			574
Computer software & data processing		1,697			1,386			3,478			2,524
Shares tax		299			351			599			702
Professional services		843			633			1,507			1,263
Other expense		865			1,075			1,675			1,790
Total operating expenses		13,202			11,477			25,566			22,085
Income before income taxes		2,062			2,866			4,899			6,555
Provision for federal income taxes		265			308			661			806
Net income		1,797			2,558			4,238			5,749
Earnings per share of common stock		0.32			0.46			0.75			1.03
Cash dividends paid per share		0.17			0.17			0.34			0.34
Weighted average shares outstanding		5,640,826			5,595,728			5,636,181			5,590,196

See Notes to the Unaudited Consolidated Interim Financial Statements

4 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(DOLLARS IN THOUSANDS)

	Three Months ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
	$			$			$			$
Net income		1,797			2,558			4,238			5,749
Other comprehensive income (loss), net of tax:
Securities available for sale not other-than-temporarily impaired:
Unrealized (losses) gains arising during the period		(1,728	)		(20,909	)		7,557			(50,819	)
Income tax effect		363			4,391			(1,587	)		10,672
		(1,365	)		(16,518	)		5,970			(40,147	)
Losses (gains) recognized in earnings		954			—			1,364			(139	)
Income tax effect		(200	)		—			(286	)		29
		754			—			1,078			(110	)
Other comprehensive (loss) income, net of tax		(611	)		(16,518	)		7,048			(40,257	)
Comprehensive Income (Loss)		1,186			(13,960	)		11,286			(34,508	)

See Notes to the Unaudited Consolidated Interim Financial Statements

5 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

									Accumulated
									Other						Total
	Common		Capital			Retained			Comprehensive			Treasury			Stockholders'
	Stock		Surplus			Earnings			Income (Loss)			Stock			Equity
	$		$			$			$			$			$
Balances, December 31, 2021		574		4,520			131,856			3,441			(3,103	)		137,288
Net income		—		—			3,191			—			—			3,191
Other comprehensive loss net of tax		—		—			—			(23,739	)		—			(23,739	)
Treasury stock issued - 11,196 shares		—		24			—			—			224			248
Cash dividends paid, $0.17 per share		—		—			(949	)		—			—			(949	)
Balances, March 31, 2022		574		4,544			134,098			(20,298	)		(2,879	)		116,039
Net income		—		—			2,558			—			—			2,558
Other comprehensive loss net of tax		—		—			—			(16,518	)		—			(16,518	)
Treasury stock purchased - 3,000 shares		—		—			—			—			(53	)		(53	)
Treasury stock issued - 18,418 shares		—		(42	)		—			—			368			326
Cash dividends paid, $0.17 per share		—		—			(951	)		—			—			(951	)
Balances, June 30, 2022		574		4,502			135,705			(36,816	)		(2,564	)		101,401
Balances, December 31, 2022		574		4,437			142,677			(48,292	)		(2,061	)		97,335
Cumulative effect of adoption of ASU 2016-13		—		—			(619	)		—			—			(619	)
Net income		—		—			2,441			—			—			2,441
Other comprehensive income net of tax		—		—			—			7,659			—			7,659
Stock-based compensation expense		—		14			—			—			—			14
Treasury stock purchased - 8,903 shares		—		—			—			—			(147	)		(147	)
Treasury stock issued - 19,523 shares		—		(110	)		—			—			383			273
Cash dividends paid, $0.17 per share		—		—			(957	)		—			—			(957	)
Balances, March 31, 2023		574		4,341			143,542			(40,633	)		(1,825	)		105,999
Net income		—		—			1,797			—			—			1,797
Other comprehensive loss net of tax		—		—			—			(611	)		—			(611	)
Stock-based compensation expense		—		15			—			—			—			15
Treasury stock purchased - 12,431 shares		—		—			—			—			(168	)		(168	)
Treasury stock issued - 20,692 shares		—		(97	)		—			—			358			261
Cash dividends paid, $0.17 per share		—		—			(959	)		—			—			(959	)
Balances, June 30, 2023		574		4,259			144,380			(41,244	)		(1,635	)		106,334

See Notes to the Unaudited Consolidated Interim Financial Statements

6 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(DOLLARS IN THOUSANDS)

	Six Months Ended June 30,
		2023			2022
		$			$
Cash flows from operating activities:
Net income			4,238			5,749
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of securities premiums and discounts and loan fees			2,346			2,539
Decrease (increase) in interest receivable			307			(1,066	)
Increase in interest payable			571			61
Provision for credit losses			2,072			750
Losses (gains) on the sale of debt securities, net			1,364			(139	)
Losses on equity securities, net			302			138
Gains on sale of mortgages			(326	)		(1,063	)
Loans originated for sale			(11,928	)		(23,563	)
Proceeds from sales of loans			17,529			23,057
Earnings on bank-owned life insurance			(463	)		(425	)
Depreciation of premises and equipment and amortization of software			973			791
Deferred income tax			(254	)		(117	)
Amortization of deferred fees on subordinated debt			80			40
Stock-based compensation expense			29			—
Other assets and other liabilities, net			1,353			1,066
Net cash provided by operating activities			18,193			7,818
Cash flows from investing activities:
Securities available for sale:
Proceeds from maturities, calls, and repayments			20,457			24,816
Proceeds from sales			61,089			8,576
Purchases			(3,030	)		(107,711	)
Equity securities
Proceeds from sales			—			150
Purchases			(202	)		(201	)
Purchase of regulatory bank stock			(1,821	)		(974	)
Redemptions of regulatory bank stock			648			209
Proceeds from bank-owned life insurance			2,083			—
Net increase in loans			(105,562	)		(120,573	)
Purchases of premises and equipment, net			(826	)		(512	)
Purchase of computer software			(494	)		(123	)
Net cash used for investing activities			(27,658	)		(196,343	)
Cash flows from financing activities:
Net (decrease) increase in demand, NOW, and savings accounts			(33,709	)		66,369
Net increase (decrease) in time deposits			50,702			(302	)
Proceeds from short-term borrowings			—			20,000
Repayments of short-term debt			(16,000	)		—
Proceeds from long-term debt			37,678			—
Repayments of long-term debt			(4,000	)		—
Dividends paid			(1,916	)		(1,900	)
Proceeds from sale of treasury stock			534			574
Treasury stock purchased			(315	)		(53	)
Net cash provided by financing activities			32,974			84,688
Decrease in cash and cash equivalents			23,509			(103,837	)
Cash and cash equivalents at beginning of period			37,572			158,449
Cash and cash equivalents at end of period			61,081			54,612
Supplemental disclosures of cash flow information:
Interest paid			8,764			1,408
Income taxes paid			1,375			950
Supplemental disclosure of non-cash investing and financing activities:
Fair value adjustments for securities available for sale			8,921			(50,958	)
Recognition of lease operating right-of-use assets			—			2,811
Recognition of operating lease liabilities			—			2,811

See Notes to the Unaudited Consolidated Interim Financial Statements

7 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and to general practices within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all significant adjustments considered necessary for fair presentation have been included. Certain items previously reported have been reclassified to conform to the current period’s reporting format. Such reclassifications did not affect net income or stockholders’ equity.

ENB Financial Corp (“the Corporation”) is the bank holding company for its wholly-owned subsidiary Ephrata National Bank (the “Bank”). Ephrata National Bank has one wholly-owned subsidiary, ENB Insurance, LLC which is consolidated into its financial statements. This Form 10-Q, for the second quarter of 2023, is reporting on the results of operations and financial condition of ENB Financial Corp on a consolidated basis.

Operating results for the six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. For further information, refer to the consolidated financial statements and footnotes thereto included in ENB Financial Corp’s Annual Report on Form 10-K for the year ended December 31, 2022.

Accounting Pronouncements Adopted in 2023

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent related updates. This ASU replaces the incurred loss methodology for recognizing credit losses and requires businesses and other organizations to measure the current expected credit losses (CECL) on financial assets measured at amortized cost, including loans and held-to-maturity securities, net investments in leases, off-balance sheet credit exposures such as unfunded commitments, and other financial instruments. In addition, ASC 326 requires credit losses on available-for-sale debt securities to be presented as an allowance rather than as a write-down when management does not intend to sell or believes that it is not more likely than not they will be required to sell. This guidance became effective on January 1, 2023 for the Corporation. The results reported for periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

The Corporation adopted this guidance, and subsequent related updates, using the modified retrospective approach for all financial assets measured at amortized cost, including loans, available-for-sale debt securities and unfunded commitments. On January 1, 2023, the Corporation recorded a cumulative effect decrease to retained earnings of $619,000, net of tax, of which $537,000 related to loans, $82,000 related to unfunded commitments, and $0 related to available-for-sale securities.

The Corporation has elected to exclude accrued interest receivable from the measurement of its allowance for credit losses (ACL). When a loan is placed on nonaccrual status, any outstanding accrued interest is reversed against interest income.

The Corporation adopted the provisions of ASC 326 related to presenting other-than-temporary impairment on available-for-sale debt securities prior to January 1, 2023, using the prospective transition approach, though no such charges had been recorded on the securities held by the Corporation as of the date of adoption.

In connection with the adoption of ASU 2016-13, the Corporation made changes to the loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Refer to Note 5 Loans and Allowance for Credit Losses for further discussion of these portfolio segments. The new segmentation consists of: Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate, and Residential Real Estate.

The impact of the change from the incurred loss model to the current expected credit loss model and the reclassification of loans for the identification of new portfolio loan segments under CECL is detailed below (in thousands).

8 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

	January 1, 2023
	Pre-adoption		Adoption Impact			As Reported
	$		$			$
Assets
ACL on debt securities available for sale		—		—			—
ACL on loans
Commercial Real Estate		6,074		(6,074	)		—
Consumer Real Estate		5,442		(5,442	)		—
Commercial and Industrial		2,151		(2,151	)		—
Consumer		67		183			250
Agriculture		—		3,537			3,537
Business Loans		—		3,382			3,382
Home Equity		—		2,129			2,129
Non-Owner Occupied CRE		—		875			875
Residential Real Estate		—		4,658			4,658
Unallocated		417		(417	)		—
		14,151		680			14,831
Liabilities
ACL for unfunded commitments		1,017		103			1,120
	$	15,168	$	783		$	15,951

Investment Securities

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date.

Investment securities classified as available for sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available for sale are carried at fair value. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Corporation’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Unrealized gains or losses are reported as increases or decreases in other comprehensive income (loss), net of the deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. The Corporation classifies all of its securities as available for sale. Equity securities are measured at fair value with changes in fair value recognized in net income.

Allowance for Credit Losses – Available for Sale Securities

The Corporation measures expected credit losses on available-for-sale debt securities when the Corporation does not intend to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this evaluation indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, equal to the amount that the fair value is less than the amortized cost basis. Economic forecast data is utilized to calculate the present value of expected cash flows. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss).

The allowance for credit losses on available-for-sale debt securities is included within investment securities available-for-sale on the consolidated balance sheet. Changes in the allowance for credit losses are recorded within the provision for credit losses on the consolidated statement of income. Losses are charged against the allowance when the Corporation believes the collectability of an available-for-sale security is in jeopardy or when either of the criteria regarding intent or requirement to sell is met.

9 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

Accrued interest receivable on available-for-sale debt securities totaled $3,560,000 at June 30, 2023, and is included within Other Assets on the consolidated balance sheet. This amount is excluded from the estimate of expected credit losses. Available-for-sale debt securities are typically classified as nonaccrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When available-for-sale debt securities are placed on nonaccrual status, unpaid interest credited to income is reversed.

Loans Receivable

Loans receivable 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 balances, net of an allowance for credit losses and any deferred fees or costs. Accrued interest receivable totaled $2,689,000 at June 30, 2023, and was reported in Other Assets on the Consolidated Balance Sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation is amortizing these amounts over the contractual life of the loan. Premiums and discounts on purchased loans are amortized as adjustments to interest income using the effective yield method.

The loans receivable portfolio is segmented into Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate (CRE), and Residential Real Estate.

For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for credit losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income on a cash basis, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months), and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Allowance for Credit Losses - Loans

The allowance for credit losses (ACL) is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.  Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions, and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Corporation measures the ACL using the following methods. 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 applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Reasonable and supportable forecast adjustment is based on the unemployment forecast, BBB Rated Corporate Bond Spread, GDP Growth, Retail Sales, Asset Prices, and Management Judgement. The reasonable and supportable period is the life of the loan as credit loss models used produce reasonable estimates of losses over the life of the loan. The qualitative adjustments for current conditions are based upon changes in lending policies and procedures, loan portfolio trends, lending management experience, asset quality, loan review, underlying collateral, credit concentrations, and external factors.  These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve.

10 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The Corporation has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on nonaccrual status, any outstanding accrued interest is reversed against interest income.

The ACL for individual loans begins with the use of normal credit review procedures to identify whether a loan no longer shares similar risk characteristics with other pooled loans and therefore should be individually assessed. Commercial loans are evaluated if they meet the following criteria: 1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) when it is determined by management that a loan does not share similar risk characteristics with other loans.  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 effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral dependent. Individual loan evaluations consist primarily of the fair value of collateral method because most of the Corporation’s loans are collateral dependent. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The allowance for credit losses on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance is carried as a liability and is included in other liabilities on the Corporation’s Consolidated Balance Sheets. The liability was $1,262,000 as of June 30, 2023, and $1,017,000 as of December 31, 2022. As the unadvanced portion of lines of credit increases, this allowance will increase.

2. Revenue from Contracts with Customers

The Corporation records revenue from contracts with customers in accordance with Accounting Standards Topic 606, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Corporation must identify contracts with customers, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when the Corporation satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods.

The Corporation’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not within the scope of Topic 606. The Corporation has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Corporation generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.

11 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

3. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of investment securities held at June 30, 2023, are as follows:  

			Gross		Gross			Allowance
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			for Credit		Fair
	Cost		Gains		Losses			Losses		Value
	$		$		$			$		$
June 30, 2023
U.S. treasuries		19,854		—		(2,089	)		—		17,765
U.S. government agencies		19,400		—		(2,412	)		—		16,988
U.S. agency mortgage-backed securities		46,834		—		(4,328	)		—		42,506
U.S. agency collateralized mortgage obligations		23,090		—		(2,446	)		—		20,644
Non-agency MBS/CMO		54,138		18		(4,004	)		—		50,152
Asset-backed securities		70,355		21		(1,835	)		—		68,541
Corporate bonds		61,401		—		(7,325	)		—		54,076
Obligations of states and political subdivisions		213,140		—		(27,808	)		—		185,332
Total securities available for sale		508,212		39		(52,247	)		—		456,004

The amortized cost, gross unrealized gains and losses, and approximate fair value of investment securities held at December 31, 2022, are as follows:

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
December 31, 2022
U.S. Treasuries		35,737		—		(3,080	)		32,657
U.S. government agencies		27,605		—		(2,818	)		24,787
U.S. agency mortgage-backed securities		49,939		—		(4,632	)		45,307
U.S. agency collateralized mortgage obligations		30,193		—		(2,703	)		27,490
Non-agency MBS/CMO		53,900		—		(3,650	)		50,250
Asset-backed securities		76,110		16		(2,892	)		73,234
Corporate bonds		76,685		10		(7,064	)		69,631
Obligations of states and political subdivisions		240,102		10		(34,326	)		205,786
Total securities available for sale		590,271		36		(61,165	)		529,142

The amortized cost and fair value of securities available for sale at June 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions.

CONTRACTUAL MATURITY OF DEBT SECURITIES
(DOLLARS IN THOUSANDS)
	Amortized
	Cost		Fair Value
	$		$
Due in one year or less		—		—
Due after one year through five years		96,888		87,463
Due after five years through ten years		75,828		64,408
Due after ten years		335,496		304,133
Total debt securities		508,212		456,004

Securities available for sale with a par value of $119,952,000 and $116,179,000 at June 30, 2023, and December 31, 2022, respectively, were pledged or restricted for public funds, borrowings, or other purposes as required by law. The fair value of these pledged securities was $110,159,000 at June 30, 2023, and $107,071,000 at December 31, 2022.

12 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

Proceeds from active sales of securities available for sale, along with the associated gross realized gains and gross realized losses, are shown below. Realized gains and losses are computed on the basis of specific identification.

PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE

(DOLLARS IN THOUSANDS)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	$		$		$		$
Proceeds from sales		32,972		—		61,089		8,576

Information pertaining to securities with gross unrealized losses at June 30, 2023, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

TEMPORARY IMPAIRMENTS OF SECURITIES

(DOLLARS IN THOUSANDS)

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of June 30, 2023
U.S. Treasuries		—		—			17,765		(2,089	)		17,765		(2,089	)
U.S. government agencies		—		—			16,988		(2,412	)		16,988		(2,412	)
U.S. agency mortgage-backed securities		—		—			42,506		(4,328	)		42,506		(4,328	)
U.S. agency collateralized mortgage obligations		527		(25	)		20,117		(2,421	)		20,644		(2,446	)
Non-Agency MBS/CMO		7,410		(669	)		39,711		(3,335	)		47,121		(4,004	)
Asset-backed securities		2,898		(43	)		64,123		(1,792	)		67,021		(1,835	)
Corporate bonds		1,711		(289	)		52,365		(7,036	)		54,076		(7,325	)
Obligations of states & political subdivisions		532		(5	)		184,770		(27,803	)		185,302		(27,808	)
Total temporarily impaired securities		13,078		(1,031	)		438,345		(51,216	)		451,423		(52,247	)

Information pertaining to securities with gross unrealized losses at December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

TEMPORARY IMPAIRMENTS OF SECURITIES

(DOLLARS IN THOUSANDS)

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of December 31, 2022
U.S. Treasuries		19,721		(1,169	)		12,936		(1,911	)		32,657		(3,080	)
U.S. government agencies		1,953		(52	)		21,634		(2,766	)		23,587		(2,818	)
U.S. agency mortgage-backed securities		24,667		(1,653	)		20,640		(2,979	)		45,307		(4,632	)
U.S. agency collateralized mortgage obligations		9,984		(500	)		17,453		(2,203	)		27,437		(2,703	)
Non-Agency MBS/CMO		50,250		(3,650	)		—		—			50,250		(3,650	)
Asset-backed securities		29,283		(1,028	)		42,032		(1,864	)		71,315		(2,892	)
Corporate bonds		15,197		(1,230	)		43,417		(5,834	)		58,614		(7,064	)
Obligations of states & political subdivisions		103,200		(10,949	)		100,575		(23,377	)		203,775		(34,326	)
Total temporarily impaired securities		254,255		(20,231	)		258,687		(40,934	)		512,942		(61,165	)

13 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

In the debt security portfolio there were 325 positions carrying unrealized losses as of June 30, 2023.

Management evaluates all of the Corporation’s securities for expected credit losses. No securities in the portfolio required an allowance for credit losses to be recorded in the first half of 2023 or other-than-temporary impairment in 2022.

Unrealized losses on the Corporation’s available-for-sale debt securities have not been recognized into income because the bonds are of high credit quality, 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 solely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

4. Equity Securities

The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of equity securities held at June 30, 2023 and December 31, 2022.

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
June 30, 2023
CRA-qualified mutual funds		7,516		—		—			7,516
Bank stocks		1,716		46		(259	)		1,503
Total equity securities		9,232		46		(259	)		9,019

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
December 31, 2022
CRA-qualified mutual funds		7,345		—		—			7,345
Bank stocks		1,685		162		(74	)		1,773
Total equity securities		9,030		162		(74	)		9,118

The following table presents the net gains and losses on the Corporation’s equity investments recognized in earnings during the three and six months ended June 30, 2023 and 2022, and the portion of unrealized gains and losses for the period that relates to equity investments held as of June 30, 2023 and 2022.

NET GAINS AND LOSSES ON EQUITY INVESTMENTS RECOGNIZED IN EARNINGS

(DOLLARS IN THOUSANDS)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
	$			$			$			$
Net losses recognized in equity securities during the period		(106	)		(130	)		(302	)		(138	)
Less: Net gains realized on the sale of equity securities during the period		—			—			—			51
Unrealized losses recognized in equity securities held at reporting date		(106	)		(130	)		(302	)		(189	)

14 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

5. Loans and Allowance for Credit Losses

The following table presents the Corporation’s loan portfolio by category of loans as of June 30, 2023 (in thousands):

	June 30,
	2023
	$
Agriculture		245,971
Business Loans		350,740
Consumer		6,310
Home Equity		102,108
Non-Owner Occupied Commercial Real Estate		125,894
Residential Real Estate (a)		462,942
Gross loans prior to deferred costs		1,293,965
Deferred loan costs, net		2,537
Allowance for credit losses		(16,833	)
Total net loans (b)		1,279,669

(a) Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets, totaled $295,406,000 as of June 30, 2023.

(b) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the Corporation’s loan portfolio, prior to the adoption of ASC 326, by category of loans and the impact of the change from the adoption of the standard (in thousands):

15 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

							Post Adoption
	December 31,			Adoption			January, 1
	2022			Impact			2023
	$			$			$
Agriculture		—			238,734			238,734
Business Loans		—			336,340			336,340
Home Equity		—			98,854			98,854
Non-Owner Occupied CRE		—			111,333			111,333
Residential Real Estate (a)		—			397,260			397,260
Commercial real estate
Commercial mortgages		210,823			(210,823	)		—
Agriculture mortgages		221,167			(221,167	)		—
Construction		86,793			(86,793	)		—
Total commercial real estate		518,783			(518,783	)		—
Consumer real estate (a)
1-4 family residential mortgages		410,301			(410,301	)		—
Home equity loans		11,937			(11,937	)		—
Home equity lines of credit		98,349			(98,349	)		—
Total consumer real estate		520,587			(520,587	)		—
Commercial and industrial
Commercial and industrial		87,528			(87,528	)		—
Tax-free loans		28,664			(28,664	)		—
Agriculture loans		27,122			(27,122	)		—
Total commercial and industrial		143,314			(143,314	)		—
Consumer		5,769			163			5,932
Gross loans prior to deferred fees		1,188,453			—			1,188,453
Deferred loan costs, net		2,664
Allowance for credit losses		(14,151	)
Total net loans		1,176,966

(a) Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets totaled $298,375,000 as of December 31, 2022.  

Age Analysis of Past-Due Loans Receivable

The performance and credit quality of the loan portfolio is 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 June 30, 2023 (in thousands):

	June 30, 2023
			31-60		61-90		Greater Than
			Days		Days		90 Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
Agriculture	$	245,702	$	—	$	—	$	269	$	269	$	245,971
Business Loans		350,599		—		—		141		141		350,740
Consumer		6,261		12		14		23		49		6,310
Home Equity		101,984		19		105		—		124		102,108
Non-Owner Occupied CRE		125,894		—		—		—		—		125,894
Residential Real Estate		462,213		614		—		115		729		462,942
Total (a)	$	1,292,653	$	645	$	119	$	548	$	1,312	$	1,293,965

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

16 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following table presents the classes of the loan portfolio summarized by the past-due status as of December 31, 2022 (in thousands):

	December 31, 2022
													Loans
					Greater								Receivable >
	30-59 Days		60-89 Days		than 90		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Days		Due		Current		Receivable		Accruing
	$		$		$		$		$		$		$
Commercial real estate
Commercial mortgages		—		—		554		554		210,269		210,823		—
Agriculture mortgages		—		—		2,787		2,787		218,380		221,167		—
Construction		—		—		—		—		86,793		86,793		—
Consumer real estate
1-4 family residential mortgages		905		—		447		1,352		408,949		410,301		139
Home equity loans		17		—		339		356		11,581		11,937		—
Home equity lines of credit		165		16		—		181		98,168		98,349		—
Commercial and industrial
Commercial and industrial		—		—		190		190		87,338		87,528		—
Tax-free loans		—		—		—		—		28,664		28,664		—
Agriculture loans		—		—		—		—		27,122		27,122		—
Consumer		9		5		30		44		5,725		5,769		30
Total		1,096		21		4,347		5,464		1,182,989		1,188,453		169

Nonperforming Loans

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of June 30, 2023, (in thousands):

	Nonaccrual		Nonaccrual				Loans Past
	with no		with		Total		Due Over 90 Days		Total
	ACL		ACL		Nonaccrual		Still Accruing		Nonperforming
Agriculture	$	2,106	$	—	$	2,106	$	269	$	2,375
Business Loans		797		—		797		—		797
Consumer Loans		—		—		—		23		23
Home Equity		—		—		—		—		—
Non-Owner Occupied CRE		—		—		—		—		—
Residential Real Esate		—		—		—		115		115
Total (a)	$	2,903	$	—	$	2,903	$	407	$	3,310

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments

related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on

Financial Instruments.

17 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following table presents nonaccrual loans by classes of the loan portfolio as of December 31, 2022 (in thousands):

Nonaccrual Loans

	December 31,
	2022
	$
Commercial real estate
Commercial mortgages		554
Agriculture mortgages		2,787
Construction		—
Consumer real estate
1-4 family residential mortgages		308
Home equity loans		339
Home equity lines of credit		—
Commercial and industrial
Commercial and industrial		190
Tax-free loans		—
Agriculture loans		—
Consumer		—
Total		4,178

Credit Quality Indicators

The Corporation grades commercial credits differently than consumer credits. The following tables represent all of the Corporation’s commercial credit exposures by internally assigned grades as of June 30, 2023 and December 31, 2022. The grading analysis estimates the capability of the borrower to repay the contractual obligations under the loan agreements as scheduled. The Corporation's internal commercial credit risk grading system is based on experiences with similarly graded loans.

The Corporation's internally assigned grades for commercial credits are as follows:

● 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 where a potential weakness or risk exists, which could cause a more serious problem, if not corrected. 

● Substandard – loans that have a well-defined weakness based on objective evidence and characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

● Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset.  In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

● Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

18 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposure as of June 30, 2023 (in thousands):

													Revolving		Revolving
	Term Loans Amortized Costs Basis by Origination Year												Loans		Loans
													Amortized		Converted
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Agriculture
Risk Rating
Pass	$	25,207	$	45,675	$	51,361	$	20,847	$	15,716	$	63,754	$	18,032	$	—	$	240,592
Special Mention		—		48		503		—		187		1,213		64		—		2,015
Substandard		—		—		—		747		306		2,311		—		—		3,364
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	25,207	$	45,723	$	51,864	$	21,594	$	16,209	$	67,278	$	18,096	$	—	$	245,971
Agriculture
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Business Loans
Risk Rating
Pass	$	22,826	$	105,175	$	71,059	$	39,252	$	16,901	$	51,583	$	37,670	$	—	$	344,466
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		3,172		1,539		—		299		—		932		332		—		6,274
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	25,998	$	106,714	$	71,059	$	39,551	$	16,901	$	52,515	$	38,002	$	—	$	350,740
Business Loans
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-Owner Occupied CRE
Risk Rating
Pass	$	14,099	$	42,236	$	27,143	$	13,186	$	7,964	$	13,647	$	4,260	$	—	$	122,535
Special Mention		—		647		—		—		—		—		—		—		647
Substandard		—		—		—		—		2,400		312		—		—		2,712
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	14,099	$	42,883	$	27,143	$	13,186	$	10,364	$	13,959	$	4,260	$	—	$	125,894
Non-Owner Occupied CRE
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Risk Rating
Pass	$	62,132	$	193,086	$	149,563	$	73,285	$	40,581	$	128,984	$	59,962	$	—	$	707,593
Special Mention		—		695		503		—		187		1,213		64		—		2,662
Substandard		3,172		1,539		—		1,046		2,706		3,555		332		—		12,350
Doubtful		—		—		—		—		—		—		—		—		—
Total (a)	$	65,304	$	195,320	$	150,066	$	74,331	$	43,474	$	133,752	$	60,358	$	—	$	722,605

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

19 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following table presents the recorded investment in loans by internal risk rating system for Commercial Credit Exposure as of December 31, 2022 in accordance with ASC 310 (in thousands):

December 31, 2022	Commercial Mortgages		Agriculture Mortgages		Construction		Commercial and Industrial		Tax-free Loans		Agriculture Loans		Total
	$		$		$		$		$		$		$
Grade:
Pass		209,534		214,905		83,240		85,977		28,664		26,749		649,069
Special Mention		—		1,966		3,553		893		—		132		6,544
Substandard		1,289		4,296		—		658		—		241		6,484
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—
Total		210,823		221,167		86,793		87,528		28,664		27,122		662,097

For consumer loans, the Corporation evaluates credit quality based on whether the loan is considered performing or non-performing. Non-performing loans consist of those loans greater than 90 days delinquent and nonaccrual loans.

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of June 30, 2023 (in thousands):

													Revolving		Revolving
	Term Loans Amortized Costs Basis by Origination Year												Loans		Loans
													Amortized		Converted
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Consumer
Payment Performance
Performing	$	2,173	$	1,470	$	606	$	270	$	65	$	9	$	1,694	$	—	$	6,287
Nonperforming		—		—		4		1		—		—		18		—		23
Total	$	2,173	$	1,470	$	610	$	271	$	65	$	9	$	1,712	$	—	$	6,310
Consumer
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	—	$	1
Home equity
Payment Performance
Performing	$	2,619	$	19,904	$	1,117	$	635	$	591	$	2,226	$	72,314	$	2,702	$	102,108
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	2,619	$	19,904	$	1,117	$	635	$	591	$	2,226	$	72,314	$	2,702	$	102,108
Home equity
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential Real Estate
Payment Performance
Performing	$	69,466	$	156,151	$	109,332	$	45,604	$	32,845	$	49,429	$	—	$	—	$	462,827
Nonperforming		—		—		—		—		—		115		—		—		115
Total	$	69,466	$	156,151	$	109,332	$	45,604	$	32,845	$	49,544	$	—	$	—	$	462,942
Residential Real Estate
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Payment Performance
Performing	$	74,258	$	177,525	$	111,055	$	46,509	$	33,501	$	51,664	$	74,008	$	2,702	$	571,222
Nonperforming		—		—		4		1		—		115		18		—		138
Total (a)	$	74,258	$	177,525	$	111,059	$	46,510	$	33,501	$	51,779	$	74,026	$	2,702	$	571,360

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

20 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of December 31, 2022 in accordance with ASC 310 (in thousands):

December 31, 2022	1-4 Family Residential Mortgages		Home Equity Loans		Home Equity Lines of Credit		Consumer		Total
Payment performance:	$		$		$		$		$
Performing		409,854		11,598		98,349		5,739		525,540
Non-performing		447		339		—		30		816
Total		410,301		11,937		98,349		5,769		526,356

As of December 31, 2022, all of the Corporation’s commercial loans on nonaccrual status were also considered impaired.

Information with respect to impaired loans for the three and six months ended June 30, 2022, in accordance with ASC 310 is as follows:

	Three		Six
	Months		Months
	Ended		Ended
	June 30,		June 30,
	2022		2022
	$		$
Average recorded balance of impaired loans		4,179		3,533
Interest income recognized on impaired loans		5		13

21 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following table summarizes information regarding impaired loans by loan portfolio class as of December 31, 2022, in accordance with ASC 310:

IMPAIRED LOAN ANALYSIS
(DOLLARS IN THOUSANDS)
December 31, 2022	Recorded Investment		Unpaid Principal Balance		Related Allowance
	$		$		$
With no related allowance recorded:
Commercial real estate
Commercial mortgages		1,201		1,271		—
Agriculture mortgages		3,229		3,348		—
Construction		—		—		—
Total commercial real estate		4,430		4,619		—
Commercial and industrial
Commercial and industrial		190		199		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		190		199		—
Total with no related allowance		4,620		4,818		—
With an allowance recorded:
Commercial real estate
Commercial mortgages		—		—		—
Agriculture mortgages		—		—		—
Construction		—		—		—
Total commercial real estate		—		—		—
Commercial and industrial
Commercial and industrial		—		—		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		—		—		—
Total with a related allowance		—		—		—
Total by loan class:
Commercial real estate
Commercial mortgages		1,201		1,271		—
Agriculture mortgages		3,229		3,348		—
Construction		—		—		—
Total commercial real estate		4,430		4,619		—
Commercial and industrial
Commercial and industrial		190		199		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		190		199		—
Total		4,620		4,818		—

22 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended June 30, 2023 (in thousands):

	Beginning							Provisions			Ending
	Balance		Charge-offs			Recoveries		(Reductions)			Balance
Allowance for credit losses:
Agriculture		3,591		—			—		75			3,666
Business Loans		3,473		—			2		(26	)		3,449
Consumer Loans		270		(14	)		1		100			357
Home Equity		2,318		—			—		21			2,339
Non-Owner Occupied CRE		942		—			—		1			943
Residential Real Estate		5,460		—			7		612			6,079
Total (a)	$	16,054	$	(14	)	$	10	$	783		$	16,833

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2023 (in thousands):

			Impact of
	Beginning		adopting								Provisions		Ending
	Balance		ASC 326			Charge-offs			Recoveries		(Reductions)		Balance
Allowance for credit losses:
Commercial Real Estate	$	6,074	$	(6,074	)	$	—		$	—	$	—	$	—
Consumer Real Estate		5,442		(5,442	)		—			—		—		—
Commerical & Industrial		2,151		(2,151	)		—			—		—		—
Consumer		67		(67	)		—			—		—		—
Agriculture		—		3,537			—			71		58		3,666
Business Loans		—		3,382			—			7		60		3,449
Consumer Loans		—		250			(15	)		1		121		357
Home Equity		—		2,129			—			—		210		2,339
Non-Owner Occupied CRE		—		875			—			—		68		943
Residential Real Estate		—		4,658			—			8		1,413		6,079
Unallocated		417		(417	)		—			—		—		—
Total (a)	$	14,151	$	680		$	(15	)	$	87	$	1,930	$	16,833

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  

During the six months ended June 30, 2023, management charged off $15,000 in loans while recovering $87,000 and added $1,930,000 to the provision for credit losses related to loans and added $142,000 to the provision for off-balance sheet credit exposure for a combined provision of $2,072,000.

The ACL is maintained at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers historical loss experience, current conditions, and forecasts of future economic conditions as of the balance sheet date. The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied CRE, and Residential Real Estate.  The following are key risks within each portfolio segment:

Agriculture – Loans made to individuals or operating companies within the Agricultural industry.  These loans are generally secured by a first lien mortgage on agricultural land.  The primary source of repayment is the income and assets of the borrower.  The condition of the agriculture industry as well as the condition of the national economy is an important indicator of risk for this segment. 

23 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

Business Loans —Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The primary source of repayment for these loans is cash flow from the operations of the company.   The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. This segment also includes loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.

Consumer - Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes personal loans and lines of credit that may be secured or unsecured.  The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

Home Equity– This segment generally includes lines of credit and term loans secured by the equity in the borrower’s residence.  The primary source of repayment for these facilities is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

Non-Owner Occupied CRE - Loans secured by commercial purpose real estate for various purposes such as hotels, retail, multifamily and health care. The primary sources of repayment for these loans are the operations of the individual projects and global cash flows of the debtors. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee.

Residential Real Estate—Loans secured by first liens on 1-4 family residential mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

The following table details activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2022:

24 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

ALLOWANCE FOR CREDIT LOSSES

(DOLLARS IN THOUSANDS)

	Commercial Real Estate			Consumer Real Estate		Commercial and Industrial			Consumer			Unallocated			Total
	$			$		$			$			$			$
Allowance for credit losses:
Beginning balance - December 31, 2021		6,263			3,834		2,112			87			635			12,931
Charge-offs		(65	)		—		—			(1	)		—			(66	)
Recoveries		—			3		10			1			—			14
Provision		(90	)		41		193			(16	)		(28	)		100
Balance - March 31, 2022		6,108			3,878		2,315			71			607			12,979
Charge-offs		—			—		(41	)		—			—			(41	)
Recoveries		2			3		12			1			—			18
Provision		(239	)		834		255			(28	)		(172	)		650
Balance - June 30, 2022		5,871			4,715		2,541			44			435			13,606

During the six months ended June 30, 2022, management charged off $107,000 in loans while recovering $32,000 and added $750,000 to the provision. The unallocated portion of the allowance decreased from 4.9% of total reserves as of December 31, 2021, to 3.2% as of June 30, 2022.

During the six months ended June 30, 2022, net provision expense was recorded for the consumer real estate and commercial and industrial sectors while the commercial real estate and consumer sectors recorded a credit provision. The provision expense recorded for consumer real estate and commercial and industrial loans was primarily related to growth in those sectors of the loan portfolio through June 30, 2022 while the credit provision in commercial real estate and consumer was primarily related to declining qualitative factors in several areas at June 30, 2022.

The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on estimation method as of June 30, 2023:

ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE

(DOLLARS IN THOUSANDS)

As of June 30, 2023:	Agriculture		Business Loans		Consumer Loans		Home Equity		Non- Owner Occupied CRE		Residential Real Estate		Total
	$		$		$		$		$		$		$
Allowance for credit losses:
Ending balance: individually evaluated		—		—		—		—		—		—		—
Ending balance: collectively evaluated		3,666		3,449		357		2,339		943		6,079		16,833
Loans receivable:
Ending balance		245,971		350,740		6,310		102,108		125,894		462,942		1,293,965
Ending balance: individually evaluated		2,521		797		—		—		—		—		3,318
Ending balance: collectively evaluated		243,450		349,943		6,310		102,108		125,894		462,942		1,290,647

The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on impairment method as of December 31, 2022:

25 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE

(DOLLARS IN THOUSANDS)

As of December 31, 2022:	Commercial Real Estate		Consumer Real Estate		Commercial and Industrial		Consumer		Unallocated		Total
	$		$		$		$		$		$
Allowance for credit losses:
Ending balance: individually evaluated for impairment		—		—		—		—		—		—
Ending balance: collectively evaluated for impairment		6,074		5,442		2,151		67		417		14,151
Loans receivable:
Ending balance		518,783		520,587		143,314		5,769				1,188,453
Ending balance: individually evaluated for impairment		4,430		—		190		—				4,620
Ending balance: collectively evaluated for impairment		514,353		520,587		143,124		5,769				1,183,833

6. Fair Value Presentation

U.S. generally accepted accounting principles establish a hierarchal disclosure framework associated with the level of observable pricing utilized in measuring assets and liabilities at fair value. The three broad levels defined by the hierarchy are as follows:

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 the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III: Assets and liabilities that have little to no observable pricing 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 judgment or estimation.

The following tables provide the fair market value for assets required to be measured and reported at fair value on a recurring basis on the Consolidated Balance Sheets as of June 30, 2023, and December 31, 2022, by level within the fair value hierarchy. As required by U.S. generally accepted accounting principles, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

26 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

ASSETS MEASURED ON A RECURRING BASIS

(DOLLARS IN THOUSANDS)

	June 30, 2023
	Level I		Level II		Level III		Total
	$		$		$		$
U.S. treasuries		17,765		—		—		17,765
U.S. government agencies		—		16,988		—		16,988
U.S. agency mortgage-backed securities		—		42,506		—		42,506
U.S. agency collateralized mortgage obligations		—		20,644		—		20,644
Non-agency MBS/CMO		—		50,152		—		50,152
Asset-backed securities		—		68,541		—		68,541
Corporate bonds		—		54,076		—		54,076
Obligations of states & political subdivisions		—		185,332		—		185,332
Equity securities		9,019		—		—		9,019
Total securities		26,784		438,239		—		465,023

On June 30, 2023, the Corporation held no securities valued using level III inputs. Most of the Corporation’s debt instruments were valued using level II inputs, where quoted prices are available and observable, but not necessarily quotes on identical securities traded in active markets on a daily basis. The Corporation’s U.S. Treasury bonds, CRA fund investments, and bank stocks are fair valued utilizing level I inputs because the funds have their own quoted prices in an active market. As of June 30, 2023, the CRA fund investments had a $7,516,000 book and fair market value and the bank stock portfolio had a book value of $1,716,000, and fair market value of $1,503,000.

Financial instruments are considered level III when their values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. In addition to these unobservable inputs, the valuation models for level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation.

ASSETS MEASURED ON A RECURRING BASIS

(DOLLARS IN THOUSANDS)

	December 31, 2022
	Level I		Level II		Level III		Total
	$		$		$		$
U.S. Treasuries		32,657		—				32,657
U.S. government agencies		—		24,787		—		24,787
U.S. agency mortgage-backed securities		—		45,307		—		45,307
U.S. agency collateralized mortgage obligations		—		27,490		—		27,490
Non-agency MBS/CMO				50,250		—		50,250
Asset-backed securities		—		73,234		—		73,234
Corporate bonds		—		69,631		—		69,631
Obligations of states & political subdivisions		—		205,786		—		205,786
Equity securities		9,118		—		—		9,118
Total securities		41,775		496,485		—		538,260

On December 31, 2022, the Corporation held no securities valued using level III inputs. Most of the Corporation’s debt instruments were valued using level II inputs, except for Treasuries, where quoted prices are available and observable but not necessarily quotes on identical securities traded in active markets on a daily basis. The Corporation’s CRA fund investments and bank stocks are fair valued utilizing level I inputs because the funds have their own quoted prices in an active market. As of December 31, 2022, the CRA fund investments had a $7,345,000 book and market value and the bank stocks had a book value of $1,685,000 and a market value of $1,773,000.

27 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following tables provide the fair value for each class of assets required to be measured and reported at fair value on a nonrecurring basis on the Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, by level within the fair value hierarchy:

ASSETS MEASURED ON A NONRECURRING BASIS

(Dollars in Thousands)

	June 30, 2023
	Level I		Level II		Level III		Total
	$		$		$		$
Assets:
Individually analyzed loans	$	—	$	—	$	3,318	$	3,318
Total	$	—	$	—	$	3,318	$	3,318

	December 31, 2022
	Level I		Level II		Level III		Total
	$		$		$		$
Assets:
Impaired Loans	$	—	$	—	$	4,620	$	4,620
Total	$	—	$	—	$	4,620	$	4,620

The Corporation had a total of $3,318,000 of individually analyzed loans as of June 30, 2023 and $4,620,000 of impaired loans as of December 31, 2022. The value of impaired loans is generally determined through independent appraisals of the underlying collateral.

28 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis for which the Corporation has utilized level III inputs to determine fair value:

QUANTITATIVE INFORMATION ABOUT LEVEL III FAIR VALUE MEASUREMENTS

(DOLLARS IN THOUSANDS)  

	June 30, 2023
	Fair Value	Valuation	Unobservable	Range
	Estimate	Techniques	Input	(Weighted Avg)
Individually analyzed loans	3,318	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -20% (-20%)
			Liquidation expenses (2)	0% to -10% (-10%)

	December 31, 2022
	Fair Value	Valuation	Unobservable	Range
	Estimate	Techniques	Input	(Weighted Avg)
Impaired loans	4,620	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -20% (-20%)
			Liquidation expenses (2)	0% to -10% (-10%)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level III inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

29 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

The following table provides the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022:

FINANCIAL INSTRUMENTS NOT REQUIRED TO BE MEASURED OR REPORTED AT FAIR VALUE

(DOLLARS IN THOUSANDS)

	June 30, 2023
					Quoted Prices in
					Active Markets		Significant Other		Significant
					for Identical		Observable		Unobservable
	Carrying				Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level II)		(Level III)
	$		$		$		$		$
Financial Assets:
Cash and cash equivalents		61,081		61,081		61,081		—		—
Regulatory stock		7,843		7,843		7,843		—		—
Loans held for sale		652		652		652		—		—
Loans, net of allowance		1,279,669		1,213,305		—		—		1,213,305
Mortgage servicing assets		2,052		2,880		—		—		2,880
Accrued interest receivable		6,249		6,249		6,249		—		—
Bank owned life insurance		35,197		35,197		35,197		—		—
Financial Liabilities:
Demand deposits		634,360		634,360		634,360		—		—
Interest-bearing demand deposits		220,949		220,949		220,949		—		—
NOW accounts		109,257		109,257		109,257		—		—
Money market deposit accounts		164,431		164,431		164,431		—		—
Savings accounts		342,422		342,422		342,422		—		—
Time deposits		184,532		180,390		—		—		180,390
Total deposits		1,655,951		1,651,809		1,471,419		—		180,390
Long-term debt		91,717		90,066		—		—		90,066
Subordinated debt		39,476		33,447		—		—		33,447
Accrued interest payable		1,169		1,169		1,169		—		—

30 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

FINANCIAL INSTRUMENTS NOT REQUIRED TO BE MEASURED OR REPORTED AT FAIR VALUE

(DOLLARS IN THOUSANDS)

	December 31, 2022
					Quoted Prices in
					Active Markets		Significant Other		Significant
					for Identical		Observable		Unobservable
	Carrying				Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level II)		(Level III)
	$		$		$		$		$
Financial Assets:
Cash and cash equivalents		37,572		37,572		37,572		—		—
Regulatory stock		6,670		6,670		6,670		—		—
Loans held for sale		5,927		5,927		5,927		—		—
Loans, net of allowance		1,176,966		1,112,400		—		—		1,112,400
Mortgage servicing assets		2,030		2,894		—		—		2,894
Accrued interest receivable		6,249		6,249		6,249		—		—
Bank owned life insurance		34,805		34,805		34,805		—		—
Financial Liabilities:
Demand deposits		672,342		672,342		672,342		—		—
Interest-bearing demand deposits		164,208		164,208		164,208		—		—
NOW accounts		139,846		139,846		139,846		—		—
Money market deposit accounts		163,836		163,836		163,836		—		—
Savings accounts		364,897		364,897		364,897		—		—
Time deposits		133,829		129,422		—		—		129,422
Total deposits		1,638,958		1,634,551		1,505,129		—		129,422
Short-term debt		16,000		15,721						15,721
Long-term debt		58,039		56,431		—		—		56,431
Subordinated debt		39,396		35,975		—		—		35,975
Accrued interest payable		597		597		597		—		—

7. Commitments and Contingent Liabilities

In order to meet the financing needs of its customers in the normal course of business, the Corporation makes various commitments that are not reflected in the accompanying consolidated financial statements. These commitments include firm commitments to extend credit, unused lines of credit, and open letters of credit. As of June 30, 2023, firm loan commitments were $90.9 million, unused lines of credit were $494.1 million, and open letters of credit were $13.8 million. The total of these commitments was $598.8 million, which represents the Corporation’s exposure to credit loss in the event of nonperformance by its customers with respect to these financial instruments. The actual credit losses that may arise from these commitments are expected to compare favorably with the Corporation’s loan loss experience on its loan portfolio taken as a whole. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for balance sheet financial instruments.

31 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

8. Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022 is as follows:

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (1) (2)

(DOLLARS IN THOUSANDS)

	Unrealized
	Gains (Losses)
	on Securities
	Available-for-Sale
	$
Balance at December 31, 2022		(48,292	)
Other comprehensive loss before reclassifications		7,335
Amount reclassified from accumulated other comprehensive income (loss)		324
Period change		7,659
Balance at March 31, 2023		(40,633	)
Other comprehensive loss before reclassifications		(1,365	)
Amount reclassified from accumulated other comprehensive income (loss)		754
Period change		(611	)
Balance at June 30, 2023		(41,244	)
Balance at December 31, 2021		3,441
Other comprehensive loss before reclassifications		(23,629	)
Amount reclassified from accumulated other comprehensive income (loss)		(110	)
Period change		(23,739	)
Balance at March 31, 2022		(20,298	)
Other comprehensive loss before reclassifications		(16,518	)
Amount reclassified from accumulated other comprehensive income (loss)		—
Period change		(16,518	)
Balance at June 30, 2022		(36,816	)

(1) All amounts are net of tax.  Related income tax expense or benefit is calculated using a Federal income tax rate of 21%.

(2) Amounts in parentheses indicate debits.  

32 

ENB FINANCIAL CORP

Notes to the Unaudited Consolidated Interim Financial Statements

DETAILS ABOUT ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) COMPONENTS (1)

(DOLLARS IN THOUSANDS)

	Amount Reclassified from
	Accumulated Other Comprehensive
	Income (Loss)
	For the Three Months
	Ended June 30,
	2023			2022		Affected Line Item in the
	$			$		Consolidated Statements of Income
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings		(954	)		—	(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)		200			—	Benefit/(Provision) for federal income taxes
Net effect on accumulated other comprehensive  income (loss) for the period		(754	)		—

(1) Amounts in parentheses indicate debits.

	Amount Reclassified from
	Accumulated Other Comprehensive
	Income (Loss)
	For the Six Months
	Ended June 30,
	2023			2022			Affected Line Item in the
	$			$			Consolidated Statements of Income
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings		(1,364	)		139		(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)		286			(29	)	Benefit/(Provision) for federal income taxes
Net effect on accumulated other comprehensive  income (loss) for the period		(1,078	)		110

(1) Amounts in parentheses indicate debits.

9. Recently Issued Accounting Standards

In March 2023, the FASB issued ASU No. 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)". The ASU allows entities to elect the proportional amortization method, on a tax-credit-program-by-tax-credit-program basis, for all equity investments in tax credit programs meeting the eligibility criteria in Accounting Standards Codification (ASC) 323-740-25-1. While the ASU does not significantly alter the existing eligibility criteria, it does provide clarifications to address existing interpretive issues. It also prescribes specific information reporting entities must disclose about tax credit investments each period. This ASU is effective for reporting periods beginning after December 15, 2023, for public business entities, or January 1, 2024 for the Corporation. The Corporation does not expect the adoption of this ASU to have a material impact on the Corporation's financial statements.

33 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

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

The following discussion and analysis represents management’s view of the financial condition and results of operations of the Corporation. This discussion and analysis should be read in conjunction with the consolidated financial statements and other financial schedules included in this quarterly report, and in conjunction with the 2022 Annual Report to Shareholders of the Corporation. The financial condition and results of operations presented are not indicative of future performance.

Forward-Looking Statements

The U.S. Private Securities Litigation Reform Act of 1995 provides safe harbor in regards to the inclusion of forward-looking statements in this document and documents incorporated by reference. Forward-looking statements pertain to possible or assumed future results that are made using current information. These forward-looking statements are generally identified when terms such as: “believe,” “estimate,” “anticipate,” “expect,” “project,” “forecast,” and other similar wordings are used. The readers of this report should take into consideration that these forward-looking statements represent management’s expectations as to future forecasts of financial performance, or the likelihood that certain events will or will not occur. Due to the very nature of estimates or predications, these forward-looking statements should not be construed to be indicative of actual future results. Additionally, management may change estimates of future performance, or the likelihood of future events, as additional information is obtained. This document may also address targets, guidelines, or strategic goals that management is striving to reach but may not be indicative of actual results.

Readers should note that many factors affect this forward-looking information, some of which are discussed elsewhere in this document and in the documents that are incorporated by reference into this document. These factors include, but are not limited to, the following:

● National and local economic conditions

● Continuing banking instability caused by recent bank failure and continuous financial uncertainty of various banks which may adversely impact the corporation and its securities values, deposit stability, capital adequacy, financial condition, operations, liquidity, and results of operations

● Interest rate and monetary policies of the Federal Reserve Board

● Inflation and monetary fluctuations and volatility

● Health of the housing market

● Volatility of the securities markets including the valuation of securities

● Real estate valuations and its impact on the loan portfolio

● Future actions or inactions of the United States government, including a failure to increase the government debt limit, a prolonged shutdown of the federal government, increase in taxes or regulations, or increasing debt balances

● Political changes and their impact on new laws and regulations

● Competitive forces

● Impact of mergers and acquisition activity in the local market and the effects thereof

● Potential impact from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses

● Changes in customer behavior impacting deposit levels and loan demand

● Changes in accounting principles, policies, or guidelines as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standards setters

● Ineffective business strategy due to current or future market and competitive conditions

● Management’s ability to manage credit risk, liquidity risk, interest rate risk, and fair value risk

● Operation, legal, and reputation risk

● Results of the regulatory examination and supervision process

● The impact of new laws and regulations

● Possible changes to the capital and liquidity requirements and other regulatory pronouncements, regulations and rules

● Effects of economic conditions particularly with regard to any pandemic, epidemic, or health-related crisis (such as COVID-19) and government and business responses thereto, specifically the effect on loan customers to repay loans

34 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

● Large scale global disruptions such as pandemics, terrorism, trade wars, and armed conflict.

● Local disruptions due to flooding, severe weather, or other natural disasters

● The risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful

● Business and competitive disruptions caused by new market and industry entrants

Readers should be aware if any of the above factors change significantly, the statements regarding future performance could also change materially. The safe harbor provision provides that the Corporation is not required to publicly update or revise forward-looking statements to reflect events or circumstances that arise after the date of this report. Readers should review any changes in risk factors in documents filed by the Corporation periodically with the Securities and Exchange Commission, including Item 1A of Part II of this Quarterly Report on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K.

Critical Accounting Policies

See Note 1, "Basis of Presentation" for additional information on the adoption of ASC 326, which changes the methodology under which management calculates its reserve for loans and investment securities, now referred to as the allowance for credit losses. Management considers the measurement of the allowance for credit losses to be a critical accounting policy.

Results of Operations

Overview

The Corporation recorded net income of $1,797,000 for the three-month period ended June 30, 2023, a $761,000, or 29.7% decrease from the three months ended June 30, 2022. Net income for the six-month period was $4,238,000, a $1,511,000, or 26.3% decrease from earnings in the six-month period ended June 30, 2022. The earnings per share, basic and diluted, were $0.32 for the three months ended June 30, 2023, compared to $0.46 for the same period in 2022, and for the year-to-date period, earnings per share were $0.75 compared to $1.03 in 2022.

The Corporation’s net interest income (NII) increased by $1,683,000, or 14.1%, and $4,766,000, or 21.0%, for the three and six months ended June 30, 2023, compared to the same periods in 2022. The increase in NII primarily resulted from an increase in interest and fees on loans of $5,431,000, or 57.0%, and $10,313,000, or 56.2%, for the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022. Additionally, interest on securities available for sale increased by $465,000, or 15.1%, for the three-month period ended June 30, 2023, and $1,838,000, or 33.2%, for the six-month period ended June 30, 2023, compared to the three and six months ended June 30, 2022. Offsetting these increases, interest expense on deposits and borrowings increased by $4,539,000, or 578.2%, and $7,869,000, or 536.0%, for the three and six months ended June 30, 2023, compared to the same periods in the prior year.

The Corporation recorded a $815,000 provision for credit losses in the second quarter of 2023, and $2,072,000 for the year-to-date period, compared to $650,000 in the second quarter of 2022 and a year-to-date provision of $750,000 through June 30, 2022. The Corporation adopted ASU 2016-13 Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments as of January 1, 2023. This standard implements a methodology that reflects credit losses that are expected to occur over the remaining life of the financial asset. This new current expected credit loss model (CECL) is based on possible economic scenarios as well as qualitative factors specific to the Corporation. During the first half of 2023, there was a significant change in the forward credit outlook due to a high interest rate environment and due to the Corporation downgrading a $5 million loan relationship to substandard requiring a higher provision related to this relationship. Due to the more subjective methodology of the CECL standard, provision expense in subsequent quarters is expected to be much more volatile than historical experience. The allowance as a percentage of total loans was 1.30% as of June 30, 2023, 1.19% as of December 31, 2022, and 1.31% as of June 30, 2022.

35 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

Other income was lower in 2023 compared to the prior year primarly as a result of lower levels of mortgage gains and strategic losses recognized on the sale of securities. The gains from the sale of mortgages were $204,000 for the three months ended June 30, 2023, compared to gains of $328,000 for the three months ended June 30, 2022, a decrease of $124,000, or 37.8%. For the six-month period, gains were $326,000, a decrease of $737,000, or 69.3%, from the six months ended June 30, 2022. The decrease in mortgage gains can be primiarly attributed to the rapid rise in mortgage rates during the first half of 2023 which has caused customer activity to shift from fixed-rate mortgages that were sold on the secondary market, to adjustable rate mortgages held on the Corporation’s balance sheet. The Corporation recorded $1,060,000 of losses on securities transactions for the three months ended June 30, 2023, and $1,666,000 for the six months ended June 30, 2023, compared to losses of $130,000 and gains of $1,000 for the three and six months ended June 30, 2022, respectively. The losses recorded in 2023 were primarily losses related to strategic sales of investments in order to fund more profitable loan growth. The lower yields on the securities portfolio provided opportunities to sell at losses and still recover the loss within a twelve-month period due to the ability to reinvest in much higher yielding assets. Outside of mortgage and security gains and losses, other non-interest income increased by $457,000, or 16.2%, and $785,000, or 13.9%, for the three and six months ended June 30, 2023. Operating expenses increased by $1,725,000, or 15.0%, and $3,481,000, or 15.8%, for the three and six months ended June 30, 2023, compared to the same periods in the prior year. This increase can be primarily attributed to the rising cost of salaries and employee benefits as well as increased investments in technology and software.

The financial services industry uses two primary performance measurements to gauge performance: return on average assets (ROA) and return on average equity (ROE). ROA measures how efficiently a bank generates income based on the amount of assets or size of a company. ROE measures the efficiency of a company in generating income based on the amount of equity or capital utilized. The latter measurement typically receives more attention from shareholders. The ROA and ROE decreased for the quarter-to-date period and the year-to-date period ended June 30, 2023, compared to the same periods in the prior year, due to lower earnings in 2023.

Key Ratios	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Return on Average Assets		0.39%		0.60%		0.46%		0.68%
Return on Average Equity		6.85%		9.55%		8.27%		9.70%

The results of the Corporation’s operations are best explained by addressing, in further detail, the five major sections of the income statement, which are as follows:

● Net interest income

● Provision for loan losses

● Other income

● Operating expenses

● Provision for income taxes

The following discussion analyzes each of these five components.

Net Interest Income (NII)

NII represents the largest portion of the Corporation’s operating income. In the first six months of 2023, NII generated 84.4% of the Corporation’s revenue stream, which consists of NII and non-interest income, compared to 77.2% in the first six months of 2022. This increase is a result of higher levels of NII in the first six months of 2023 as well as lower non-interest income compared to 2022. The overall performance of the Corporation is highly dependent on the changes in NII since it comprises such a significant portion of operating income.

The following table shows a summary analysis of NII on a fully taxable equivalent (FTE) basis. For analytical purposes and throughout this discussion, yields, rates, and measurements such as NII, net interest spread, and net yield on interest earning assets are presented on an FTE basis. The FTE NII shown in both tables below will exceed the NII reported on the consolidated statements of income, which is not shown on an FTE basis. The amount of FTE adjustment totaled $160,000 for the three months ended June 30, 2023, and $356,000 for the six months ended June 30, 2023, compared to $317,000 and $621,000 for the same periods in 2022.

36 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

NET INTEREST INCOME

(DOLLARS IN THOUSANDS)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	$		$		$		$
Total interest income		18,981		12,759		36,798		24,163
Total interest expense		5,324		785		9,337		1,468
Net interest income		13,657		11,974		27,461		22,695
Tax equivalent adjustment		160		317		356		621
Net interest income (fully taxable equivalent)		13,817		12,291		27,817		23,316

NII is the difference between interest income earned on assets and interest expense incurred on liabilities. Accordingly, two factors affect NII:

● The rates earned on interest earning assets and paid on interest bearing liabilities

● The average balance of interest earning assets and interest bearing liabilities

NII is impacted by yields earned on assets and rates paid on liabilities. During 2022, asset yields increased with the Federal Reserve rate movements, but liability costs were still low due to the ability to slowly raise deposit rates. In the first half of 2023, interest rates on deposits increased more dramatically as a result of competitive pressure and the desire to retain existing deposits and attract new ones to add to the Corporation’s liquidity position. While higher market rates have helped the Corporation’s NIM, the higher cost of funds has put pressure on the NIM. Management believes that compression will accelerate with the continued higher cost of liabilities without a similar-sized increase in asset yield.

As a result of a larger balance sheet and improved asset yields in the first half of 2023, the Corporation’s NII and net interest margin on a tax equivalent basis increased. The Corporation’s margin increased to 3.00% for the quarter ended June 30, 2023, and 3.04% for the year-to-date period ended June 30, 2023, compared to 2.96% in the second quarter of 2022, and 2.85% for the year-to-date period. The Corporation’s NII on a fully-taxable equivalent basis for the three and six months ended June 30, 2023, increased over the same periods in 2022 by $1,526,000, or 12.4%, and $4,501,000, or 19.3%, respectively.

Security yields will generally fluctuate more rapidly than loan yields based on changes to the U.S. Treasury rates and yield curve. With higher Treasury rates in 2022 and 2023, security yields have increased and have helped to increase NII during the first half of 2023.

The Corporation’s overall cost of funds has risen significantly through the first half of 2023. Core deposit interest rates have risen over the past year; however, time deposit rates have risen to higher levels and more quickly than core deposit rates. The change in deposit rates has resulted in some movement from low interest bearing core deposits to time deposits or other higher yielding money market deposits. This resulted in the total cost of deposits increasing by $3,807,000 for the quarter and $6,398,000 for the six months ended June 30, 2023, compared to the same periods in the prior year. The average balance of borrowings was higher in the first six months of 2023 compared to 2022, and interest rates were also higer, resulting in the total cost of borrowings increasing by $732,000, or 153.5%, and $1,471,000, or 162.0%, for the three and six months ended June 30, 2023, compared to the same periods in 2022.

The following table provides an analysis of year-to-date changes in NII on a FTE basis by distinguishing what changes were a result of average balance increases or decreases and what changes were a result of interest rate increases or decreases.

37 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

RATE/VOLUME ANALYSIS OF CHANGES IN NET INTEREST INCOME

(TAXABLE EQUIVALENT BASIS, DOLLARS IN THOUSANDS)

	Three Months Ended June 30,									Six Months Ended June 30,
	2023 vs. 2022									2023 vs. 2022
	Increase (Decrease)									Increase (Decrease)
	Due To Change In									Due To Change In
							Net									Net
	Average			Interest			Increase			Average			Interest			Increase
	Balances			Rates			(Decrease)			Balances			Rates			(Decrease)
	$			$			$			$			$			$
INTEREST INCOME
Interest on deposits at other banks		(17	)		181			164			(100	)		262			162
Securities available for sale:
Taxable		(283	)		1,176			893			(177	)		2,761			2,584
Tax-exempt		(284	)		(230	)		(514	)		(474	)		(406	)		(880	)
Total securities		(567	)		946			379			(651	)		2,355			1,704
Loans		3,050			2,399			5,449			6,193			4,157			10,350
Regulatory stock		30			43			73			55			99			154
Total interest income		2,496			3,569			6,065			5,497			6,873			12,370
INTEREST EXPENSE
Deposits:
Demand deposits		39			2,792			2,831			57			4,826			4,883
Savings deposits		(1	)		69			68			(1	)		127			126
Time deposits		120			788			908			183			1,207			1,390
Total deposits		158			3,649			3,807			239			6,160			6,399
Borrowings:
Total borrowings		473			259			732			1,060			410			1,470
Total interest expense		631			3,908			4,539			1,299			6,570			7,869
NET INTEREST INCOME		1,865			(339	)		1,526			4,198			303			4,501

The following tables show a more detailed analysis of NII on a FTE basis with all the major elements of the Corporation’s balance sheet, which consists of interest earning and non-interest earning assets and interest bearing and non-interest bearing liabilities.

38 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

COMPARATIVE AVERAGE BALANCE SHEETS AND NET INTEREST INCOME

(DOLLARS IN THOUSANDS)  

	For the Three Months Ended June 30,
	2023						2022
					(c)						(c)
	Average				Annualized		Average				Annualized
	Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate
	$		$		%		$		$		%
ASSETS
Interest earning assets:
Federal funds sold and interest
on deposits at other banks		21,680		212		3.93		29,899		48		0.65
Securities available for sale:
Taxable		372,638		2,935		3.15		426,130		2,042		1.92
Tax-exempt		158,553		835		2.11		207,379		1,349		2.60
Total securities (d)		531,191		3,770		2.84		633,509		3,391		2.14
Loans (a)		1,278,552		15,015		4.70		996,100		9,566		3.86
Regulatory stock		7,808		144		7.37		5,776		71		4.90
Total interest earning assets		1,839,231		19,141		4.17		1,665,284		13,076		3.15
Non-interest earning assets (d)		45,260						57,983
Total assets		1,884,491						1,723,267
LIABILITIES & STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Demand deposits		490,767		2,947		2.41		388,334		117		0.12
Savings deposits		344,778		86		0.10		368,095		18		0.02
Time deposits		169,711		1,081		2.56		114,026		173		0.62
Borrowed funds		132,717		1,210		3.66		74,011		477		2.61
Total interest bearing liabilities		1,137,973		5,324		1.88		944,466		785		0.34
Non-interest bearing liabilities:
Demand deposits		629,778						664,435
Other		11,465						6,940
Total liabilities		1,779,216						1,615,841
Stockholders' equity		105,275						107,426
Total liabilities & stockholders' equity		1,884,491						1,723,267
Net interest income (FTE)				13,817						12,291
Net interest spread (b)						2.29						2.81
Effect of non-interest bearing deposits						0.71						0.15
Net yield on interest earning assets (c)						3.00						2.96

(a) Includes balances of nonaccrual loans and the recognition of any related interest income.  The quarter-to-date average balances include net deferred loan costs of $2,546,000 as of June 30, 2023, and $2,111,000 as of June 30, 2022.  Such fees and costs recognized through income and included in the interest amounts totaled ($57,000) in 2023, and $52,000 in 2022.

(b) Net interest spread is the arithmetic difference between the yield on interest earning assets and the rate paid on interest bearing liabilities.

(c) Net yield, also referred to as net interest margin, is computed by dividing NII (FTE) by total interest earning assets.

(d) Securities recorded at amortized cost.  Unrealized holding gains and losses are included in non-interest earning assets.  

39 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

COMPARATIVE AVERAGE BALANCE SHEETS AND NET INTEREST INCOME

(DOLLARS IN THOUSANDS)

	For the Six Months Ended June 30,
	2023						2022
					(c)						(c)
	Average				Annualized		Average				Annualized
	Balance		Interest		Yield/Rate		Balance		Interest		Yield/Rate
	$		$		%		$		$		%
ASSETS
Interest earning assets:
Federal funds sold and interest
on deposits at other banks		16,776		246		2.96		58,307		85		0.29
Securities available for sale:
Taxable		389,333		6,090		3.11		409,125		3,505		1.70
Tax-exempt		162,296		1,759		2.17		202,298		2,639		2.61
Total securities (d)		551,629		7,849		2.84		611,423		6,144		2.01
Loans (a)		1,252,994		28,774		4.61		963,808		18,424		3.83
Regulatory stock		7,542		285		7.55		5,594		131		4.67
Total interest earning assets		1,828,941		37,154		4.07		1,639,132		24,784		3.03
Non-interest earning assets (d)		44,158						72,762
Total assets		1,873,099						1,711,894
LIABILITIES & STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Demand deposits		483,659		5,049		2.11		379,971		165		0.09
Savings deposits		351,535		162		0.09		361,471		36		0.02
Time deposits		157,623		1,747		2.24		113,965		359		0.63
Borrowed funds		132,051		2,379		3.63		68,982		908		2.66
Total interest bearing liabilities		1,124,868		9,337		1.67		924,389		1,468		0.32
Non-interest bearing liabilities:
Demand deposits		634,248						661,746
Other		10,623						6,204
Total liabilities		1,769,739						1,592,339
Stockholders' equity		103,360						119,555
Total liabilities & stockholders' equity		1,873,099						1,711,894
Net interest income (FTE)				27,817						23,316
Net interest spread (b)						2.40						2.71
Effect of non-interest bearing deposits						0.64						0.14
Net yield on interest earning assets (c)						3.04						2.85

(a) Includes balances of nonaccrual loans and the recognition of any related interest income.  The year-to-date average balances include net deferred loan costs of $2,600,000 as of June 30, 2023, and $1,972,000 as of June 30, 2022.  Such fees and costs recognized through income and included in the interest amounts totaled $(21,000) in 2023, and $38,000 in 2022.

(b) Net interest spread is the arithmetic difference between the yield on interest earning assets and the rate paid on interest bearing liabilities.

(c) Net yield, also referred to as net interest margin, is computed by dividing net interest income (FTE) by total interest earning assets.

(d) Securities recorded at amortized cost.  Unrealized holding gains and losses are included in non-interest earning assets.    

40 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

The Corporation’s average balances on securities decreased by $102.3 million, or 16.2%, for the three months ended June 30, 2023, and $59.8 million, or 9.8%, for the six months ended June 30, 2023, compared to the same periods in 2022. The tax equivalent yield on investments increased by 70 basis points for the quarter-to-date period and 83 basis points for the year-to-date period when comparing both years. As a result of the higher yields, interest income on securities increased by $379,000, or 11.2%, and $1,704,000, or 27.8%, for the three and six months ended June 30, 2023, compared to the same periods in the prior year.

Average balances on loans increased by $282.5 million, or 28.4%, for the three months ended June 30, 2023, and $289.2 million, or 30.0%, for the six months ended June 30, 2023, compared to the same periods in the prior year. Loan yields increased by 84 basis points for the quarter, and 78 basis points for the year-to-date period and loan interest income increased by $5,449,000, or 57.0%, and $10,349,000, or 56.2%, for both time frames due to the increase in loan balances and higher yields.

The average balance of interest-bearing deposit accounts increased by $134.8 million, or 15.5%, and $137.4 million, or 16.1%, for the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year. Interest-bearing deposits increased as rates increased due to funds shifting from non-interest earning accounts to interest earning accounts due to the rapid increase in market rates. The average balance of savings accounts decreased as funds moved into higher-yielding accounts. The interest rate paid on all interest-bearing deposits increased significantly for both time periods. The combined rate on interest-bearing deposits increased by 431 basis points for the quarter ended June 30, 2023, and 370 basis points for the year-to-date period, compared to the same periods in the prior year. The combination of these changes resulted in an increase in interest expense on deposits of $3,806,000, for the three months ended June 30, 2023, and $6,398,000, for the six months ended June 30, 2023, compared to the same periods in 2022.

The Corporation’s average balance on borrowed funds increased by $58.7 million, or 79.3%, for the three months ended June 30, 2023, and $63.1 million, or 91.4%, for the six months ended June 30, 2023, compared to the same periods in 2022. The Corporation’s borrowed funds consist of FHLB advances as well as subordinated debt issued in December of 2020 and July of 2022 which was used to support capital growth for the Corporation. The rate paid on borrowed funds increased by 105 basis points for the three months ended June 30, 2023, and 97 basis points for the six months ended June 30, 2023, compared to the same periods in the prior year. This increase in rate can be attributed to initiating higher-rate FHLB advances in late 2022 and early 2023 as well as the issuance of subordinated debt in July of 2022.

For the three months ended June 30, 2023, the net interest spread decreased by 52 basis points to 2.29%, compared to 2.81% for the three months ended June 30, 2022. For the six months ended June 30, 2023, the net interest spread decreased by 31 basis points to 2.40%, compared to 2.71% for the six months ended June 30, 2022. The effect of non-interest bearing funds increased to 71 basis points from 15 basis points for the three months ended June 30, 2023, and increased to 64 basis points from 14 basis points for the six months ended June 30, 2023, compared to the same periods in 2022. The effect of non-interest bearing funds refers to the benefit gained from deposits on which the Corporation does not pay interest. As rates go higher, the benefit of non-interest bearing deposits increases because there is more difference between non-interest bearing funds and interest bearing liabilities. The Corporation’s NIM for the second quarter of 2023 was 3.00%, compared to 2.96% for the second quarter of 2022. For the year-to-date period, the Corporation’s NIM was 3.04%, compared to 2.85% for the same period in 2022.

The Asset Liability Committee (ALCO) carefully monitors the NIM because it indicates trends in NII, the Corporation’s largest source of revenue. For more information on the plans and strategies in place to protect the NIM and moderate the impact of changes in rates, refer to Item 7A: Quantitative and Qualitative Disclosures about Market Risk.

Provision for Credit Losses

The provision for credit losses includes a provision for losses on loans, available-for-sale debt securities, and unfunded loan commitments. The provision provides for losses inherent in the financial assets as determined by a quarterly analysis and calculation of various factors related to the financial assets. The amount of the provision reflects the adjustment management determines necessary to ensure the Allowance for Credit Losses (ACL) is adequate to cover any losses inherent in the financial assets. The Corporation recorded a provision expense of $1,930,000 for credit losses related to loans, $142,000 for unfunded commitments and $0 related to available-for-sale securities for the first six months of 2023, compared to $750,000 related to loans for the six months ended June 30, 2022. The provision expense was higher in the first half of 2023 due to the Corporation’s adoption of ASU 2016-13 which requires a reliance on forward economic indicators to project expected credit losses as well as a higher balance of classified loans. As of June 30, 2023, the allowance as a percentage of total loans was 1.30%, compared to 1.31% at June 30, 2022. More detail is provided under Allowance for Credit Losses in the Financial Condition section that follows.

41 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

Other Income

Other income for the second quarter of 2023 was $2,422,000, a decrease of $597,000, or 19.8%, compared to the $3,019,000 earned during the second quarter of 2022. For the year-to-date period ended June 30, 2023, other income totaled $5,076,000, a decrease of $1,619,000, or 24.2%, compared to the same period in 2022. The following table details the categories that comprise other income.

OTHER INCOME

(DOLLARS IN THOUSANDS)

	Three Months Ended June 30,
	2023			2022			Increase (Decrease)
	$			$			$			%
Trust and investment services		674			628			46			7.3
Service charges on deposit accounts		344			334			10			3.0
Other fees		778			350			428			>100%
Commissions		917			952			(35	)		(3.7	)
Net gains (losses) on debt and equity securities		(1,060	)		(130	)		(930	)		>100%
Gains on sale of mortgages		204			328			(124	)		(37.8	)
Earnings on bank owned life insurance		237			235			2			0.9
Other miscellaneous income		328			322			6			1.9
Total other income		2,422			3,019			(597	)		(19.8	)

OTHER INCOME

(DOLLARS IN THOUSANDS)

	Six Months Ended June 30,
	2023			2022		Increase (Decrease)
	$			$		$			%
Trust and investment services		1,459			1,299		160			12.3
Service charges on deposit accounts		631			627		4			0.6
Other fees		1,391			645		746			>100%
Commissions		1,812			1,821		(9	)		(0.5	)
Net gains (losses) on debt and equity securities		(1,666	)		1		(1,667	)		>100%
Gains on sale of mortgages		326			1,063		(737	)		(69.3	)
Earnings on bank owned life insurance		463			425		38			8.9
Other miscellaneous income		660			814		(154	)		(18.9	)
Total other income		5,076			6,695		(1,619	)		(24.2	)

Trust and investment services income increased for the quarter and year-to-date as a result of a larger level of assets under management and higher fees. Other fees increased for both time periods driven by fees earned on an off-balance-sheet sweep product. The Corporation incurred $1,060,000 of losses on debt and equity securities in the second quareter of 2023, and $1,666,000 of losses for the year-to-date period as a result of strategic sales of debt securities to fund higher yielding loan growth and depreciation of bank stock values causing an unrealized loss on equity securities. Mortgage gains declined by $124,000, or 37.8%, in the second quarter of 2023, compared to the second quarter of 2022, and $737,000, or 69.3%, for the six months ended June 30, 2023, compared to the same period in 2022. This was primarly a result of the rapid increase in interest rates during the last three quarters of 2022 that resulted in very low margins on mortgages sold and a switch to mortgages held on the Corporation’s balance sheet as opposed to sold on the secondary market. The miscellaneous income category was lower for the six months ended June 30, 2023, by 18.9% as a result of non-recurring income items that impacted the first half of 2022.

42 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

Operating Expenses

Operating expenses for the second quarter of 2023 were $13,202,000, an increase of $1,725,000, or 15.0%, compared to the $11,477,000 for the second quarter of 2022. For the year-to-date period ended June 30, 2023, operating expenses totaled $25,566,000, an increase of $3,481,000, or 15.8%, compared to the same period in 2022. The following table provides details of the Corporation’s operating expenses for the three and six-month periods ended June 30, 2023, compared to the same periods in 2022.

OPERATING EXPENSES

(DOLLARS IN THOUSANDS)

	Three Months Ended June 30,
	2023		2022		Increase (Decrease)
	$		$		$			%
Salaries and employee benefits		7,901		6,707		1,194			17.8
Occupancy expenses		860		694		166			23.9
Equipment expenses		325		336		(11	)		(3.3	)
Advertising & marketing expenses		412		295		117			39.7
Computer software & data processing expenses		1,697		1,386		311			22.4
Shares tax		299		351		(52	)		(14.8	)
Professional services		843		633		210			33.2
Other operating expenses		865		1,075		(210	)		(19.5	)
Total Operating Expenses		13,202		11,477		1,725			15.0

OPERATING EXPENSES

(DOLLARS IN THOUSANDS) 

	Six Months Ended June 30,
	2023		2022		Increase (Decrease)
	$		$		$			%
Salaries and employee benefits		15,356		13,219		2,137			16.2
Occupancy expenses		1,596		1,412		184			13.0
Equipment expenses		669		601		68			11.3
Advertising & marketing expenses		686		574		112			19.5
Computer software & data processing expenses		3,478		2,524		954			37.8
Bank shares tax		599		702		(103	)		(14.7	)
Professional services		1,507		1,263		244			19.3
Other operating expenses		1,675		1,790		(115	)		(6.4	)
Total Operating Expenses		25,566		22,085		3,481			15.8

Salaries and employee benefits are the largest category of operating expenses. For the second quarter of 2023, salaries and benefits increased $1,194,000, or 17.8%, and for the six months ended June 30, 2023, salaries and benefits increased $2,137,000, or 16.2%, compared to the same periods in 2022. This was primarily due to a competitive labor market that resulted in higher costs to attract and retain employees inclusive of costs related to merit increases and higher employee benefit expenses. Occupancy and equipment expenses in total increased by 15.0% for the quarter, and 12.5% for the year-to-date period, compared to the same periods in the prior year as a result of new branch and leased office locations. Computer software and data processing expenses increased by $311,000, or 22.4%, and $954,00, or 37.8%, for the three and six months ended June 30, 2023, as a result of higher technology costs caused primarily by a debit card conversion scheduled to take place in 2023 that resulted in amortized contract costs. Shares tax expense is based on the Corporation’s level of shareholders’ equity and has decreased due to the decline in the Corporation’s level of shareholders’ equity. Professional services expenses increased by 33.2% in the second quarter of 2023, and 19.3% for the year-to-date period compared to the prior year driven by higher fees associated with the issuance of subordinated debt.

43 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

Income Taxes

Federal income tax expense was $265,000 for the second quarter of 2023 compared to $308,000 for the same period in 2022. For the six months ended June 30, 2023, the Corporation recorded Federal income tax expense of $661,000, compared to $806,000 for the six months ended June 30, 2022. The effective tax rate for the Corporation was 13.5% for the six months ended June 30, 2023, and 12.3% for the six months ended June 30, 2022. Certain items of income are not subject to Federal income tax, such as tax-exempt interest income on loans and securities, and Bank Owned Life Insurance (BOLI) income; therefore, the effective income tax rate for the Corporation is lower than the stated tax rate.

44 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

Financial Condition

Investment Securities

The Corporation classifies all of its debt securities as available for sale and reports the portfolio at fair value. As of June 30, 2023, the Corporation had $456.0 million of debt securities available for sale, which accounted for 24.0% of assets, compared to 28.5% as of December 31, 2022, and 32.7% as of June 30, 2022. Based on ending balances, the debt securities portfolio decreased 21.2% from June 30, 2022, and 13.8% from December 31, 2022.

The debt securities portfolio was showing a net unrealized loss of $52,208,000 as of June 30, 2023, compared to $61,129,000 as of December 31, 2022, and $46,602,000 as of June 30, 2022. The valuation of the Corporation’s securities portfolio, predominately debt securities, is impacted by both the U.S. Treasury rates and the perceived forward direction of interest rates.

Each quarter, management sets portfolio allocation guidelines and adjusts the security portfolio strategy generally based on the following factors:

● ALCO positions as to liquidity, credit risk, interest rate risk, and fair value risk

● Growth of the loan portfolio

● Slope of the U.S. Treasury curve

● Relative performance of the various instruments, including spread to U.S. Treasuries

● Duration and average length of the portfolio

● Volatility of the portfolio

● Direction of interest rates

● Economic factors impacting debt securities

The investment policy of the Corporation establishes guidelines to promote diversification within the portfolio. The diversity specifications provide opportunities to shorten or lengthen duration, maximize yield, and mitigate credit risk.

The Corporation’s U.S. Treasury sector decreased $14.9 million during the first half of 2023, resulting in a 45.6% decrease in this sector. This sector represents a safe credit, but carries a low yield due to the investments made in 2020 and 2021. As a result, some Treasuries were sold during the first half of the year to provide liquidity for much higher yielding loan growth. The Corporation’s U.S. government agency sector decreased by $7.8 million, or 31.5%, since December 31, 2022.

The Corporation’s U.S. agency MBS and CMO sectors have decreased slightly since December 31, 2022, with MBS decreasing $2.8 million, or 6.2%, and CMOs decreasing $6.8 million, or 24.9%. These two security types both consist of mortgage instruments that pay monthly interest and principal, however the behavior of the two types vary according to the structure of the mortgage pool or CMO instrument. Management desires to maintain a substantial amount of MBS and CMOs in order to assist in adding to and maintaining a stable five-year ladder of cash flows, which is important in providing stable liquidity and interest rate risk positions. U.S. agency MBS and CMO securities pay contractual monthly principal and interest, but are also subject to additional prepayment of principal. The combined effect of all of these instruments paying monthly principal and interest provides the Corporation with a reasonably stable base cash flow of approximately $2.0 - $3.0 million per month. Cash flows coming off of MBS and CMOs do slow down and speed up as interest rates increase or decrease, which has an impact on the portfolio’s length and yield.

The portfolio of non-agency MBS and CMO securities stood at $50.2 million as of June 30, 2023, or 10.8% of the total portfolio. This sector will better structure the portfolio to achieve higher yields and shorten the duration while also protecting in a rates-up environment. The non-agency portfolio stood at $50.3 million at December 31, 2022.

The Corporation’s asset-backed securities declined by $4.7 million, or 6.4%, from December 31, 2022, to June 30, 2023. Many of the bonds in this sector receive regular monthly principal payments which caused the value to decline. These bonds are primarily floating rate instruments, so in the current rates-up environment, they have added to the overall yield increase for the portfolio.

45 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

As of June 30, 2023, the fair value of the Corporation’s corporate bonds decreased by $15.6 million, or 22.3%, from balances at December 31, 2022. During the first half of 2023, some Corporate bonds were sold to provide liquidity for loan growth. Like any security, corporate bonds have both positive and negative qualities and management must evaluate these securities on a risk versus reward basis. Corporate bonds add diversity to the portfolio and provide strong yields for short maturities; however, by their very nature, corporate bonds carry a high level of credit risk should the entity experience financial difficulties. As a result of the higher level of credit risk taken by purchasing a corporate bond, management has in place procedures to closely analyze the financial health of the company as well as policy guidelines. The guidelines include both maximum investment by issuer and minimal credit ratings that must be met in order for management to purchase a corporate bond. Financial analysis is conducted prior to every corporate bond purchase with ongoing monitoring performed on all securities held.

Obligations of states and political subdivisions, or municipal bonds, consist of both tax-free and taxable securities. They carry the longest duration on average of any instrument in the securities portfolio. Municipal tax-equivalent yields generally start well above other taxable bonds. These instruments also experience significant fair market value gains and losses when interest rates decrease and increase. Municipal securities were purchased throughout 2020 and 2021 due to the levels of excess liquidity experienced due to deposit inflows. Municipal bonds represented 39.9% of the securities portfolio as of June 30, 2023, compared to 38.2% as of December 31, 2022.

Loans

Net loans outstanding increased by 24.5%, to $1,279.7 million at June 30, 2023, from $1,027.8 million at June 30, 2022. Net loans increased by 8.7%, an annualized rate of 17.5%, from $1,177.0 million at December 31, 2022. The following table shows the composition of the loan portfolio as of June 30, 2023 and December 31, 2022.

LOANS BY MAJOR CATEGORY

(DOLLARS IN THOUSANDS)

	June 30,					December 31,
	2023					2022
	$			%		$			%
Agriculture		245,971			19.0		238,734			20.1
Business Loans		350,740			27.1		336,340			28.3
Consumer		6,310			0.5		5,932			0.5
Home Equity		102,108			7.9		98,854			8.3
Non-Owner Occupied CRE		125,894			9.7		111,333			9.4
Residential Real Estate (a)		462,942			35.8		397,260			33.4
Total loans		1,293,965			100		1,188,453			100
Less:
Deferred loan costs, net		2,537					2,664
Allowance for credit losses		(16,833	)				(14,151	)
Total net loans (b)		1,279,669					1,176,966

(a) Residential real estate loans do not include mortgage loans serviced for others which totaled $295,406,000 as of June 30, 2023 and $298,375,000 as of December 31, 2022.

(b) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

There was moderate growth in the loan portfolio since December 31, 2022. All of the loan categories showed an increase in balances since December 31, 2022.

From December 31, 2022, the Agriculture Loan segment increased $7,237,000, or 3.0%, the Business Loan segment increased $14,400,000, of 4.3%, the Consumer Loan segment increased $378,000, or 6.4%, the Home Equity segment increased $3,254,000, or 3.3%, the Non-Owner Occupied segment increased $14,561,000, or 13.1%, and the Residential Real Estate segment increased $65,682,000, or 16.5% from December 31, 2022.

In the second quarter of 2023, mortgage production increased 6% from the previous quarter but was down 9% from the second quarter of 2022.  Purchase money origination constituted 93% of the Corporation’s mortgage originations for the quarter, with construction-only and construction-permanent loans making up 56% of that mix.  With the continued elevated fixed interest rate environment, the percentage of mortgage originations placed in the Corporation’s held-for-investment mortgage portfolio remained high at 87%, 77% of which were adjustable rate mortgages.  As of June 30, 2023, ARM balances were $279.8 million, representing 60.4% of the 1-4 family residential loan portfolio of the Corporation.

46 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

The consumer loan portfolio represents 0.5% of total loans. The long-term trend over the past decade has seen homeowners turning to the equity in their homes to finance cars and education rather than traditional consumer loans that are generally unsecured. Demand for unsecured credit is being matched by principal payments on existing loans resulting in stable balances.

Non-Performing Assets

Non-performing assets include:

● Nonaccrual loans

● Loans past due 90 days or more and still accruing

● Other real estate owned

NON-PERFORMING ASSETS

(DOLLARS IN THOUSANDS)

	June 30,		December 31,		June 30,
	2023		2022		2022
	$		$		$
Nonaccrual loans		2,903		4,178		4,666
Loans past due 90 days or more and still accruing		407		169		813
Total non-performing loans		3,310		4,347		5,479
Other real estate owned		—		—		—
Total non-performing assets		3,310		4,347		5,479
Non-performing assets to net loans		0.26%		0.31%		0.53%

The total balance of non-performing assets decreased by $2,169,000, or 39.6% from balances at June 30, 2022, and $1,037,000, or 23.9%, from balances at December 31, 2022. Non-accrual loans decreased by $1,763,000, or 37.8%, since June 30, 2022, and $1,275,000, or 30.5% since December 31, 2022. Loans past due 90 days or more and still accruing decreased $406,000, or 49.9%, since June 30, 2022, and increased $238,000, or 140.8%, since December 31, 2022. This increase was primarily caused by the addition of one agriculture mortgage totaling $269,000.

There was no other real estate owned (OREO) as of June 30, 2023, December 31, 2022, or June 30, 2022.

Allowance for Credit Losses

The allowance for credit losses (ACL) is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on total loans. Management reviews the adequacy of the ACL on a quarterly basis.  The ACL represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The ACL is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Corporation measures expected credit losses for loans on a pooled basis when similar risk characteristics exist.  Additionally, the ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending policies and procedures, loan portfolio trends, lending management experience, asset quality, loan review, underlying collateral, credit concentrations, and external factors. Loans that do not share risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date adjusted for selling costs as appropriate. Based on the quarterly calculation, management will adjust the ACL through the provision for credit losses as necessary.

47 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

Strong credit and collateral policies have been instrumental in producing a favorable history of loan losses for the Corporation. The Net Charge-Off table below shows the net charge-offs for each segment of the Corporation’s loan portfolio as of June 30, 2023.

Net Charge-Offs

(DOLLARS IN THOUSANDS)

	June 30,
	2023
	$
Loans charged-off:
Agriculture		—
Business Loans		—
Consumer Loans		15
Home Equity		—
Non-Owner Occupied CRE		—
Residential Real Estate		—
Total loans charged-off		15
Recoveries of loans previously charged-off
Agriculture		71
Business Loans		7
Consumer Loans		1
Home Equity		—
Non-Owner Occupied CRE		—
Residential Real Estate		8
Total recoveries		87
Net charge-offs (recoveries)
Agriculture		(71	)
Business Loans		(7	)
Consumer Loans		14
Home Equity		—
Non-Owner Occupied CRE		—
Residential Real Estate		(8	)
Total net charge-offs (recoveries)		(72	)

48 

ENB FINANCIAL CORP

Management’s Discussion and Analysis

The Net Charge-Off table below shows the net charge-offs for each segment of the Corporation’s loan portfolio as of June 30, 2022.

Net Charge-Offs

(DOLLARS IN THOUSANDS)

	June 30,
	2022
	$
Loans charged-off:
Commercial real estate		65
Consumer real estate		—
Commercial and industrial		41
Consumer		1
Total loans charged-off		107
Recoveries of loans previously charged-off
Commercial real estate		2
Consumer real estate		6
Commercial and industrial		22
Consumer		2
Total recoveries		32
Net charge-offs (recoveries)
Commercial real estate		63
Consumer real estate		(6	)
Commercial and industrial		19
Consumer		(1	)
Total net charge-offs (recoveries)		75

The net charge-offs as a percentage of average total loans outstanding indicates the percentage of the Corporation’s total loan portfolio that has been charged off during the period. The Corporation has historically experienced very low net charge-off percentages due to conservative credit practices. As of June 30, 2023, there were $15,000 in charge-offs and $87,000 of recoveries, representing a net recovery position of 0.01% of average loans outstanding as reflected above. As of June 30, 2022, net charge-offs were very low at $75,000, resulting in a net charge-off as a percentage of average loans of 0.01% for the quarter.

Management regularly reviews the overall risk profile of the loan portfolio and the impact that current economic trends have on the Corporation’s loans. The financial industry typically evaluates the quality of loans on a scale with “unclassified” representing healthy loans, “special mention” being the first indication of credit concern, and several successive classified ratings indicating further credit declines of “substandard,” “doubtful,” and, ultimately, “loss.”

The Corporation’s level of classified loans was $13.1 million on June 30, 2023, compared to $13.6 million on June 30, 2022. Total classified loans have decreased from the prior year. Having more loans in a classified status could result in a larger allowance as higher amounts of projected historical losses and qualitative factors are attached to these loans.

Premises and Equipment

Premises and equipment, net of accumulated depreciation, increased by $1.1 million, or 4.5%, to $25.4 million as of June 30, 2023, from $24.3 million as of June 30, 2022. As of June 30, 2023, $435,000 was classified as construction or improvement in process compared to $380,000 as of June 30, 2022. Fixed assets increased as a result of new purchases outpacing depreciation on existing assets year over year.

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ENB FINANCIAL CORP

Management’s Discussion and Analysis

Regulatory Stock

The Corporation owns multiple forms of regulatory stock that is required in order to be a member of the Federal Reserve Bank (FRB) and members of banks such as the Federal Home Loan Bank (FHLB) and Atlantic Community Bankers Bank (ACBB). The Corporation’s $7.8 million of regulatory stock holdings as of June 30, 2023, consisted of $6.7 million of FHLB of Pittsburgh stock, $1.1 million of FRB stock, and $37,000 of Atlantic Community Bancshares, Inc. stock, the Bank Holding Company of ACBB. All of these stocks are valued at a stable dollar price, which is the price used to purchase or liquidate shares; therefore, the investment is carried at book value and there is no fair market value adjustment.

The Corporation’s investment in FHLB stock is required for membership in the organization. The amount of stock required is dependent upon the relative size of outstanding FHLB borrowings and mortgage activity. Excess stock is typically repurchased from the Corporation at par if the borrowings decline to a predetermined level. The Corporation’s FHLB stock position was $6.7 million on June 30, 2023, $5.6 million on December 31, 2022, and $5.5 million on June 30, 2022, with no excess capital stock position. Any future stock repurchases would be the result of lower borrowing balances. Stock repurchases by the FHLB occur every quarter.

Deposits

The Corporation’s total ending deposits at June 30, 2023, increased by $17.0 million, or 1.0%, and by $77.7 million, or 4.9%, from December 31, 2022, and June 30, 2022, respectively. Customer deposits are the Corporation’s primary source of funding for loans and securities. The mix of the Corporation’s deposit categories has changed moderately since June 30, 2022, with the changes being a $44.1 million, or 6.5% decrease in non-interest bearing demand deposit accounts, a $101.2 million, or 84.6% increase in interest bearing demand balances, a $18.4 million, or 14.4% decrease in NOW balances, a $1.3 million, or 0.8% decrease in money market account balances, a $30.6 million, or 8.2% decrease in savings account balances, and a $70.9 million, or 62.4% increase in time deposit balances.

The growth in interest bearing demand balances was a result of participating in a reciprocal arrangement for the Corporation’s off balance sheet cash management sweep product as a strategic decision to fund loan growth. This product allows customers to sweep balances off the Corporation’s balance sheet, maintain a competitive yield, and receive full FDIC insurance coverage. The Corporation now fully receives reciprocal balances back on balance sheet for this product, resulting in the large increase in balances since June 30, 2022.

The significant increase in time deposit balances was a result of issuing $20 million in brokered time deposits since June 30, 2022, as well as increases in the Corporation’s customer time deposits as a result of the increased rate environment and offering several promotional rates on specific time deposit terms. Time deposits are typically a more rate-sensitive product, making them a source of funding that is prone to balance variations depending on the interest rate environment and how the Corporation’s time deposit rates compare with the local market rates. Time deposits fluctuate as consumers search for the best rates in the market, with less allegiance to any particular financial institution.

As of June 30, 2023 and 2022, the total uninsured deposits of the Corporation were approximately $228,159,000 and $333,476,000, respectively. Total uninsured deposits is calculated based on regulatory reporting requirements and reflects the portion of any deposit of a customer at an insured depository institution that exceeds the applicable FDIC insurance coverage for that depositor at that institution and amounts in any other uninsured investment or deposit accounts that are classified as deposits and not subject to any federal or state deposit insurance regime.

The Deposits by Major Classification table, shown below, provides the balances of each category for June 30, 2023, December 31, 2022, and June 30, 2022.

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ENB FINANCIAL CORP

Management’s Discussion and Analysis

DEPOSITS BY MAJOR CLASSIFICATION

(DOLLARS IN THOUSANDS)

	June 30,		December 31,		June 30,
	2023		2022		2022
	$		$		$
Non-interest bearing demand		634,360		672,342		678,472
Interest bearing demand		220,949		164,208		119,711
NOW accounts		109,257		139,846		127,622
Money market deposit accounts		164,432		163,836		165,781
Savings accounts		342,422		364,897		373,060
Time deposits		184,531		133,829		113,634
Total deposits		1,655,951		1,638,958		1,578,280

The growth and mix of deposits is often driven by several factors including:

● Convenience and service provided

● Current rates paid on deposits relative to competitor rates

● Level of and perceived direction of interest rates

● Financial condition and perceived safety of the institution

● Possible risks associated with other investment opportunities

● Level of fees on deposit products

Borrowings

Total borrowings were $131.2 million, $113.4 million, and $83.9 million as of June 30, 2023, December 31, 2022, and June 30, 2022, respectively. There were no short-term borrowings as of June 30, 2023, but as of December 31, 2022, there were $16.0 million, and $20.0 million at June 30, 2022. Short-term funds are used for immediate liquidity needs and are not typically part of an ongoing liquidity or interest rate risk strategy; therefore, they fluctuate more rapidly. When short-term funds are used, they are purchased through correspondent and member bank relationships as overnight borrowings or through the FHLB for terms less than one year.

Total long-term borrowings, borrowings initiated for terms longer than one year, were $91.7 million as of June 30, 2023, $58.0 million as of December 31, 2022, and $44.2 million as of June 30, 2022, respectively. The long-term borrowings for the Corporation were made up entirely of FHLB long-term advances. FHLB advances are used as a secondary source of funding and to mitigate interest rate risk. These long-term funding instruments are typically a more effective funding instrument in terms of selecting the exact amount, rate, and term of funding rather than trying to source the same through deposits. In this manner, management can efficiently meet known liquidity and interest rate risk needs. The increase in long-term FHLB borrowings since June 30, 2022, can be attributed to the changing interest rate environment and the desire to ladder out some borrowings into future years to cover liquidity needs. The Corporation continues to be well under the FHLB maximum borrowing capacity (MBC), which is currently $633.5 million. The Corporation’s internal policy limits are far more restrictive than the FHLB MBC, which is calculated and set quarterly by FHLB.

In addition to the long-term advances funded through the FHLB, on December 30, 2020, the Corporation completed the sale of a subordinated debt note offering. The Corporation sold $20.0 million of subordinated debt notes with a maturity date of December 30, 2030. These notes are non-callable for 5 years and carry a fixed interest rate of 4% per year for 5 years and then convert to a floating rate for the remainder of the term. The notes can be redeemed at par beginning 5 years prior to maturity. The notes are structured to qualify as Tier 2 capital for the Corporation and any funds it invests in the Bank qualify as Tier 1 capital at the Bank. As of June 30, 2023, $16.0 million of funds were invested in the Bank. The Corporation paid an issuance fee of 2% of the total issue that will be amortized to the call date on a pro-rata basis.

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ENB FINANCIAL CORP

Management’s Discussion and Analysis

On July 22, 2022, the Corporation completed the sale of an additional subordinated debt note offering.  The Corporation sold $20.0 million of subordinated debt notes with a maturity date of September 30, 2032.  These notes are all non-callable for 5 years and carry a fixed interest rate of 5.75% per year for the 5 years and then convert to a floating rate for the remainder of the term.  The notes can be redeemed at par beginning 5 years prior to maturity.  The notes are structured to qualify as Tier 2 capital for the Corporation and any funds it invests in the Bank qualify as Tier 1 capital at the Bank.  As of June 30, 2023, $17.0 million of funds were invested in the Bank. The Corporation paid an issuance fee of 2% of the total issue that will be amortized to the call date on a pro-rata basis. 

Stockholders’ Equity

Federal regulatory authorities require banks to meet minimum capital levels. The Corporation, as well as the Bank, as the solely owned subsidiary of the Corporation, maintains capital ratios well above those minimum levels. The risk-weighted capital ratios are calculated by dividing capital by total risk-weighted assets. Regulatory guidelines determine the risk-weighted assets by assigning assets to specific risk-weighted categories. The calculation of tier I capital to risk-weighted average assets does not include an add-back to capital for the amount of the allowance for credit losses, thereby making this ratio lower than the total capital to risk-weighted assets ratio.

The consolidated asset limit on small bank holding companies is $3 billion and a company with assets under that limit is not subject to the consolidated capital rules but may disclose capital amounts and ratios. The Corporation has elected to disclose those amounts and ratios.

The following tables reflect the capital ratios for the Corporation and Bank compared to the regulatory capital requirements.

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ENB FINANCIAL CORP

Management’s Discussion and Analysis

REGULATORY CAPITAL RATIOS:

			Regulatory Requirements
			Adequately		Well
As of June 30, 2023	Capital Ratios		Capitalized		Capitalized
Total Capital to Risk-Weighted Assets
Consolidated		14.9%		N/A		N/A
Bank		14.4%		8.0%		10.0%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		10.7%		N/A		N/A
Bank		13.2%		6.0%		8.0%
Common Equity Tier 1 Capital to Risk-Weighted Assets
Consolidated		10.7%		N/A		N/A
Bank		13.2%		4.5%		6.5%
Tier 1 Capital to Average Assets
Consolidated		7.6%		N/A		N/A
Bank		9.3%		4.0%		5.0%
As of December 31, 2022
Total Capital to Risk-Weighted Assets
Consolidated		15.0%		N/A		N/A
Bank		14.5%		8.0%		10.0%
Tier I Capital to Risk-Weighted Assets
Consolidated		10.9%		N/A		N/A
Bank		13.4%		6.0%		8.0%
Common Equity Tier I Capital to Risk-Weighted Assets
Consolidated		10.9%		N/A		N/A
Bank		13.4%		4.5%		6.5%
Tier I Capital to Average Assets
Consolidated		7.6%		N/A		N/A
Bank		9.3%		4.0%		5.0%
As of June 30, 2022
Total Capital to Risk-Weighted Assets
Consolidated		13.8%		N/A		N/A
Bank		13.4%		8.0%		10.0%
Tier 1 Capital to Risk-Weighted Assets
Consolidated		11.0%		N/A		N/A
Bank		12.3%		6.0%		8.0%
Common Equity Tier 1 Capital to Risk-Weighted Assets
Consolidated		11.0%		N/A		N/A
Bank		12.3%		4.5%		6.5%
Tier 1 Capital to Average Assets
Consolidated		7.8%		N/A		N/A
Bank		8.7%		4.0%		5.0%

As of June 30, 2023, the Bank’s Tier 1 Leverage Ratio stood at 9.3% while the Corporation’s Tier 1 Leverage Ratio was 7.6%. Tier 1 Capital levels at the Corporation level were not impacted by the subordinated debt issue since subordinated debt only qualifies as Tier 2 Capital at the corporate level. As such, in terms of the Corporation’s regulatory capital ratios, only the Total Capital to Risk-Weighted Assets ratio was enhanced as a result of the $40 million subordinated debt issue. Most of the marked improvement in capital ratios occurred at the Bank level. In 2022 and 2023, the Corporation’s earnings, net of dividends paid, positively impacted the level of stockholders’ equity, but a devaluation of the investment portfolio, resulted in a higher level of unrealized losses, and a negative impact.

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ENB FINANCIAL CORP

Management’s Discussion and Analysis

Off-Balance Sheet Arrangements

In the normal course of business, the Corporation typically has off-balance sheet arrangements related to loan funding commitments. These arrangements may impact the Corporation’s financial condition and liquidity if they were to be exercised within a short period of time. As discussed in the following liquidity section, the Corporation has in place sufficient liquidity alternatives to meet these obligations. The following table presents information on the commitments by the Corporation as of June 30, 2023.

	2023
	$
Commitments to extend credit:
Revolving home equity		210,804
Construction loans		50,360
Real estate loans		89,756
Business loans		227,002
Consumer loans		1,373
Other		5,715
Standby letters of credit		13,805
Total		598,815

Market Risks

During March and April 2023, three significant bank failures occurred (Silicon Valley Bank, Signature Bank, and First Republic Bank). This was and continues to be accompanied by financial instability at certain additional banks. These bank failures and bank instabilities have created and may continue to create market and other risks, for all financial institutions and banks, including the Corporation. These risks include, but are not limited to:

1. Market risk and loss of confidence in the financial services sector, and/or specific banks;

2. Deterioration of securities and loan portfolios;

3. Deposit reductions with higher volumes and occurring over shorter periods of time;

4. Increased liquidity demand and utilization of sources of liquidity; and

5. Interest rate volatility and abrupt, sudden and greater than usual rate changes.

These factors individually, or in any combination, could materially and adversely affect:

1. Financial condition;

2. Operations and results thereof; and

3. Stock price.

In addition, the previously mentioned bank failures and instabilities may result in an increase of FDIC deposit insurance premiums and/or result in special FDIC deposit insurance assessments, which also may adversely affect the Corporation’s financial condition, operations, results thereof or stock price.

The Corporation cannot predict the impact, timing or duration of such events.

Significant Legislation

Dodd-Frank Wall Street Reform and Consumer Protection Act

In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was signed into law. Dodd-Frank is intended to affect a fundamental restructuring of federal banking regulation. Among other things, Dodd-Frank creates a new Financial Stability Oversight Council to identify systemic risks in the financial system and gives federal regulators new authority to take control of and liquidate financial firms. Dodd-Frank additionally creates a new independent federal regulator to administer federal consumer protection laws. Among the provisions that have already or are likely to affect the Corporation are the following:

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ENB FINANCIAL CORP

Management’s Discussion and Analysis

Holding Company Capital Requirements

Dodd-Frank requires the Federal Reserve to apply consolidated capital requirements to bank holding companies that are no less stringent than those currently applied to depository institutions. Under these standards, trust preferred securities will be excluded from tier I capital unless such securities were issued prior to May 19, 2010, by a bank holding company with less than $15 billion in assets. Dodd-Frank additionally requires that bank regulators issue countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, are consistent with safety and soundness.

Deposit Insurance

Dodd-Frank permanently increased the maximum deposit insurance amount for banks, savings institutions, and credit unions to $250,000 per depositor. Additionally, on February 7, 2011, the Board of Directors of the FDIC approved a final rule based on the Dodd-Frank Act that revises the assessment base from one based on domestic deposits to one based on assets. This change, which was effective in April 2011, saved the Corporation a significant amount of FDIC insurance premiums from the significantly higher FDIC insurance premiums placed into effect after the financial crisis.

Corporate Governance

Dodd-Frank requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years, a non-binding vote regarding the frequency of the vote on executive compensation at least every six years, and a non-binding vote on “golden parachute” payments in connection with approvals of mergers and acquisitions unless previously voted on by shareholders. The SEC has finalized the rules implementing these requirements which took effect on January 21, 2011. The Corporation was exempt from these requirements until January 21, 2013, due to its status as a smaller reporting company.

Consumer Financial Protection Bureau

Dodd-Frank created the Consumer Financial Protection Bureau (CFPB), which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy Provisions of the Gramm-Leach-Bliley Act, and certain other statutes. The CFPB has examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions will be subject to rules promulgated by the CFPB but will continue to be examined and supervised by federal banking regulators for consumer compliance purposes. The CFPB will have authority to prevent unfair, deceptive, or abusive practices in connection with the offering of consumer financial products. Dodd-Frank authorizes the CFPB to establish certain minimum standards for the origination of residential mortgages including a determination of the borrower’s ability to repay. In addition, Dodd-Frank will allow borrowers to raise certain defenses to foreclosure if they receive any loan other than a “qualified mortgage” as defined by the CFPB. Dodd-Frank permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations.

Interstate Branching

Dodd-Frank authorizes national and state banks to establish branches in other states to the same extent as a bank chartered by that state would be permitted. Previously, banks could only establish branches in other states if the host state expressly permitted out-of-state banks to establish branches in that state. Accordingly, banks will be able to enter new markets more freely.

Limits on Interstate Acquisitions and Mergers

Dodd-Frank precludes a bank holding company from engaging in an interstate acquisition – the acquisition of a bank outside its home state – unless the bank holding company is both well capitalized and well managed. Furthermore, a bank may not engage in an interstate merger with another bank headquartered in another state unless the surviving institution will be well capitalized and well managed. The previous standard in both cases was adequately capitalized and adequately managed.

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ENB FINANCIAL CORP

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a financial institution, the Corporation is subject to three primary risks:

● Credit risk

● Liquidity risk

● Interest rate risk

The Board of Directors has established an Asset Liability Management Committee (ALCO) to measure, monitor, and manage these primary market risks. The Asset Liability Policy has instituted guidelines for all of these primary risks, as well as other financial performance measurements with target ranges. The Asset Liability goals and guidelines are consistent with the Strategic Plan goals related to financial performance.

Credit Risk

For discussion on credit risk refer to the sections in Item 2. Management’s Discussion and Analysis, on securities, non-performing assets, and allowance for credit losses.

Liquidity Risk

Liquidity refers to having an adequate supply of cash available to meet business needs. Financial institutions must ensure that there is adequate liquidity to meet a variety of funding needs, at a minimal cost. Funding new loans and covering deposit withdrawals are the primary liquidity needs of the Corporation. The Corporation uses a variety of funding sources to meet liquidity needs, such as deposits, loan repayments, cash flows from securities, borrowings, and current earnings.

As noted in the discussion on deposits, customers have historically provided the Corporation with a reliable and steadily increasing source of funds liquidity. The Corporation also has in place relationships with other banking institutions for the purpose of buying and selling Federal funds. The lines of credit with these institutions provide immediate sources of additional liquidity. The Corporation currently has unsecured lines of credit totaling $32 million. This does not include amounts available from member banks such as the Federal Reserve Discount Window or the FHLB of Pittsburgh.

The Corporation regularly reviews its liquidity position by measuring its projected net cash flows at a 30 and 90-day interval. The Corporation stresses the measurements by assuming a level of deposit out-flows that have not historically been realized. In addition to this forecast, other funding sources are reviewed as a method to provide emergency funding if necessary. The objective of this measurement is to identify the amount of cash that could be raised quickly without the need to liquidate assets. The Corporation also stresses its liquidity position utilizing different longer-term scenarios. The varying degrees of stress create pressure on deposit flows in its local market, reduce access to wholesale funding and limit access of funds available through brokered deposit channels. In addition to stressing cash flow, specific liquidity risk indicators are monitored to help identify risk areas. This analysis helps identify and quantify the potential cash surplus/deficit over a variety of time horizons to ensure the Corporation has adequate funding resources. Assumptions used for liquidity stress testing are subjective. Should an evolving liquidity situation or business cycle present new data, potential assumption changes will be considered. The Corporation believes it can meet all anticipated liquidity demands.

Historically, the Corporation has satisfied its liquidity needs from earnings, repayment of loans and amortizing investment securities, maturing investment securities, loan sales, deposit growth and its ability to access existing lines of credit. All investment securities are classified as available for sale; therefore, securities that are unencumbered can be used as collateral for borrowings and are an additional source of readily available liquidity.

The Corporation analyzes the following additional liquidity measurements in an effort to monitor and mitigate liquidity risk:

● On-hand Liquidity/Total Liabilities – Net liquid assets as a percentage of total liabilities

● Non-Core Funding Dependence – Non-core liabilities minus short-term investments as a percentage of long-term assets

● Reliance on Wholesale Funding – Wholesale funding as a percentage of total funding

● Net Short-term Liabilities/Total Assets – Short-term liabilities minus short-term assets as a percentage of total assets

● Loan to Deposit Ratio – Total loans as a percentage of total deposits

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ENB FINANCIAL CORP

These measurements are designed to prevent undue reliance on outside sources of funding and to ensure a steady stream of liquidity is available should events occur that would cause a sudden decrease in deposits or large increase in loans or both, which would in turn draw significantly from the Corporation’s available liquidity sources. As of June 30, 2023, the Corporation was within guidelines for all of the above measurements.

The Corporation’s liquidity measurements are tracked and reported quarterly by management to both observe trends and ensure the measurements stay within desired ranges. Management is confident that a sufficient amount of internal and external liquidity exists to provide for significant unanticipated liquidity needs.

Interest Rate Risk

Interest rate risk is measured using two analytical tools:

● Changes in net interest income

● Changes in net portfolio value

Financial modeling is used to forecast net interest income and earnings, as well as net portfolio value, also referred to as fair value. The modeling is generally conducted under seven different interest rate scenarios that can vary according to the present level of interest rates. The scenarios consist of a projection of net interest income if rates remain flat, increase 100, 200, or 300 basis points, or decrease 100, 200, or 300 basis points.

The results obtained through the use of forecasting models are based on a variety of factors. Both the net interest income and fair value forecasts make use of the maturity and repricing schedules to determine the changes to the balance sheet over the course of time. Additionally, there are many assumptions that factor into the results. These assumptions include, but are not limited to, the following:

● Projected forward interest rates

● Slope of the U.S. Treasury curve

● Spreads available on securities over the U.S. Treasury curve

● Prepayment speeds on loans held and mortgage-backed securities

● Anticipated calls on securities with call options

● Deposit and loan balance fluctuations

● Competitive pressures affecting loan and deposit rates

● Economic conditions

● Consumer reaction to interest rate changes

As a result of the many assumptions, this information should not be relied upon to predict future results. Additionally, both of the analyses discussed below do not consider any action that management could take to minimize or offset the negative effect of changes in interest rates. These tools are used to assist management in identifying possible areas of risk in order to address them before a greater risk is posed. Back testing of the model is completed to compare actual results to projections to ensure the validity of the assumptions in the model. The back testing analyses indicate that the model assumptions are reliable.

Changes in Net Interest Income

The change in net interest income measures the amount of net interest income fluctuation that would be experienced over one year, assuming interest rates change immediately and remain the same for one year. This is considered to be a short-term view of interest rate risk. The analysis of changes in net interest income due to changes in interest rates is commonly referred to as interest rate sensitivity. The Corporation’s interest rate sensitivity analysis indicates that if interest rates were to change immediately, the Corporation would realize less net interest income in all up and down rate scenarios. In past years, the Corporation was generally showing asset sensitivity meaning in a rates-up environment, assets would reprice faster than liabilities resulting in higher net interest income. In the past few quarters, this increase in net interest income shifted to a decline primarily due to the increased impact from a higher cost of funds as rates continue to rise. While the Corporation would recognize higher interest income on its variable-rate assets, it would also now be repricing liabilities at a much faster pace resulting in increased interest expense that would offset the rise in interest income. Likewise, in the down-rate scenarios, asset yields would decline in conjunction with market rate moves, while deposit repricing would be slower to retain existing deposit balances.

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ENB FINANCIAL CORP

The second quarter of 2023 analysis projects net interest income expected in the seven rate scenarios over a one-year time horizon. As of June 30, 2023, the Corporation was within guidelines for the maximum amount of net interest income change in all rate scenarios.

The assumptions and analysis of interest rate risk are based on historical experience during varied economic cycles. Management believes these assumptions to be appropriate; however, actual results could vary significantly. Management uses this analysis to identify trends in interest rate sensitivity and determine if action is necessary to mitigate asset liability risk.

Changes in Net Portfolio Value

The change in net portfolio value is considered a tool to measure long-term interest rate risk. The analysis measures the exposure of the balance sheet to valuation changes due to changes in interest rates. The calculation of net portfolio value discounts future cash flows to the present value based on current market rates. The change in net portfolio value estimates the gain or loss in value that would occur on market sensitive instruments given an interest rate increase or decrease in the same seven scenarios mentioned above. As of June 30, 2023, the Corporation was within guidelines for all rate scenarios except the down-200 and down-300 basis point scenarios. The Corporation shows a favorable benefit to net portfolio value in the rising rate scenarios, due primarily to the large amount of core deposits on the Corporation’s balance sheet. The non-interest bearing demand deposit accounts and low-interest bearing checking, NOW, and money market accounts provide more benefit to the Corporation when interest rates are higher and the difference between the overnight funding costs compared to the average interest bearing core deposit rates are greater. As interest rates increase, the discount rate used to value the Corporation’s interest bearing accounts increases, causing a lower net present value for these interest-bearing deposits. This improves the modeling of the Corporation’s fair value risk to higher interest rates as the liability amounts decrease causing a higher net portfolio value of the Corporation’s balance sheet. However, as interest rates decrease, the discount rate used to value the Corporation’s interest bearing accounts decreases, causing a higher net present value for these interest-bearing deposits.

The analysis shows a valuation loss in the down rate scenarios. Policy allows for a valuation decline of 25% for the down-200 basis point scenario and actual projected results show a valuation decline of 27%. In the down-300 basis point scenario, policy allows for a valuation decline of 30% and actual projection results show a valuation decline of 51%. While these losses are outside of policy guidelines, the Federal Reserve has signaled that their preferred course of action is to increase rates until inflation retracts. The Corporation will continue to monitor these measurements in the down-rate scenarios and adjust balance sheet structure as necessary to prepare for future potential lower rates.

The weakness with the net portfolio value analysis is that it assumes liquidation of the Corporation rather than as a going concern. For that reason, it is considered a secondary measurement of interest rate risk to “Changes in Net Interest Income” discussed above. However, the net portfolio value analysis is a more important tool to measure the impact of interest rate changes to capital. In the current regulatory climate, the focus is on ensuring adequate asset liability modeling is being done to project the impact of very large interest rate increases on capital. The asset liability modeling currently in place measures the impact of such a rate change on the valuation of the Corporation’s loans, securities, deposits, and borrowings, and the resulting impact to capital. Management continues to analyze additional scenario testing to model “worst case” scenarios to adequately plan for the possible severe impact of such events.

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Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

Management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer (Principal Executive Officer) and Treasurer (Principal Financial Officer), of the effectiveness of the design and the operation of the Corporation’s disclosure controls and procedures (as such term as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2023, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer (Principal Executive Officer) along with the Treasurer (Principal Financial Officer) concluded that the Corporation’s disclosure controls and procedures as of June 30, 2023, are effective to ensure that information required to be disclosed in the reports that the company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

(b) Changes in Internal Controls.

There have been no changes in the Corporation’s internal controls over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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PART II – OTHER INFORMATION

June 30, 2023

Item 1. Legal Proceedings

Management is not aware of any litigation that would have a material adverse effect on the consolidated financial position or results of operations of the Corporation or its subsidiaries taken as a whole. There are no proceedings pending other than ordinary routine litigation incident to the business of the Corporation. In addition, no material proceedings are pending, are known to be threatened, or contemplated against the Corporation by governmental authorities.

Item 1A. Risk Factors

The Corporation continually monitors the risks related to the Corporation’s business, other events, the Corporation’s Common Stock, and the Corporation’s industry. Other than as noted below, there have been no material changes in risk factors applicable to the Corporation from those disclosed in "Risk Factors" in Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2022.

Recent negative developments affecting the banking industry, including recent bank failures or concerns regarding liquidity, have eroded customer confidence in the banking system and may have a material adverse effect on the Corporation.

Recent events impacting the banking industry, including the high-profile failure or instability of certain banking institutions, have resulted in general uncertainty and eroded confidence in the safety, soundness, and financial strength of the financial services sector. In particular, the bank failures highlighted the potential serious impact of a financial institution unable to meet withdrawal requests by depositors. This has resulted in a growing concern about liquidity in the banking industry, access to and volatile capital markets and reduced stock valuations for certain financial institutions. Similar future events, including additional bank failures or bank instability, could directly or indirectly adversely impact our own liquidity, access to capital markets, stock price, financial condition and results of operations. Further, these recent events may also result in: greater regulatory scrutiny and enforcement; additional and more stringent laws and regulations for the financial services industry; increased FDIC deposit insurance premiums or special FDIC assessments; and higher capital ratio requirements, which as a result could have a material negative impact and adverse effect on our business, financial condition and results of operations.

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

Purchases

The following table details the Corporation’s purchase of its own common stock during the three months ended June 30, 2023.

Issuer Purchase of Equity Securites
					Total Number of		Maximum Number
	Total Number		Average		Shares Purchased		of Shares that May
	of Shares		Price Paid		as Part of Publicly		Yet be Purchased
Period	Purchased		Per Share		Announced Plans *		Under the Plan *
April 2023		3,331		13.56		3,331		148,410
May 2023		5,000		13.30		5,000		143,410
June 2023		4,100		13.95		4,100		139,310
Total		12,431

* On October 21, 2020, the Board of Directors of the Corporation approved a plan to repurchase, in open market and privately negotiated transactions, up to 200,000 shares of its outstanding common stock. The first purchase of common stock under this plan occurred on October 28, 2020. By June 30, 2023, a total of 60,690 shares were repurchased at a total cost of $1,101,000 for an average cost per share of $18.14.

60 

ENB FINANCIAL CORP

Item 3. Defaults Upon Senior Securities – Nothing to Report

Item 4. Mine Safety Disclosures – Not Applicable

Item 5. Other Information – Nothing to Report

61 

ENB FINANCIAL CORP

Item 6. Exhibits:

Exhibit No.	Description
3(i)	Articles of Incorporation of the Registrant, as amended (Incorporated by reference to Exhibit 3.1 of the Corporation’s Form 8-K  filed with the SEC on June 7, 2019)
3 (ii)	By-Laws of the Registrant, as amended. (Incorporated herein by reference to Exhibit 3.2 of the Corporation’s Form 8-K filed with the SEC on July 21, 2021.)
10.1	Form of Deferred Income Agreement.  (Incorporated herein by reference to Exhibit 10.1 of the Corporation’s Quarterly Report on Form 10-Q filed with the SEC on August 13, 2008.)
10.2	2022 Employee Stock Purchase Plan (Incorporated herein by reference to Appendix A to the Corporation’s Definitive Proxy Statement filed with the SEC on April 4, 2022.)
10.3	2020 Non-Employee Directors’ Stock Plan.  (Incorporated herein by reference to Exhibit 99.1 of the Corporation’s Form S-8 filed with the SEC on June 3, 2020.)
10.4	Employment Agreement by and among ENB Financial Corp, The Ephrata National Bank and Chad E. Neiss dated as of October 28, 2022. (Incorporated herein by reference to Exhibit 10.1 of the Corporation's Form 8-K filed with the SEC on November 1, 2022.)
10.5	Employment Agreement by and among ENB Financial Corp, The Ephrata National Bank and Jeffrey S. Stauffer dated as of October 28, 2022. (Incorporated herein by reference to Exhibit 10.2 of the Corporation's Form 8-K filed with the SEC on November 1, 2022.)
10.6	Employment Agreement by and among ENB Financial Corp, The Ephrata National Bank and Rachel G. Bitner dated as of October 28, 2022. (Incorporated herein by reference to Exhibit 10.4 of the Corporation's Form 8-K filed with the SEC on November 1, 2022.)
10.7	Employment Agreement by and among ENB Financial Corp, The Ephrata National Bank and Joselyn D. Strohm dated as of June 5, 2023. (Incorporated herein by reference to Exhibit 10.1 of the Corporation's Form 8-K filed with the SEC on June 7, 2023.)
31.1	Section 302 Chief Executive Officer Certification (Required by Rule 13a-14(a)).
31.2	Section 302 Principal Financial Officer Certification (Required by Rule 13a-14(a)).
32.1	Section 1350 Chief Executive Officer Certification (Required by Rule 13a-14(b)).
32.2	Section 1350 Principal Financial Officer Certification (Required by Rule 13a-14(b)).

62 

ENB FINANCIAL CORP

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) 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.

	ENB Financial Corp
	(Registrant)
Dated:  August 14, 2023	By:	/s/  Jeffrey S. Stauffer
		Jeffrey S. Stauffer
		Chairman of the Board
		Chief Executive Officer and President
		Principal Executive Officer
Dated: August 14, 2023	By:	/s/  Rachel G. Bitner
		Rachel G. Bitner
		Treasurer
		Principal Financial Officer

63 

EX-31.1

ENB FINANCIAL CORP

Exhibit 31.1

CERTIFICATION

I, Jeffrey S. Stauffer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ENB Financial Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies, and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     August 14, 2023	By:	/s/  Jeffrey S. Stauffer
		Jeffrey S. Stauffer
		Chairman of the Board
		Chief Executive Officer and President
		Principal Executive Officer

64 

EX-31.2

ENB FINANCIAL CORP

Exhibit 31.2

CERTIFICATION

I, Rachel G. Bitner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ENB Financial Corp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies, and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     August 14, 2023	By:	/s/   Rachel G. Bitner
		Rachel G. Bitner
		Treasurer
		Principal Financial Officer

65 

EX-32.1

ENB FINANCIAL CORP

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of ENB Financial Corp (the "Corporation") for the period ended June 30, 2023, as filed with the Securities and Exchange Commission (the "Report"), I, Jeffrey S. Stauffer, Chief Executive Officer and President, of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of and for the period covered by the Report.

Date:     August 14, 2023	By:	/s/  Jeffrey S. Stauffer
		Jeffrey S. Stauffer
		Chairman of the Board
		Chief Executive Officer and President
		Principal Executive Officer

66 

EX-32.2

ENB FINANCIAL CORP

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of ENB Financial Corp (the "Corporation") for the period ended June 30, 2023, as filed with the Securities and Exchange Commission (the "Report"), I, Rachel G. Bitner, Treasurer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of and for the period covered by the Report.

Date:  August 14, 2023	By:	/s/   Rachel G. Bitner
		Rachel G. Bitner
		Treasurer
		Principal Financial Officer

67 

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 01, 2023
Document Information Line Items
Entity Registrant Name	ENB Financial Corp
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		5,645,612
Amendment Flag	false
Entity Central Index Key	0001437479
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	PA
Entity File Number	000-53297
Entity Tax Identification Number	51-0661129
Entity Address, Address Line One	31 E. Main St.
Entity Address, City or Town	Ephrata
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	17522-0457
City Area Code	(717)
Local Phone Number	733-4181
Entity Information, Former Legal or Registered Name	Not Applicable
Entity Interactive Data Current	Yes

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
ASSETS
Cash and due from banks	$ 24,672	$ 28,935	$ 22,571
Interest-bearing deposits in other banks	36,409	8,637	32,041
Total cash and cash equivalents	61,081	37,572	54,612
Securities available for sale (at fair value, net of allowance for credit losses of $0)	456,004	529,142	579,018
Equity securities (at fair value)	9,019	9,118	8,895
Loans held for sale	652	5,927	4,763
Loans (net of unearned income)	1,296,502	1,191,117	1,041,440
Less: Allowance for credit losses	16,833	14,151	13,606
Net loans	1,279,669	1,176,966	1,027,834
Premises and equipment	25,381	25,333	24,340
Regulatory stock	7,843	6,670	6,145
Bank owned life insurance	35,197	34,805	35,780
Other assets	28,806	33,183	28,958
Total assets	1,903,652	1,858,716	1,770,345
Liabilities:
Noninterest-bearing	634,360	672,342	678,472
Interest-bearing	1,021,591	966,616	899,808
Total deposits	1,655,951	1,638,958	1,578,280
Short-term borrowings		16,000	20,000
Long-term debt	91,717	58,039	44,206
Subordinated debt	39,476	39,396	19,720
Other liabilities	10,174	8,988	6,738
Total liabilities	1,797,318	1,761,381	1,668,944
Stockholders' equity:
Common stock, par value $0.10 Shares: Authorized 24,000,000 Issued 5,739,114 and Outstanding 5,654,415 as of 6/30/23, 5,635,533 as of 12/31/22, and 5,610,571 as of 6/30/22	574	574	574
Capital surplus	4,259	4,437	4,502
Retained earnings	144,380	142,677	135,705
Accumulated other comprehensive loss, net of tax	(41,244)	(48,292)	(36,816)
Less: Treasury stock cost on 84,700 shares as of 6/30/23, 103,581 as of 12/31/22, and 128,544 as of 6/30/22	(1,635)	(2,061)	(2,564)
Total stockholders' equity	106,334	97,335	101,401
Total liabilities and stockholders' equity	$ 1,903,652	$ 1,858,716	$ 1,770,345

XML

CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Statement of Financial Position [Abstract]
Securities available for sale at fair value, net of credit losses (in Dollars)	$ 0	$ 0	$ 0
Common stock, par value (in Dollars per share)	$ 0.1	$ 0.1	$ 0.1
Common stock, shares authorized	24,000,000	24,000,000	24,000,000
Common stock, shares issued	5,739,114	5,739,114	5,739,114
Common stock, shares outstanding	5,654,415	5,635,533	5,610,571
Less: Treasury stock shares	84,700	103,581	128,544

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Interest and dividend income:
Interest and fees on loans	$ 14,951	$ 9,520	$ 28,648	$ 18,335
Interest on securities available for sale
Taxable	2,811	2,007	5,853	3,436
Tax-exempt	740	1,079	1,529	2,108
Interest on deposits at other banks	213	47	247	84
Dividend income	266	106	521	200
Total interest and dividend income	18,981	12,759	36,798	24,163
Interest expense:
Interest on deposits	4,114	308	6,958	560
Interest on borrowings	1,210	477	2,379	908
Total interest expense	5,324	785	9,337	1,468
Net interest income	13,657	11,974	27,461	22,695
Provision for credit losses	815	650	2,072	750
Net interest income after provision for credit losses	12,842	11,324	25,389	21,945
Other income:
Trust and investment services income	674	628	1,459	1,299
Service fees	1,122	684	2,022	1,272
Commissions	917	952	1,812	1,821
(Losses) gains on the sale of debt securities, net	(954)		(1,364)	139
Losses on equity securities, net	(106)	(130)	(302)	(138)
Gains on sale of mortgages	204	328	326	1,063
Earnings on bank-owned life insurance	237	235	463	425
Other income	328	322	660	814
Total other income	2,422	3,019	5,076	6,695
Operating expenses:
Salaries and employee benefits	7,901	6,707	15,356	13,219
Occupancy	860	694	1,596	1,412
Equipment	325	336	669	601
Advertising & marketing	412	295	686	574
Computer software & data processing	1,697	1,386	3,478	2,524
Shares tax	299	351	599	702
Professional services	843	633	1,507	1,263
Other expense	865	1,075	1,675	1,790
Total operating expenses	13,202	11,477	25,566	22,085
Income before income taxes	2,062	2,866	4,899	6,555
Provision for federal income taxes	265	308	661	806
Net income	$ 1,797	$ 2,558	$ 4,238	$ 5,749
Earnings per share of common stock (in Dollars per share)	$ 0.32	$ 0.46	$ 0.75	$ 1.03
Cash dividends paid per share (in Dollars per share)	$ 0.17	$ 0.17	$ 0.34	$ 0.34
Weighted average shares outstanding (in Shares)	5,640,826	5,595,728	5,636,181	5,590,196

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 1,797	$ 2,558	$ 4,238	$ 5,749
Securities available for sale not other-than-temporarily impaired:
Unrealized (losses) gains arising during the period	(1,728)	(20,909)	7,557	(50,819)
Income tax effect	363	4,391	(1,587)	10,672
Total	(1,365)	(16,518)	5,970	(40,147)
Losses (gains) recognized in earnings	954		1,364	(139)
Income tax effect	(200)		(286)	29
Total	754		1,078	(110)
Other comprehensive (loss) income, net of tax	(611)	(16,518)	7,048	(40,257)
Comprehensive Income (Loss)	$ 1,186	$ (13,960)	$ 11,286	$ (34,508)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Common Stock	Capital Surplus	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Total
Balances at Dec. 31, 2021	$ 574	$ 4,520	$ 131,856	$ 3,441	$ (3,103)	$ 137,288
Net income			3,191			3,191
Other comprehensive income (loss) net of tax				(23,739)		(23,739)
Treasury stock issued		24			224	248
Cash dividends paid			(949)			(949)
Balances at Mar. 31, 2022	574	4,544	134,098	(20,298)	(2,879)	116,039
Balances at Dec. 31, 2021	574	4,520	131,856	3,441	(3,103)	137,288
Net income						5,749
Balances at Jun. 30, 2022	574	4,502	135,705	(36,816)	(2,564)	101,401
Balances at Mar. 31, 2022	574	4,544	134,098	(20,298)	(2,879)	116,039
Net income			2,558			2,558
Other comprehensive income (loss) net of tax				(16,518)		(16,518)
Treasury stock purchased					(53)	(53)
Treasury stock issued		(42)			368	326
Cash dividends paid			(951)			(951)
Balances at Jun. 30, 2022	574	4,502	135,705	(36,816)	(2,564)	101,401
Balances at Dec. 31, 2022	574	4,437	142,677	(48,292)	(2,061)	97,335
Cumulative effect of adoption of ASU 2016-13			(619)			(619)
Net income			2,441			2,441
Other comprehensive income (loss) net of tax				7,659		7,659
Stock-based compensation expense		14				14
Treasury stock purchased					(147)	(147)
Treasury stock issued		(110)			383	273
Cash dividends paid			(957)			(957)
Balances at Mar. 31, 2023	574	4,341	143,542	(40,633)	(1,825)	105,999
Balances at Dec. 31, 2022	574	4,437	142,677	(48,292)	(2,061)	97,335
Net income						4,238
Balances at Jun. 30, 2023	574	4,259	144,380	(41,244)	(1,635)	106,334
Balances at Mar. 31, 2023	574	4,341	143,542	(40,633)	(1,825)	105,999
Net income			1,797			1,797
Other comprehensive income (loss) net of tax				(611)		(611)
Stock-based compensation expense		15				15
Treasury stock purchased					(168)	(168)
Treasury stock issued		(97)			358	261
Cash dividends paid			(959)			(959)
Balances at Jun. 30, 2023	$ 574	$ 4,259	$ 144,380	$ (41,244)	$ (1,635)	$ 106,334

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (Parentheticals) - shares	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Treasury stock issued, shares	20,692	19,523	18,418	11,196
Cash dividends paid, per share	0.17	0.17	0.17	0.17
Treasury stock purchased, shares	12,431	8,903	3,000

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income	$ 4,238	$ 5,749
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of securities premiums and discounts and loan fees	2,346	2,539
Decrease (increase) in interest receivable	307	(1,066)
Increase in interest payable	571	61
Provision for credit losses	2,072	750
Losses (gains) on the sale of debt securities, net	1,364	(139)
Losses on equity securities, net	302	138
Gains on sale of mortgages	(326)	(1,063)
Loans originated for sale	(11,928)	(23,563)
Proceeds from sales of loans	17,529	23,057
Earnings on bank-owned life insurance	(463)	(425)
Depreciation of premises and equipment and amortization of software	973	791
Deferred income tax	(254)	(117)
Amortization of deferred fees on subordinated debt	80	40
Stock-based compensation expense	29
Other assets and other liabilities, net	1,353	1,066
Net cash provided by operating activities	18,193	7,818
Cash flows from investing activities:
Proceeds from maturities, calls, and repayments	20,457	24,816
Proceeds from sales	61,089	8,576
Purchases	(3,030)	(107,711)
Equity securities
Proceeds from sales		150
Purchases	(202)	(201)
Purchase of regulatory bank stock	(1,821)	(974)
Redemptions of regulatory bank stock	648	209
Proceeds from bank-owned life insurance	2,083
Net increase in loans	(105,562)	(120,573)
Purchases of premises and equipment, net	(826)	(512)
Purchase of computer software	(494)	(123)
Net cash used for investing activities	(27,658)	(196,343)
Cash flows from financing activities:
Net (decrease) increase in demand, NOW, and savings accounts	(33,709)	66,369
Net increase (decrease) in time deposits	50,702	(302)
Proceeds from short-term borrowings		20,000
Repayments of short-term debt	(16,000)
Proceeds from long-term debt	37,678
Repayments of long-term debt	(4,000)
Dividends paid	(1,916)	(1,900)
Proceeds from sale of treasury stock	534	574
Treasury stock purchased	(315)	(53)
Net cash provided by financing activities	32,974	84,688
Decrease in cash and cash equivalents	23,509	(103,837)
Cash and cash equivalents at beginning of period	37,572	158,449
Cash and cash equivalents at end of period	61,081	54,612
Supplemental disclosures of cash flow information:
Interest paid	8,764	1,408
Income taxes paid	1,375	950
Supplemental disclosure of non-cash investing and financing activities:
Fair value adjustments for securities available for sale	8,921	(50,958)
Recognition of lease operating right-of-use assets		2,811
Recognition of operating lease liabilities		$ 2,811

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and to general practices within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all significant adjustments considered necessary for fair presentation have been included. Certain items previously reported have been reclassified to conform to the current period’s reporting format. Such reclassifications did not affect net income or stockholders’ equity.

ENB Financial Corp (“the Corporation”) is the bank holding company for its wholly-owned subsidiary Ephrata National Bank (the “Bank”). Ephrata National Bank has one wholly-owned subsidiary, ENB Insurance, LLC which is consolidated into its financial statements. This Form 10-Q, for the second quarter of 2023, is reporting on the results of operations and financial condition of ENB Financial Corp on a consolidated basis.

Operating results for the six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. For further information, refer to the consolidated financial statements and footnotes thereto included in ENB Financial Corp’s Annual Report on Form 10-K for the year ended December 31, 2022.

Accounting Pronouncements Adopted in 2023

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent related updates. This ASU replaces the incurred loss methodology for recognizing credit losses and requires businesses and other organizations to measure the current expected credit losses (CECL) on financial assets measured at amortized cost, including loans and held-to-maturity securities, net investments in leases, off-balance sheet credit exposures such as unfunded commitments, and other financial instruments. In addition, ASC 326 requires credit losses on available-for-sale debt securities to be presented as an allowance rather than as a write-down when management does not intend to sell or believes that it is not more likely than not they will be required to sell. This guidance became effective on January 1, 2023 for the Corporation. The results reported for periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

The Corporation adopted this guidance, and subsequent related updates, using the modified retrospective approach for all financial assets measured at amortized cost, including loans, available-for-sale debt securities and unfunded commitments. On January 1, 2023, the Corporation recorded a cumulative effect decrease to retained earnings of $619,000, net of tax, of which $537,000 related to loans, $82,000 related to unfunded commitments, and $0 related to available-for-sale securities.

The Corporation has elected to exclude accrued interest receivable from the measurement of its allowance for credit losses (ACL). When a loan is placed on nonaccrual status, any outstanding accrued interest is reversed against interest income.

The Corporation adopted the provisions of ASC 326 related to presenting other-than-temporary impairment on available-for-sale debt securities prior to January 1, 2023, using the prospective transition approach, though no such charges had been recorded on the securities held by the Corporation as of the date of adoption.

In connection with the adoption of ASU 2016-13, the Corporation made changes to the loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Refer to Note 5 Loans and Allowance for Credit Losses for further discussion of these portfolio segments. The new segmentation consists of: Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate, and Residential Real Estate.

The impact of the change from the incurred loss model to the current expected credit loss model and the reclassification of loans for the identification of new portfolio loan segments under CECL is detailed below (in thousands).

	January 1, 2023
	Pre-adoption		Adoption Impact			As Reported
	$		$			$
Assets
ACL on debt securities available for sale		—		—			—
ACL on loans
Commercial Real Estate		6,074		(6,074	)		—
Consumer Real Estate		5,442		(5,442	)		—
Commercial and Industrial		2,151		(2,151	)		—
Consumer		67		183			250
Agriculture		—		3,537			3,537
Business Loans		—		3,382			3,382
Home Equity		—		2,129			2,129
Non-Owner Occupied CRE		—		875			875
Residential Real Estate		—		4,658			4,658
Unallocated		417		(417	)		—
		14,151		680			14,831
Liabilities
ACL for unfunded commitments		1,017		103			1,120
	$	15,168	$	783		$	15,951

Investment Securities

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date.

Investment securities classified as available for sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available for sale are carried at fair value. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Corporation’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Unrealized gains or losses are reported as increases or decreases in other comprehensive income (loss), net of the deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. The Corporation classifies all of its securities as available for sale. Equity securities are measured at fair value with changes in fair value recognized in net income.

Allowance for Credit Losses – Available for Sale Securities

The Corporation measures expected credit losses on available-for-sale debt securities when the Corporation does not intend to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this evaluation indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, equal to the amount that the fair value is less than the amortized cost basis. Economic forecast data is utilized to calculate the present value of expected cash flows. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss).

The allowance for credit losses on available-for-sale debt securities is included within investment securities available-for-sale on the consolidated balance sheet. Changes in the allowance for credit losses are recorded within the provision for credit losses on the consolidated statement of income. Losses are charged against the allowance when the Corporation believes the collectability of an available-for-sale security is in jeopardy or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available-for-sale debt securities totaled $3,560,000 at June 30, 2023, and is included within Other Assets on the consolidated balance sheet. This amount is excluded from the estimate of expected credit losses. Available-for-sale debt securities are typically classified as nonaccrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When available-for-sale debt securities are placed on nonaccrual status, unpaid interest credited to income is reversed.

Loans Receivable

Loans receivable 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 balances, net of an allowance for credit losses and any deferred fees or costs. Accrued interest receivable totaled $2,689,000 at June 30, 2023, and was reported in Other Assets on the Consolidated Balance Sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation is amortizing these amounts over the contractual life of the loan. Premiums and discounts on purchased loans are amortized as adjustments to interest income using the effective yield method.

The loans receivable portfolio is segmented into Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate (CRE), and Residential Real Estate.

For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for credit losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income on a cash basis, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months), and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Allowance for Credit Losses - Loans

The allowance for credit losses (ACL) is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.  Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions, and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Corporation measures the ACL using the following methods. 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 applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Reasonable and supportable forecast adjustment is based on the unemployment forecast, BBB Rated Corporate Bond Spread, GDP Growth, Retail Sales, Asset Prices, and Management Judgement. The reasonable and supportable period is the life of the loan as credit loss models used produce reasonable estimates of losses over the life of the loan. The qualitative adjustments for current conditions are based upon changes in lending policies and procedures, loan portfolio trends, lending management experience, asset quality, loan review, underlying collateral, credit concentrations, and external factors.  These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve.

The Corporation has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on nonaccrual status, any outstanding accrued interest is reversed against interest income.

The ACL for individual loans begins with the use of normal credit review procedures to identify whether a loan no longer shares similar risk characteristics with other pooled loans and therefore should be individually assessed. Commercial loans are evaluated if they meet the following criteria: 1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) when it is determined by management that a loan does not share similar risk characteristics with other loans.  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 effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral dependent. Individual loan evaluations consist primarily of the fair value of collateral method because most of the Corporation’s loans are collateral dependent. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The allowance for credit losses on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance is carried as a liability and is included in other liabilities on the Corporation’s Consolidated Balance Sheets. The liability was $1,262,000 as of June 30, 2023, and $1,017,000 as of December 31, 2022. As the unadvanced portion of lines of credit increases, this allowance will increase.

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

2. Revenue from Contracts with Customers

The Corporation records revenue from contracts with customers in accordance with Accounting Standards Topic 606, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Corporation must identify contracts with customers, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when the Corporation satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods.

The Corporation’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not within the scope of Topic 606. The Corporation has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Corporation generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.

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Securities Available for Sale

6 Months Ended

Jun. 30, 2023

Securities Available for Sale [Abstract]

Securities Available for Sale

3. Securities Available for Sale

The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of investment securities held at June 30, 2023, are as follows:  

			Gross		Gross			Allowance
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			for Credit		Fair
	Cost		Gains		Losses			Losses		Value
	$		$		$			$		$
June 30, 2023
U.S. treasuries		19,854		—		(2,089	)		—		17,765
U.S. government agencies		19,400		—		(2,412	)		—		16,988
U.S. agency mortgage-backed securities		46,834		—		(4,328	)		—		42,506
U.S. agency collateralized mortgage obligations		23,090		—		(2,446	)		—		20,644
Non-agency MBS/CMO		54,138		18		(4,004	)		—		50,152
Asset-backed securities		70,355		21		(1,835	)		—		68,541
Corporate bonds		61,401		—		(7,325	)		—		54,076
Obligations of states and political subdivisions		213,140		—		(27,808	)		—		185,332
Total securities available for sale		508,212		39		(52,247	)		—		456,004

The amortized cost, gross unrealized gains and losses, and approximate fair value of investment securities held at December 31, 2022, are as follows:

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
December 31, 2022
U.S. Treasuries		35,737		—		(3,080	)		32,657
U.S. government agencies		27,605		—		(2,818	)		24,787
U.S. agency mortgage-backed securities		49,939		—		(4,632	)		45,307
U.S. agency collateralized mortgage obligations		30,193		—		(2,703	)		27,490
Non-agency MBS/CMO		53,900		—		(3,650	)		50,250
Asset-backed securities		76,110		16		(2,892	)		73,234
Corporate bonds		76,685		10		(7,064	)		69,631
Obligations of states and political subdivisions		240,102		10		(34,326	)		205,786
Total securities available for sale		590,271		36		(61,165	)		529,142

The amortized cost and fair value of securities available for sale at June 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions.

CONTRACTUAL MATURITY OF DEBT SECURITIES
(DOLLARS IN THOUSANDS)
	Amortized
	Cost		Fair Value
	$		$
Due in one year or less		—		—
Due after one year through five years		96,888		87,463
Due after five years through ten years		75,828		64,408
Due after ten years		335,496		304,133
Total debt securities		508,212		456,004

Securities available for sale with a par value of $119,952,000 and $116,179,000 at June 30, 2023, and December 31, 2022, respectively, were pledged or restricted for public funds, borrowings, or other purposes as required by law. The fair value of these pledged securities was $110,159,000 at June 30, 2023, and $107,071,000 at December 31, 2022.

Proceeds from active sales of securities available for sale, along with the associated gross realized gains and gross realized losses, are shown below. Realized gains and losses are computed on the basis of specific identification.

PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE

(DOLLARS IN THOUSANDS)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	$		$		$		$
Proceeds from sales		32,972		—		61,089		8,576

Information pertaining to securities with gross unrealized losses at June 30, 2023, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

TEMPORARY IMPAIRMENTS OF SECURITIES

(DOLLARS IN THOUSANDS)

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of June 30, 2023
U.S. Treasuries		—		—			17,765		(2,089	)		17,765		(2,089	)
U.S. government agencies		—		—			16,988		(2,412	)		16,988		(2,412	)
U.S. agency mortgage-backed securities		—		—			42,506		(4,328	)		42,506		(4,328	)
U.S. agency collateralized mortgage obligations		527		(25	)		20,117		(2,421	)		20,644		(2,446	)
Non-Agency MBS/CMO		7,410		(669	)		39,711		(3,335	)		47,121		(4,004	)
Asset-backed securities		2,898		(43	)		64,123		(1,792	)		67,021		(1,835	)
Corporate bonds		1,711		(289	)		52,365		(7,036	)		54,076		(7,325	)
Obligations of states & political subdivisions		532		(5	)		184,770		(27,803	)		185,302		(27,808	)
Total temporarily impaired securities		13,078		(1,031	)		438,345		(51,216	)		451,423		(52,247	)

Information pertaining to securities with gross unrealized losses at December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

TEMPORARY IMPAIRMENTS OF SECURITIES

(DOLLARS IN THOUSANDS)

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of December 31, 2022
U.S. Treasuries		19,721		(1,169	)		12,936		(1,911	)		32,657		(3,080	)
U.S. government agencies		1,953		(52	)		21,634		(2,766	)		23,587		(2,818	)
U.S. agency mortgage-backed securities		24,667		(1,653	)		20,640		(2,979	)		45,307		(4,632	)
U.S. agency collateralized mortgage obligations		9,984		(500	)		17,453		(2,203	)		27,437		(2,703	)
Non-Agency MBS/CMO		50,250		(3,650	)		—		—			50,250		(3,650	)
Asset-backed securities		29,283		(1,028	)		42,032		(1,864	)		71,315		(2,892	)
Corporate bonds		15,197		(1,230	)		43,417		(5,834	)		58,614		(7,064	)
Obligations of states & political subdivisions		103,200		(10,949	)		100,575		(23,377	)		203,775		(34,326	)
Total temporarily impaired securities		254,255		(20,231	)		258,687		(40,934	)		512,942		(61,165	)

In the debt security portfolio there were 325 positions carrying unrealized losses as of June 30, 2023.

Management evaluates all of the Corporation’s securities for expected credit losses. No securities in the portfolio required an allowance for credit losses to be recorded in the first half of 2023 or other-than-temporary impairment in 2022.

Unrealized losses on the Corporation’s available-for-sale debt securities have not been recognized into income because the bonds are of high credit quality, 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 solely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

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Equity Securities

6 Months Ended

Jun. 30, 2023

Equity Securities [Abstract]

Equity Securities

4. Equity Securities

The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of equity securities held at June 30, 2023 and December 31, 2022.

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
June 30, 2023
CRA-qualified mutual funds		7,516		—		—			7,516
Bank stocks		1,716		46		(259	)		1,503
Total equity securities		9,232		46		(259	)		9,019

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
December 31, 2022
CRA-qualified mutual funds		7,345		—		—			7,345
Bank stocks		1,685		162		(74	)		1,773
Total equity securities		9,030		162		(74	)		9,118

The following table presents the net gains and losses on the Corporation’s equity investments recognized in earnings during the three and six months ended June 30, 2023 and 2022, and the portion of unrealized gains and losses for the period that relates to equity investments held as of June 30, 2023 and 2022.

NET GAINS AND LOSSES ON EQUITY INVESTMENTS RECOGNIZED IN EARNINGS

(DOLLARS IN THOUSANDS)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
	$			$			$			$
Net losses recognized in equity securities during the period		(106	)		(130	)		(302	)		(138	)
Less: Net gains realized on the sale of equity securities during the period		—			—			—			51
Unrealized losses recognized in equity securities held at reporting date		(106	)		(130	)		(302	)		(189	)

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Loans and Allowance for Credit Losses

6 Months Ended

Jun. 30, 2023

Loans and Allowance for Credit Losses [Abstract]

Loans and Allowance for Credit Losses

5. Loans and Allowance for Credit Losses

The following table presents the Corporation’s loan portfolio by category of loans as of June 30, 2023 (in thousands):

	June 30,
	2023
	$
Agriculture		245,971
Business Loans		350,740
Consumer		6,310
Home Equity		102,108
Non-Owner Occupied Commercial Real Estate		125,894
Residential Real Estate (a)		462,942
Gross loans prior to deferred costs		1,293,965
Deferred loan costs, net		2,537
Allowance for credit losses		(16,833	)
Total net loans (b)		1,279,669

(a) Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets, totaled $295,406,000 as of June 30, 2023.

(b) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the Corporation’s loan portfolio, prior to the adoption of ASC 326, by category of loans and the impact of the change from the adoption of the standard (in thousands):

							Post Adoption
	December 31,			Adoption			January, 1
	2022			Impact			2023
	$			$			$
Agriculture		—			238,734			238,734
Business Loans		—			336,340			336,340
Home Equity		—			98,854			98,854
Non-Owner Occupied CRE		—			111,333			111,333
Residential Real Estate (a)		—			397,260			397,260
Commercial real estate
Commercial mortgages		210,823			(210,823	)		—
Agriculture mortgages		221,167			(221,167	)		—
Construction		86,793			(86,793	)		—
Total commercial real estate		518,783			(518,783	)		—
Consumer real estate (a)
1-4 family residential mortgages		410,301			(410,301	)		—
Home equity loans		11,937			(11,937	)		—
Home equity lines of credit		98,349			(98,349	)		—
Total consumer real estate		520,587			(520,587	)		—
Commercial and industrial
Commercial and industrial		87,528			(87,528	)		—
Tax-free loans		28,664			(28,664	)		—
Agriculture loans		27,122			(27,122	)		—
Total commercial and industrial		143,314			(143,314	)		—
Consumer		5,769			163			5,932
Gross loans prior to deferred fees		1,188,453			—			1,188,453
Deferred loan costs, net		2,664
Allowance for credit losses		(14,151	)
Total net loans		1,176,966

(a) Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets totaled $298,375,000 as of December 31, 2022.  

Age Analysis of Past-Due Loans Receivable

The performance and credit quality of the loan portfolio is 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 June 30, 2023 (in thousands):

	June 30, 2023
			31-60		61-90		Greater Than
			Days		Days		90 Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
Agriculture	$	245,702	$	—	$	—	$	269	$	269	$	245,971
Business Loans		350,599		—		—		141		141		350,740
Consumer		6,261		12		14		23		49		6,310
Home Equity		101,984		19		105		—		124		102,108
Non-Owner Occupied CRE		125,894		—		—		—		—		125,894
Residential Real Estate		462,213		614		—		115		729		462,942
Total (a)	$	1,292,653	$	645	$	119	$	548	$	1,312	$	1,293,965

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the classes of the loan portfolio summarized by the past-due status as of December 31, 2022 (in thousands):

	December 31, 2022
													Loans
					Greater								Receivable >
	30-59 Days		60-89 Days		than 90		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Days		Due		Current		Receivable		Accruing
	$		$		$		$		$		$		$
Commercial real estate
Commercial mortgages		—		—		554		554		210,269		210,823		—
Agriculture mortgages		—		—		2,787		2,787		218,380		221,167		—
Construction		—		—		—		—		86,793		86,793		—
Consumer real estate
1-4 family residential mortgages		905		—		447		1,352		408,949		410,301		139
Home equity loans		17		—		339		356		11,581		11,937		—
Home equity lines of credit		165		16		—		181		98,168		98,349		—
Commercial and industrial
Commercial and industrial		—		—		190		190		87,338		87,528		—
Tax-free loans		—		—		—		—		28,664		28,664		—
Agriculture loans		—		—		—		—		27,122		27,122		—
Consumer		9		5		30		44		5,725		5,769		30
Total		1,096		21		4,347		5,464		1,182,989		1,188,453		169

Nonperforming Loans

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of June 30, 2023, (in thousands):

	Nonaccrual		Nonaccrual				Loans Past
	with no		with		Total		Due Over 90 Days		Total
	ACL		ACL		Nonaccrual		Still Accruing		Nonperforming
Agriculture	$	2,106	$	—	$	2,106	$	269	$	2,375
Business Loans		797		—		797		—		797
Consumer Loans		—		—		—		23		23
Home Equity		—		—		—		—		—
Non-Owner Occupied CRE		—		—		—		—		—
Residential Real Esate		—		—		—		115		115
Total (a)	$	2,903	$	—	$	2,903	$	407	$	3,310

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments

related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on

Financial Instruments.

The following table presents nonaccrual loans by classes of the loan portfolio as of December 31, 2022 (in thousands):

Nonaccrual Loans

	December 31,
	2022
	$
Commercial real estate
Commercial mortgages		554
Agriculture mortgages		2,787
Construction		—
Consumer real estate
1-4 family residential mortgages		308
Home equity loans		339
Home equity lines of credit		—
Commercial and industrial
Commercial and industrial		190
Tax-free loans		—
Agriculture loans		—
Consumer		—
Total		4,178

Credit Quality Indicators

The Corporation grades commercial credits differently than consumer credits. The following tables represent all of the Corporation’s commercial credit exposures by internally assigned grades as of June 30, 2023 and December 31, 2022. The grading analysis estimates the capability of the borrower to repay the contractual obligations under the loan agreements as scheduled. The Corporation's internal commercial credit risk grading system is based on experiences with similarly graded loans.

The Corporation's internally assigned grades for commercial credits are as follows:

● 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 where a potential weakness or risk exists, which could cause a more serious problem, if not corrected. 

● Substandard – loans that have a well-defined weakness based on objective evidence and characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

● Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset.  In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

● Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposure as of June 30, 2023 (in thousands):

													Revolving		Revolving
	Term Loans Amortized Costs Basis by Origination Year												Loans		Loans
													Amortized		Converted
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Agriculture
Risk Rating
Pass	$	25,207	$	45,675	$	51,361	$	20,847	$	15,716	$	63,754	$	18,032	$	—	$	240,592
Special Mention		—		48		503		—		187		1,213		64		—		2,015
Substandard		—		—		—		747		306		2,311		—		—		3,364
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	25,207	$	45,723	$	51,864	$	21,594	$	16,209	$	67,278	$	18,096	$	—	$	245,971
Agriculture
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Business Loans
Risk Rating
Pass	$	22,826	$	105,175	$	71,059	$	39,252	$	16,901	$	51,583	$	37,670	$	—	$	344,466
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		3,172		1,539		—		299		—		932		332		—		6,274
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	25,998	$	106,714	$	71,059	$	39,551	$	16,901	$	52,515	$	38,002	$	—	$	350,740
Business Loans
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-Owner Occupied CRE
Risk Rating
Pass	$	14,099	$	42,236	$	27,143	$	13,186	$	7,964	$	13,647	$	4,260	$	—	$	122,535
Special Mention		—		647		—		—		—		—		—		—		647
Substandard		—		—		—		—		2,400		312		—		—		2,712
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	14,099	$	42,883	$	27,143	$	13,186	$	10,364	$	13,959	$	4,260	$	—	$	125,894
Non-Owner Occupied CRE
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Risk Rating
Pass	$	62,132	$	193,086	$	149,563	$	73,285	$	40,581	$	128,984	$	59,962	$	—	$	707,593
Special Mention		—		695		503		—		187		1,213		64		—		2,662
Substandard		3,172		1,539		—		1,046		2,706		3,555		332		—		12,350
Doubtful		—		—		—		—		—		—		—		—		—
Total (a)	$	65,304	$	195,320	$	150,066	$	74,331	$	43,474	$	133,752	$	60,358	$	—	$	722,605

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the recorded investment in loans by internal risk rating system for Commercial Credit Exposure as of December 31, 2022 in accordance with ASC 310 (in thousands):

December 31, 2022	Commercial Mortgages		Agriculture Mortgages		Construction		Commercial and Industrial		Tax-free Loans		Agriculture Loans		Total
	$		$		$		$		$		$		$
Grade:
Pass		209,534		214,905		83,240		85,977		28,664		26,749		649,069
Special Mention		—		1,966		3,553		893		—		132		6,544
Substandard		1,289		4,296		—		658		—		241		6,484
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—
Total		210,823		221,167		86,793		87,528		28,664		27,122		662,097

For consumer loans, the Corporation evaluates credit quality based on whether the loan is considered performing or non-performing. Non-performing loans consist of those loans greater than 90 days delinquent and nonaccrual loans.

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of June 30, 2023 (in thousands):

													Revolving		Revolving
	Term Loans Amortized Costs Basis by Origination Year												Loans		Loans
													Amortized		Converted
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Consumer
Payment Performance
Performing	$	2,173	$	1,470	$	606	$	270	$	65	$	9	$	1,694	$	—	$	6,287
Nonperforming		—		—		4		1		—		—		18		—		23
Total	$	2,173	$	1,470	$	610	$	271	$	65	$	9	$	1,712	$	—	$	6,310
Consumer
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	—	$	1
Home equity
Payment Performance
Performing	$	2,619	$	19,904	$	1,117	$	635	$	591	$	2,226	$	72,314	$	2,702	$	102,108
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	2,619	$	19,904	$	1,117	$	635	$	591	$	2,226	$	72,314	$	2,702	$	102,108
Home equity
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential Real Estate
Payment Performance
Performing	$	69,466	$	156,151	$	109,332	$	45,604	$	32,845	$	49,429	$	—	$	—	$	462,827
Nonperforming		—		—		—		—		—		115		—		—		115
Total	$	69,466	$	156,151	$	109,332	$	45,604	$	32,845	$	49,544	$	—	$	—	$	462,942
Residential Real Estate
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Payment Performance
Performing	$	74,258	$	177,525	$	111,055	$	46,509	$	33,501	$	51,664	$	74,008	$	2,702	$	571,222
Nonperforming		—		—		4		1		—		115		18		—		138
Total (a)	$	74,258	$	177,525	$	111,059	$	46,510	$	33,501	$	51,779	$	74,026	$	2,702	$	571,360

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of December 31, 2022 in accordance with ASC 310 (in thousands):

December 31, 2022	1-4 Family Residential Mortgages		Home Equity Loans		Home Equity Lines of Credit		Consumer		Total
Payment performance:	$		$		$		$		$
Performing		409,854		11,598		98,349		5,739		525,540
Non-performing		447		339		—		30		816
Total		410,301		11,937		98,349		5,769		526,356

As of December 31, 2022, all of the Corporation’s commercial loans on nonaccrual status were also considered impaired.

Information with respect to impaired loans for the three and six months ended June 30, 2022, in accordance with ASC 310 is as follows:

	Three		Six
	Months		Months
	Ended		Ended
	June 30,		June 30,
	2022		2022
	$		$
Average recorded balance of impaired loans		4,179		3,533
Interest income recognized on impaired loans		5		13

The following table summarizes information regarding impaired loans by loan portfolio class as of December 31, 2022, in accordance with ASC 310:

IMPAIRED LOAN ANALYSIS
(DOLLARS IN THOUSANDS)
December 31, 2022	Recorded Investment		Unpaid Principal Balance		Related Allowance
	$		$		$
With no related allowance recorded:
Commercial real estate
Commercial mortgages		1,201		1,271		—
Agriculture mortgages		3,229		3,348		—
Construction		—		—		—
Total commercial real estate		4,430		4,619		—
Commercial and industrial
Commercial and industrial		190		199		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		190		199		—
Total with no related allowance		4,620		4,818		—
With an allowance recorded:
Commercial real estate
Commercial mortgages		—		—		—
Agriculture mortgages		—		—		—
Construction		—		—		—
Total commercial real estate		—		—		—
Commercial and industrial
Commercial and industrial		—		—		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		—		—		—
Total with a related allowance		—		—		—
Total by loan class:
Commercial real estate
Commercial mortgages		1,201		1,271		—
Agriculture mortgages		3,229		3,348		—
Construction		—		—		—
Total commercial real estate		4,430		4,619		—
Commercial and industrial
Commercial and industrial		190		199		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		190		199		—
Total		4,620		4,818		—

Allowance for Credit Losses

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended June 30, 2023 (in thousands):

	Beginning							Provisions			Ending
	Balance		Charge-offs			Recoveries		(Reductions)			Balance
Allowance for credit losses:
Agriculture		3,591		—			—		75			3,666
Business Loans		3,473		—			2		(26	)		3,449
Consumer Loans		270		(14	)		1		100			357
Home Equity		2,318		—			—		21			2,339
Non-Owner Occupied CRE		942		—			—		1			943
Residential Real Estate		5,460		—			7		612			6,079
Total (a)	$	16,054	$	(14	)	$	10	$	783		$	16,833

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2023 (in thousands):

			Impact of
	Beginning		adopting								Provisions		Ending
	Balance		ASC 326			Charge-offs			Recoveries		(Reductions)		Balance
Allowance for credit losses:
Commercial Real Estate	$	6,074	$	(6,074	)	$	—		$	—	$	—	$	—
Consumer Real Estate		5,442		(5,442	)		—			—		—		—
Commerical & Industrial		2,151		(2,151	)		—			—		—		—
Consumer		67		(67	)		—			—		—		—
Agriculture		—		3,537			—			71		58		3,666
Business Loans		—		3,382			—			7		60		3,449
Consumer Loans		—		250			(15	)		1		121		357
Home Equity		—		2,129			—			—		210		2,339
Non-Owner Occupied CRE		—		875			—			—		68		943
Residential Real Estate		—		4,658			—			8		1,413		6,079
Unallocated		417		(417	)		—			—		—		—
Total (a)	$	14,151	$	680		$	(15	)	$	87	$	1,930	$	16,833

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.  

During the six months ended June 30, 2023, management charged off $15,000 in loans while recovering $87,000 and added $1,930,000 to the provision for credit losses related to loans and added $142,000 to the provision for off-balance sheet credit exposure for a combined provision of $2,072,000.

The ACL is maintained at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers historical loss experience, current conditions, and forecasts of future economic conditions as of the balance sheet date. The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied CRE, and Residential Real Estate.  The following are key risks within each portfolio segment:

Agriculture – Loans made to individuals or operating companies within the Agricultural industry.  These loans are generally secured by a first lien mortgage on agricultural land.  The primary source of repayment is the income and assets of the borrower.  The condition of the agriculture industry as well as the condition of the national economy is an important indicator of risk for this segment. 

Business Loans —Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The primary source of repayment for these loans is cash flow from the operations of the company.   The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. This segment also includes loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.

Consumer - Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes personal loans and lines of credit that may be secured or unsecured.  The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.

Home Equity– This segment generally includes lines of credit and term loans secured by the equity in the borrower’s residence.  The primary source of repayment for these facilities is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

Non-Owner Occupied CRE - Loans secured by commercial purpose real estate for various purposes such as hotels, retail, multifamily and health care. The primary sources of repayment for these loans are the operations of the individual projects and global cash flows of the debtors. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee.

Residential Real Estate—Loans secured by first liens on 1-4 family residential mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.

The following table details activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2022:

ALLOWANCE FOR CREDIT LOSSES

(DOLLARS IN THOUSANDS)

	Commercial Real Estate			Consumer Real Estate		Commercial and Industrial			Consumer			Unallocated			Total
	$			$		$			$			$			$
Allowance for credit losses:
Beginning balance - December 31, 2021		6,263			3,834		2,112			87			635			12,931
Charge-offs		(65	)		—		—			(1	)		—			(66	)
Recoveries		—			3		10			1			—			14
Provision		(90	)		41		193			(16	)		(28	)		100
Balance - March 31, 2022		6,108			3,878		2,315			71			607			12,979
Charge-offs		—			—		(41	)		—			—			(41	)
Recoveries		2			3		12			1			—			18
Provision		(239	)		834		255			(28	)		(172	)		650
Balance - June 30, 2022		5,871			4,715		2,541			44			435			13,606

During the six months ended June 30, 2022, management charged off $107,000 in loans while recovering $32,000 and added $750,000 to the provision. The unallocated portion of the allowance decreased from 4.9% of total reserves as of December 31, 2021, to 3.2% as of June 30, 2022.

During the six months ended June 30, 2022, net provision expense was recorded for the consumer real estate and commercial and industrial sectors while the commercial real estate and consumer sectors recorded a credit provision. The provision expense recorded for consumer real estate and commercial and industrial loans was primarily related to growth in those sectors of the loan portfolio through June 30, 2022 while the credit provision in commercial real estate and consumer was primarily related to declining qualitative factors in several areas at June 30, 2022.

The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on estimation method as of June 30, 2023:

ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE

(DOLLARS IN THOUSANDS)

As of June 30, 2023:	Agriculture		Business Loans		Consumer Loans		Home Equity		Non- Owner Occupied CRE		Residential Real Estate		Total
	$		$		$		$		$		$		$
Allowance for credit losses:
Ending balance: individually evaluated		—		—		—		—		—		—		—
Ending balance: collectively evaluated		3,666		3,449		357		2,339		943		6,079		16,833
Loans receivable:
Ending balance		245,971		350,740		6,310		102,108		125,894		462,942		1,293,965
Ending balance: individually evaluated		2,521		797		—		—		—		—		3,318
Ending balance: collectively evaluated		243,450		349,943		6,310		102,108		125,894		462,942		1,290,647

The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on impairment method as of December 31, 2022:

ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE

(DOLLARS IN THOUSANDS)

As of December 31, 2022:	Commercial Real Estate		Consumer Real Estate		Commercial and Industrial		Consumer		Unallocated		Total
	$		$		$		$		$		$
Allowance for credit losses:
Ending balance: individually evaluated for impairment		—		—		—		—		—		—
Ending balance: collectively evaluated for impairment		6,074		5,442		2,151		67		417		14,151
Loans receivable:
Ending balance		518,783		520,587		143,314		5,769				1,188,453
Ending balance: individually evaluated for impairment		4,430		—		190		—				4,620
Ending balance: collectively evaluated for impairment		514,353		520,587		143,124		5,769				1,183,833

XML

Fair Value Presentation

6 Months Ended

Jun. 30, 2023

Fair Value Presentation [Abstract]

Fair Value Presentation

6. Fair Value Presentation

U.S. generally accepted accounting principles establish a hierarchal disclosure framework associated with the level of observable pricing utilized in measuring assets and liabilities at fair value. The three broad levels defined by the hierarchy are as follows:

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 the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed.

Level III: Assets and liabilities that have little to no observable pricing 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 judgment or estimation.

The following tables provide the fair market value for assets required to be measured and reported at fair value on a recurring basis on the Consolidated Balance Sheets as of June 30, 2023, and December 31, 2022, by level within the fair value hierarchy. As required by U.S. generally accepted accounting principles, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

ASSETS MEASURED ON A RECURRING BASIS

(DOLLARS IN THOUSANDS)

	June 30, 2023
	Level I		Level II		Level III		Total
	$		$		$		$
U.S. treasuries		17,765		—		—		17,765
U.S. government agencies		—		16,988		—		16,988
U.S. agency mortgage-backed securities		—		42,506		—		42,506
U.S. agency collateralized mortgage obligations		—		20,644		—		20,644
Non-agency MBS/CMO		—		50,152		—		50,152
Asset-backed securities		—		68,541		—		68,541
Corporate bonds		—		54,076		—		54,076
Obligations of states & political subdivisions		—		185,332		—		185,332
Equity securities		9,019		—		—		9,019
Total securities		26,784		438,239		—		465,023

On June 30, 2023, the Corporation held no securities valued using level III inputs. Most of the Corporation’s debt instruments were valued using level II inputs, where quoted prices are available and observable, but not necessarily quotes on identical securities traded in active markets on a daily basis. The Corporation’s U.S. Treasury bonds, CRA fund investments, and bank stocks are fair valued utilizing level I inputs because the funds have their own quoted prices in an active market. As of June 30, 2023, the CRA fund investments had a $7,516,000 book and fair market value and the bank stock portfolio had a book value of $1,716,000, and fair market value of $1,503,000.

Financial instruments are considered level III when their values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. In addition to these unobservable inputs, the valuation models for level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation.

ASSETS MEASURED ON A RECURRING BASIS

(DOLLARS IN THOUSANDS)

	December 31, 2022
	Level I		Level II		Level III		Total
	$		$		$		$
U.S. Treasuries		32,657		—				32,657
U.S. government agencies		—		24,787		—		24,787
U.S. agency mortgage-backed securities		—		45,307		—		45,307
U.S. agency collateralized mortgage obligations		—		27,490		—		27,490
Non-agency MBS/CMO				50,250		—		50,250
Asset-backed securities		—		73,234		—		73,234
Corporate bonds		—		69,631		—		69,631
Obligations of states & political subdivisions		—		205,786		—		205,786
Equity securities		9,118		—		—		9,118
Total securities		41,775		496,485		—		538,260

On December 31, 2022, the Corporation held no securities valued using level III inputs. Most of the Corporation’s debt instruments were valued using level II inputs, except for Treasuries, where quoted prices are available and observable but not necessarily quotes on identical securities traded in active markets on a daily basis. The Corporation’s CRA fund investments and bank stocks are fair valued utilizing level I inputs because the funds have their own quoted prices in an active market. As of December 31, 2022, the CRA fund investments had a $7,345,000 book and market value and the bank stocks had a book value of $1,685,000 and a market value of $1,773,000.

The following tables provide the fair value for each class of assets required to be measured and reported at fair value on a nonrecurring basis on the Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, by level within the fair value hierarchy:

ASSETS MEASURED ON A NONRECURRING BASIS

(Dollars in Thousands)

	June 30, 2023
	Level I		Level II		Level III		Total
	$		$		$		$
Assets:
Individually analyzed loans	$	—	$	—	$	3,318	$	3,318
Total	$	—	$	—	$	3,318	$	3,318

	December 31, 2022
	Level I		Level II		Level III		Total
	$		$		$		$
Assets:
Impaired Loans	$	—	$	—	$	4,620	$	4,620
Total	$	—	$	—	$	4,620	$	4,620

The Corporation had a total of $3,318,000 of individually analyzed loans as of June 30, 2023 and $4,620,000 of impaired loans as of December 31, 2022. The value of impaired loans is generally determined through independent appraisals of the underlying collateral.

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis for which the Corporation has utilized level III inputs to determine fair value:

QUANTITATIVE INFORMATION ABOUT LEVEL III FAIR VALUE MEASUREMENTS

(DOLLARS IN THOUSANDS)  

	June 30, 2023
	Fair Value	Valuation	Unobservable	Range
	Estimate	Techniques	Input	(Weighted Avg)
Individually analyzed loans	3,318	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -20% (-20%)
			Liquidation expenses (2)	0% to -10% (-10%)

	December 31, 2022
	Fair Value	Valuation	Unobservable	Range
	Estimate	Techniques	Input	(Weighted Avg)
Impaired loans	4,620	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -20% (-20%)
			Liquidation expenses (2)	0% to -10% (-10%)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level III inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

The following table provides the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022:

FINANCIAL INSTRUMENTS NOT REQUIRED TO BE MEASURED OR REPORTED AT FAIR VALUE

(DOLLARS IN THOUSANDS)

	June 30, 2023
					Quoted Prices in
					Active Markets		Significant Other		Significant
					for Identical		Observable		Unobservable
	Carrying				Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level II)		(Level III)
	$		$		$		$		$
Financial Assets:
Cash and cash equivalents		61,081		61,081		61,081		—		—
Regulatory stock		7,843		7,843		7,843		—		—
Loans held for sale		652		652		652		—		—
Loans, net of allowance		1,279,669		1,213,305		—		—		1,213,305
Mortgage servicing assets		2,052		2,880		—		—		2,880
Accrued interest receivable		6,249		6,249		6,249		—		—
Bank owned life insurance		35,197		35,197		35,197		—		—
Financial Liabilities:
Demand deposits		634,360		634,360		634,360		—		—
Interest-bearing demand deposits		220,949		220,949		220,949		—		—
NOW accounts		109,257		109,257		109,257		—		—
Money market deposit accounts		164,431		164,431		164,431		—		—
Savings accounts		342,422		342,422		342,422		—		—
Time deposits		184,532		180,390		—		—		180,390
Total deposits		1,655,951		1,651,809		1,471,419		—		180,390
Long-term debt		91,717		90,066		—		—		90,066
Subordinated debt		39,476		33,447		—		—		33,447
Accrued interest payable		1,169		1,169		1,169		—		—

FINANCIAL INSTRUMENTS NOT REQUIRED TO BE MEASURED OR REPORTED AT FAIR VALUE

(DOLLARS IN THOUSANDS)

	December 31, 2022
					Quoted Prices in
					Active Markets		Significant Other		Significant
					for Identical		Observable		Unobservable
	Carrying				Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level II)		(Level III)
	$		$		$		$		$
Financial Assets:
Cash and cash equivalents		37,572		37,572		37,572		—		—
Regulatory stock		6,670		6,670		6,670		—		—
Loans held for sale		5,927		5,927		5,927		—		—
Loans, net of allowance		1,176,966		1,112,400		—		—		1,112,400
Mortgage servicing assets		2,030		2,894		—		—		2,894
Accrued interest receivable		6,249		6,249		6,249		—		—
Bank owned life insurance		34,805		34,805		34,805		—		—
Financial Liabilities:
Demand deposits		672,342		672,342		672,342		—		—
Interest-bearing demand deposits		164,208		164,208		164,208		—		—
NOW accounts		139,846		139,846		139,846		—		—
Money market deposit accounts		163,836		163,836		163,836		—		—
Savings accounts		364,897		364,897		364,897		—		—
Time deposits		133,829		129,422		—		—		129,422
Total deposits		1,638,958		1,634,551		1,505,129		—		129,422
Short-term debt		16,000		15,721						15,721
Long-term debt		58,039		56,431		—		—		56,431
Subordinated debt		39,396		35,975		—		—		35,975
Accrued interest payable		597		597		597		—		—

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Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies [Abstract]

Commitments and Contingent Liabilities

7. Commitments and Contingent Liabilities

In order to meet the financing needs of its customers in the normal course of business, the Corporation makes various commitments that are not reflected in the accompanying consolidated financial statements. These commitments include firm commitments to extend credit, unused lines of credit, and open letters of credit. As of June 30, 2023, firm loan commitments were $90.9 million, unused lines of credit were $494.1 million, and open letters of credit were $13.8 million. The total of these commitments was $598.8 million, which represents the Corporation’s exposure to credit loss in the event of nonperformance by its customers with respect to these financial instruments. The actual credit losses that may arise from these commitments are expected to compare favorably with the Corporation’s loan loss experience on its loan portfolio taken as a whole. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for balance sheet financial instruments.

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2023

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Income (Loss)

8. Accumulated Other Comprehensive Income (Loss)

The activity in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022 is as follows:

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (1) (2)

(DOLLARS IN THOUSANDS)

	Unrealized
	Gains (Losses)
	on Securities
	Available-for-Sale
	$
Balance at December 31, 2022		(48,292	)
Other comprehensive loss before reclassifications		7,335
Amount reclassified from accumulated other comprehensive income (loss)		324
Period change		7,659
Balance at March 31, 2023		(40,633	)
Other comprehensive loss before reclassifications		(1,365	)
Amount reclassified from accumulated other comprehensive income (loss)		754
Period change		(611	)
Balance at June 30, 2023		(41,244	)
Balance at December 31, 2021		3,441
Other comprehensive loss before reclassifications		(23,629	)
Amount reclassified from accumulated other comprehensive income (loss)		(110	)
Period change		(23,739	)
Balance at March 31, 2022		(20,298	)
Other comprehensive loss before reclassifications		(16,518	)
Amount reclassified from accumulated other comprehensive income (loss)		—
Period change		(16,518	)
Balance at June 30, 2022		(36,816	)

(1) All amounts are net of tax.  Related income tax expense or benefit is calculated using a Federal income tax rate of 21%.

(2) Amounts in parentheses indicate debits.  

DETAILS ABOUT ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) COMPONENTS (1)

(DOLLARS IN THOUSANDS)

	Amount Reclassified from
	Accumulated Other Comprehensive
	Income (Loss)
	For the Three Months
	Ended June 30,
	2023			2022		Affected Line Item in the
	$			$		Consolidated Statements of Income
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings		(954	)		—	(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)		200			—	Benefit/(Provision) for federal income taxes
Net effect on accumulated other comprehensive  income (loss) for the period		(754	)		—

(1) Amounts in parentheses indicate debits.

	Amount Reclassified from
	Accumulated Other Comprehensive
	Income (Loss)
	For the Six Months
	Ended June 30,
	2023			2022			Affected Line Item in the
	$			$			Consolidated Statements of Income
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings		(1,364	)		139		(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)		286			(29	)	Benefit/(Provision) for federal income taxes
Net effect on accumulated other comprehensive  income (loss) for the period		(1,078	)		110

(1) Amounts in parentheses indicate debits.

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Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2023

Recently Issued Accounting Standards [Abstract]

Recently Issued Accounting Standards

9. Recently Issued Accounting Standards

In March 2023, the FASB issued ASU No. 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force)". The ASU allows entities to elect the proportional amortization method, on a tax-credit-program-by-tax-credit-program basis, for all equity investments in tax credit programs meeting the eligibility criteria in Accounting Standards Codification (ASC) 323-740-25-1. While the ASU does not significantly alter the existing eligibility criteria, it does provide clarifications to address existing interpretive issues. It also prescribes specific information reporting entities must disclose about tax credit investments each period. This ASU is effective for reporting periods beginning after December 15, 2023, for public business entities, or January 1, 2024 for the Corporation. The Corporation does not expect the adoption of this ASU to have a material impact on the Corporation's financial statements.

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and to general practices within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all significant adjustments considered necessary for fair presentation have been included. Certain items previously reported have been reclassified to conform to the current period’s reporting format. Such reclassifications did not affect net income or stockholders’ equity.

ENB Financial Corp (“the Corporation”) is the bank holding company for its wholly-owned subsidiary Ephrata National Bank (the “Bank”). Ephrata National Bank has one wholly-owned subsidiary, ENB Insurance, LLC which is consolidated into its financial statements. This Form 10-Q, for the second quarter of 2023, is reporting on the results of operations and financial condition of ENB Financial Corp on a consolidated basis.

Operating results for the six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. For further information, refer to the consolidated financial statements and footnotes thereto included in ENB Financial Corp’s Annual Report on Form 10-K for the year ended December 31, 2022.

Accounting Pronouncements Adopted in 2023

Accounting Pronouncements Adopted in 2023

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" and subsequent related updates. This ASU replaces the incurred loss methodology for recognizing credit losses and requires businesses and other organizations to measure the current expected credit losses (CECL) on financial assets measured at amortized cost, including loans and held-to-maturity securities, net investments in leases, off-balance sheet credit exposures such as unfunded commitments, and other financial instruments. In addition, ASC 326 requires credit losses on available-for-sale debt securities to be presented as an allowance rather than as a write-down when management does not intend to sell or believes that it is not more likely than not they will be required to sell. This guidance became effective on January 1, 2023 for the Corporation. The results reported for periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable accounting standards.

The Corporation adopted this guidance, and subsequent related updates, using the modified retrospective approach for all financial assets measured at amortized cost, including loans, available-for-sale debt securities and unfunded commitments. On January 1, 2023, the Corporation recorded a cumulative effect decrease to retained earnings of $619,000, net of tax, of which $537,000 related to loans, $82,000 related to unfunded commitments, and $0 related to available-for-sale securities.

The Corporation has elected to exclude accrued interest receivable from the measurement of its allowance for credit losses (ACL). When a loan is placed on nonaccrual status, any outstanding accrued interest is reversed against interest income.

The Corporation adopted the provisions of ASC 326 related to presenting other-than-temporary impairment on available-for-sale debt securities prior to January 1, 2023, using the prospective transition approach, though no such charges had been recorded on the securities held by the Corporation as of the date of adoption.

In connection with the adoption of ASU 2016-13, the Corporation made changes to the loan portfolio segments to align with the methodology applied in determining the allowance under CECL. Refer to Note 5 Loans and Allowance for Credit Losses for further discussion of these portfolio segments. The new segmentation consists of: Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate, and Residential Real Estate.

The impact of the change from the incurred loss model to the current expected credit loss model and the reclassification of loans for the identification of new portfolio loan segments under CECL is detailed below (in thousands).

	January 1, 2023
	Pre-adoption		Adoption Impact			As Reported
	$		$			$
Assets
ACL on debt securities available for sale		—		—			—
ACL on loans
Commercial Real Estate		6,074		(6,074	)		—
Consumer Real Estate		5,442		(5,442	)		—
Commercial and Industrial		2,151		(2,151	)		—
Consumer		67		183			250
Agriculture		—		3,537			3,537
Business Loans		—		3,382			3,382
Home Equity		—		2,129			2,129
Non-Owner Occupied CRE		—		875			875
Residential Real Estate		—		4,658			4,658
Unallocated		417		(417	)		—
		14,151		680			14,831
Liabilities
ACL for unfunded commitments		1,017		103			1,120
	$	15,168	$	783		$	15,951

Investment Securities

Investment Securities

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date.

Investment securities classified as available for sale are those securities that the Corporation intends to hold for an indefinite period of time but not necessarily to maturity. Securities available for sale are carried at fair value. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Corporation’s assets and liabilities, liquidity needs, regulatory capital considerations, and other similar factors. Unrealized gains or losses are reported as increases or decreases in other comprehensive income (loss), net of the deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the terms of the securities. The Corporation classifies all of its securities as available for sale. Equity securities are measured at fair value with changes in fair value recognized in net income.

Allowance for Credit Losses – Available for Sale Securities

Allowance for Credit Losses – Available for Sale Securities

The Corporation measures expected credit losses on available-for-sale debt securities when the Corporation does not intend to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Corporation considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this evaluation indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, equal to the amount that the fair value is less than the amortized cost basis. Economic forecast data is utilized to calculate the present value of expected cash flows. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss).

The allowance for credit losses on available-for-sale debt securities is included within investment securities available-for-sale on the consolidated balance sheet. Changes in the allowance for credit losses are recorded within the provision for credit losses on the consolidated statement of income. Losses are charged against the allowance when the Corporation believes the collectability of an available-for-sale security is in jeopardy or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available-for-sale debt securities totaled $3,560,000 at June 30, 2023, and is included within Other Assets on the consolidated balance sheet. This amount is excluded from the estimate of expected credit losses. Available-for-sale debt securities are typically classified as nonaccrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When available-for-sale debt securities are placed on nonaccrual status, unpaid interest credited to income is reversed.

Loans Receivable

Loans Receivable

Loans receivable 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 balances, net of an allowance for credit losses and any deferred fees or costs. Accrued interest receivable totaled $2,689,000 at June 30, 2023, and was reported in Other Assets on the Consolidated Balance Sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Corporation is amortizing these amounts over the contractual life of the loan. Premiums and discounts on purchased loans are amortized as adjustments to interest income using the effective yield method.

The loans receivable portfolio is segmented into Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate (CRE), and Residential Real Estate.

For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for credit losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income on a cash basis, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months), and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

Allowance for Credit Losses - Loans

Allowance for Credit Losses - Loans

The allowance for credit losses (ACL) is a valuation reserve established and maintained by charges against income and is deducted from the amortized cost basis of loans to present the net amount expected to be collected on the loans.  Loans, or portions thereof, are charged off against the ACL when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

The ACL is an estimate of expected credit losses, measured over the contractual life of a loan, that considers historical loss experience, current conditions, and forecasts of future economic conditions. Determination of an appropriate ACL is inherently subjective and may have significant changes from period to period. The methodology for determining the ACL has two main components: evaluation of expected credit losses for certain groups of homogeneous loans that share similar risk characteristics and evaluation of loans that do not share risk characteristics with other loans.

The ACL is measured on a collective (pool) basis when similar risk characteristics exist. The Corporation measures the ACL using the following methods. 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 applies qualitative adjustments to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information at the balance sheet date. Reasonable and supportable forecast adjustment is based on the unemployment forecast, BBB Rated Corporate Bond Spread, GDP Growth, Retail Sales, Asset Prices, and Management Judgement. The reasonable and supportable period is the life of the loan as credit loss models used produce reasonable estimates of losses over the life of the loan. The qualitative adjustments for current conditions are based upon changes in lending policies and procedures, loan portfolio trends, lending management experience, asset quality, loan review, underlying collateral, credit concentrations, and external factors.  These modified historical loss rates are multiplied by the outstanding principal balance of each loan to calculate a required reserve.

The Corporation has elected to exclude accrued interest receivable from the measurement of its ACL. When a loan is placed on nonaccrual status, any outstanding accrued interest is reversed against interest income.

The ACL for individual loans begins with the use of normal credit review procedures to identify whether a loan no longer shares similar risk characteristics with other pooled loans and therefore should be individually assessed. Commercial loans are evaluated if they meet the following criteria: 1) when it is determined that foreclosure is probable, 2) substandard, doubtful and nonperforming loans when repayment is expected to be provided substantially through the operation or sale of the collateral, 3) when it is determined by management that a loan does not share similar risk characteristics with other loans.  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 effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral when the loan is collateral dependent. Individual loan evaluations consist primarily of the fair value of collateral method because most of the Corporation’s loans are collateral dependent. Collateral values are discounted to consider disposition costs when appropriate. A specific reserve is established or a charge-off is taken if the fair value of the loan is less than the loan balance

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Corporation estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The allowance for credit losses on off-balance sheet credit exposures is adjusted through credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance is carried as a liability and is included in other liabilities on the Corporation’s Consolidated Balance Sheets. The liability was $1,262,000 as of June 30, 2023, and $1,017,000 as of December 31, 2022. As the unadvanced portion of lines of credit increases, this allowance will increase.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Schedule of Reclassification of Loans

The impact of the change from the incurred loss model to the current expected credit loss model and the reclassification of loans for the identification of new portfolio loan segments under CECL is detailed below (in thousands).

	January 1, 2023
	Pre-adoption		Adoption Impact			As Reported
	$		$			$
Assets
ACL on debt securities available for sale		—		—			—
ACL on loans
Commercial Real Estate		6,074		(6,074	)		—
Consumer Real Estate		5,442		(5,442	)		—
Commercial and Industrial		2,151		(2,151	)		—
Consumer		67		183			250
Agriculture		—		3,537			3,537
Business Loans		—		3,382			3,382
Home Equity		—		2,129			2,129
Non-Owner Occupied CRE		—		875			875
Residential Real Estate		—		4,658			4,658
Unallocated		417		(417	)		—
		14,151		680			14,831
Liabilities
ACL for unfunded commitments		1,017		103			1,120
	$	15,168	$	783		$	15,951

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Securities Available for Sale (Tables)

6 Months Ended

Jun. 30, 2023

Securities Available for Sale [Abstract]

Schedule of Amortized Cost and Fair Value of Securities

The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of investment securities held at June 30, 2023, are as follows:

			Gross		Gross			Allowance
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			for Credit		Fair
	Cost		Gains		Losses			Losses		Value
	$		$		$			$		$
June 30, 2023
U.S. treasuries		19,854		—		(2,089	)		—		17,765
U.S. government agencies		19,400		—		(2,412	)		—		16,988
U.S. agency mortgage-backed securities		46,834		—		(4,328	)		—		42,506
U.S. agency collateralized mortgage obligations		23,090		—		(2,446	)		—		20,644
Non-agency MBS/CMO		54,138		18		(4,004	)		—		50,152
Asset-backed securities		70,355		21		(1,835	)		—		68,541
Corporate bonds		61,401		—		(7,325	)		—		54,076
Obligations of states and political subdivisions		213,140		—		(27,808	)		—		185,332
Total securities available for sale		508,212		39		(52,247	)		—		456,004

The amortized cost, gross unrealized gains and losses, and approximate fair value of investment securities held at December 31, 2022, are as follows:

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
December 31, 2022
U.S. Treasuries		35,737		—		(3,080	)		32,657
U.S. government agencies		27,605		—		(2,818	)		24,787
U.S. agency mortgage-backed securities		49,939		—		(4,632	)		45,307
U.S. agency collateralized mortgage obligations		30,193		—		(2,703	)		27,490
Non-agency MBS/CMO		53,900		—		(3,650	)		50,250
Asset-backed securities		76,110		16		(2,892	)		73,234
Corporate bonds		76,685		10		(7,064	)		69,631
Obligations of states and political subdivisions		240,102		10		(34,326	)		205,786
Total securities available for sale		590,271		36		(61,165	)		529,142

Schedule of Contractual Maturity of Debt Securities

The amortized cost and fair value of securities available for sale at June 30, 2023, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions.

CONTRACTUAL MATURITY OF DEBT SECURITIES
(DOLLARS IN THOUSANDS)
	Amortized
	Cost		Fair Value
	$		$
Due in one year or less		—		—
Due after one year through five years		96,888		87,463
Due after five years through ten years		75,828		64,408
Due after ten years		335,496		304,133
Total debt securities		508,212		456,004

Schedule of Proceeds from Sales of Securities Available for Sale

PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	$		$		$		$
Proceeds from sales		32,972		—		61,089		8,576

Schedule of Temporary Impairments of Securities

TEMPORARY IMPAIRMENTS OF SECURITIES

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of June 30, 2023
U.S. Treasuries		—		—			17,765		(2,089	)		17,765		(2,089	)
U.S. government agencies		—		—			16,988		(2,412	)		16,988		(2,412	)
U.S. agency mortgage-backed securities		—		—			42,506		(4,328	)		42,506		(4,328	)
U.S. agency collateralized mortgage obligations		527		(25	)		20,117		(2,421	)		20,644		(2,446	)
Non-Agency MBS/CMO		7,410		(669	)		39,711		(3,335	)		47,121		(4,004	)
Asset-backed securities		2,898		(43	)		64,123		(1,792	)		67,021		(1,835	)
Corporate bonds		1,711		(289	)		52,365		(7,036	)		54,076		(7,325	)
Obligations of states & political subdivisions		532		(5	)		184,770		(27,803	)		185,302		(27,808	)
Total temporarily impaired securities		13,078		(1,031	)		438,345		(51,216	)		451,423		(52,247	)

Information pertaining to securities with gross unrealized losses at December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of December 31, 2022
U.S. Treasuries		19,721		(1,169	)		12,936		(1,911	)		32,657		(3,080	)
U.S. government agencies		1,953		(52	)		21,634		(2,766	)		23,587		(2,818	)
U.S. agency mortgage-backed securities		24,667		(1,653	)		20,640		(2,979	)		45,307		(4,632	)
U.S. agency collateralized mortgage obligations		9,984		(500	)		17,453		(2,203	)		27,437		(2,703	)
Non-Agency MBS/CMO		50,250		(3,650	)		—		—			50,250		(3,650	)
Asset-backed securities		29,283		(1,028	)		42,032		(1,864	)		71,315		(2,892	)
Corporate bonds		15,197		(1,230	)		43,417		(5,834	)		58,614		(7,064	)
Obligations of states & political subdivisions		103,200		(10,949	)		100,575		(23,377	)		203,775		(34,326	)
Total temporarily impaired securities		254,255		(20,231	)		258,687		(40,934	)		512,942		(61,165	)

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Equity Securities (Tables)

6 Months Ended

Jun. 30, 2023

Equity Securities [Abstract]

Schedule of Amortized Cost

The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of equity securities held at June 30, 2023 and December 31, 2022.

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
June 30, 2023
CRA-qualified mutual funds		7,516		—		—			7,516
Bank stocks		1,716		46		(259	)		1,503
Total equity securities		9,232		46		(259	)		9,019

			Gross		Gross
(DOLLARS IN THOUSANDS)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
December 31, 2022
CRA-qualified mutual funds		7,345		—		—			7,345
Bank stocks		1,685		162		(74	)		1,773
Total equity securities		9,030		162		(74	)		9,118

Schedule of Net Gains and Losses

NET GAINS AND LOSSES ON EQUITY INVESTMENTS RECOGNIZED IN EARNINGS

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
	$			$			$			$
Net losses recognized in equity securities during the period		(106	)		(130	)		(302	)		(138	)
Less: Net gains realized on the sale of equity securities during the period		—			—			—			51
Unrealized losses recognized in equity securities held at reporting date		(106	)		(130	)		(302	)		(189	)

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Loans and Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2023

Loans and Allowance for Credit Losses [Abstract]

Schedule of Corporation’s Loan Portfolio by Category of Loans

The following table presents the Corporation’s loan portfolio by category of loans as of June 30, 2023 (in thousands):

	June 30,
	2023
	$
Agriculture		245,971
Business Loans		350,740
Consumer		6,310
Home Equity		102,108
Non-Owner Occupied Commercial Real Estate		125,894
Residential Real Estate (a)		462,942
Gross loans prior to deferred costs		1,293,965
Deferred loan costs, net		2,537
Allowance for credit losses		(16,833	)
Total net loans (b)		1,279,669

(a) Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets, totaled $295,406,000 as of June 30, 2023.

(b) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard

The following table presents the Corporation’s loan portfolio, prior to the adoption of ASC 326, by category of loans and the impact of the change from the adoption of the standard (in thousands):

							Post Adoption
	December 31,			Adoption			January, 1
	2022			Impact			2023
	$			$			$
Agriculture		—			238,734			238,734
Business Loans		—			336,340			336,340
Home Equity		—			98,854			98,854
Non-Owner Occupied CRE		—			111,333			111,333
Residential Real Estate (a)		—			397,260			397,260
Commercial real estate
Commercial mortgages		210,823			(210,823	)		—
Agriculture mortgages		221,167			(221,167	)		—
Construction		86,793			(86,793	)		—
Total commercial real estate		518,783			(518,783	)		—
Consumer real estate (a)
1-4 family residential mortgages		410,301			(410,301	)		—
Home equity loans		11,937			(11,937	)		—
Home equity lines of credit		98,349			(98,349	)		—
Total consumer real estate		520,587			(520,587	)		—
Commercial and industrial
Commercial and industrial		87,528			(87,528	)		—
Tax-free loans		28,664			(28,664	)		—
Agriculture loans		27,122			(27,122	)		—
Total commercial and industrial		143,314			(143,314	)		—
Consumer		5,769			163			5,932
Gross loans prior to deferred fees		1,188,453			—			1,188,453
Deferred loan costs, net		2,664
Allowance for credit losses		(14,151	)
Total net loans		1,176,966

(a) Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets totaled $298,375,000 as of December 31, 2022.  

Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status

The performance and credit quality of the loan portfolio is 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 June 30, 2023 (in thousands):

	June 30, 2023
			31-60		61-90		Greater Than
			Days		Days		90 Days		Total		Total
	Current		Past Due		Past Due		Past Due		Past Due		Loans
Agriculture	$	245,702	$	—	$	—	$	269	$	269	$	245,971
Business Loans		350,599		—		—		141		141		350,740
Consumer		6,261		12		14		23		49		6,310
Home Equity		101,984		19		105		—		124		102,108
Non-Owner Occupied CRE		125,894		—		—		—		—		125,894
Residential Real Estate		462,213		614		—		115		729		462,942
Total (a)	$	1,292,653	$	645	$	119	$	548	$	1,312	$	1,293,965

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the classes of the loan portfolio summarized by the past-due status as of December 31, 2022 (in thousands):

	December 31, 2022
													Loans
					Greater								Receivable >
	30-59 Days		60-89 Days		than 90		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Days		Due		Current		Receivable		Accruing
	$		$		$		$		$		$		$
Commercial real estate
Commercial mortgages		—		—		554		554		210,269		210,823		—
Agriculture mortgages		—		—		2,787		2,787		218,380		221,167		—
Construction		—		—		—		—		86,793		86,793		—
Consumer real estate
1-4 family residential mortgages		905		—		447		1,352		408,949		410,301		139
Home equity loans		17		—		339		356		11,581		11,937		—
Home equity lines of credit		165		16		—		181		98,168		98,349		—
Commercial and industrial
Commercial and industrial		—		—		190		190		87,338		87,528		—
Tax-free loans		—		—		—		—		28,664		28,664		—
Agriculture loans		—		—		—		—		27,122		27,122		—
Consumer		9		5		30		44		5,725		5,769		30
Total		1,096		21		4,347		5,464		1,182,989		1,188,453		169

Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of June 30, 2023, (in thousands):

	Nonaccrual		Nonaccrual				Loans Past
	with no		with		Total		Due Over 90 Days		Total
	ACL		ACL		Nonaccrual		Still Accruing		Nonperforming
Agriculture	$	2,106	$	—	$	2,106	$	269	$	2,375
Business Loans		797		—		797		—		797
Consumer Loans		—		—		—		23		23
Home Equity		—		—		—		—		—
Non-Owner Occupied CRE		—		—		—		—		—
Residential Real Esate		—		—		—		115		115
Total (a)	$	2,903	$	—	$	2,903	$	407	$	3,310

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments

Schedule of Nonperforming Loans

The following table presents nonaccrual loans by classes of the loan portfolio as of December 31, 2022 (in thousands):

	December 31,
	2022
	$
Commercial real estate
Commercial mortgages		554
Agriculture mortgages		2,787
Construction		—
Consumer real estate
1-4 family residential mortgages		308
Home equity loans		339
Home equity lines of credit		—
Commercial and industrial
Commercial and industrial		190
Tax-free loans		—
Agriculture loans		—
Consumer		—
Total		4,178

Schedule of Allowance for Credit Losses and Recorded Investment in Loans Receivable

Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposure as of June 30, 2023 (in thousands):

													Revolving		Revolving
	Term Loans Amortized Costs Basis by Origination Year												Loans		Loans
													Amortized		Converted
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Agriculture
Risk Rating
Pass	$	25,207	$	45,675	$	51,361	$	20,847	$	15,716	$	63,754	$	18,032	$	—	$	240,592
Special Mention		—		48		503		—		187		1,213		64		—		2,015
Substandard		—		—		—		747		306		2,311		—		—		3,364
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	25,207	$	45,723	$	51,864	$	21,594	$	16,209	$	67,278	$	18,096	$	—	$	245,971
Agriculture
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Business Loans
Risk Rating
Pass	$	22,826	$	105,175	$	71,059	$	39,252	$	16,901	$	51,583	$	37,670	$	—	$	344,466
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		3,172		1,539		—		299		—		932		332		—		6,274
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	25,998	$	106,714	$	71,059	$	39,551	$	16,901	$	52,515	$	38,002	$	—	$	350,740
Business Loans
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Non-Owner Occupied CRE
Risk Rating
Pass	$	14,099	$	42,236	$	27,143	$	13,186	$	7,964	$	13,647	$	4,260	$	—	$	122,535
Special Mention		—		647		—		—		—		—		—		—		647
Substandard		—		—		—		—		2,400		312		—		—		2,712
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	14,099	$	42,883	$	27,143	$	13,186	$	10,364	$	13,959	$	4,260	$	—	$	125,894
Non-Owner Occupied CRE
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Risk Rating
Pass	$	62,132	$	193,086	$	149,563	$	73,285	$	40,581	$	128,984	$	59,962	$	—	$	707,593
Special Mention		—		695		503		—		187		1,213		64		—		2,662
Substandard		3,172		1,539		—		1,046		2,706		3,555		332		—		12,350
Doubtful		—		—		—		—		—		—		—		—		—
Total (a)	$	65,304	$	195,320	$	150,066	$	74,331	$	43,474	$	133,752	$	60,358	$	—	$	722,605

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of June 30, 2023 (in thousands):

													Revolving		Revolving
	Term Loans Amortized Costs Basis by Origination Year												Loans		Loans
													Amortized		Converted
June 30, 2023	2023		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total
Consumer
Payment Performance
Performing	$	2,173	$	1,470	$	606	$	270	$	65	$	9	$	1,694	$	—	$	6,287
Nonperforming		—		—		4		1		—		—		18		—		23
Total	$	2,173	$	1,470	$	610	$	271	$	65	$	9	$	1,712	$	—	$	6,310
Consumer
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	—	$	1
Home equity
Payment Performance
Performing	$	2,619	$	19,904	$	1,117	$	635	$	591	$	2,226	$	72,314	$	2,702	$	102,108
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	2,619	$	19,904	$	1,117	$	635	$	591	$	2,226	$	72,314	$	2,702	$	102,108
Home equity
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Residential Real Estate
Payment Performance
Performing	$	69,466	$	156,151	$	109,332	$	45,604	$	32,845	$	49,429	$	—	$	—	$	462,827
Nonperforming		—		—		—		—		—		115		—		—		115
Total	$	69,466	$	156,151	$	109,332	$	45,604	$	32,845	$	49,544	$	—	$	—	$	462,942
Residential Real Estate
Current period gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Payment Performance
Performing	$	74,258	$	177,525	$	111,055	$	46,509	$	33,501	$	51,664	$	74,008	$	2,702	$	571,222
Nonperforming		—		—		4		1		—		115		18		—		138
Total (a)	$	74,258	$	177,525	$	111,059	$	46,510	$	33,501	$	51,779	$	74,026	$	2,702	$	571,360

Schedule of Credit Risk Profile by Internally Assigned Grade

The following table presents the recorded investment in loans by internal risk rating system for Commercial Credit Exposure as of December 31, 2022 in accordance with ASC 310 (in thousands):

December 31, 2022	Commercial Mortgages		Agriculture Mortgages		Construction		Commercial and Industrial		Tax-free Loans		Agriculture Loans		Total
	$		$		$		$		$		$		$
Grade:
Pass		209,534		214,905		83,240		85,977		28,664		26,749		649,069
Special Mention		—		1,966		3,553		893		—		132		6,544
Substandard		1,289		4,296		—		658		—		241		6,484
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—
Total		210,823		221,167		86,793		87,528		28,664		27,122		662,097

Schedule of Credit Risk Profile by Payment Performance

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of December 31, 2022 in accordance with ASC 310 (in thousands):

December 31, 2022	1-4 Family Residential Mortgages		Home Equity Loans		Home Equity Lines of Credit		Consumer		Total
Payment performance:	$		$		$		$		$
Performing		409,854		11,598		98,349		5,739		525,540
Non-performing		447		339		—		30		816
Total		410,301		11,937		98,349		5,769		526,356

Schedule of Impaired Loans

Information with respect to impaired loans for the three and six months ended June 30, 2022, in accordance with ASC 310 is as follows:

	Three		Six
	Months		Months
	Ended		Ended
	June 30,		June 30,
	2022		2022
	$		$
Average recorded balance of impaired loans		4,179		3,533
Interest income recognized on impaired loans		5		13

Schedule of Impaired Loan Analysis

The following table summarizes information regarding impaired loans by loan portfolio class as of December 31, 2022, in accordance with ASC 310:

IMPAIRED LOAN ANALYSIS
(DOLLARS IN THOUSANDS)
December 31, 2022	Recorded Investment		Unpaid Principal Balance		Related Allowance
	$		$		$
With no related allowance recorded:
Commercial real estate
Commercial mortgages		1,201		1,271		—
Agriculture mortgages		3,229		3,348		—
Construction		—		—		—
Total commercial real estate		4,430		4,619		—
Commercial and industrial
Commercial and industrial		190		199		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		190		199		—
Total with no related allowance		4,620		4,818		—
With an allowance recorded:
Commercial real estate
Commercial mortgages		—		—		—
Agriculture mortgages		—		—		—
Construction		—		—		—
Total commercial real estate		—		—		—
Commercial and industrial
Commercial and industrial		—		—		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		—		—		—
Total with a related allowance		—		—		—
Total by loan class:
Commercial real estate
Commercial mortgages		1,201		1,271		—
Agriculture mortgages		3,229		3,348		—
Construction		—		—		—
Total commercial real estate		4,430		4,619		—
Commercial and industrial
Commercial and industrial		190		199		—
Tax-free loans		—		—		—
Agriculture loans		—		—		—
Total commercial and industrial		190		199		—
Total		4,620		4,818		—

Schedule of Allowance for Credit Losses by Portfolio Segment

The following table presents the activity in the allowance for credit losses by portfolio segment for the three months ended June 30, 2023 (in thousands):

	Beginning							Provisions			Ending
	Balance		Charge-offs			Recoveries		(Reductions)			Balance
Allowance for credit losses:
Agriculture		3,591		—			—		75			3,666
Business Loans		3,473		—			2		(26	)		3,449
Consumer Loans		270		(14	)		1		100			357
Home Equity		2,318		—			—		21			2,339
Non-Owner Occupied CRE		942		—			—		1			943
Residential Real Estate		5,460		—			7		612			6,079
Total (a)	$	16,054	$	(14	)	$	10	$	783		$	16,833

(a) Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

The following table presents the activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2023 (in thousands):

			Impact of
	Beginning		adopting								Provisions		Ending
	Balance		ASC 326			Charge-offs			Recoveries		(Reductions)		Balance
Allowance for credit losses:
Commercial Real Estate	$	6,074	$	(6,074	)	$	—		$	—	$	—	$	—
Consumer Real Estate		5,442		(5,442	)		—			—		—		—
Commerical & Industrial		2,151		(2,151	)		—			—		—		—
Consumer		67		(67	)		—			—		—		—
Agriculture		—		3,537			—			71		58		3,666
Business Loans		—		3,382			—			7		60		3,449
Consumer Loans		—		250			(15	)		1		121		357
Home Equity		—		2,129			—			—		210		2,339
Non-Owner Occupied CRE		—		875			—			—		68		943
Residential Real Estate		—		4,658			—			8		1,413		6,079
Unallocated		417		(417	)		—			—		—		—
Total (a)	$	14,151	$	680		$	(15	)	$	87	$	1,930	$	16,833

Schedule of Allowance for Credit Losses By Portfolio Segment

The following table details activity in the allowance for credit losses by portfolio segment for the six months ended June 30, 2022:

	Commercial Real Estate			Consumer Real Estate		Commercial and Industrial			Consumer			Unallocated			Total
	$			$		$			$			$			$
Allowance for credit losses:
Beginning balance - December 31, 2021		6,263			3,834		2,112			87			635			12,931
Charge-offs		(65	)		—		—			(1	)		—			(66	)
Recoveries		—			3		10			1			—			14
Provision		(90	)		41		193			(16	)		(28	)		100
Balance - March 31, 2022		6,108			3,878		2,315			71			607			12,979
Charge-offs		—			—		(41	)		—			—			(41	)
Recoveries		2			3		12			1			—			18
Provision		(239	)		834		255			(28	)		(172	)		650
Balance - June 30, 2022		5,871			4,715		2,541			44			435			13,606

Schedule of Allowance for Credit Losses and Recorded Investment in Loans Receivable

The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on estimation method as of June 30, 2023:

As of June 30, 2023:	Agriculture		Business Loans		Consumer Loans		Home Equity		Non- Owner Occupied CRE		Residential Real Estate		Total
	$		$		$		$		$		$		$
Allowance for credit losses:
Ending balance: individually evaluated		—		—		—		—		—		—		—
Ending balance: collectively evaluated		3,666		3,449		357		2,339		943		6,079		16,833
Loans receivable:
Ending balance		245,971		350,740		6,310		102,108		125,894		462,942		1,293,965
Ending balance: individually evaluated		2,521		797		—		—		—		—		3,318
Ending balance: collectively evaluated		243,450		349,943		6,310		102,108		125,894		462,942		1,290,647

As of December 31, 2022:	Commercial Real Estate		Consumer Real Estate		Commercial and Industrial		Consumer		Unallocated		Total
	$		$		$		$		$		$
Allowance for credit losses:
Ending balance: individually evaluated for impairment		—		—		—		—		—		—
Ending balance: collectively evaluated for impairment		6,074		5,442		2,151		67		417		14,151
Loans receivable:
Ending balance		518,783		520,587		143,314		5,769				1,188,453
Ending balance: individually evaluated for impairment		4,430		—		190		—				4,620
Ending balance: collectively evaluated for impairment		514,353		520,587		143,124		5,769				1,183,833

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Fair Value Presentation (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Presentation [Abstract]

Schedule of Assets Measured on A Recurring Basis

ASSETS MEASURED ON A RECURRING BASIS

	June 30, 2023
	Level I		Level II		Level III		Total
	$		$		$		$
U.S. treasuries		17,765		—		—		17,765
U.S. government agencies		—		16,988		—		16,988
U.S. agency mortgage-backed securities		—		42,506		—		42,506
U.S. agency collateralized mortgage obligations		—		20,644		—		20,644
Non-agency MBS/CMO		—		50,152		—		50,152
Asset-backed securities		—		68,541		—		68,541
Corporate bonds		—		54,076		—		54,076
Obligations of states & political subdivisions		—		185,332		—		185,332
Equity securities		9,019		—		—		9,019
Total securities		26,784		438,239		—		465,023

	December 31, 2022
	Level I		Level II		Level III		Total
	$		$		$		$
U.S. Treasuries		32,657		—				32,657
U.S. government agencies		—		24,787		—		24,787
U.S. agency mortgage-backed securities		—		45,307		—		45,307
U.S. agency collateralized mortgage obligations		—		27,490		—		27,490
Non-agency MBS/CMO				50,250		—		50,250
Asset-backed securities		—		73,234		—		73,234
Corporate bonds		—		69,631		—		69,631
Obligations of states & political subdivisions		—		205,786		—		205,786
Equity securities		9,118		—		—		9,118
Total securities		41,775		496,485		—		538,260

Schedule of Financial Instruments not Required to be Measured or Reported at Fair Value

ASSETS MEASURED ON A NONRECURRING BASIS

	June 30, 2023
	Level I		Level II		Level III		Total
	$		$		$		$
Assets:
Individually analyzed loans	$	—	$	—	$	3,318	$	3,318
Total	$	—	$	—	$	3,318	$	3,318

	December 31, 2022
	Level I		Level II		Level III		Total
	$		$		$		$
Assets:
Impaired Loans	$	—	$	—	$	4,620	$	4,620
Total	$	—	$	—	$	4,620	$	4,620

Schedule of Level III Fair Value Measurements

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis for which the Corporation has utilized level III inputs to determine fair value:

	June 30, 2023
	Fair Value	Valuation	Unobservable	Range
	Estimate	Techniques	Input	(Weighted Avg)
Individually analyzed loans	3,318	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -20% (-20%)
			Liquidation expenses (2)	0% to -10% (-10%)

	December 31, 2022
	Fair Value	Valuation	Unobservable	Range
	Estimate	Techniques	Input	(Weighted Avg)
Impaired loans	4,620	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -20% (-20%)
			Liquidation expenses (2)	0% to -10% (-10%)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level III inputs which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Schedule of Financial Instruments not Required to be Measured or Reported at Fair Value

FINANCIAL INSTRUMENTS NOT REQUIRED TO BE MEASURED OR REPORTED AT FAIR VALUE

	June 30, 2023
					Quoted Prices in
					Active Markets		Significant Other		Significant
					for Identical		Observable		Unobservable
	Carrying				Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level II)		(Level III)
	$		$		$		$		$
Financial Assets:
Cash and cash equivalents		61,081		61,081		61,081		—		—
Regulatory stock		7,843		7,843		7,843		—		—
Loans held for sale		652		652		652		—		—
Loans, net of allowance		1,279,669		1,213,305		—		—		1,213,305
Mortgage servicing assets		2,052		2,880		—		—		2,880
Accrued interest receivable		6,249		6,249		6,249		—		—
Bank owned life insurance		35,197		35,197		35,197		—		—
Financial Liabilities:
Demand deposits		634,360		634,360		634,360		—		—
Interest-bearing demand deposits		220,949		220,949		220,949		—		—
NOW accounts		109,257		109,257		109,257		—		—
Money market deposit accounts		164,431		164,431		164,431		—		—
Savings accounts		342,422		342,422		342,422		—		—
Time deposits		184,532		180,390		—		—		180,390
Total deposits		1,655,951		1,651,809		1,471,419		—		180,390
Long-term debt		91,717		90,066		—		—		90,066
Subordinated debt		39,476		33,447		—		—		33,447
Accrued interest payable		1,169		1,169		1,169		—		—

	December 31, 2022
					Quoted Prices in
					Active Markets		Significant Other		Significant
					for Identical		Observable		Unobservable
	Carrying				Assets		Inputs		Inputs
	Amount		Fair Value		(Level 1)		(Level II)		(Level III)
	$		$		$		$		$
Financial Assets:
Cash and cash equivalents		37,572		37,572		37,572		—		—
Regulatory stock		6,670		6,670		6,670		—		—
Loans held for sale		5,927		5,927		5,927		—		—
Loans, net of allowance		1,176,966		1,112,400		—		—		1,112,400
Mortgage servicing assets		2,030		2,894		—		—		2,894
Accrued interest receivable		6,249		6,249		6,249		—		—
Bank owned life insurance		34,805		34,805		34,805		—		—
Financial Liabilities:
Demand deposits		672,342		672,342		672,342		—		—
Interest-bearing demand deposits		164,208		164,208		164,208		—		—
NOW accounts		139,846		139,846		139,846		—		—
Money market deposit accounts		163,836		163,836		163,836		—		—
Savings accounts		364,897		364,897		364,897		—		—
Time deposits		133,829		129,422		—		—		129,422
Total deposits		1,638,958		1,634,551		1,505,129		—		129,422
Short-term debt		16,000		15,721						15,721
Long-term debt		58,039		56,431		—		—		56,431
Subordinated debt		39,396		35,975		—		—		35,975
Accrued interest payable		597		597		597		—		—

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2023

Accumulated Other Comprehensive Income (Loss) [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

	Unrealized
	Gains (Losses)
	on Securities
	Available-for-Sale
	$
Balance at December 31, 2022		(48,292	)
Other comprehensive loss before reclassifications		7,335
Amount reclassified from accumulated other comprehensive income (loss)		324
Period change		7,659
Balance at March 31, 2023		(40,633	)
Other comprehensive loss before reclassifications		(1,365	)
Amount reclassified from accumulated other comprehensive income (loss)		754
Period change		(611	)
Balance at June 30, 2023		(41,244	)
Balance at December 31, 2021		3,441
Other comprehensive loss before reclassifications		(23,629	)
Amount reclassified from accumulated other comprehensive income (loss)		(110	)
Period change		(23,739	)
Balance at March 31, 2022		(20,298	)
Other comprehensive loss before reclassifications		(16,518	)
Amount reclassified from accumulated other comprehensive income (loss)		—
Period change		(16,518	)
Balance at June 30, 2022		(36,816	)

(1) All amounts are net of tax.  Related income tax expense or benefit is calculated using a Federal income tax rate of 21%.

(2) Amounts in parentheses indicate debits.  

Schedule of Accumulated Other Comprehensive Income (Loss) Components

DETAILS ABOUT ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) COMPONENTS

	Amount Reclassified from
	Accumulated Other Comprehensive
	Income (Loss)
	For the Three Months
	Ended June 30,
	2023			2022		Affected Line Item in the
	$			$		Consolidated Statements of Income
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings		(954	)		—	(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)		200			—	Benefit/(Provision) for federal income taxes
Net effect on accumulated other comprehensive  income (loss) for the period		(754	)		—

(1) Amounts in parentheses indicate debits.

	Amount Reclassified from
	Accumulated Other Comprehensive
	Income (Loss)
	For the Six Months
	Ended June 30,
	2023			2022			Affected Line Item in the
	$			$			Consolidated Statements of Income
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings		(1,364	)		139		(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)		286			(29	)	Benefit/(Provision) for federal income taxes
Net effect on accumulated other comprehensive  income (loss) for the period		(1,078	)		110

(1) Amounts in parentheses indicate debits.

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Summary of Significant Accounting Policies (Details) - USD ($)		6 Months Ended
	Jan. 01, 2023	Jun. 30, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Retained earnings	$ 619,000
Net of tax related to loan	537,000
Other commitment	82,000
Available-for-sale securities	$ 0
Available-for-sale debt securities		$ 3,560,000
Contractual payment		90 years
Accrued interest receivable		$ 2,689,000
Allowance for off-balance sheet extensions of credit		$ 1,262,000	$ 1,017,000

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Summary of Significant Accounting Policies (Details) - Schedule of Reclassification of Loans $ in Thousands	Jan. 01, 2023 USD ($)
Pre-adoption [Member]
Assets
Assets	$ 14,151
Liabilities
Total	15,168
Pre-adoption [Member] | ACL on Debt Securities Available for Sale [Member]
Assets
Assets
Pre-adoption [Member] | Commercial Real Estate [Member]
Assets
Assets	6,074
Pre-adoption [Member] | Consumer Real Estate [Member]
Assets
Assets	5,442
Pre-adoption [Member] | Commercial and Industrial [Member]
Assets
Assets	2,151
Pre-adoption [Member] | Consumer [Member]
Assets
Assets	67
Pre-adoption [Member] | Agriculture [Member]
Assets
Assets
Pre-adoption [Member] | Business Loans [Member]
Assets
Assets
Pre-adoption [Member] | Home Equity [Member]
Assets
Assets
Pre-adoption [Member] | Non-Owner Occupied CRE [Member]
Assets
Assets
Pre-adoption [Member] | Residential Real Estate [Member]
Assets
Assets
Pre-adoption [Member] | Unallocated [Member]
Assets
Assets	417
Pre-adoption [Member] | ACL for Unfunded Commitments [Member]
Liabilities
Liabilities	1,017
Adoption Impact [Member]
Assets
Assets	680
Liabilities
Total	783
Adoption Impact [Member] | ACL on Debt Securities Available for Sale [Member]
Assets
Assets
Adoption Impact [Member] | Commercial Real Estate [Member]
Assets
Assets	(6,074)
Adoption Impact [Member] | Consumer Real Estate [Member]
Assets
Assets	(5,442)
Adoption Impact [Member] | Commercial and Industrial [Member]
Assets
Assets	(2,151)
Adoption Impact [Member] | Consumer [Member]
Assets
Assets	183
Adoption Impact [Member] | Agriculture [Member]
Assets
Assets	3,537
Adoption Impact [Member] | Business Loans [Member]
Assets
Assets	3,382
Adoption Impact [Member] | Home Equity [Member]
Assets
Assets	2,129
Adoption Impact [Member] | Non-Owner Occupied CRE [Member]
Assets
Assets	875
Adoption Impact [Member] | Residential Real Estate [Member]
Assets
Assets	4,658
Adoption Impact [Member] | Unallocated [Member]
Assets
Assets	(417)
Adoption Impact [Member] | ACL for Unfunded Commitments [Member]
Liabilities
Liabilities	103
As Reported [Member]
Assets
Assets	14,831
Liabilities
Total	15,951
As Reported [Member] | ACL on Debt Securities Available for Sale [Member]
Assets
Assets
As Reported [Member] | Commercial Real Estate [Member]
Assets
Assets
As Reported [Member] | Consumer Real Estate [Member]
Assets
Assets
As Reported [Member] | Commercial and Industrial [Member]
Assets
Assets
As Reported [Member] | Consumer [Member]
Assets
Assets	250
As Reported [Member] | Agriculture [Member]
Assets
Assets	3,537
As Reported [Member] | Business Loans [Member]
Assets
Assets	3,382
As Reported [Member] | Home Equity [Member]
Assets
Assets	2,129
As Reported [Member] | Non-Owner Occupied CRE [Member]
Assets
Assets	875
As Reported [Member] | Residential Real Estate [Member]
Assets
Assets	4,658
As Reported [Member] | Unallocated [Member]
Assets
Assets
As Reported [Member] | ACL for Unfunded Commitments [Member]
Liabilities
Liabilities	$ 1,120

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Securities Available for Sale (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Securities Available for Sale [Abstract]
Available for sale debt securities	$ 119,952,000	$ 116,179,000
Pledged securities	$ 110,159,000	$ 107,071,000

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Securities Available for Sale (Details) - Schedule of Amortized Cost and Fair Value of Securities - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	$ 508,212	$ 590,271
Gross Unrealized Gains	39	36
Gross Unrealized Losses	(52,247)	(61,165)
Allowance for Credit Losses
Fair Value	456,004	529,142
U.S. Treasuries [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	19,854	35,737
Gross Unrealized Gains
Gross Unrealized Losses	(2,089)	(3,080)
Allowance for Credit Losses
Fair Value	17,765	32,657
U.S. government agencies [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	19,400	27,605
Gross Unrealized Gains
Gross Unrealized Losses	(2,412)	(2,818)
Allowance for Credit Losses
Fair Value	16,988	24,787
U.S. agency mortgage-backed securities [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	46,834	49,939
Gross Unrealized Gains
Gross Unrealized Losses	(4,328)	(4,632)
Allowance for Credit Losses
Fair Value	42,506	45,307
U.S. agency collateralized mortgage obligations [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	23,090	30,193
Gross Unrealized Gains
Gross Unrealized Losses	(2,446)	(2,703)
Allowance for Credit Losses
Fair Value	20,644	27,490
Non-agency MBS/CMO [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	54,138	53,900
Gross Unrealized Gains	18
Gross Unrealized Losses	(4,004)	(3,650)
Allowance for Credit Losses
Fair Value	50,152	50,250
Asset-backed securities [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	70,355	76,110
Gross Unrealized Gains	21	16
Gross Unrealized Losses	(1,835)	(2,892)
Allowance for Credit Losses
Fair Value	68,541	73,234
Corporate bonds [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	61,401	76,685
Gross Unrealized Gains		10
Gross Unrealized Losses	(7,325)	(7,064)
Allowance for Credit Losses
Fair Value	54,076	69,631
Obligations of states and political subdivisions [Member]
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	213,140	240,102
Gross Unrealized Gains		10
Gross Unrealized Losses	(27,808)	(34,326)
Allowance for Credit Losses
Fair Value	$ 185,332	$ 205,786

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Securities Available for Sale (Details) - Schedule of Contractual Maturity of Debt Securities $ in Thousands	Jun. 30, 2023 USD ($)
Schedule of Contractual Maturity of Debt Securities [Abstract]
Due in one year or less, Amortized Cost
Due in one year or less, Fair Value
Due after one year through five years, Amortized Cost	96,888
Due after one year through five years, Fair Value	87,463
Due after five years through ten years, Amortized Cost	75,828
Due after five years through ten years, Fair Value	64,408
Due after ten years, Amortized Cost	335,496
Due after ten years, Fair Value	304,133
Total debt securities, Amortized Cost	508,212
Total debt securities, Fair Value	$ 456,004

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Securities Available for Sale (Details) - Schedule of Proceeds from Sales of Securities Available for Sale - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Schedule of Proceeds from Sales of Securities Available for Sale [Abstract]
Proceeds from sales	$ 32,972		$ 61,089	$ 8,576

XML

Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value	$ 13,078	$ 254,255
Less than 12 months, Gross Unrealized Losses	(1,031)	(20,231)
More than 12 months, Fair Value	438,345	258,687
More than 12 months, Gross Unrealized Losses	(51,216)	(40,934)
Total, Fair Value	451,423	512,942
Total, Gross Unrealized Losses	(52,247)	(61,165)
U.S. Treasuries [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value		19,721
Less than 12 months, Gross Unrealized Losses		(1,169)
More than 12 months, Fair Value	17,765	12,936
More than 12 months, Gross Unrealized Losses	(2,089)	(1,911)
Total, Fair Value	17,765	32,657
Total, Gross Unrealized Losses	(2,089)	(3,080)
U.S. Government Agencies [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value		1,953
Less than 12 months, Gross Unrealized Losses		(52)
More than 12 months, Fair Value	16,988	21,634
More than 12 months, Gross Unrealized Losses	(2,412)	(2,766)
Total, Fair Value	16,988	23,587
Total, Gross Unrealized Losses	(2,412)	(2,818)
U.S. Agency Mortgage-Backed Securities [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value		24,667
Less than 12 months, Gross Unrealized Losses		(1,653)
More than 12 months, Fair Value	42,506	20,640
More than 12 months, Gross Unrealized Losses	(4,328)	(2,979)
Total, Fair Value	42,506	45,307
Total, Gross Unrealized Losses	(4,328)	(4,632)
U.S. Agency Collateralized Mortgage Obligations [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value	527	9,984
Less than 12 months, Gross Unrealized Losses	(25)	(500)
More than 12 months, Fair Value	20,117	17,453
More than 12 months, Gross Unrealized Losses	(2,421)	(2,203)
Total, Fair Value	20,644	27,437
Total, Gross Unrealized Losses	(2,446)	(2,703)
Non-Agency MBS/CMO [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value	7,410	50,250
Less than 12 months, Gross Unrealized Losses	(669)	(3,650)
More than 12 months, Fair Value	39,711
More than 12 months, Gross Unrealized Losses	(3,335)
Total, Fair Value	47,121	50,250
Total, Gross Unrealized Losses	(4,004)	(3,650)
Asset-backed Securities [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value	2,898	29,283
Less than 12 months, Gross Unrealized Losses	(43)	(1,028)
More than 12 months, Fair Value	64,123	42,032
More than 12 months, Gross Unrealized Losses	(1,792)	(1,864)
Total, Fair Value	67,021	71,315
Total, Gross Unrealized Losses	(1,835)	(2,892)
Corporate Bonds [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value	1,711	15,197
Less than 12 months, Gross Unrealized Losses	(289)	(1,230)
More than 12 months, Fair Value	52,365	43,417
More than 12 months, Gross Unrealized Losses	(7,036)	(5,834)
Total, Fair Value	54,076	58,614
Total, Gross Unrealized Losses	(7,325)	(7,064)
Obligations of States and Political Subdivisions [Member]
Securities Available for Sale (Details) - Schedule of Temporary Impairments of Securities [Line Items]
Less than 12 months, Fair Value	532	103,200
Less than 12 months, Gross Unrealized Losses	(5)	(10,949)
More than 12 months, Fair Value	184,770	100,575
More than 12 months, Gross Unrealized Losses	(27,803)	(23,377)
Total, Fair Value	185,302	203,775
Total, Gross Unrealized Losses	$ (27,808)	$ (34,326)

XML

Equity Securities (Details) - Schedule of Amortized Cost - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Equity Securities (Details) - Schedule of Amortized Cost [Line Items]
Amortized Cost	$ 508,212	$ 590,271
Gross Unrealized Gains	39	36
Gross Unrealized Losses	(52,247)	(61,165)
Fair Value	456,004	529,142	$ 579,018
CRA-Qualified Mutual Funds [Member]
Equity Securities (Details) - Schedule of Amortized Cost [Line Items]
Amortized Cost	7,516	7,345
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	7,516	7,345
Bank Stocks [Member]
Equity Securities (Details) - Schedule of Amortized Cost [Line Items]
Amortized Cost	1,716	1,685
Gross Unrealized Gains	46	162
Gross Unrealized Losses	(259)	(74)
Fair Value	1,503	1,773
Equity Securities [Member]
Equity Securities (Details) - Schedule of Amortized Cost [Line Items]
Amortized Cost	9,232	9,030
Gross Unrealized Gains	46	162
Gross Unrealized Losses	(259)	(74)
Fair Value	$ 9,019	$ 9,118

XML

Equity Securities (Details) - Schedule of Net Gains and Losses - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Schedule of Net Gains and Losses on Equity Investments Recognized in Earnings [Abstract]
Net losses recognized in equity securities during the period	$ (106)	$ (130)	$ (302)	$ (138)
Less: Net gains realized on the sale of equity securities during the period				51
Unrealized losses recognized in equity securities held at reporting date	$ (106)	$ (130)	$ (302)	$ (189)

XML

Loans and Allowance for Credit Losses (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2022
Loans and Allowance for Credit Losses (Details) [Line Items]
Charge-offs	$ 15,000	$ 107,000
Recoveries of loan losses	87,000	32,000
Provision for on balance sheet exposure	1,930,000
Provision for off-balance sheet credit	142,000
Provision for on balance sheet exposure	2,072,000	$ 750,000
Allowance as a percentage		3.20%	4.90%
Real Estate Loans [Member]
Loans and Allowance for Credit Losses (Details) [Line Items]
Real estate loans serviced for others	$ 295,406,000			$ 298,375,000

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Corporation’s Loan Portfolio by Category of Loans $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans prior to deferred fees	$ 1,293,965
Deferred loan costs, net	2,537
Allowance for credit losses	(16,833)
Total net loans (b)	1,279,669	[1]
Agriculture [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans prior to deferred fees	245,971
Business Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans prior to deferred fees	350,740
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans prior to deferred fees	6,310
Home Equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans prior to deferred fees	102,108
Non-Owner Occupied Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans prior to deferred fees	125,894
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans prior to deferred fees	$ 462,942	[2]

[1] Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to the adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

[2] Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets, totaled $295,406,000 as of June 30, 2023.

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Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard - USD ($) $ in Thousands		Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022	Jun. 30, 2022
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees			$ 1,188,453	$ 1,188,453
Deferred loan costs, net				2,664
Allowance for credit losses		$ (16,833)		(14,151)	$ (13,606)
Total net loans				1,176,966
Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees
Deferred loan costs, net
Allowance for credit losses
Total net loans
Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees			238,734
Agriculture [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				238,734
Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees			336,340
Business Loans [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				336,340
Home Equity [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees			98,854
Home Equity [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				98,854
Non-Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees			111,333
Non-Owner Occupied CRE [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				111,333
Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]		397,260
Residential Real Estate [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			397,260
Commercial Mortgages [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				210,823
Commercial Mortgages [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(210,823)
Agriculture Mortgages [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				221,167
Agriculture Mortgages [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(221,167)
Construction [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				86,793
Construction [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(86,793)
Commercial Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				518,783
Commercial Real Estate [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(518,783)
1-4 Family Residential Mortgages
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			410,301
1-4 Family Residential Mortgages | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			(410,301)
Home Equity Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			11,937
Home Equity Loans [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			(11,937)
Home Equity Lines of Credit [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			98,349
Home Equity Lines of Credit [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			(98,349)
Consumer Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			520,587
Consumer Real Estate [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees	[1]			(520,587)
Commercial and Industrial [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				87,528
Commercial and Industrial [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(87,528)
Tax-free Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				28,664
Tax-free Loans [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(28,664)
Agriculture Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				27,122
Agriculture Loans [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(27,122)
Commercial and Industrial [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				143,314
Commercial and Industrial [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				(143,314)
Consumer [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees			$ 5,932	5,769
Consumer [Member] | Adoption Impact [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Category of Loans and Impact of the Change from the Adoption of the Standard [Line Items]
Gross loans prior to deferred fees				$ 163

[1] Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets totaled $298,375,000 as of December 31, 2022.

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status - USD ($) $ in Thousands		Jun. 30, 2023	Dec. 31, 2022
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			$ 1,182,989
Total Past Due			5,464
Total Loans			1,188,453
Loans Receivable 90 Days and Accruing			169
30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			1,096
60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			21
Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			4,347
Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current		$ 245,702
Total Past Due		269
Total Loans		245,971
Agriculture [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Agriculture [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Agriculture [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		269
Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current		350,599
Total Past Due		141
Total Loans		350,740
Business Loans [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Business Loans [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Business Loans [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		141
Consumer [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current		6,261
Total Past Due		49
Total Loans		6,310
Consumer [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		12
Consumer [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		14
Consumer [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		23
Home Equity [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current		101,984
Total Past Due		124
Total Loans		102,108
Home Equity [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		19
Home Equity [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		105
Home Equity [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Non- Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current		125,894
Total Past Due
Total Loans		125,894
Non- Owner Occupied CRE [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Non- Owner Occupied CRE [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Non- Owner Occupied CRE [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current		462,213
Total Past Due		729
Total Loans		462,942
Residential Real Estate [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		614
Residential Real Estate [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Residential Real Estate [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due		115
Age Analysis of Past-Due Loans Receivable [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current	[1]	1,292,653
Total Past Due	[1]	1,312
Total Loans	[1]	1,293,965
Age Analysis of Past-Due Loans Receivable [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due	[1]	645
Age Analysis of Past-Due Loans Receivable [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due	[1]	119
Age Analysis of Past-Due Loans Receivable [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due	[1]	$ 548
Commercial Mortgages [Member] | Commercial Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			210,269
Total Past Due			554
Total Loans			210,823
Loans Receivable 90 Days and Accruing
Commercial Mortgages [Member] | Commercial Real Estate [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Commercial Mortgages [Member] | Commercial Real Estate [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Commercial Mortgages [Member] | Commercial Real Estate [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			554
Agriculture Mortgages [Member] | Commercial Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			218,380
Total Past Due			2,787
Total Loans			221,167
Loans Receivable 90 Days and Accruing
Agriculture Mortgages [Member] | Commercial Real Estate [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Agriculture Mortgages [Member] | Commercial Real Estate [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Agriculture Mortgages [Member] | Commercial Real Estate [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			2,787
Construction [Member] | Commercial Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			86,793
Total Past Due
Total Loans			86,793
Loans Receivable 90 Days and Accruing
Construction [Member] | Commercial Real Estate [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Construction [Member] | Commercial Real Estate [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Construction [Member] | Commercial Real Estate [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
1-4 Family Residential Mortgages [Member] | Consumer Portfolio Segment [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			408,949
Total Past Due			1,352
Total Loans			410,301
Loans Receivable 90 Days and Accruing			139
1-4 Family Residential Mortgages [Member] | Consumer Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			905
1-4 Family Residential Mortgages [Member] | Consumer Portfolio Segment [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
1-4 Family Residential Mortgages [Member] | Consumer Portfolio Segment [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			447
Home Equity Loans [Member] | Consumer Portfolio Segment [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			11,581
Total Past Due			356
Total Loans			11,937
Loans Receivable 90 Days and Accruing
Home Equity Loans [Member] | Consumer Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			17
Home Equity Loans [Member] | Consumer Portfolio Segment [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Home Equity Loans [Member] | Consumer Portfolio Segment [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			339
Home Equity Lines of Credit [Member] | Consumer Portfolio Segment [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			98,168
Total Past Due			181
Total Loans			98,349
Loans Receivable 90 Days and Accruing
Home Equity Lines of Credit [Member] | Consumer Portfolio Segment [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			165
Home Equity Lines of Credit [Member] | Consumer Portfolio Segment [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			16
Home Equity Lines of Credit [Member] | Consumer Portfolio Segment [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Commercial and Industrials [Member] | Commercial and Industrial [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			87,338
Total Past Due			190
Total Loans			87,528
Loans Receivable 90 Days and Accruing
Commercial and Industrials [Member] | Commercial and Industrial [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Commercial and Industrials [Member] | Commercial and Industrial [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Commercial and Industrials [Member] | Commercial and Industrial [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			190
Tax-free loans [Member] | Commercial and Industrial [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			28,664
Total Past Due
Total Loans			28,664
Loans Receivable 90 Days and Accruing
Tax-free loans [Member] | Commercial and Industrial [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Tax-free loans [Member] | Commercial and Industrial [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Tax-free loans [Member] | Commercial and Industrial [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Agriculture loans [Member] | Commercial and Industrial [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			27,122
Total Past Due
Total Loans			27,122
Loans Receivable 90 Days and Accruing
Agriculture loans [Member] | Commercial and Industrial [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Agriculture loans [Member] | Commercial and Industrial [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Agriculture loans [Member] | Commercial and Industrial [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due
Consumer [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Current			5,725
Total Past Due			44
Total Loans			5,769
Loans Receivable 90 Days and Accruing			30
Consumer [Member] | 30-59 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			9
Consumer [Member] | 60-89 Days Past Due [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			5
Consumer [Member] | Greater than 90 Days [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Classes of the Loan Portfolio Summarized by the Past-Due Status [Line Items]
Total Past Due			$ 30

[1] Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due $ in Thousands	Jun. 30, 2023 USD ($)
Nonaccrual with no ACL [Member] | Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	$ 2,106
Nonaccrual with no ACL [Member] | Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	797
Nonaccrual with no ACL [Member] | Consumer Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual with no ACL [Member] | Home Equity Loan [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual with no ACL [Member] | Non- Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual with no ACL [Member] | Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual with no ACL [Member] | Total amortized cost [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	2,903	[1]
Nonaccrual With ACL [Member] | Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual With ACL [Member] | Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual With ACL [Member] | Consumer Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual With ACL [Member] | Home Equity Loan [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual With ACL [Member] | Non- Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual With ACL [Member] | Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Nonaccrual With ACL [Member] | Total amortized cost [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost		[1]
Total Nonaccrual [Member] | Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	2,106
Total Nonaccrual [Member] | Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	797
Total Nonaccrual [Member] | Consumer Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Total Nonaccrual [Member] | Home Equity Loan [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Total Nonaccrual [Member] | Non- Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Total Nonaccrual [Member] | Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Total Nonaccrual [Member] | Total amortized cost [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	2,903	[1]
Loans Past DueOver 90 Days Still Accruing [Member] | Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	269
Loans Past DueOver 90 Days Still Accruing [Member] | Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Loans Past DueOver 90 Days Still Accruing [Member] | Consumer Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	23
Loans Past DueOver 90 Days Still Accruing [Member] | Home Equity Loan [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Loans Past DueOver 90 Days Still Accruing [Member] | Non- Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Loans Past DueOver 90 Days Still Accruing [Member] | Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	115
Loans Past DueOver 90 Days Still Accruing [Member] | Total amortized cost [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	407	[1]
Total Nonperforming [Member] | Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	2,375
Total Nonperforming [Member] | Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	797
Total Nonperforming [Member] | Consumer Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	23
Total Nonperforming [Member] | Home Equity Loan [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Total Nonperforming [Member] | Non- Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost
Total Nonperforming [Member] | Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	115
Total Nonperforming [Member] | Total amortized cost [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Amortized Cost Basis of Loans on Nonaccrual Status and Loans Past Due [Line Items]
Amortized cost	$ 3,310	[1]

[1] Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Nonperforming Loans $ in Thousands	Dec. 31, 2022 USD ($)
Commercial real estate
Total	$ 4,178
Commercial mortgages [Member]
Commercial real estate
Total	554
Agriculture mortgages [Member]
Commercial real estate
Total	2,787
Construction [Member]
Commercial real estate
Total
1-4 Family Residential Mortgages [Member]
Commercial real estate
Total	308
Home Equity Loan [Member]
Commercial real estate
Total	339
Home Equity Line of Credit [Member]
Commercial real estate
Total
Commercial and Industrial Sector [Member]
Commercial real estate
Total	190
Tax-free loans [Member]
Commercial real estate
Total
Agriculture loans [Member]
Commercial real estate
Total
Consumer Loan [Member]
Commercial real estate
Total

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Recorded Investment by Internal Risk Rating System for Commercial Credit Exposure $ in Thousands	Jun. 30, 2023 USD ($)
Pass [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	$ 62,132
Term Loans Amortized Costs Basis by Origination Year 2022	193,086
Term Loans Amortized Costs Basis by Origination Year 2021	149,563
Term Loans Amortized Costs Basis by Origination Year 2020	73,285
Term Loans Amortized Costs Basis by Origination Year 2019	40,581
Term Loans Amortized Costs Basis by Origination Year Prior	128,984
Revolving Loans Amortized Cost Basis	59,962
Total	707,593
Special Mention [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022	695
Term Loans Amortized Costs Basis by Origination Year 2021	503
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019	187
Term Loans Amortized Costs Basis by Origination Year Prior	1,213
Revolving Loans Amortized Cost Basis	64
Revolving Loans Converted to Term
Total	2,662
Substandard [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	3,172
Term Loans Amortized Costs Basis by Origination Year 2022	1,539
Term Loans Amortized Costs Basis by Origination Year 2020	1,046
Term Loans Amortized Costs Basis by Origination Year 2019	2,706
Term Loans Amortized Costs Basis by Origination Year Prior	3,555
Revolving Loans Amortized Cost Basis	332
Revolving Loans Converted to Term
Total	12,350
Doubtful [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Performing [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	74,258
Term Loans Amortized Costs Basis by Origination Year 2022	177,525
Term Loans Amortized Costs Basis by Origination Year 2021	111,055
Term Loans Amortized Costs Basis by Origination Year 2020	46,509
Term Loans Amortized Costs Basis by Origination Year 2019	33,501
Term Loans Amortized Costs Basis by Origination Year Prior	51,664
Revolving Loans Amortized Cost Basis	74,008
Revolving Loans Converted to Term	2,702
Total	571,222
Non-performing [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2021	4
Term Loans Amortized Costs Basis by Origination Year 2020	1
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior	115
Revolving Loans Amortized Cost Basis	18
Revolving Loans Converted to Term
Total	138
Home Equity [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Agriculture [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	25,207
Term Loans Amortized Costs Basis by Origination Year 2022	45,723
Term Loans Amortized Costs Basis by Origination Year 2021	51,864
Term Loans Amortized Costs Basis by Origination Year 2020	21,594
Term Loans Amortized Costs Basis by Origination Year 2019	16,209
Term Loans Amortized Costs Basis by Origination Year Prior	67,278
Revolving Loans Amortized Cost Basis	18,096
Total	245,971
Agriculture [Member] | Pass [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	25,207
Term Loans Amortized Costs Basis by Origination Year 2022	45,675
Term Loans Amortized Costs Basis by Origination Year 2021	51,361
Term Loans Amortized Costs Basis by Origination Year 2020	20,847
Term Loans Amortized Costs Basis by Origination Year 2019	15,716
Term Loans Amortized Costs Basis by Origination Year Prior	63,754
Revolving Loans Amortized Cost Basis	18,032
Revolving Loans Converted to Term
Total	240,592
Agriculture [Member] | Special Mention [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022	48
Term Loans Amortized Costs Basis by Origination Year 2021	503
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019	187
Term Loans Amortized Costs Basis by Origination Year Prior	1,213
Revolving Loans Amortized Cost Basis	64
Revolving Loans Converted to Term
Total	2,015
Agriculture [Member] | Substandard [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020	747
Term Loans Amortized Costs Basis by Origination Year 2019	306
Term Loans Amortized Costs Basis by Origination Year Prior	2,311
Revolving Loans Converted to Term
Total	3,364
Agriculture [Member] | Doubtful [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Agriculture [Member] | Current period gross charge-offs [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Business Loans [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	25,998
Term Loans Amortized Costs Basis by Origination Year 2022	106,714
Term Loans Amortized Costs Basis by Origination Year 2021	71,059
Term Loans Amortized Costs Basis by Origination Year 2020	39,551
Term Loans Amortized Costs Basis by Origination Year 2019	16,901
Term Loans Amortized Costs Basis by Origination Year Prior	52,515
Revolving Loans Amortized Cost Basis	38,002
Total	350,740
Business Loans [Member] | Pass [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	22,826
Term Loans Amortized Costs Basis by Origination Year 2022	105,175
Term Loans Amortized Costs Basis by Origination Year 2021	71,059
Term Loans Amortized Costs Basis by Origination Year 2020	39,252
Term Loans Amortized Costs Basis by Origination Year 2019	16,901
Term Loans Amortized Costs Basis by Origination Year Prior	51,583
Revolving Loans Amortized Cost Basis	37,670
Total	344,466
Business Loans [Member] | Special Mention [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Business Loans [Member] | Substandard [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	3,172
Term Loans Amortized Costs Basis by Origination Year 2022	1,539
Term Loans Amortized Costs Basis by Origination Year 2020	299
Term Loans Amortized Costs Basis by Origination Year Prior	932
Revolving Loans Amortized Cost Basis	332
Total	6,274
Business Loans [Member] | Doubtful [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Business Loans [Member] | Current period gross charge-offs [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Non- Owner Occupied CRE [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	14,099
Term Loans Amortized Costs Basis by Origination Year 2022	42,883
Term Loans Amortized Costs Basis by Origination Year 2021	27,143
Term Loans Amortized Costs Basis by Origination Year 2020	13,186
Term Loans Amortized Costs Basis by Origination Year 2019	10,364
Term Loans Amortized Costs Basis by Origination Year Prior	13,959
Revolving Loans Amortized Cost Basis	4,260
Total	125,894
Non- Owner Occupied CRE [Member] | Pass [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	14,099
Term Loans Amortized Costs Basis by Origination Year 2022	42,236
Term Loans Amortized Costs Basis by Origination Year 2021	27,143
Term Loans Amortized Costs Basis by Origination Year 2020	13,186
Term Loans Amortized Costs Basis by Origination Year 2019	7,964
Term Loans Amortized Costs Basis by Origination Year Prior	13,647
Revolving Loans Amortized Cost Basis	4,260
Revolving Loans Converted to Term
Total	122,535
Non- Owner Occupied CRE [Member] | Special Mention [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022	647
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total	647
Non- Owner Occupied CRE [Member] | Substandard [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019	2,400
Term Loans Amortized Costs Basis by Origination Year Prior	312
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total	2,712
Non- Owner Occupied CRE [Member] | Doubtful [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Non- Owner Occupied CRE [Member] | Current period gross charge-offs [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Consumer [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	2,173
Term Loans Amortized Costs Basis by Origination Year 2022	1,470
Term Loans Amortized Costs Basis by Origination Year 2021	610
Term Loans Amortized Costs Basis by Origination Year 2020	271
Term Loans Amortized Costs Basis by Origination Year 2019	65
Term Loans Amortized Costs Basis by Origination Year Prior	9
Revolving Loans Amortized Cost Basis	1,712
Total	6,310
Consumer [Member] | Current period gross charge-offs [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019	1
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total	1
Consumer [Member] | Performing [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	2,173
Term Loans Amortized Costs Basis by Origination Year 2022	1,470
Term Loans Amortized Costs Basis by Origination Year 2021	606
Term Loans Amortized Costs Basis by Origination Year 2020	270
Term Loans Amortized Costs Basis by Origination Year 2019	65
Term Loans Amortized Costs Basis by Origination Year Prior	9
Revolving Loans Amortized Cost Basis	1,694
Revolving Loans Converted to Term
Total	6,287
Consumer [Member] | Non-performing [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2021	4
Term Loans Amortized Costs Basis by Origination Year 2020	1
Term Loans Amortized Costs Basis by Origination Year 2019
Revolving Loans Amortized Cost Basis	18
Revolving Loans Converted to Term
Total	23
Home Equity [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	2,619
Term Loans Amortized Costs Basis by Origination Year 2022	19,904
Term Loans Amortized Costs Basis by Origination Year 2021	1,117
Term Loans Amortized Costs Basis by Origination Year 2020	635
Term Loans Amortized Costs Basis by Origination Year 2019	591
Term Loans Amortized Costs Basis by Origination Year Prior	2,226
Revolving Loans Amortized Cost Basis	72,314
Revolving Loans Converted to Term	2,702
Total	102,108
Home Equity [Member] | Current period gross charge-offs [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Home Equity [Member] | Performing [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	2,619
Term Loans Amortized Costs Basis by Origination Year 2022	19,904
Term Loans Amortized Costs Basis by Origination Year 2021	1,117
Term Loans Amortized Costs Basis by Origination Year 2020	635
Term Loans Amortized Costs Basis by Origination Year 2019	591
Term Loans Amortized Costs Basis by Origination Year Prior	2,226
Revolving Loans Amortized Cost Basis	72,314
Revolving Loans Converted to Term	2,702
Total	102,108
Residential Real Estate [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	69,466
Term Loans Amortized Costs Basis by Origination Year 2022	156,151
Term Loans Amortized Costs Basis by Origination Year 2021	109,332
Term Loans Amortized Costs Basis by Origination Year 2020	45,604
Term Loans Amortized Costs Basis by Origination Year 2019	32,845
Term Loans Amortized Costs Basis by Origination Year Prior	49,544
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total	462,942
Residential Real Estate [Member] | Current period gross charge-offs [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
Residential Real Estate [Member] | Performing [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	69,466
Term Loans Amortized Costs Basis by Origination Year 2022	156,151
Term Loans Amortized Costs Basis by Origination Year 2021	109,332
Term Loans Amortized Costs Basis by Origination Year 2020	45,604
Term Loans Amortized Costs Basis by Origination Year 2019	32,845
Term Loans Amortized Costs Basis by Origination Year Prior	49,429
Total	462,827
Residential Real Estate [Member] | Non-performing [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023
Term Loans Amortized Costs Basis by Origination Year 2022
Term Loans Amortized Costs Basis by Origination Year 2021
Term Loans Amortized Costs Basis by Origination Year 2020
Term Loans Amortized Costs Basis by Origination Year 2019
Term Loans Amortized Costs Basis by Origination Year Prior	115
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total	115
Commercial credit exposure [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	65,304	[1]
Term Loans Amortized Costs Basis by Origination Year 2022	195,320	[1]
Term Loans Amortized Costs Basis by Origination Year 2021	150,066	[1]
Term Loans Amortized Costs Basis by Origination Year 2020	74,331	[1]
Term Loans Amortized Costs Basis by Origination Year 2019	43,474	[1]
Term Loans Amortized Costs Basis by Origination Year Prior	133,752	[1]
Revolving Loans Amortized Cost Basis	60,358	[1]
Revolving Loans Converted to Term		[1]
Total	722,605	[1]
Payment Performance [Member]
Risk Rating
Term Loans Amortized Costs Basis by Origination Year 2023	74,258	[1]
Term Loans Amortized Costs Basis by Origination Year 2022	177,525	[1]
Term Loans Amortized Costs Basis by Origination Year 2021	111,059	[1]
Term Loans Amortized Costs Basis by Origination Year 2020	46,510	[1]
Term Loans Amortized Costs Basis by Origination Year 2019	33,501	[1]
Term Loans Amortized Costs Basis by Origination Year Prior	51,779	[1]
Revolving Loans Amortized Cost Basis	74,026	[1]
Revolving Loans Converted to Term	2,702	[1]
Total	$ 571,360	[1]

[1] Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Credit Risk Profile by Internally Assigned Grade $ in Thousands	Dec. 31, 2022 USD ($)
Financing Receivable, Credit Quality Indicator [Line Items]
Total	$ 662,097
Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	649,069
Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	6,544
Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	6,484
Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Agriculture Mortgages [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	221,167
Agriculture Mortgages [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	214,905
Agriculture Mortgages [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	1,966
Agriculture Mortgages [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	4,296
Agriculture Mortgages [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Agriculture Mortgages [Member] | Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Construction [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	86,793
Construction [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	83,240
Construction [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	3,553
Construction [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Construction [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Construction [Member] | Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Commercial and Industrial [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	87,528
Commercial and Industrial [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	85,977
Commercial and Industrial [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	893
Commercial and Industrial [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	658
Commercial and Industrial [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Commercial and Industrial [Member] | Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Tax-free Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	28,664
Tax-free Loans [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	28,664
Tax-free Loans [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Tax-free Loans [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Tax-free Loans [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Tax-free Loans [Member] | Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Agriculture Loans [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	27,122
Agriculture Loans [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	26,749
Agriculture Loans [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	132
Agriculture Loans [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	241
Agriculture Loans [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Agriculture Loans [Member] | Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Commercial Mortgages [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	210,823
Commercial Mortgages [Member] | Pass [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	209,534
Commercial Mortgages [Member] | Special Mention [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Commercial Mortgages [Member] | Substandard [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total	1,289
Commercial Mortgages [Member] | Doubtful [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total
Commercial Mortgages [Member] | Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Credit Quality Indicator [Line Items]
Total

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Credit Risk Profile by Payment Performance $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Financing Receivable, Past Due [Line Items]
Total	$ 526,356
Performing [Member]
Financing Receivable, Past Due [Line Items]
Total	525,540
Non-performing [Member]
Financing Receivable, Past Due [Line Items]
Total	816
1-4 Family Residential Mortgages [Member]
Financing Receivable, Past Due [Line Items]
Total	410,301
1-4 Family Residential Mortgages [Member] | Performing [Member]
Financing Receivable, Past Due [Line Items]
Total	409,854
1-4 Family Residential Mortgages [Member] | Non-performing [Member]
Financing Receivable, Past Due [Line Items]
Total	447
Home Equity Loans [Member]
Financing Receivable, Past Due [Line Items]
Total	11,937
Home Equity Loans [Member] | Performing [Member]
Financing Receivable, Past Due [Line Items]
Total	11,598
Home Equity Loans [Member] | Non-performing [Member]
Financing Receivable, Past Due [Line Items]
Total	339
Home Equity Lines of Credit [Member]
Financing Receivable, Past Due [Line Items]
Total	98,349
Home Equity Lines of Credit [Member] | Performing [Member]
Financing Receivable, Past Due [Line Items]
Total	98,349
Home Equity Lines of Credit [Member] | Non-performing [Member]
Financing Receivable, Past Due [Line Items]
Total
Consumer [Member]
Financing Receivable, Past Due [Line Items]
Total	5,769
Consumer [Member] | Performing [Member]
Financing Receivable, Past Due [Line Items]
Total	5,739
Consumer [Member] | Non-performing [Member]
Financing Receivable, Past Due [Line Items]
Total	$ 30

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Impaired Loans - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Schedule of Impaired Loans [Abstract]
Average recorded balance of impaired loans	$ 4,179	$ 3,533
Interest income recognized on impaired loans	$ 5	$ 13

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Impaired Loan Analysis $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Commercial real estate
With no related allowance recorded, Recorded Investment	$ 4,620
With no related allowance recorded, Unpaid Principal Balance	4,818
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment	4,620
Total by loan class, Unpaid Principal Balance	4,818
Total by loan class, Related Allowance
Commercial Real Estate [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment	4,430
With no related allowance recorded, Unpaid Principal Balance	4,619
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment	4,430
Total by loan class, Unpaid Principal Balance	4,619
Total by loan class, Related Allowance
Commercial Real Estate [Member] | Commercial Mortgages [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment	1,201
With no related allowance recorded, Unpaid Principal Balance	1,271
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment	1,201
Total by loan class, Unpaid Principal Balance	1,271
Total by loan class, Related Allowance
Commercial Real Estate [Member] | Agriculture Mortgages [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment	3,229
With no related allowance recorded, Unpaid Principal Balance	3,348
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment	3,229
Total by loan class, Unpaid Principal Balance	3,348
Total by loan class, Related Allowance
Commercial Real Estate [Member] | Construction [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment
With no related allowance recorded, Unpaid Principal Balance
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment
Total by loan class, Unpaid Principal Balance
Total by loan class, Related Allowance
Commercial and Industrial [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment	190
With no related allowance recorded, Unpaid Principal Balance	199
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment	190
Total by loan class, Unpaid Principal Balance	199
Total by loan class, Related Allowance
Commercial and Industrial [Member] | Commercial and Industrial [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment	190
With no related allowance recorded, Unpaid Principal Balance	199
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment	190
Total by loan class, Unpaid Principal Balance	199
Total by loan class, Related Allowance
Commercial and Industrial [Member] | Tax-free Loans [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment
With no related allowance recorded, Unpaid Principal Balance
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment
Total by loan class, Unpaid Principal Balance
Total by loan class, Related Allowance
Commercial and Industrial [Member] | Agriculture Loans [Member]
Commercial real estate
With no related allowance recorded, Recorded Investment
With no related allowance recorded, Unpaid Principal Balance
With no related allowance recorded, Related Allowance
Commercial real estate
With an allowance recorded, Recorded Investment
With an allowance recorded, Unpaid Principal Balance
With an allowance recorded, Related Allowance
Commercial real estate
Total by loan class, Recorded Investment
Total by loan class, Unpaid Principal Balance
Total by loan class, Related Allowance

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment - USD ($) $ in Thousands		3 Months Ended		6 Months Ended	18 Months Ended
		Jun. 30, 2023	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Agriculture [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance		$ 3,591
Impact of adopting ASC 326				3,537
Charge-offs
Recoveries				71
Provisions (Reductions)		75		58
Ending Balance		3,666		3,666
Business Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance		3,473
Impact of adopting ASC 326				3,382
Charge-offs
Recoveries		2		7
Provisions (Reductions)		(26)		60
Ending Balance		3,449		3,449
Consumer Loans [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance		270
Impact of adopting ASC 326				250
Charge-offs		(14)		(15)
Recoveries		1		1
Provisions (Reductions)		100		121
Ending Balance		357		357
Home Equity [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance		2,318
Impact of adopting ASC 326				2,129
Charge-offs
Recoveries
Provisions (Reductions)		21		210
Ending Balance		2,339		2,339
Non-Owner Occupied CRE [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance		942
Impact of adopting ASC 326				875
Charge-offs
Recoveries
Provisions (Reductions)		1		68
Ending Balance		943		943
Residential Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance		5,460
Impact of adopting ASC 326				4,658
Charge-offs
Recoveries		7		8
Provisions (Reductions)		612		1,413
Ending Balance		6,079		6,079
Allowance for credit losses [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance	[1]	16,054		14,151
Impact of adopting ASC 326	[1]			680
Charge-offs	[1]	(14)		(15)
Recoveries	[1]	10		87
Provisions (Reductions)	[1]	783		1,930
Ending Balance	[1]	16,833		16,833
Commercial Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance				6,074
Impact of adopting ASC 326				(6,074)
Charge-offs
Recoveries
Provisions (Reductions)
Ending Balance
Consumer Real Estate [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance				5,442
Impact of adopting ASC 326				(5,442)
Charge-offs
Recoveries
Provisions (Reductions)
Ending Balance
Commerical & Industrial [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance				2,151
Impact of adopting ASC 326				(2,151)
Charge-offs
Recoveries
Provisions (Reductions)			$ 193		$ 255
Ending Balance
Consumer [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance				67
Impact of adopting ASC 326				(67)
Charge-offs
Recoveries
Provisions (Reductions)			(16)		(28)
Ending Balance
Unallocated [Member]
Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses by Portfolio Segment [Line Items]
Beginning balance				417
Impact of adopting ASC 326				(417)
Charge-offs
Recoveries
Provisions (Reductions)			$ (28)		$ (172)
Ending Balance

[1] Refer to Note 1, Accounting Pronouncements Adopted in 2023 for details of reclassification of the portfolio segments related to adoption of ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses By Portfolio Segment - USD ($) $ in Thousands	3 Months Ended		6 Months Ended	18 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Allowance for credit losses:
Beginning balance	$ 12,979	$ 12,931
Charge-offs	(41)	(66)
Recoveries		14		$ 18
Provision		100		650
Ending balance	13,606	12,979		13,606
Consumer Real Estate [Member]
Allowance for credit losses:
Beginning balance	3,878	3,834
Charge-offs
Recoveries		3		3
Provision		41		834
Ending balance	4,715	3,878		4,715
Commercial and Industrial [Member]
Allowance for credit losses:
Beginning balance	2,315	2,112
Charge-offs	(41)
Recoveries		10		12
Provision		193		255
Ending balance	2,541	2,315		2,541
Consumer [Member]
Allowance for credit losses:
Beginning balance	71	87
Charge-offs		(1)
Recoveries		1		1
Provision		(16)		(28)
Ending balance	44	71		44
Unallocated [Member]
Allowance for credit losses:
Beginning balance	607	635
Charge-offs
Recoveries
Provision		(28)		(172)
Ending balance	435	607		435
Commercial Real Estate [Member]
Allowance for credit losses:
Beginning balance	6,108	6,263
Charge-offs		(65)
Recoveries				2
Provision		(90)		(239)
Ending balance	$ 5,871	$ 6,108		$ 5,871

XML

Loans and Allowance for Credit Losses (Details) - Schedule of Allowance for Credit Losses and Recorded Investment in Loans Receivable - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated	16,833	14,151
Loans receivable:
Loans receivable, Ending balance	1,293,965	1,188,453
Loans receivable, Ending balance: individually evaluated	3,318	4,620
Loans receivable, Ending balance: collectively evaluated	1,290,647	1,183,833
Agriculture [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated	3,666
Loans receivable:
Loans receivable, Ending balance	245,971
Loans receivable, Ending balance: individually evaluated	2,521
Loans receivable, Ending balance: collectively evaluated	243,450
Business Loans [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated	3,449
Loans receivable:
Loans receivable, Ending balance	350,740
Loans receivable, Ending balance: individually evaluated	797
Loans receivable, Ending balance: collectively evaluated	349,943
Consumer Loans [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated	357
Loans receivable:
Loans receivable, Ending balance	6,310
Loans receivable, Ending balance: individually evaluated
Loans receivable, Ending balance: collectively evaluated	6,310
Home Equity [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated	2,339
Loans receivable:
Loans receivable, Ending balance	102,108
Loans receivable, Ending balance: individually evaluated
Loans receivable, Ending balance: collectively evaluated	102,108
Non- Owner Occupied CRE [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated	943
Loans receivable:
Loans receivable, Ending balance	125,894
Loans receivable, Ending balance: individually evaluated
Loans receivable, Ending balance: collectively evaluated	125,894
Residential Real Estate [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated	6,079
Loans receivable:
Loans receivable, Ending balance	462,942
Loans receivable, Ending balance: individually evaluated
Loans receivable, Ending balance: collectively evaluated	$ 462,942
Consumer Real Estate [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated		5,442
Loans receivable:
Loans receivable, Ending balance		520,587
Loans receivable, Ending balance: individually evaluated
Loans receivable, Ending balance: collectively evaluated		520,587
Commercial and Industrial [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated		2,151
Loans receivable:
Loans receivable, Ending balance		143,314
Loans receivable, Ending balance: individually evaluated		190
Loans receivable, Ending balance: collectively evaluated		143,124
Consumer [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated		67
Loans receivable:
Loans receivable, Ending balance		5,769
Loans receivable, Ending balance: individually evaluated
Loans receivable, Ending balance: collectively evaluated		5,769
Unallocated [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated		417
Commercial Real Estate [Member]
Allowance for credit losses:
Allowance for credit losses, Ending balance: individually evaluated
Allowance for credit losses, Ending balance: collectively evaluated		6,074
Loans receivable:
Loans receivable, Ending balance		518,783
Loans receivable, Ending balance: individually evaluated		4,430
Loans receivable, Ending balance: collectively evaluated		$ 514,353

XML

Fair Value Presentation (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Fair Value Presentation (Details) [Line Items]
Impaired loans	$ 3,318,000	$ 4,620,000
CRA Investment Fund [Member]
Fair Value Presentation (Details) [Line Items]
Marketable equity securities, book value	7,516,000	7,345,000
Regulatory Bank Stock [Member]
Fair Value Presentation (Details) [Line Items]
Marketable equity securities, book value	1,716,000	1,685,000
Quoted Prices in Active Markets for Identical Assets (Level I) [Member] | Regulatory Bank Stock [Member]
Fair Value Presentation (Details) [Line Items]
Marketable equity securities, book value	$ 1,503,000	$ 1,773,000

XML

Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	$ 465,023	$ 538,260
U.S. Treasuries [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	17,765	32,657
U.S. Government Agencies [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	16,988	24,787
U.S. Agency Mortgage-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	42,506	45,307
U.S. Agency Collateralized Mortgage Obligations [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	20,644	27,490
Non-Agency MBS/CMO [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	50,152	50,250
Asset-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	68,541	73,234
Corporate Bonds [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	54,076	69,631
Obligations of states & political subdivisions [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	185,332	205,786
Equity Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	9,019	9,118
Level I [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	26,784	41,775
Level I [Member] | U.S. Treasuries [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	17,765	32,657
Level I [Member] | U.S. Government Agencies [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level I [Member] | U.S. Agency Mortgage-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level I [Member] | U.S. Agency Collateralized Mortgage Obligations [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level I [Member] | Non-Agency MBS/CMO [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level I [Member] | Asset-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level I [Member] | Corporate Bonds [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level I [Member] | Obligations of states & political subdivisions [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level I [Member] | Equity Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	9,019	9,118
Level II [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	438,239	496,485
Level II [Member] | U.S. Treasuries [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level II [Member] | U.S. Government Agencies [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	16,988	24,787
Level II [Member] | U.S. Agency Mortgage-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	42,506	45,307
Level II [Member] | U.S. Agency Collateralized Mortgage Obligations [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	20,644	27,490
Level II [Member] | Non-Agency MBS/CMO [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	50,152	50,250
Level II [Member] | Asset-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	68,541	73,234
Level II [Member] | Corporate Bonds [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	54,076	69,631
Level II [Member] | Obligations of states & political subdivisions [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)	185,332	205,786
Level II [Member] | Equity Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | U.S. Treasuries [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | U.S. Government Agencies [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | U.S. Agency Mortgage-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | U.S. Agency Collateralized Mortgage Obligations [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | Non-Agency MBS/CMO [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | Asset-Backed Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | Corporate Bonds [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | Obligations of states & political subdivisions [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)
Level III [Member] | Equity Securities [Member] | Fair Value Measured on a Recurring Basis [Member]
Fair Value Presentation (Details) - Schedule of Assets Measured on a Recurring Basis [Line Items]
Securities available for sale (at fair value)

XML

Fair Value Presentation (Details) - Schedule of Assets Measured on a Nonrecurring Basis - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets:
Individually analyzed loans	$ 3,318
Total	3,318	$ 4,620
Assets:
Impaired Loans		4,620
Level I [Member]
Assets:
Individually analyzed loans
Total
Assets:
Impaired Loans
Level II [Member]
Assets:
Individually analyzed loans
Total
Assets:
Impaired Loans
Level III [Member]
Assets:
Individually analyzed loans	3,318
Total	$ 3,318	4,620
Assets:
Impaired Loans		$ 4,620

XML

Fair Value Presentation (Details) - Schedule of Level III Fair Value Measurements - Impaired Loans [Member] - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		Jun. 30, 2023	Dec. 31, 2022
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total Fair Value, non-recurring (in Dollars)		$ 3,318	$ 4,620
Valuation Techniques	[1]	Appraisal of collateral	Appraisal of collateral
Minimum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Unobservable inputs - Appraisal adjustments	[2]	0.00%	0.00%
Unobservable inputs - Liquidation expenses	[2]	0.00%	0.00%
Maximum [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Unobservable inputs - Appraisal adjustments	[2]	20.00%	20.00%
Unobservable inputs - Liquidation expenses	[2]	10.00%	10.00%
Weighted Average [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Unobservable inputs - Appraisal adjustments	[2]	20.00%	20.00%
Unobservable inputs - Liquidation expenses	[2]	10.00%	10.00%

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various level III inputs which are not identifiable.

[2] Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

XML

Fair Value Presentation (Details) - Schedule of Financial Instruments not Required to be Measured or Reported at Fair Value - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Financial Assets:
Cash and cash equivalents	$ 61,081	$ 37,572	$ 54,612
Regulatory stock	7,843	6,670	6,145
Bank owned life insurance	35,197	34,805	35,780
Financial Liabilities:
Demand deposits	634,360	672,342	678,472
Total deposits	1,655,951	1,638,958	1,578,280
Short-term debt		16,000	20,000
Subordinated debt	39,476	39,396	$ 19,720
Carrying Amount [Member]
Financial Assets:
Cash and cash equivalents	61,081	37,572
Regulatory stock	7,843	6,670
Loans held for sale	652	5,927
Loans, net of allowance	1,279,669	1,176,966
Mortgage servicing assets	2,052	2,030
Accrued interest receivable	6,249	6,249
Bank owned life insurance	35,197	34,805
Financial Liabilities:
Demand deposits	634,360	672,342
Interest-bearing demand deposits	220,949	164,208
NOW accounts	109,257	139,846
Money market deposit accounts	164,431	163,836
Savings accounts	342,422	364,897
Time deposits	184,532	133,829
Total deposits	1,655,951	1,638,958
Short-term debt		16,000
Long-term debt	91,717	58,039
Subordinated debt	39,476	39,396
Accrued interest payable	1,169	597
Fair Value [Member]
Financial Assets:
Cash and cash equivalents	61,081	37,572
Regulatory stock	7,843	6,670
Loans held for sale	652	5,927
Loans, net of allowance	1,213,305	1,112,400
Mortgage servicing assets	2,880	2,894
Accrued interest receivable	6,249	6,249
Bank owned life insurance	35,197	34,805
Financial Liabilities:
Demand deposits	634,360	672,342
Interest-bearing demand deposits	220,949	164,208
NOW accounts	109,257	139,846
Money market deposit accounts	164,431	163,836
Savings accounts	342,422	364,897
Time deposits	180,390	129,422
Total deposits	1,651,809	1,634,551
Short-term debt		15,721
Long-term debt	90,066	56,431
Subordinated debt	33,447	35,975
Accrued interest payable	1,169	597
Quoted Prices in Active Markets for Identical Assets (Level I) [Member]
Financial Assets:
Cash and cash equivalents	61,081	37,572
Regulatory stock	7,843	6,670
Loans held for sale	652	5,927
Loans, net of allowance
Mortgage servicing assets
Accrued interest receivable	6,249	6,249
Bank owned life insurance	35,197	34,805
Financial Liabilities:
Demand deposits	634,360	672,342
Interest-bearing demand deposits	220,949	164,208
NOW accounts	109,257	139,846
Money market deposit accounts	164,431	163,836
Savings accounts	342,422	364,897
Time deposits
Total deposits	1,471,419	1,505,129
Long-term debt
Subordinated debt
Accrued interest payable	1,169	597
Significant Other Observable Inputs (Level II) [Member]
Financial Assets:
Cash and cash equivalents
Regulatory stock
Loans held for sale
Loans, net of allowance
Mortgage servicing assets
Accrued interest receivable
Bank owned life insurance
Financial Liabilities:
Demand deposits
Interest-bearing demand deposits
NOW accounts
Money market deposit accounts
Savings accounts
Time deposits
Total deposits
Long-term debt
Subordinated debt
Accrued interest payable
Significant Unobservable Inputs (Level III) [Member]
Financial Assets:
Cash and cash equivalents
Regulatory stock
Loans held for sale
Loans, net of allowance	1,213,305	1,112,400
Mortgage servicing assets	2,880	2,894
Accrued interest receivable
Bank owned life insurance
Financial Liabilities:
Demand deposits
Interest-bearing demand deposits
NOW accounts
Money market deposit accounts
Savings accounts
Time deposits	180,390	129,422
Total deposits	180,390	129,422
Short-term debt		15,721
Long-term debt	90,066	56,431
Subordinated debt	33,447	$ 35,975
Accrued interest payable

XML

Commitments and Contingent Liabilities (Details) $ in Millions	Jun. 30, 2023 USD ($)
Commitments and Contingent Liabilities (Details) [Line Items]
Commitment to extend credit	$ 598.8
Commitments to Extend Credit [Member]
Commitments and Contingent Liabilities (Details) [Line Items]
Commitment to extend credit	90.9
Line of Credit [Member]
Commitments and Contingent Liabilities (Details) [Line Items]
Commitment to extend credit	494.1
Letter of Credit [Member]
Commitments and Contingent Liabilities (Details) [Line Items]
Commitment to extend credit	$ 13.8

XML

Accumulated Other Comprehensive Income (Loss) (Details)	6 Months Ended
	Jun. 30, 2023
Accumulated Other Comprehensive Income (Loss) [Abstract]
Federal income tax rate percentage	21.00%

XML

Accumulated Other Comprehensive Income (Loss) (Details) - Schedule of Accumulated Other Comprehensive Income (Loss) - Unrealized Gains/(Losses) on Securities Available-for-Sale [Member] - USD ($) $ in Thousands		3 Months Ended
		Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022
Accumulated Other Comprehensive Income (Loss) (Details) - Schedule of Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	[1],[2]	$ (40,633)	$ (48,292)	$ (20,298)	$ 3,441
Other comprehensive loss before reclassifications	[1],[2]	(1,365)	7,335	(16,518)	(23,629)
Amount reclassified from accumulated other comprehensive income (loss)	[1],[2]	754	324		(110)
Period change	[1],[2]	(611)	7,659	(16,518)	(23,739)
Ending Balance	[1],[2]	$ (41,244)	$ (40,633)	$ (36,816)	$ (20,298)

[1] All amounts are net of tax.  Related income tax expense or benefit is calculated using a Federal income tax rate of 21%.

[2] Amounts in parentheses indicate debits.

XML

Accumulated Other Comprehensive Income (Loss) (Details) - Schedule of Accumulated Other Comprehensive Income (Loss) Components - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings	[1]			(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)		$ 265	$ 308	$ 661	$ 806
Related income tax benefit (expense)	[1]			Benefit/(Provision) for federal income taxes
Securities available-for-sale [Member]
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings	[1]			(Losses) gains on the sale of debt securities, net
Related income tax benefit (expense)	[1]			Benefit/(Provision) for federal income taxes
Reclassification out of Accumulated Other Comprehensive Income [Member]
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings	[1]			$ (954)
Related income tax benefit (expense)	[1]			200
Net effect on accumulated other comprehensive income (loss) for the period	[1]			(754)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Securities available-for-sale [Member]
Securities available-for-sale:
Net securities (losses) gains, reclassified into earnings	[1]			(1,364)	139
Related income tax benefit (expense)	[1]			286	(29)
Net effect on accumulated other comprehensive income (loss) for the period	[1]			$ (1,078)	$ 110

[1] Amounts in parentheses indicate debits.