10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

☑ Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

for the Quarterly Period Ended June 30, 2022. 

☐ Transition report pursuant to Section 13 or 15 (d) of the Exchange Act

For the Transition Period from                    to                   .

No. 0-17077

(Commission File Number)

PENNS WOODS BANCORP INC.

(Exact name of Registrant as specified in its charter) 

Pennsylvania	300 Market Street, P.O. Box 967	23-2226454
(State or other jurisdiction of	Williamsport	(I.R.S. Employer Identification No.)
incorporation or organization)	Pennsylvania	17703-0967
	(Address of principal executive offices)	(Zip Code)

(570) 322-1111

Registrant’s telephone number, including area code

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $5.55 par value	PWOD	The Nasdaq Global Select Market

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

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

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

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

If an emerging growth company, indicate by check mark if 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 ☒

On August 1, 2022 there were 7,052,242 shares of the Registrant’s common stock outstanding.

PENNS WOODS BANCORP, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

		Page
		Number
Part I	Financial Information
Item 1.	Financial Statements	3
Consolidated Balance Sheet (Unaudited) as of June 30, 2022 and December 31, 2021		3
Consolidated Statement of Income (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021		4
Consolidated Statement of Comprehensive (Loss) Income (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021		5
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021		6
Consolidated Statement of Cash Flows (Unaudited) for the Six Months Ended June 30, 2022 and 2021		8
Notes to Consolidated Financial Statements (Unaudited)		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
Part II	Other Information
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50
Signatures		51

2

Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

PENNS WOODS BANCORP, INC.

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	June 30,		December 31,
(In Thousands, Except Share And Per Share Data)	2022		2021
ASSETS:
Noninterest-bearing balances	$	26,540	$	19,233
Interest-bearing balances in other financial institutions	24,452		194,629
Federal funds sold	40,000		50,000
Total cash and cash equivalents	90,992		263,862
Investment debt securities, available for sale, at fair value	192,438		166,410
Investment equity securities, at fair value	1,186		1,288
Restricted investment in bank stock	13,458		14,531
Loans held for sale	3,857		3,725
Loans	1,489,132		1,392,147
Allowance for loan losses	(14,393)		(14,176)
Loans, net	1,474,739		1,377,971
Premises and equipment, net	32,671		34,025
Accrued interest receivable	8,246		8,048
Bank-owned life insurance	34,115		33,768
Investment in limited partnerships	4,901		4,607
Goodwill	17,104		17,104
Intangibles	396		480
Operating lease right-of-use asset	2,747		2,851
Deferred tax asset	5,689		2,946
Other assets	9,267		9,193
TOTAL ASSETS	$	1,891,806	$	1,940,809
LIABILITIES:
Interest-bearing deposits	$	1,065,291	$	1,126,955
Noninterest-bearing deposits	524,288		494,360
Total deposits	1,589,579		1,621,315
Short-term borrowings	5,464		5,747
Long-term borrowings	112,874		125,963
Accrued interest payable	452		651
Operating lease liability	2,800		2,898
Other liabilities	14,583		11,961
TOTAL LIABILITIES	1,725,752		1,768,535
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value, 3,000,000 shares authorized; no shares issued	—		—
Common stock, par value $5.55, 22,500,000 shares authorized; 7,559,165 and 7,550,272 shares issued; 7,048,940 and 7,070,047 outstanding	41,995		41,945
Additional paid-in capital	53,651		53,795
Retained earnings	92,903		89,761
Accumulated other comprehensive loss:
Net unrealized (loss) gain on available for sale securities	(6,222)		2,373
Defined benefit plan	(3,458)		(3,485)
Treasury stock at cost, 510,225 and 480,225	(12,815)		(12,115)
TOTAL SHAREHOLDERS' EQUITY	166,054		172,274
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,891,806	$	1,940,809

See accompanying notes to the unaudited consolidated financial statements.

3

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands, Except Share And Per Share Data)	2022		2021		2022		2021
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$	13,620	$	13,099	$	26,658	$	26,444
Investment securities:
Taxable	864		838		1,601		1,657
Tax-exempt	194		164		358		335
Dividend and other interest income	506		305		842		565
TOTAL INTEREST AND DIVIDEND INCOME	15,184		14,406		29,459		29,001
INTEREST EXPENSE:
Deposits	710		1,489		1,498		3,173
Short-term borrowings	2		2		3		4
Long-term borrowings	625		820		1,258		1,659
TOTAL INTEREST EXPENSE	1,337		2,311		2,759		4,836
NET INTEREST INCOME	13,847		12,095		26,700		24,165
PROVISION FOR LOAN LOSSES	330		350		480		865
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	13,517		11,745		26,220		23,300
NON-INTEREST INCOME:
Service charges	509		379		1,004		762
Net debt securities (losses) gains, available for sale	(10)		137		(12)		275
Net equity securities (losses) gains	(44)		3		(103)		(16)
Bank-owned life insurance	161		162		331		335
Gain on sale of loans	266		670		611		1,578
Insurance commissions	107		150		277		307
Brokerage commissions	158		207		358		426
Loan broker commissions	371		496		912		677
Debit card income	391		398		736		778
Other	228		307		435		401
TOTAL NON-INTEREST INCOME	2,137		2,909		4,549		5,523
NON-INTEREST EXPENSE:
Salaries and employee benefits	6,141		5,672		12,405		11,270
Occupancy	740		717		1,650		1,693
Furniture and equipment	746		971		1,638		1,780
Software amortization	219		208		472		406
Pennsylvania shares tax	396		372		785		724
Professional fees	582		684		1,120		1,267
Federal Deposit Insurance Corporation deposit insurance	228		264		430		485
Marketing	220		140		284		203
Intangible amortization	41		50		85		103
Other	1,107		1,170		2,558		2,268
TOTAL NON-INTEREST EXPENSE	10,420		10,248		21,427		20,199
INCOME BEFORE INCOME TAX PROVISION	5,234		4,406		9,342		8,624
INCOME TAX PROVISION	1,003		813		1,679		1,584
CONSOLIDATED NET INCOME	$	4,231	$	3,593	$	7,663	$	7,040
Less: Net income attributable to noncontrolling interest	—		5		—		11
NET INCOME ATTRIBUTABLE TO PENNS WOODS BANCORP, INC.	$	4,231	$	3,588	$	7,663	$	7,029
EARNINGS PER SHARE - BASIC	$	0.60	$	0.51	$	1.08	$	1.00
EARNINGS PER SHARE - DILUTED	$	0.60	$	0.51	$	1.08	$	1.00
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC	7,059,045		7,059,667		7,065,772		7,057,404
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED	7,059,045		7,059,667		7,065,772		7,057,404

See accompanying notes to the unaudited consolidated financial statements.

4

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Net Income	$	4,231	$	3,588	$	7,663	$	7,029
Other comprehensive income (loss):
Unrealized (loss) gain on available for sale securities	(3,995)		1,390		(10,892)		(521)
Tax effect	839		(292)		2,287		109
Net realized loss (gain) on available for sale securities included in net income	10		(137)		12		(275)
Tax effect	(2)		29		(2)		58
Amortization of unrecognized pension loss	18		47		35		93
Tax effect	(4)		(10)		(8)		(20)
Total other comprehensive (loss) income	(3,134)		1,027		(8,568)		(556)
Comprehensive (loss) income	$	1,097	$	4,615	$	(905)	$	6,473

See accompanying notes to the unaudited consolidated financial statements.

5

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

 Three months ended:

	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE LOSS		TREASURY STOCK		NON-CONTROLLING INTEREST		TOTAL SHAREHOLDERS’ EQUITY
(In Thousands, Except Share And Per Share Data)	SHARES	AMOUNT
Balance, March 31, 2022	7,554,567	$	41,969	$	54,191	$	90,928	$	(6,546)	$	(12,115)	$	—	$	168,427
Net income						4,231								4,231
Other comprehensive loss								(3,134)						(3,134)
Stock-based compensation				453										453
Cash settlement of options				(1,074)										(1,074)
Dividends declared ($0.32 per share)						(2,256)								(2,256)
Common shares issued for employee stock purchase plan	1,023	6		17										23
Director Compensation Plan	3,575	20		64										84
Purchase of treasury stock (30,000 shares)										(700)				(700)
Balance, June 30, 2022	7,559,165	$	41,995	$	53,651	$	92,903	$	(9,680)	$	(12,815)	$	—	$	166,054

	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE LOSS		TREASURY STOCK		NON-CONTROLLING INTEREST		TOTAL SHAREHOLDERS’ EQUITY
(In Thousands, Except Share And Per Share Data)	SHARES	AMOUNT
Balance, March 31, 2021	7,537,242	$	41,873	$	52,818	$	83,948	$	(2,465)	$	(12,115)	$	4	$	164,063
Net income						3,588						5		3,593
Other comprehensive income								1,027						1,027
Stock-based compensation				307										307
Dividends declared ($0.32 per share)						(2,255)								(2,255)
Common shares issued for employee stock purchase plan	1,045	6		19										25
Director Compensation Plan	3,340	18		61										79
Distributions to noncontrolling interest												(4)		(4)
Balance, June 30, 2021	7,541,627	$	41,897	$	53,205	$	85,281	$	(1,438)	$	(12,115)	$	5	$	166,835

See accompanying notes to the unaudited consolidated financial statements.

6

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

 Six months ended:

	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE LOSS		TREASURY STOCK		NON-CONTROLLING INTEREST		TOTAL SHAREHOLDERS’ EQUITY
(In Thousands, Except Share And Per Share Data)	SHARES	AMOUNT
Balance, December 31, 2021	7,550,272	$	41,945	$	53,795	$	89,761	$	(1,112)	$	(12,115)	$	—	$	172,274
Net income						7,663								7,663
Other comprehensive loss								(8,568)						(8,568)
Stock-based compensation				768										768
Cash settlement of options				(1,074)										(1,074)
Dividends declared ($0.64 per share)						(4,521)								(4,521)
Common shares issued for employee stock purchase plan	1,903	11		33										44
Director Compensation Plan	6,990	39		129										168
Purchase of treasury stock 30,000 shares)										(700)				(700)
Balance, June 30, 2022	7,559,165	$	41,995	$	53,651	$	92,903	$	(9,680)	$	(12,815)	$	—	$	166,054

	COMMON STOCK			ADDITIONAL PAID-IN CAPITAL		RETAINED EARNINGS		ACCUMULATED OTHER COMPREHENSIVE LOSS		TREASURY STOCK		NON-CONTROLLING INTEREST		TOTAL SHAREHOLDERS’ EQUITY
(In Thousands, Except Share And Per Share Data)	SHARES	AMOUNT
Balance, December 31, 2020	7,532,576	$	41,847	$	52,523	$	82,769	$	(882)	$	(12,115)	$	4	$	164,146
Net income						7,029						11		7,040
Other comprehensive loss								(556)						(556)
Stock-based compensation				527										527
Dividends declared ($0.64 per share)						(4,517)								(4,517)
Common shares issued for employee stock purchase plan	1,984	11		34										45
Director Compensation Plan	7,067	39		121										160
Distributions to noncontrolling interest												(10)		(10)
Balance, June 30, 2021	7,541,627	$	41,897	$	53,205	$	85,281	$	(1,438)	$	(12,115)	$	5	$	166,835

See accompanying notes to the unaudited consolidated financial statements.

7

PENNS WOODS BANCORP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED) 

	Six Months Ended June 30,
(In Thousands)	2022		2021
OPERATING ACTIVITIES:
Net Income	$	7,663	$	7,040
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,833		1,644
Write down of leasehold improvements	254		—
Amortization of intangible assets	85		103
Provision for loan losses	480		865
Stock based compensation	768		527
Accretion and amortization of investment security discounts and premiums	655		531
Net securities losses (gains), available for sale	12		(275)
Originations of loans held for sale	(21,248)		(55,058)
Proceeds of loans held for sale	21,727		56,948
Gain on sale of loans	(611)		(1,578)
Net equity securities losses	99		19
Net securities losses (gains), trading	4		(3)
Security trades payable	896		—
Earnings on bank-owned life insurance	(331)		(335)
Increase in deferred tax asset	(458)		(931)
Other, net	(1,453)		(2,556)
Net cash provided by operating activities	10,375		6,941
INVESTING ACTIVITIES:
Proceeds from sales of available for sale securities	—		13,574
Proceeds from calls and maturities of available for sale securities	7,500		7,566
Purchases of available for sale securities	(43,812)		(31,714)
Net (increase) decrease in loans	(97,345)		6,150
Acquisition of premises and equipment	(157)		(513)
Proceeds from the sale of premises and equipment	137		2
Proceeds from the sale of foreclosed assets	46		246
Purchase of bank-owned life insurance	(18)		(26)
Proceeds from bank-owned life insurance death benefit	2		—
Investment in limited partnership	(554)		(851)
Proceeds from redemption of regulatory stock	4,385		1,411
Purchases of regulatory stock	(3,312)		(1,154)
Net cash used for investing activities	(133,128)		(5,309)
FINANCING ACTIVITIES:
Net (decrease) increase in interest-bearing deposits	(61,664)		41,266
Net increase in noninterest-bearing deposits	29,928		27,987
Repayment of long-term borrowings	(13,000)		(15,000)
Net (decrease) increase in short-term borrowings	(283)		2,276
Finance lease principal payments	(89)		(77)
Dividends paid	(4,521)		(4,517)
Distributions to non-controlling interest	—		(10)
Issuance of common stock	212		205
Purchases of treasury stock	(700)		—
Net cash (used for) provided by financing activities	(50,117)		52,130
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(172,870)		53,762
CASH AND CASH EQUIVALENTS, BEGINNING	263,862		213,358
CASH AND CASH EQUIVALENTS, ENDING	$	90,992	$	267,120

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	2,958	$	4,987
Income taxes paid	1,121		2,375
Non-cash investing and financing activities:
Right-of-use lease assets obtained in exchange for lessee finance lease liabilities	—		2,653
Transfer of loans to foreclosed real estate	97		—

See accompanying notes to the unaudited consolidated financial statements.

8

PENNS WOODS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.  Basis of Presentation

The consolidated financial statements include the accounts of Penns Woods Bancorp, Inc. (the “Company”) and its wholly-owned subsidiaries: Woods Investment Company, Inc., Woods Real Estate Development Company, Inc., United Insurance Solutions, LLC., Luzerne Bank, and Jersey Shore State Bank (Jersey Shore State Bank and Luzerne Bank are referred to together as the “Banks”) and Jersey Shore State Bank’s wholly-owned subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group (“The M Group”).  All significant inter-company balances and transactions have been eliminated in the consolidation.

The interim financial statements are unaudited, but in the opinion of management reflect all adjustments necessary for the fair presentation of results for such periods.  The results of operations for any interim period are not necessarily indicative of results for the full year.  These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

In reference to the attached financial statements, all adjustments are of a normal recurring nature pursuant to Rule 10-01(b) (8) of Regulation S-X.

Note 2.  Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component shown net of tax and parenthesis indicating debits, as of June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
(In Thousands)	Net Unrealized (Loss) Gain on Available for Sale Securities		Defined Benefit  Plan		Total		Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total
Beginning balance	$	(3,074)	$	(3,472)	$	(6,546)	$	3,095	$	(5,560)	$	(2,465)
Other comprehensive (loss) gain before reclassifications	(3,156)		—		(3,156)		1,098		—		1,098
Amounts reclassified from accumulated other comprehensive (loss) gain	8		14		22		(108)		37		(71)
Net current-period other comprehensive (loss) income	(3,148)		14		(3,134)		990		37		1,027
Ending balance	$	(6,222)	$	(3,458)	$	(9,680)	$	4,085	$	(5,523)	$	(1,438)

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
(In Thousands)	Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total		Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total
Beginning balance	$	2,373	$	(3,485)	$	(1,112)	$	4,714	$	(5,596)	$	(882)
Other comprehensive loss before reclassifications	(8,605)		—		(8,605)		(412)		—		(412)
Amounts reclassified from accumulated other comprehensive gain (loss)	10		27		37		(217)		73		(144)
Net current-period other comprehensive (loss) income	(8,595)		27		(8,568)		(629)		73		(556)
Ending balance	$	(6,222)	$	(3,458)	$	(9,680)	$	4,085	$	(5,523)	$	(1,438)

9

The reclassifications out of accumulated other comprehensive loss shown, net of tax and parenthesis indicating debits to net income, as of June 30, 2022 and 2021 were as follows:

Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item  in the Consolidated  Statement of Income
	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Net unrealized (loss) gain on available for sale securities	$	(10)	$	137	Net debt securities (losses) gains, available for sale
Income tax effect	2		(29)		Income tax provision
Total reclassifications for the period	$	(8)	$	108
Net unrecognized pension costs	$	(18)	$	(47)	Other non-interest expense
Income tax effect	4		10		Income tax provision
Total reclassifications for the period	$	(14)	$	(37)

Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item  in the Consolidated  Statement of Income
	Six months ended June 30, 2022		Six months ended June 30, 2021
Net unrealized (losses) gain on available for sale securities	$	(12)	$	275	Net debt securities (losses) gains, available for sale
Income tax effect	2		(58)		Income tax provision
Total reclassifications for the period	$	(10)	$	217
Net unrecognized pension costs	$	(35)	$	(93)	Other non-interest expense
Income tax effect	8		20		Income tax provision
Total reclassifications for the period	$	(27)	$	(73)

Note 3.  Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative-effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This Update is effective for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has contracted with a third-party software vendor to assist with the development of our approach in determining the calculations under the new guidance. The Company is currently refining the expected credit losses calculation along with process documentation and data validation testing. We expect to recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of January 1, 2023. The Company recognizes that this one-time adjustment may be material but currently the impact to the financial statements is unknown.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Update is effective for smaller reporting companies and all other entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Derivatives, and Hedging (Topic 815); and Financial Instruments (Topic 825), which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. ASU 2019-04 makes

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clarifying amendments to certain financial instrument standards. For entities that have not yet adopted ASU 2016-13, the effective dates for the amendments related to ASU 2016-13 are the same as the effective dates in ASU 2016-13. For entities that have adopted ASU 2016-13, the amendments related to ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For entities that have not yet adopted ASU 2017-12 as of April 25, 2019, the effective dates for the amendments to Topic 815 are the same as the effective dates in ASU 2017-12. For entities that have adopted ASU 2017-12 as of April 25, 2019, the effective date is as of the beginning of the first annual period beginning after April 25, 2019. The amendments related to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326), which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted the credit losses standard, the ASU is effective when they implement the credit losses standard. For entities that already have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt ASU 2016-13.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. For entities that have not yet adopted ASU 2016-13 as of November 26, 2019, the effective dates for ASU 2019-11 are the same as the effective dates and transition requirements in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate reform” if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon

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issuance through December 31, 2022. It is too early to predict whether a new rate index replacement and the adoption of the ASU will have a material impact on the Company’s financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium. This ASU requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The amendments in this ASU are effective for public business entities that are not smaller reporting companies, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2020, the FASB issued ASU 2020-11, Financial Services – Insurance (Topic 944), which was made in consideration of the implications of the Coronavirus Disease 2019 (COVID-19) pandemic on an insurance entity’s ability to effectively implement the amendments in Accounting Standards Update No. 2018-12, Financial Services— Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The amendments in this Update defer the effective date of LDTI for all entities by one year, as (1) for public business entities that meet the definition of an SEC filer and are not SRCs, LDTI is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years; and (2) for all other entities, LDTI is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. This Update is not expected to have a significant impact on the Company’s financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842), which amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease. Furthermore, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate. For public business entities and certain not-for-profit entities and employee benefit plans that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years. For all other entities that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. All entities that have adopted ASC 842 are permitted to early adopt the amendments in ASU 2021-05. The amendments in ASU 2021-05 are effective as of the same date as the guidance in ASC 842 for entities that have not adopted ASC 842. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This amendment clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. It also introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments are effective for fiscal years beginning after

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December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The amendments will be applied prospectively, with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This Update is not expected to have a significant impact on the Company’s financial statements.

Note 4. Per Share Data

There are no convertible securities which would affect the denominator in calculating basic and dilutive earnings per share. There were a total of 919,250 stock options, with an average exercise price of $25.36, outstanding on June 30, 2022. These options were excluded, on a weighted average basis, in the computation of diluted earnings per share for the period due to the average market price of common shares of $23.78 being less than the exercise price of the options issued. There were a total of 1,075,775 stock options, with an average exercise price of $27.31 that were excluded, on a weighted average basis, in the computation of diluted earnings per share for the period due to the average market price of common shares of $24.43 being less than the strike price for the period ending June 30, 2021.

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average common shares issued	7,557,402	7,539,892	7,555,113	7,537,629
Weighted average treasury stock shares	(498,357)	(480,225)	(489,341)	(480,225)
Weighted average common shares outstanding - basic and diluted	7,059,045	7,059,667	7,065,772	7,057,404

Note 5. Investment Securities

The amortized cost, gross unrealized gains and losses, and fair values of our investment securities portfolio at June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In Thousands)	Cost		Gains		Losses		Value
Available for sale (AFS):
U.S. Government and agency securities	$	1,007	$	—	$	(27)	$	980
Mortgage-backed securities	1,520		—		(145)		1,375
State and political securities	150,303		203		(5,358)		145,148
Other debt securities	47,484		12		(2,561)		44,935
Total debt securities	$	200,314	$	215	$	(8,091)	$	192,438
Investment equity securities:
Equity securities	$	1,350	$	—	$	(164)	$	1,186

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In Thousands)	Cost		Gains		Losses		Value
Available for sale (AFS):
Mortgage-backed securities	$	1,752	$	—	$	(5)	$	1,747
State and political securities	113,852		3,500		(694)		116,658
Other debt securities	47,802		524		(321)		48,005
Total debt securities	$	163,406	$	4,024	$	(1,020)	$	166,410
Investment equity securities:
Equity securities	$	1,350	$	—	$	(62)	$	1,288

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The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual debt securities have been in a continuous unrealized loss position, at June 30, 2022 and December 31, 2021.

	June 30, 2022
	Less than Twelve Months				Twelve Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In Thousands)	Value		Losses		Value		Losses		Value		Losses
Available for sale (AFS):
U.S. Government and agency securities	$	980	$	(27)	$	—	$	—	$	980	$	(27)
Mortgage-backed securities	1,375		(145)		—		—		1,375		(145)
State and political securities	100,753		(3,945)		12,228		(1,413)		112,981		(5,358)
Other debt securities	35,886		(1,937)		6,731		(624)		42,617		(2,561)
Total debt securities	$	138,994	$	(6,054)	$	18,959	$	(2,037)	$	157,953	$	(8,091)

	December 31, 2021
	Less than Twelve Months				Twelve Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In Thousands)	Value		Losses		Value		Losses		Value		Losses
Available for sale (AFS):
Mortgage-backed securities	$	1,747	$	(5)	$	—	$	—	$	1,747	$	(5)
State and political securities	34,203		(398)		7,408		(296)		41,611		(694)
Other debt securities	21,446		(301)		1,808		(20)		23,254		(321)
Total debt securities	$	57,396	$	(704)	$	9,216	$	(316)	$	66,612	$	(1,020)

At June 30, 2022, there were a total of 209 securities in a continuous unrealized loss position for less than twelve months and 30 individual securities that were in a continuous unrealized loss position for twelve months or greater.

The Company reviews its position quarterly and has determined that, at June 30, 2022, the declines outlined in the above table represent temporary declines and the Company does not intend to sell, and does not believe it will be required to sell, these securities before recovery of their cost basis, which may be at maturity.  The Company has concluded that the unrealized losses disclosed above are not other than temporary but are the result of interest rate changes, sector credit ratings changes, or company-specific ratings changes that are not expected to result in the non-collection of principal and interest during the period.

The amortized cost and fair value of debt securities at June 30, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities since borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In Thousands)	Amortized Cost		Fair Value
Due in one year or less	$	12,892	$	12,827
Due after one year to five years	116,729		112,732
Due after five years to ten years	67,668		63,997
Due after ten years	3,025		2,882
Total	$	200,314	$	192,438

Total gross proceeds from sales of debt securities available for sale for the six months ended June 30, 2022 was $0, compared to $13,574,000 for the corresponding 2021 period.

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The following table represents gross realized gains and losses from the sales of debt securities available for sale:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Available for sale (AFS):
Gross realized gains:
U.S. Government and agency securities	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—
State and political securities	13		—		14		—
Other debt securities	—		137		—		275
Total gross realized gains	$	13	$	137	$	14	$	275
Gross realized losses:
State and political securities	$	23	$	—	$	26	$	—
Other debt securities	—		—		—		—
Total gross realized losses	$	23	$	—	$	26	$	—

There were no impairment charges included in gross realized losses for the three and six months ended June 30, 2022 and 2021, respectively.

Investment securities with a carrying value of approximately $171,435,000 and $139,435,000 at June 30, 2022 and December 31, 2021, respectively, were pledged to secure certain deposits, repurchase agreements, and for other purposes as required by law.

At June 30, 2022 and December 31, 2021, we had $1,186,000 and $1,288,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Net (losses) gains recognized in equity securities during the period	$	(44)	$	3	$	(103)	$	(16)
Less: Net gains realized on the sale of equity securities during the period	—		—		—		—
Unrealized (losses) gains recognized in equity securities held at reporting date	$	(44)	$	3	$	(103)	$	(16)

Note 6. Loans

Management segments the Banks' loan portfolio to a level that enables risk and performance monitoring according to similar risk characteristics.  Loans are segmented based on the underlying collateral characteristics.  Categories include commercial, financial, and agricultural, real estate, and installment loans.  Real estate loans are further segmented into three categories: residential, commercial, and construction, while installment loans are classified as either consumer automobile loans or other installment loans.

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The following table presents the related aging categories of loans, by segment, as of June 30, 2022 and December 31, 2021:

	June 30, 2022
			Past Due		Past Due 90
			30 To 89		Days Or More		Non-
(In Thousands)	Current		Days		& Still Accruing		Accrual		Total
Commercial, financial, and agricultural	$	178,479	$	103	$	3	$	418	$	179,003
Real estate mortgage:
Residential	648,960		2,006		351		642		651,959
Commercial	459,923		141		—		3,605		463,669
Construction	47,018		—		—		—		47,018
Consumer automobile loans	136,830		759		67		14		137,670
Other consumer installment loans	9,604		29		—		—		9,633
	1,480,814		$	3,038	$	421	$	4,679	1,488,952
Net deferred loan fees and discounts	180								180
Allowance for loan losses	(14,393)								(14,393)
Loans, net	$	1,466,601							$	1,474,739

	December 31, 2021
			Past Due		Past Due 90
			30 To 89		Days Or More		Non-
(In Thousands)	Current		Days		& Still Accruing		Accrual		Total
Commercial, financial, and agricultural	$	162,571	$	139	$	—	$	575	$	163,285
Real estate mortgage:
Residential	590,240		4,083		687		837		595,847
Commercial	442,573		224		—		3,937		446,734
Construction	36,701		554		—		40		37,295
Consumer automobile loans	138,775		490		143		—		139,408
Other consumer installment loans	9,199		47		31		—		9,277
	1,380,059		$	5,537	$	861	$	5,389	1,391,846
Net deferred loan fees and discounts	301								301
Allowance for loan losses	(14,176)								(14,176)
Loans, net	$	1,366,184							$	1,377,971

 

Impaired Loans

Impaired loans are loans for which it is probable the Banks will not be able to collect all amounts due according to the contractual terms of the loan agreement.  The Banks individually evaluate such loans for impairment and do not aggregate loans by major risk classifications.  The definition of “impaired loans” is not the same as the definition of “non-accrual loans,” although the two categories overlap.  The Banks may choose to place a loan on non-accrual status due to payment delinquency or uncertain collectability, while not classifying the loan as impaired. Factors considered by management in determining impairment include payment status and collateral value.  The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loan.  When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $100,000 and if the loan is either on non-accrual status or has a risk rating of substandard or worse.  Management may also elect to measure an individual loans of less than $100,000 for impairment on a case-by-case basis.

Mortgage loans on one-to-four family properties and consumer loans are measured for impairment collectively with the exception of loans identified as troubled debt restructurings. Loans that experience insignificant payment delays, which are

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defined as 90 days or less, generally are not classified as impaired.  Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances surrounding the loan and the borrower including the length of the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed.  Interest income for impaired loans is recorded consistent to the Banks' policy.

The following table presents the recorded investment, unpaid principal balance, and related allowance of impaired loans by segment as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Recorded		Unpaid Principal		Related
(In Thousands)	Investment		Balance		Allowance
With no related allowance recorded:
Commercial, financial, and agricultural	$	316	$	316	$	—
Real estate mortgage:
Residential	3,533		3,533		—
Commercial	2,725		2,725		—
Construction	—		—		—
Consumer automobile loans	—		—		—
Installment loans to individuals	—		—		—
	6,574		6,574		—
With an allowance recorded:
Commercial, financial, and agricultural	383		383		1
Real estate mortgage:
Residential	1,177		1,177		192
Commercial	4,573		4,573		842
Construction	—		—		—
Consumer automobile loans	14		14		14
Installment loans to individuals	19		19		19
	6,166		6,166		1,068
Total:
Commercial, financial, and agricultural	699		699		1
Real estate mortgage:
Residential	4,710		4,710		192
Commercial	7,298		7,298		842
Construction	—		—		—
Consumer automobile loans	14		14		14
Installment loans to individuals	19		19		19
	$	12,740	$	12,740	$	1,068

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	December 31, 2021
	Recorded		Unpaid Principal		Related
(In Thousands)	Investment		Balance		Allowance
With no related allowance recorded:
Commercial, financial, and agricultural	$	355	$	355	$	—
Real estate mortgage:
Residential	3,874		3,874		—
Commercial	3,105		3,105		—
Construction	105		105		—
Consumer automobile loans	—		—		—
Installment loans to individuals	—		—		—
	7,439		7,439		—
With an allowance recorded:
Commercial, financial, and agricultural	534		3,321		2
Real estate mortgage:
Residential	1,178		1,178		201
Commercial	4,814		4,814		800
Construction	—		—		—
Consumer automobile loans	—		—		—
Installment loans to individuals	20		20		20
	6,546		9,333		1,023
Total:
Commercial, financial, and agricultural	889		3,676		2
Real estate mortgage:
Residential	5,052		5,052		201
Commercial	7,919		7,919		800
Construction	105		105		—
Consumer automobile loans	—		—		—
Installment loans to individuals	20		20		20
	$	13,985	$	16,772	$	1,023

The following table presents the average recorded investment in impaired loans and related interest income recognized for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022						2021
(In Thousands)	Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans		Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans
Commercial, financial, and agricultural	$	758	$	5	$	—	$	1,641	$	2	$	—
Real estate mortgage:
Residential	4,773		48		—		5,504		89		—
Commercial	7,446		49		—		9,865		35		—
Construction	32		—		—		118		2		—
Consumer automobile	7		1		—		76		—		—
Other consumer installment loans	19		—		—		10		9		—
	$	13,035	$	103	$	—	$	17,214	$	137	$	—

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	Six Months Ended June 30,
	2022						2021
(In Thousands)	Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans		Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans
Commercial, financial, and agricultural	$	801	$	10	$	—	$	1,382	$	30	$	—
Real estate mortgage:
Residential	4,866		94		—		5,775		98		—
Commercial	7,605		101		—		9,703		65		—
Construction	56		1		—		120		3		—
Consumer automobile	5		1		—		50		—		—
Other consumer installment loans	19		—		—		6		9		—
	$	13,352	$	207	$	—	$	17,036	$	205	$	—

Troubled Debt Restructurings

The loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (“TDR”), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties.  These concessions typically result from loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions.  Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

There were no loan modifications considered to be TDRs completed during the three and six months ended June 30, 2022, respectively. There were three and five loan modifications considered TDRs completed during the three and six months ended June 30, 2021. Loan modifications that are considered TDRs completed during the three and six months ended June 30, 2021 were as follows:

	Three Months Ended June 30,
		2021
(In Thousands, Except Number of Contracts)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial, financial, and agricultural		1	$	949	$	949
Real estate mortgage:
Residential		1	178		178
Commercial		1	730		730
Construction		—	—		—
		3	$	1,857	$	1,857

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	Six Months Ended June 30,
		2021
(In Thousands, Except Number of Contracts)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial, financial, and agricultural		1	$	949	$	949
Real estate mortgage:
Residential		2	865		865
Commercial		2	855		855
Construction		—	—		—
		5	$	2,669	$	2,669

There was no loan modification considered to be a TDR made during the twelve months prior to June 30, 2022 that defaulted during the six months ended June 30, 2022. There was one loan modification considered to be a TDR made during the twelve months previous to June 30, 2021 that defaulted during the six months ended June 30, 2021. The defaulted loan type and recorded investments at June 30, 2021 were as follows: one residential real estate loan with a recorded investment of $687,000.

Troubled debt restructurings amounted to $8,692,000 and $9,410,000 as of June 30, 2022 and December 31, 2021, respectively.

The amount of foreclosed residential real estate held at June 30, 2022 and December 31, 2021, totaled $127,000 and $339,000, respectively. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process at June 30, 2022 and December 31, 2021, totaled $165,000 and $193,000, respectively.

The Company began offering short-term loan modifications to provide relief to borrowers during the COVID-19 national emergency. The CARES Act, along with a joint agency statement issued by federal and state banking agencies, provides that short-term modifications made in a good faith basis in response to COVID-19 to loans that are current at the time the modification program is implemented do not need to be accounted for as TDRs. Loan modifications and payment deferrals have been at historically high levels as the impact of the pandemic continues. As of June 30, 2022, the loan modification/deferral program in place has generated deferrals of up to 180 days that have been granted on 1,372 loans with no loan remaining in its deferral period. As of June 30, 2021, the loan modification/deferral program in place had generated deferrals of up to 180 days that were granted on 1,365 loans with 20 loans remaining in their deferral period with an aggregate outstanding balance of $7,931,000.These loan modifications met applicable requirements to not be considered TDRs. The Economic Aid to Hard-Hit Small Businesses, Non-profits and Venues Act (the “Economic Aid Act”) passed in December 2020 extended the CARES Act provisions permitting financial institutions to suspend TDR assessment and reporting requirements under generally accepted accounting principles until the earlier of 60 days after the date that the President terminates the COVID-19 national emergency or January 1, 2022.

Internal Risk Ratings

Management uses a ten point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a substandard classification. Loans in the substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are evaluated for substandard classification.  Loans in the doubtful category exhibit the same weaknesses found in the substandard loans; however, the weaknesses are more pronounced.  Such loans are static and collection in full is improbable.  However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.  Loans classified as loss are considered uncollectible and charge-off is imminent.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Banks have a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the pass category unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  An external semi-annual loan review of large commercial relationships is performed, as well as a sample of smaller transactions. The 2022 loan review will evaluate 55% of the Banks' average outstanding commercial portfolio which can consist of outstanding loans, commercial real estate mortgages and outstanding

20

commitments. Detailed reviews, including plans for resolution, are performed on loans classified as substandard, doubtful, or loss on a quarterly basis.

The following table presents the credit quality categories identified above as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment loans
(In Thousands)			Residential		Commercial		Construction						Totals
Pass	$	176,987	$	648,929	$	450,530	$	46,914	$	137,656	$	9,614	$	1,470,630
Special Mention	180		273		5,147		—		—		—		5,600
Substandard	1,836		2,757		7,992		104		14		19		12,722
	$	179,003	$	651,959	$	463,669	$	47,018	$	137,670	$	9,633	$	1,488,952

	December 31, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment loans
(In Thousands)			Residential		Commercial		Construction						Totals
Pass	$	160,899	$	592,570	$	432,158	$	36,511	$	139,408	$	9,257	$	1,370,803
Special Mention	234		284		6,108		676		—		—		7,302
Substandard	2,152		2,993		8,468		108		—		20		13,741
	$	163,285	$	595,847	$	446,734	$	37,295	$	139,408	$	9,277	$	1,391,846

Allowance for Loan Losses

An allowance for loan losses (“ALL”) is maintained to absorb losses from the loan portfolio.  The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated future loss experience, and the amount of non-performing loans.

The Banks' methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (previously discussed) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.  The total of the two components represents the Banks' ALL.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  Allowances are segmented based on collateral characteristics previously disclosed, and consistent with credit quality monitoring.  Loans that are collectively evaluated for impairment are grouped into two classes for evaluation.  A general allowance is determined for “Pass” rated credits, while a separate pool allowance is provided for “Criticized” rated credits that are not individually evaluated for impairment.

For the general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.  A historical charge-off factor is calculated utilizing a twelve quarter moving average.  However, management may adjust the moving average time frame by up to four quarters to adjust for variances in the economic cycle. Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Loans in the criticized pools, which possess certain qualities or characteristics that may lead to collection and loss issues, are closely monitored by management and subject to additional qualitative factors.  Management also monitors industry loss factors by loan segment for applicable adjustments to actual loss experience.

Management reviews the loan portfolio on a quarterly basis in order to make appropriate and timely adjustments to the ALL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

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Activity in the allowance is presented for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,936	$	4,801	$	5,215	$	197	$	1,376	$	114	$	384	$	14,023
Charge-offs	—		(15)		—		—		(48)		(43)		—		(106)
Recoveries	41		42		1		28		13		21		—		146
Provision	131		(10)		179		(26)		(34)		18		72		330
Ending Balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393

	Three Months Ended June 30, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	2,606	$	4,401	$	4,176	$	142	$	1,735	$	235	$	907	$	14,202
Charge-offs	—		(129)		—		—		(127)		(28)		—		(284)
Recoveries	9		109		25		—		15		12		—		170
Provision	(769)		238		235		70		201		(175)		550		350
Ending Balance	$	1,846	$	4,619	$	4,436	$	212	$	1,824	$	44	$	1,457	$	14,438

 

t	Six Months Ended June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,946	$	4,701	$	5,336	$	179	$	1,411	$	111	$	492	$	14,176
Charge-offs	—		(15)		(155)		—		(177)		(103)		—		(450)
Recoveries	45		45		2		28		22		45		—		187
Provision	117		87		212		(8)		51		57		(36)		480
Ending Balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393

	Six Months Ended June 30, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,936	$	4,460	$	3,635	$	134	$	1,906	$	261	$	1,471	$	13,803
Charge-offs	(35)		(143)		—		—		(223)		(57)		—		(458)
Recoveries	14		112		25		5		32		40		—		228
Provision	(69)		190		776		73		109		(200)		(14)		865
Ending Balance	$	1,846	$	4,619	$	4,436	$	212	$	1,824	$	44	$	1,457	$	14,438

The shift in allocation and the decrease in the loan provision is primarily due to changes in the credit metrics within the loan portfolio and decreasing economic uncertainty caused by the COVID-19 pandemic including supply chain disruptions.

The Company grants commercial, industrial, residential, and installment loans to customers primarily throughout north-east and central Pennsylvania. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on the economic conditions within this region.

The Company has a concentration of the following to gross loans at June 30, 2022 and 2021: 

	June 30,
	2022		2021
Owners of residential rental properties	19.65	%	18.15	%
Owners of commercial rental properties	16.11	%	13.54	%

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The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer Automobile		Other consumer installment		Unallocated
(In Thousands)			Residential		Commercial		Construction								Totals
Allowance for Loan Losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	192	$	842	$	—	$	14	$	19	$	—	$	1,068
Collectively evaluated for impairment	2,107		4,626		4,553		199		1,293		91		456		13,325
Total ending allowance balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393
Loans:
Individually evaluated for impairment	$	699	$	4,710	$	7,298	$	—	$	14	$	19			$	12,740
Collectively evaluated for impairment	178,304		647,249		456,371		47,018		137,656		9,614				1,476,212
Total ending loans balance	$	179,003	$	651,959	$	463,669	$	47,018	$	137,670	$	9,633			$	1,488,952

	December 31, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer Automobile		Other consumer installment		Unallocated
(In Thousands)			Residential		Commercial		Construction								Totals
Allowance for Loan Losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2	$	201	$	800	$	—	$	—	$	20	$	—	$	1,023
Collectively evaluated for impairment	1,944		4,500		4,536		179		1,411		91		492		13,153
Total ending allowance balance	$	1,946	$	4,701	$	5,336	$	179	$	1,411	$	111	$	492	$	14,176
Loans:
Individually evaluated for impairment	$	889	$	5,052	$	7,919	$	105	$	—	$	20			$	13,985
Collectively evaluated for impairment	162,396		590,795		438,815		37,190		139,408		9,257				1,377,861
Total ending loans balance	$	163,285	$	595,847	$	446,734	$	37,295	$	139,408	$	9,277			$	1,391,846

Note 7.  Net Periodic Benefit Cost-Defined Benefit Plans

For a detailed disclosure on the Company’s pension and employee benefits plans, please refer to Note 13 of the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2021.

The following sets forth the components of the net periodic expense/(gain) of the domestic non-contributory defined benefit plan for the three and six months ended June 30, 2022 and 2021, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Interest cost	$	138	$	127	$	276	$	254
Expected return on plan assets	(413)		(386)		(825)		(772)
Amortization of net loss	18		47		35		93
Net periodic benefit	$	(257)	$	(212)	$	(514)	$	(425)

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Employer Contributions

The Company previously disclosed in its consolidated financial statements, included in the Annual Report on Form 10-K for the year ended December 31, 2021, that it does not expect to contribute to its defined benefit plan in 2022.  As of June 30, 2022, there were no contributions made to the pension plan.

Note 8.  Stock Purchase Plans

The Company maintains an Employee Stock Purchase Plan (“Plan”).  The Plan is intended to encourage employee participation in the ownership and economic progress of the Company.  The Plan allows for up to 1,500,000 shares to be purchased by employees.  The purchase price of the shares is 95% of market value with an employee eligible to purchase up to the lesser of 15% of base compensation or $12,000 in market value annually.  During the six months ended June 30, 2022 and 2021, there were 1,903 and 1,984 shares issued under the Plan, respectively, for total proceeds of $44,000 and $45,000.

The Company maintains the 2020 Non-Employee Director Compensation Plan ("Director Plan"). Under this Director Plan, non-employee directors who have not attained specified stock ownership levels are required to receive a portion of their annual compensation in the form of common stock (currently 50%of total annual compensation), with the ability to elect to receive up to 100% of annual compensation in the form of common stock by making a written election prior to the calendar year to which the compensation relates. The Director Plan allows for up to 100,000 shares to be issued. As of June 30 2022, the Company has issued a total of 28,700 shares of common stock to non-employee directors under the Director Plan in lieu of otherwise payable cash compensation with 6,990 and 7,067 shares issued during the six months ended June 30, 2022 and 2021.

Note 9.  Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments are primarily comprised of commitments to extend credit, standby letters of credit, and credit exposure from the sale of assets with recourse.  These instruments involve, to varying degrees, elements of credit, interest rate, or liquidity risk in excess of the amount recognized in the Consolidated Balance Sheet.  The contract amounts of these instruments express the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss from nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments.  The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.  The Company may require collateral or other security to support financial instruments with off-balance sheet credit risk.

Financial instruments whose contract amounts represent credit risk are as follows at June 30, 2022 and December 31, 2021:

(In Thousands)	June 30, 2022		December 31, 2021
Commitments to extend credit	$	211,827	$	184,364
Standby letters of credit	9,942		7,027
Credit exposure from the sale of assets with recourse	10,339		10,248
	$	232,108	$	201,639

Commitments to extend credit are legally binding agreements to lend to customers.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of fees.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future liquidity requirements.  The Company evaluates each customer’s credit worthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary by the Company, on an extension of credit is based on management’s credit assessment of the counterparty.

Standby letters of credit represent conditional commitments issued by the Company to guarantee the performance of a customer to a third party.  These instruments are issued primarily to support bid or performance related contracts.  The coverage period for these instruments is typically a one year period with an annual renewal option subject to prior approval by management.  Fees earned from the issuance of these letters are recognized upon expiration of the coverage period.  For secured letters of credit, the collateral is typically Bank deposit instruments or customer business assets.

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Note 10.  Fair Value Measurements

The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value.

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

This hierarchy requires the use of observable market data when available.

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value on a recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	June 30, 2022
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
U.S. Government and agency securities	$	—	$	980	$	—	$	980
Mortgage-backed securities	—		1,375		—		1,375
State and political securities	—		145,148		—		145,148
Other debt securities	—		44,935		—		44,935
Investment equity securities:
Equity securities	1,186		—		—		1,186

	December 31, 2021
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
Mortgage-backed securities	$	—	$	1,747	$	—	$	1,747
State and political securities	—		116,658		—		116,658
Other debt securities	—		48,005		—		48,005
Investment equity securities:
Equity securities	1,288		—		—		1,288

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value on a non-recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 

	June 30, 2022
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	2,041	$	2,041
Other real estate owned	—		—		127		127

25

	December 31, 2021
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	2,360	$	2,360
Other real estate owned	—		—		83		83

The following tables present a listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques as of June 30, 2022 and December 31, 2021: 

	June 30, 2022
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	2,041		Appraisal of collateral (1)	Appraisal adjustments (1)	0% to (20)%	(3)%
Other real estate owned	$	127	Appraisal of collateral (1)	Appraisal adjustments (1)	(20)%	(20)%

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

	December 31, 2021
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	2,360		Appraisal of collateral (1)	Appraisal adjustments (1)	0% to (34)%	(15)%
Other real estate owned	$	83	Appraisal of collateral (1)	Appraisal adjustments (1)	(20)%	(20)%

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

The discounted cash flow valuation technique is utilized to determine the fair value of performing impaired loans, while non-performing impaired loans utilize the appraisal of collateral method.

The significant unobservable input used in the fair value measurement of the Company’s impaired loans using the appraisal of collateral valuation technique include appraisal adjustments, which are adjustments to appraisals by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The significant unobservable input used in the fair value measurement of the Company’s other real estate owned are the same inputs used to value impaired loans using the appraisal of collateral valuation technique. 

Note 11. Fair Value of Financial Instruments

The Company is required to disclose fair values for its financial instruments.  Fair values are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Also, it is the Company’s general practice and intention to hold most of its financial instruments to maturity and not to engage in trading or sales activities.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.  These fair values are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions can significantly affect the fair values.

Fair values have been determined by the Company using historical data and an estimation methodology suitable for each category of financial instruments.  The Company’s fair values are set forth below for the Company’s other financial instruments.

As certain assets and liabilities, such as deferred tax assets, premises and equipment, and many other operational elements of the Company, are not considered financial instruments but have value, this fair value of financial instruments would not represent the full market value of the Company.

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The fair values of the Company’s financial instruments not recorded at fair value on a recurring or nonrecurring basis are as follows at June 30, 2022 and December 31, 2021:

	Carrying		Fair		Fair Value Measurements at June 30, 2022
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:
Loans held for sale (1)	$	3,857	$	3,857	$	3,857	$	—	$	—
Loans, net	1,474,739		1,420,867		—		—		1,420,867
Financial liabilities:
Time deposits	153,679		145,812		—		—		145,812
Short-term borrowings	5,464		5,464		5,464		—		—
Long-term borrowings	112,874		108,433		—		—		108,433

(1) The financial instrument is carried at cost at, June 30, 2022 which approximate the fair value of the instruments

	Carrying		Fair		Fair Value Measurements at December 31, 2021
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:
Loans held for sale (1)	$	3,725	$	3,725	$	3,725	$	—	$	—
Loans, net	1,377,971		1,379,787		—		—		1,379,787
Financial liabilities:
Time deposits	205,367		204,512		—		—		204,512
Short-term borrowings	5,747		5,747		5,747		—		—
Long-term borrowings	125,963		127,679		—		—		127,679

(1) The financial instrument is carried at cost at, December 31, 2021 which approximate the fair value of the instruments

The methods and assumptions used by the Company in estimating fair values of financial instruments is in accordance with ASC Topic 825, Financial Instruments, as amended by ASU 2016-01 which requires public entities to use exit pricing in the calculation of the above tables.

Note 12.  Stock Options

In 2020, the Company adopted the 2020 Equity Incentive Plan which replaced the 2014 Equity Incentive Plan that did not have any remaining shares available for issuance. The plans are designed to help the Company attract, retain, and motivate employees and non-employee directors. Incentive stock options, non-qualified stock options, restricted stock, restricted stock units, and other equity-based awards may be granted as part of the plan.

As of January 1, 2022, the Company had a total of 1,034,525 stock options outstanding. During the period ended June 30, 2022, the Company issued 234,000 stock options with a strike price of $24.10 to a group of employees. The options granted in 2022 all expire ten years from the grant date. Of the 234,000 grants awarded in 2022, 156,000 of the options vest in three years while the 78,000 remaining options vest in five years. During the period ended June 30, 2022, a voluntary cash settlement of 346,725 outstanding stock options with an average strike price of $30.07 was initiated. The repurchase price per outstanding share ranged from $1.4770 to $3.3685 as determined by the utilization of a Black Scholes valuation methodology.

27

Stock Options Granted
Date	Shares	Forfeited	Cash Settlement	Outstanding	Strike Price		Vesting Period	Expiration
January 18, 2022	156,000	—	—	156,000	$	24.10	3 years	10 years
January 18, 2022	78,000	—	—	78,000	24.10		5 years	10 years
April 9, 2021	156,500	—	—	156,500	24.23		3 years	10 years
April 9, 2021	78,000	—	—	78,000	24.23		5 years	10 years
March 11, 2020	119,300	—	—	119,300	25.34		3 years	10 years
March 11, 2020	119,200	—	—	119,200	25.34		5 years	10 years
March 15, 2019	120,900	(15,600)	—	105,300	28.01		3 years	10 years
March 15, 2019	119,100	(15,150)	—	103,950	28.01		5 years	10 years
August 24, 2018	75,300	(11,850)	(63,450)	—	30.67		3 years	10 years
August 24, 2018	149,250	(23,850)	(125,400)	—	30.67		5 years	10 years
January 5, 2018	18,750	—	(18,750)	—	30.07		3 years	10 years
January 5, 2018	18,750	—	(18,750)	—	30.07		5 years	10 years
March 24, 2017	69,375	(11,250)	(58,125)	—	29.47		3 years	10 years
March 24, 2017	35,625	(2,250)	(33,375)	—	29.47		5 years	10 years
August 27, 2015	58,125	(26,250)	(28,875)	3,000	28.02		5 years	10 years

A summary of stock option activity is presented below:

	June 30, 2022
	Shares	Weighted Average Exercise Price
Outstanding, beginning of year	1,034,525	$	27.23
Granted	234,000	24.10
Cash settlement	(346,725)	30.07
Forfeited	(2,550)	29.10
Expired	—	—
Outstanding, end of period	919,250	$	25.36
Exercisable, end of period	108,300	$	28.01

The estimated fair value of options, including the effect of estimated forfeitures, is recognized as expense on a straightline basis over the options’ vesting periods while ensuring that the cumulative amount of compensation cost recognized at least equals the value of the vested portion of the award at that date.

The fair value of stock options is estimated using the Black-Scholes option pricing model. The following is a summary of the assumptions used in this model for stock options granted for the six months ended June 30, 2022:

	Six months ended June 30,
	2022
Risk-free interest rate	1.23		%
Expected volatility	33		%
Expected Annual dividend	$	1.28
Expected life	6.84 years
Weighted average grant date fair value per option	$	4.28

28

Compensation expense for stock options is recognized using the fair value when the stock options are granted and is amortized over the options' vesting period. Compensation expense related to stock options was $768,000 for the six months ended June 30, 2022 compared to $527,000 for the same period of 2021. The expense level for the six months ended June 30, 2022 was impacted by the voluntary cash settlement of 346,725 stock options which resulted in $183,000 in additional compensation expense and a reduction in additional paid-in capital of $1,074,000. As of June 30, 2022, a total of 108,300 stock options were exercisable and the weighted average years to expiration of these options was 7.21 years. Total unrecognized compensation cost for non-vested options was $2,088,000 and will be recognized over their weighted average remaining vesting period of 1.35 years.

Note 13.  Leases

The following table shows finance lease right of use assets and finance lease liabilities as of:

(In Thousands)	Statement of Financial Condition classification	June 30, 2022		December 31, 2021
Finance lease right of use assets	Premises and equipment, net	$	7,220	$	7,435
Finance lease liabilities	Long-term borrowings	7,874		7,963

The following table shows the components of finance and operating lease expense for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Finance Lease Cost:
Amortization of right-of-use asset	$	107	$	107	$	215	$	259
Interest expense	62		62		123		133
Operating lease cost	71		74		143		150
Variable lease cost	—		—		—		—
Total Lease Cost	$	240	$	243	$	481	$	542

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(In Thousands)	Operating		Finance
2022	$	146	$	210
2023	265		421
2024	255		427
2025	257		929
2026	260		387
2027 and thereafter	2,568		9,276
Total undiscounted cash flows	3,751		11,650
Discount on cash flows	(951)		(3,776)
Total lease liability	$	2,800	$	7,874

The following table shows the weighted average remaining lease term and weighted average discount rate for both operating and finance leases outstanding as of June 30, 2022.

	Operating		Finance
Weighted-average term (years)	17.3		23.9
Weighted-average discount rate	3.54	%	3.20	%

29

Note 14.  Reclassification of Comparative Amounts

Certain comparative amounts for the prior period have been reclassified to conform to current period presentations. Such reclassifications had no effect on net income or shareholders’ equity.

30

CAUTIONARY STATEMENT FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Report contains certain “forward-looking statements” including statements concerning plans, objectives, future events or performance and assumptions and other statements which are other than statements of historical fact.  The Company cautions readers that the following important factors, among others, may have affected and could in the future affect the Company’s actual results and could cause the Company’s actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company herein:  (i) the effect of changes in laws and regulations, including federal and state banking laws and regulations, with which the Company must comply, and the associated costs of compliance with such laws and regulations either currently or in the future as applicable; (ii) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies as well as by the Financial Accounting Standards Board, or of changes in the Company’s organization, compensation and benefit plans; (iii) the effect on the Company’s competitive position within its market area of the  increasing consolidation within the banking and financial services industries, including the increased competition from larger regional and out-of-state banking organizations as well as non-bank providers of various financial services; (iv) the effect of changes in interest rates; (v) the negative impacts and disruptions of the COVID-19 pandemic and measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; (vi) the length and extent of the economic contraction as a result of the COVID-19 pandemic; or (vii) the effect of changes in the business cycle and downturns in the local, regional or national economies, including the effects of inflation,; and (viii) the Risk Factors identified in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and in other filings made by the Company under the Securities Exchange Act of 1934.

You should not put undue reliance on any forward-looking statements.  These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available by the Company on its website or otherwise.  The Company undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.

31

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

EARNINGS SUMMARY

Comparison of the Three and Six Months Ended June 30, 2022 and 2021

Summary Results

Net income for the three and six months ended June 30, 2022 was $4,231,000 and $7,663,000 compared to $3,588,000 and $7,029,000 for the same periods of 2021. Results for the three and six months ended June 30, 2022 compared to 2021 were impacted by an increase in after-tax securities losses of $154,000 (from a gain of $111,000 to a loss of $43,000) for the three month period and an increase in after-tax securities losses of $296,000 (from a gain of $205,000 to a loss of $91,000) for the six month period. Results for the three and six months ended June 30, 2022 were impacted by additional compensation expense of $183,000 (after-tax $145,000) associated with the voluntary cash settlement of 346,725 outstanding stock options. In addition, an after-tax loss of $201,000 related to a branch closure negatively impacted results for the six months ended June 30, 2022. Basic and diluted earnings per share for the three and six months ended June 30, 2022 were $0.60 and $1.08. Basic and diluted earnings per share for the three and six months ended June 30, 2021 were $0.51 and $1.00. Annualized return on average assets was 0.88% for three months ended June 30, 2022, compared to 0.76% for the corresponding period of 2021. Annualized return on average assets was 0.80% for the six months ended June 30, 2022, compared to 0.75% for the corresponding period of 2021. Annualized return on average equity was 10.15% for the three months ended June 30, 2022, compared to 8.70% for the corresponding period of 2021. Annualized return on average equity was 9.20% for the six months ended June 30, 2022, compared to 8.69% for the corresponding period of 2021. Net income from core operations (“core earnings”), which is a non-generally accepted accounting principles (GAAP) measure of net income excluding net securities gains or losses, was $4.3 million for the three months ended June 30, 2022 compared to $3.5 million for the same period of 2021. Core earnings were $7.8 million for the six months ended June 30, 2022, compared to $6.8 million for the same period of 2021. Core earnings per share for the three months ended June 30, 2022 were $0.61 basic and diluted, compared to $0.49 basic and diluted core earnings per share for the same period of 2021. Core earnings per share for the six months ended June 30, 2022 were $1.10 basic and diluted, compared to $0.97 basic and diluted for the same period of 2021.

Management uses the non-GAAP measure of net income from core operations in its analysis of the Company’s performance.  This measure, as used by the Company, adjusts net income by excluding significant gains or losses that are unusual in nature.  Because certain of these items and their impact on the Company’s performance are difficult to predict, management believes the presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company’s core businesses.  For purposes of this Quarterly Report on Form 10-Q, net income from core operations means net income adjusted to exclude after-tax net securities gains or losses. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Reconciliation of GAAP and Non-GAAP Financial Measures

(Dollars in Thousands, Except Per Share Data)	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
GAAP net income	$	4,231	$	3,588	$	7,663	$	7,029
Less: net securities (losses) gains, net of tax	(43)		111		(91)		205
Non-GAAP core earnings	$	4,274	$	3,477	$	7,754	$	6,824

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
GAAP Return on average assets (ROA)	0.88	%	0.76	%	0.80	%	0.75	%
Less: net securities (losses) gains, net of tax	(0.01)	%	0.02	%	(0.01)	%	0.02	%
Non-GAAP core ROA	0.89	%	0.74	%	0.81	%	0.73	%

32

		Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021
GAAP Return on average equity (ROE)		10.15	%	8.70	%	9.20	%	8.69	%
Less: net securities (losses) gains, net of tax		(0.10)	%	0.27	%	(0.11)	%	0.25	%
Non-GAAP core ROE	.	10.25	%	8.43	%	9.31	%	8.44	%

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
GAAP Basic earnings per share (EPS)	$	0.60	$	0.51	$	1.08	$	1.00
Less: net securities (losses) gains, net of tax	(0.01)		0.02		(0.02)		0.03
Non-GAAP core operating EPS	$	0.61	$	0.49	$	1.10	$	0.97

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
GAAP Diluted EPS	$	0.60	$	0.51	$	1.08	$	1.00
Less: net securities (losses) gains, net of tax	(0.01)		0.02		(0.02)		0.03
Non-GAAP diluted core EPS	$	0.61	$	0.49	$	1.10	$	0.97

Interest and Dividend Income

Interest and dividend income for the three and six months ended June 30, 2022 increased $778,000 and $458,000 compared to the same periods of 2021. The increase in loan portfolio income was due to a increase in the average loan portfolio balance offset partially by a decrease in average rate earned on the portfolio.  Investment securities income has been impacted by a decrease in the average rate earned on the portfolio as higher yielding legacy investments matured. The size of the investment portfolio began to increase during the three months ended June 30, 2022 which offset the decrease in average rate earned. The increase in dividend and other interest income is due to the increase in interest earned on federal funds sold and interest-bearing deposits.

Interest and dividend income composition for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Loans including fees	$	13,620	89.70	%	$	13,099	90.93	%	$	521	3.98	%
Investment securities:
Taxable	864		5.69		838		5.82		26		3.10
Tax-exempt	194		1.28		164		1.14		30		18.29
Dividend and other interest income	506		3.33		305		2.11		201		65.90
Total interest and dividend income	$	15,184	100.00	%	$	14,406	100.00	%	$	778	5.40	%

	Six Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Loans including fees	$	26,658	90.49	%	$	26,444	91.18	%	$	214	0.81	%
Investment securities:
Taxable	1,601		5.43		1,657		5.71		(56)		(3.38)
Tax-exempt	358		1.22		335		1.16		23		6.87
Dividend and other interest income	842		2.86		565		1.95		277		49.03
Total interest and dividend income	$	29,459	100.00	%	$	29,001	100.00	%	$	458	1.58	%

33

Interest Expense

Interest expense for the three and six months ended June 30, 2022 decreased $974,000 and $2,077,000 compared to the same periods of 2021. Interest-bearing deposit rates continued to remain at low levels due to the continued economic impact of COVID-19 and level of excess balance sheet liquidity. The decrease in deposit rates was offset in part by an increase in average interest-bearing demand deposits. Growth in the deposit portfolio has allowed for a decrease in average long-term borrowings resulting in a decrease in long-term borrowing interest expense.

Interest expense composition for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Deposits	$	710	53.10	%	$	1,489	64.43	%	$	(779)	(52.32)	%
Short-term borrowings	2		0.15		2		0.09		—		—
Long-term borrowings	625		46.75		820		35.48		(195)		(23.78)
Total interest expense	$	1,337	100.00	%	$	2,311	100.00	%	$	(974)	(42.15)	%

	Six Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Deposits	$	1,498	54.30	%	$	3,173	65.61	%	$	(1,675)	(52.79)	%
Short-term borrowings	3		0.11		4		0.08		(1)		(25.00)
Long-term borrowings	1,258		45.59		1,659		34.31		(401)		(24.17)
Total interest expense	$	2,759	100.00	%	$	4,836	100.00	%	$	(2,077)	(42.95)	%

Net Interest Margin

The net interest margin for the three and six months ended June 30, 2022 was 3.12% and 3.03%, compared to 2.78% and 2.83% for the corresponding periods of 2021. The increase in the net interest margin for the three and six month periods was driven by a decline in the rate paid on interest-bearing deposits of 29 and 33 basis points ("bps") as rates paid decreased throughout 2021 and remained at historically low levels during 2022. Leading the decline in the rate paid on interest-bearing deposits were decreases of 98 and 95 bps in the rate paid on time deposits as time deposits issued prior to the COVID-19 pandemic matured. The increase in the earning asset yield was driven by an increase in yield on federal funds sold and interest-bearing deposits due to the rate increases enacted by the Federal Open Market Committee ("FOMC"). For the three and six months ended June 30, 2022 there was an increase in rate on federal funds sold of 57 and 30 bps, respectively, while the rate on interest bearing deposits increased 57 and 26 bps.

34

The following is a schedule of average balances and associated yields for the three and six months ended June 30, 2022 and 2021:

	AVERAGE BALANCES AND INTEREST RATES
	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
(In Thousands)	Average Balance (1)		Interest		Average Rate		Average Balance (1)		Interest		Average Rate
Assets:
Tax-exempt loans (3)	$	52,886	$	331	2.51	%	$	46,926	$	334	2.85	%
All other loans	1,394,631		13,358		3.84	%	1,285,853		12,835		4.00	%
Total loans (2)	1,447,517		13,689		3.79	%	1,332,779		13,169		3.96	%
Federal funds sold	48,352		154		1.28	%	25,538		45		0.71	%
Taxable securities	154,484		1,048		2.75	%	148,415		1,051		2.87	%
Tax-exempt securities (3)	45,824		245		2.17	%	36,469		208		2.31	%
Total securities	200,308		1,293		2.62	%	184,884		1,259		2.76	%
Interest-bearing deposits	102,172		168		0.66	%	218,868		48		0.09	%
Total interest-earning assets	1,798,349		15,304		3.42	%	1,762,069		14,521		3.31	%
Other assets	131,117						128,402
Total assets	$	1,929,466					$	1,890,471
Liabilities and shareholders’ equity:
Savings	$	248,063	24		0.04	%	$	225,625	28		0.05	%
Super Now deposits	388,002		239		0.25	%	285,672		208		0.29	%
Money market deposits	304,636		210		0.28	%	309,749		256		0.33	%
Time deposits	164,301		237		0.58	%	256,345		997		1.56	%
Total interest-bearing deposits	1,105,002		710		0.26	%	1,077,391		1,489		0.55	%
Short-term borrowings	5,636		2		0.14	%	7,047		2		0.11	%
Long-term borrowings	112,901		625		2.22	%	141,076		820		2.33	%
Total borrowings	118,537		627		2.12	%	148,123		822		2.23	%
Total interest-bearing liabilities	1,223,539		1,337		0.44	%	1,225,514		2,311		0.76	%
Demand deposits	518,467						482,513
Other liabilities	20,708						17,384
Shareholders’ equity	166,752						165,060
Total liabilities and shareholders’ equity	$	1,929,466					$	1,890,471
Interest rate spread (3)					2.98	%					2.55	%
Net interest income/margin (3)			$	13,967	3.12	%			$	12,210	2.78	%

1.    Information on this table has been calculated using average daily balance sheets to obtain average balances.

2.    Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.

3.    Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income     

from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

35

	AVERAGE BALANCES AND INTEREST RATES
	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
(In Thousands)	Average Balance (1)		Interest		Average Rate		Average Balance (1)		Interest		Average Rate
Assets:
Tax-exempt loans (3)	$	50,775	$	639	2.54	%	$	46,177	$	684	2.99	%
All other loans	1,372,810		26,153		3.84	%	1,289,660		25,904		4.05	%
Total loans (2)	1,423,585		26,792		3.80	%	1,335,837		26,588		4.01	%
Federal funds sold	49,171		247		1.01	%	12,840		45		0.71	%
Taxable securities	149,489		1,968		2.67	%	146,740		2,083		2.88	%
Tax-exempt securities (3)	43,416		453		2.12	%	36,420		424		2.36	%
Total securities	192,905		2,421		2.54	%	183,160		2,507		2.78	%
Interest-bearing deposits	129,704		228		0.35	%	207,495		94		0.09	%
Total interest-earning assets	1,795,365		29,688		3.34	%	1,739,332		29,234		3.39	%
Other assets	128,624						126,418
Total assets	$	1,923,989					$	1,865,750
Liabilities and shareholders’ equity:
Savings	$	244,528	46		0.04	%	$	220,161	72		0.07	%
Super Now deposits	379,496		434		0.23	%	287,444		475		0.33	%
Money market deposits	301,744		396		0.26	%	307,885		523		0.34	%
Time deposits	177,487		622		0.71	%	255,408		2,103		1.66	%
Total interest-bearing deposits	1,103,255		1,498		0.27	%	1,070,898		3,173		0.60	%
Short-term borrowings	5,416		3		0.11	%	6,368		4		0.13	%
Long-term borrowings	114,077		1,258		2.23	%	141,279		1,659		2.37	%
Total borrowings	119,493		1,261		2.13	%	147,647		1,663		2.27	%
Total interest-bearing liabilities	1,222,748		2,759		0.46	%	1,218,545		4,836		0.80	%
Demand deposits	512,441						464,237
Other liabilities	22,184						21,227
Shareholders’ equity	16,616						161,741
Total liabilities and shareholders’ equity	$	1,773,989					$	1,865,750
Interest rate spread (3)					2.88	%					2.59	%
Net interest income/margin (3)			$	26,929	3.03	%			$	24,398	2.83	%

1.    Information on this table has been calculated using average daily balance sheets to obtain average balances.

2.    Non-accrual loans have been included with loans for the purpose of analyzing net interest earnings.

3.    Income and rates on fully taxable equivalent basis include an adjustment for the difference between annual income     

from tax-exempt obligations and the taxable equivalent of such income at the standard tax rate of 21%

The following table presents the adjustment to convert net interest income to net interest income on a fully taxable equivalent basis for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Total interest income	$	15,184	$	14,406	$	29,459	$	29,001
Total interest expense	1,337		2,311		2,759		4,836
Net interest income (GAAP)	13,847		12,095		26,700		24,165
Tax equivalent adjustment	120		115		229		233
Net interest income (fully taxable equivalent) (NON-GAAP)	$	13,967	$	12,210	$	26,929	$	24,398

36

The following table sets forth the respective impact that both volume and rate changes have had on net interest income on a fully taxable equivalent basis for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,						Three months ended June 30,
	2022 vs. 2021						2022 vs. 2021
	Increase (Decrease) Due to						Increase (Decrease) Due to
(In Thousands)	Volume		Rate		Net		Volume			Rate		Net
Interest income:
Tax-exempt loans	$	39	$	(42)	$	(3)	$	64		$	(109)	$	(45)
All other loans	1,053		(530)		523		1,627			(1,378)		249
Federal funds sold	57		52		109		176			26		202
Taxable investment securities	43		(46)		(3)		39			(154)		(115)
Tax-exempt investment securities	51		(14)		37		75			(46)		29
Interest bearing deposits	(39)		159		120		(35)			169		134
Total interest-earning assets	1,204		(421)		783		1,946			(1,492)		454
Interest expense:
Savings deposits	3		(7)		(4)		8			(34)		(26)
Super Now deposits	64		(33)		31		126			(167)		(41)
Money market deposits	(4)		(42)		(46)		(10)			(117)		(127)
Time deposits	(276)		(484)		(760)		(515)			(966)		(1,481)
Short-term borrowings	—		—		—		(1)		0	—		(1)
Long-term borrowings	(158)		(37)		(195)		(307)		0	(94)		(401)
Total interest-bearing liabilities	(371)		(603)		(974)		(699)			(1,378)		(2,077)
Change in net interest income	$	1,575	$	182	$	1,757	$	2,645		$	(114)	$	2,531

Provision for Loan Losses

The provision for loan losses is based upon management’s quarterly review of the loan portfolio.  The purpose of the review is to assess loan quality, identify impaired loans, analyze delinquencies, ascertain loan growth, evaluate potential charge-offs and recoveries, and assess general economic conditions in the markets served.  An external independent loan review is also performed annually for the Banks.  Management remains committed to an aggressive program of problem loan identification and resolution.

The allowance for loan losses is determined by applying loss factors to outstanding loans by type, excluding loans for which a specific allowance has been determined.  Loss factors are based on management’s consideration of the nature of the portfolio segments, changes in mix and volume of the loan portfolio, and historical loan loss experience.  In addition, management considers industry standards and trends with respect to non-performing loans and its knowledge and experience with specific lending segments.

Although management believes it uses the best information available to make such determinations and that the allowance for loan losses is adequate at June 30, 2022, future adjustments could be necessary if circumstances or economic conditions differ substantially from the assumptions used in making the initial determinations.  A downturn in the local economy, increased unemployment, and delays in receiving financial information from borrowers could result in increased levels of nonperforming assets, charge-offs, loan loss provisions, and reductions in income.  Additionally, as an integral part of the examination process, bank regulatory agencies periodically review the Banks' loan loss allowance.  The banking agencies could require the recognition of additions to the loan loss allowance based on their judgment of information available to them at the time of their examination.

When determining the appropriate allowance level, management has attributed the allowance for loan losses to various portfolio segments; however, the allowance is available for the entire portfolio as needed.

The allowance for loan losses increased from $14,176,000 at December 31, 2021 to $14,393,000 at June 30, 2022. The increase in allowance was due to growth in the loan portfolio. At June 30, 2022 and December 31, 2021, the allowance for loan losses to total loans was 0.97% and 1.02%, respectively.

37

The provision for loan losses totaled $330,000 and $480,000 for the three and six months ended June 30, 2022 and the amounts for the corresponding 2021 periods were $350,000 and $865,000. The decrease in the provision for loan losses for the three months and six months ended June 30 2022 compared to the corresponding 2021 periods was the result of economic improvement along with the 2021 period provision being affected by the continued economic uncertainty caused by COVID-19 and supply chain shortages.

Nonperforming loans decreased to $5,100,000 at June 30, 2022 from $6,250,000 at December 31, 2021. The majority of nonperforming loans involve loans that are either in a secured position and have sureties with a strong underlying financial position or have a specific allocation for any impairment recorded within the allowance for loan losses. The ratio of nonperforming loans to total loans was 0.34% and 0.45% at June 30, 2022 and December 31, 2021, respectively, and the ratio of the allowance for loan losses to nonperforming loans was 282.22% and 226.82% at June 30, 2022 and December 31, 2021, respectively. Internal loan review and analysis coupled with changes in the loan portfolio composition resulted in a provision for loan losses of $330,000 and $480,000 for the three and six months ended June 30, 2022.

The following is a table showing total nonperforming loans as of:

	Total Nonperforming Loans
(In Thousands)	90 Days Past Due		Non-accrual		Total
June 30, 2022	$	421	$	4,679	$	5,100
March 31, 2022	364		4,917		5,281
December 31, 2021	861		5,389		6,250
September 30, 2021	854		6,909		7,763
June 30, 2021	529		7,402		7,931

	June 30, 2022
	Amount of Allowance for Loan Losses Allocated			Total loans		Allowance for Loan Losses to Total Loans Ratio		Net (Charge-Offs) Recoveries		Average Loans		Ratio of Net (Charge-Offs) Recoveries to Average Loans
(In Thousands)
Commercial, financial, and agricultural	$	2,108		$	179,003	1.18	%	$	45	$	167,240	0.03	%
Real estate mortgage:
Residential	4,818			651,959		0.74	%	30		618,285		—	%
Commercial	5,395			463,669		1.16	%	(153)		449,734		(0.03)	%
Construction	199			47,018		0.42	%	28		42,232		0.07	%
Consumer automobiles	1,307			137,670		0.95	%	(155)		136,536		(0.11)	%
Other consumer installment loans	110			9,633		1.14	%	(58)		9,558		(0.61)	%
Unallocated	456
	$	14,393		$	1,488,952	0.97	%	$	(263)	$	1,423,585	(0.02)	%
Total non-accrual loans outstanding	$	4,679
Non-accrual loans to total loans outstanding	0.31		%
Allowance for loan losses to non-accrual loans	307.61		%

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	December 31, 2021
	Amount of Allowance for Loan Losses Allocated			Total loans		Allowance for Loan Losses to Total Loans Ratio		Net (Charge-Offs) Recoveries		Average Loans		Ratio of Net (Charge-Offs) Recoveries to Average Loans
(In Thousands)
Commercial, financial, and agricultural	$	1,946		$	163,285	1.19	%	$	(10)	$	175,631	(0.01)	%
Real estate mortgage:
Residential	4,701			595,847		0.79	%	(107)		584,849		(0.02)	%
Commercial	5,336			446,734		1.19	%	95		381,306		0.02	%
Construction	179			37,295		0.48	%	10		41,564		0.02	%
Consumer automobiles	1,411			139,408		1.01	%	(143)		152,496		(0.09)	%
Other consumer installment loans	111			9,277		1.20	%	(112)		9,787		(1.14)	%
Unallocated	492
	$	14,176		$	1,391,846	1.02	%	$	(267)	$	1,345,633	(0.02)	%
Total non-accrual loans outstanding	$	5,389
Non-accrual loans to total loans outstanding	0.39		%
Allowance for loan losses to non-accrual loans	263.05		%

Non-interest Income

Total non-interest income for the three and six months ended June 30, 2022 compared to the same periods in 2021 decreased $772,000 and $974,000. Excluding net securities gains, non-interest income for the three and six months ended June 30, 2022 decreased $578,000 and $600,000 compared to the same periods in 2021. Gain on sale of loans decreased as the volume of loan sales has declined and the product mix has caused the Company to increasingly act in a broker capacity with the fee income from broker activity included in loan broker commissions. Service charges increased for the three and six month periods primarily due to an increase in overdraft fees. Brokerage commissions have fluctuated due to changes in the product mix and reduced consumer activity. The decrease in debit card fees is a result of an decrease in debit card usage.

Non-interest income composition for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Service charges	$	509	23.82	%	$	379	13.03	%	$	130	34.30	%
Net debt securities (losses) gains, available for sale	(10)		(0.47)		137		4.71		(147)		107.30
Net equity securities (losses) gains	(44)		(2.06)		3		0.10		(47)		1,566.67
Net securities (losses) gains, trading	—		—		—		—		—		#DIV/0!
Bank-owned life insurance	161		7.53		162		5.57		(1)		(0.62)
Gain on sale of loans	266		12.45		670		23.03		(404)		(60.30)
Insurance commissions	107		5.01		150		5.16		(43)		(28.67)
Brokerage commissions	158		7.39		207		7.12		(49)		(23.67)
Loan broker commissions	371		17.36		496		17.05		(125)		(25.20)
Debit card income	391		18.30		398		13.68		(7)		(1.76)
Other	228		10.67		307		10.54		(79)		(25.73)
Total non-interest income	$	2,137	100.00	%	$	2,909	99.99	%	$	(772)	(26.54)	%

39

	Six Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Service charges	$	1,004	22.07	%	$	762	13.80	%	$	242	31.76	%
Net debt securities (losses) gains, available for sale	(12)		(0.26)		275		4.98		(287)		104.36
Net equity securities (losses) gains	(103)		(2.26)		(16)		(0.29)		(87)		(543.75)
Net securities (losses) gains, trading	—		—		—		—		—		#DIV/0!
Bank-owned life insurance	331		7.28		335		6.07		(4)		(1.19)
Gain on sale of loans	611		13.43		1,578		28.57		(967)		(61.28)
Insurance commissions	277		6.09		307		5.56		(30)		(9.77)
Brokerage commissions	358		7.87		426		7.71		(68)		(15.96)
Loan broker commissions	912		20.05		677		12.26		235		34.71
Debit card income	736		16.18		778		14.09		(42)		(5.40)
Other	435		9.56		401		7.25		34		8.48
Total non-interest income	$	4,549	100.01	%	$	5,523	100.00	%	$	(974)	(17.64)	%

Non-interest Expense

Total non-interest expense increased $172,000 and $1,228,000 for the three and six months ended June 30, 2022 compared to the same periods of 2021. The increase in salaries and employee benefits is attributable to the current employment environment, employee retention efforts, routine annual wage increases, and the voluntary cash settlement of 346,725 outstanding stock options resulting in $183,000 of compensation expense. Furniture and equipment expenses in addition to occupancy expenses for the six month period have decreased as maintenance costs and the level of depreciation have decreased. Software amortization increased due to increased software licensing costs. Other expense increased for the six month period primarily from a write down on leasehold improvements of $254,000 related to a branch closure.

Non-interest expense composition for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Salaries and employee benefits	$	6,141	58.93	%	$	5,672	55.35	%	$	469	8.27	%
Occupancy	740		7.10		717		7.00		23		3.21
Furniture and equipment	746		7.16		971		9.48		(225)		(23.17)
Software amortization	219		2.10		208		2.03		11		5.29
Pennsylvania shares tax	396		3.80		372		3.63		24		6.45
Professional fees	582		5.59		684		6.67		(102)		(14.91)
Federal Deposit Insurance Corporation deposit insurance	228		2.19		264		2.58		(36)		(13.64)
Marketing	220		2.11		140		1.37		80		57.14
Intangible amortization	41		0.39		50		0.49		(9)		(18.00)
Other	1,107		10.63		1,170		11.40		(63)		(5.38)
Total non-interest expense	$	10,420	100.00	%	$	10,248	100.00	%	$	172	1.68	%

40

	Six Months Ended
	June 30, 2022				June 30, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Salaries and employee benefits	$	12,405	57.89	%	$	11,270	55.79	%	$	1,135	10.07	%
Occupancy	1,650		7.70		1,693		8.38		(43)		(2.54)
Furniture and equipment	1,638		7.64		1,780		8.81		(142)		(7.98)
Software amortization	472		2.20		406		2.01		66		16.26
Pennsylvania shares tax	785		3.66		724		3.58		61		8.43
Professional fees	1,120		5.23		1,267		6.27		(147)		(11.60)
Federal Deposit Insurance Corporation deposit insurance	430		2.01		485		2.40		(55)		(11.34)
Marketing	284		1.33		203		1.01		81		39.90
Intangible amortization	85		0.40		103		0.51		(18)		(17.48)
Other	2,558		11.94		2,268		11.24		290		12.79
Total non-interest expense	$	21,427	100.00	%	$	20,199	100.00	%	$	1,228	6.08	%

Provision for Income Taxes

Income taxes increased $190,000 and $95,000 for the three and six months ended June 30, 2022 compared to the same periods of 2021. The effective tax rate for the three and six months ended June 30, 2022 was 19.16% and 17.97% compared to 18.44% and 18.10% for the same periods of 2021. The Company currently is in a deferred tax asset position. A valuation allowance was established on the $1,003,000 of capital loss carryforwards for the twelve months ended December 31, 2021, which remained unchanged during the second quarter of 2022.

ASSET/LIABILITY MANAGEMENT

Cash and Cash Equivalents

Cash and cash equivalents decreased $172,870,000 from $263,862,000 at December 31, 2021 to $90,992,000 at June 30, 2022, primarily as a result of the following activities during the six months ended June 30, 2022. The decrease in cash and cash equivalents is primarily due to the decrease in interest-bearing balances held with other financial institutions.

Loans Held for Sale

Activity regarding loans held for sale resulted in sales proceeds being less than loan originations, less $611,000 in realized gains, by $132,000 for the six months ended June 30, 2022.

Loans

Gross loans increased $96,985,000 since December 31, 2021 due primarily to an increase in both residential and commercial real estate mortgage categories. Consumer automobile loans decreased as used car inventories remain at historically low levels.

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The allocation of the loan portfolio, by category, as of June 30, 2022 and December 31, 2021 is presented below:

	June 30, 2022				December 31, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Commercial, financial, and agricultural	$	179,003	12.02	%	$	163,285	11.73	%	$	15,718	9.63	%
Real estate mortgage:
Residential	651,959		43.78		595,847		42.80		56,112		9.42	%
Commercial	463,669		31.14		446,734		32.09		16,935		3.79	%
Construction	47,018		3.16		37,295		2.68		9,723		26.07	%
Consumer automobile loans	137,670		9.24		139,408		10.01		(1,738)		(1.25)	%
Other consumer installment loans	9,633		0.65		9,277		0.67		356		3.84	%
Net deferred loan fees and discounts	180		0.01		301		0.02		(121)		(40.20)	%
Gross loans	$	1,489,132	100.00	%	$	1,392,147	100.00	%	$	96,985	6.97	%

The following table shows the amount of accrual and non-accrual TDRs at June 30, 2022 and December 31, 2021:

	June 30, 2022						December 31, 2021
(In Thousands)	Accrual		Non-accrual		Total		Accrual		Non-accrual		Total
Commercial, financial, and agricultural	$	320	$	379	$	699	$	314	$	574	$	888
Real estate mortgage:
Residential	3,925		175		4,100		3,999		178		4,177
Commercial	1,633		2,260		3,893		1,836		2,509		4,345
	$	5,878	$	2,814	$	8,692	$	6,149	$	3,261	$	9,410

Investments

The fair value of the investment debt securities portfolio at June 30, 2022 increased $26,028,000 since December 31, 2021, while the amortized cost of the portfolio increased $36,908,000.  The increase in the investment portfolio amortized value occurred within the state and political segment of the portfolio. The mortgage-backed segment was reduced as bonds prepaid due to the low interest rate environment. The other debt segment of the investment portfolio is primarily corporate bonds and this segment remained flat. The municipal segment was increased as primarily bonds with a final maturity of one to five years have been purchased. The portfolio continues to be actively managed in order to reduce interest rate and market risk. The unrealized losses within the debt securities portfolio are the result of market activity, not credit issues/ratings, as approximately 90.47% of the debt securities portfolio on an amortized cost basis is currently rated A or higher by either S&P or Moody’s.

The Company considers various factors, which include examples from applicable accounting guidance, when analyzing the available for sale portfolio for possible other than temporary impairment.  The Company primarily considers the following factors in its analysis: length of time and severity of the fair value being less than carrying value; reduction of dividend paid (equities); continued payment of dividend/interest, credit rating, and financial condition of an issuer; intent and ability to hold until anticipated recovery (which may be maturity); and general outlook for the economy, specific industry, and entity in question.

The bond portion of the portfolio review is conducted with emphases on several factors.  Continued payment of principal and interest is given primary importance with credit rating and financial condition of the issuer following as the next most important.  Credit ratings were reviewed with the ratings of the bonds being satisfactory.  Bonds that were not currently rated were discussed with a third party and/or underwent an internal financial review. Each bond is reviewed to determine whether it is a general obligation bond, which is backed by the credit and taxing power of the issuing jurisdiction, or a revenue bond, which is only payable from specified revenues.  Based on the review undertaken by the Company, the Company determined that the decline in value of the various bond holdings were temporary and were the result of the general market downturns and interest rate/yield curve changes, not credit issues.  The fact that almost all of such bonds are general obligation bonds further solidified the Company’s determination that the decline in the value of these bond holdings is temporary.

The fair value of the equity portfolio continues to fluctuate as the economic and political environment continues to impact stock pricing. The amortized cost of the available for sale equity securities portfolio has remained flat at $1,350,000 for June 30, 2022 and December 31, 2021 while the fair value decreased $102,000 over the same time period.

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The distribution of credit ratings by amortized cost and fair values for the debt security portfolio at June 30, 2022 follows:

	A- to AAA					B- to BBB+				C- to CCC+				Not Rated				Total
(In Thousands)	Amortized Cost			Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale (AFS):
U.S. Government and agency securities	$	1,007		$	980	$	—	$	—	$	—	$	—	$	—	$	—	$	1,007	$	980
Mortgage-backed securities	1,520		7	1,375		—		—		—		—		—		—		1,520		1,375
State and political securities	149,003			143,858		120		120		—		—		1,180		1,170		150,303		145,148
Other debt securities	29,704			27,839		1,806		1,769		—		—		15,974		15,327		47,484		44,935
Total debt securities AFS	$	181,234		$	174,052	$	1,926	$	1,889	$	—	$	—	$	17,154	$	16,497	$	200,314	$	192,438

Financing Activities

Deposits

Total deposits decreased $31,736,000 from December 31, 2021 to June 30, 2022. Time deposits decreased $51,688,000 over this period to a total of $153,679,000 as excess on balance sheet liquidity has allowed for a decrease in the reliance on higher rate time deposit funding. An increase in core deposits (deposits less time deposits) of $19,952,000 has provided relationship driven funding for the loan and investment portfolios. Emphasis during 2021 and through 2022 has been on increasing the utilization of electronic (internet and mobile) deposit banking among our customers. Utilization of internet and mobile banking has increased due to these efforts coupled with a change in consumer behavior due to the business and travel restrictions that were temporarily in effect due to the COVID-19 pandemic.

Deposit balances and their changes for the periods being discussed follow:

	June 30, 2022				December 31, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Demand deposits	$	524,288	32.98	%	$	494,360	30.49	%	$	29,928	6.05	%
NOW accounts	353,102		22.21		366,399		22.60		(13,297)		(3.63)
Money market deposits	309,453		19.47		318,877		19.67		(9,424)		(2.96)
Savings deposits	249,057		15.67		236,312		14.58		12,745		5.39
Time deposits	153,679		9.67		205,367		12.66		(51,688)		(25.17)
Total deposits	$	1,589,579	100.00	%	$	1,621,315	100.00	%	$	(31,736)	(1.96)	%

Borrowed Funds

Total borrowed funds decreased 10.15%, or $13,372,000, to $118,338,000 at June 30, 2022 compared to $131,710,000 at December 31, 2021. The decrease in long term borrowings occurred as fixed rate borrowings matured. Securities sold under agreements to repurchase have decreased as customers balances have decreased.

	June 30, 2022				December 31, 2021				Change
(In Thousands)	Amount		% Total		Amount		% Total		Amount		%
Short-term borrowings:
Securities sold under agreement to repurchase	$	5,464	4.62	%	$	5,747	4.36	%	$	(283)	(4.92)	%
Total short-term borrowings	5,464		4.62		5,747		4.36		(283)		(4.92)
Long-term borrowings:
Long-term FHLB borrowings	105,000		88.72		118,000		89.59		(13,000)		(11.02)
Long-term finance lease	7,874		6.65		7,963		6.05		(89)		(1.12)
Total long-term borrowings	112,874		95.38		125,963		95.64		(13,089)		(10.39)
Total borrowed funds	$	118,338	100.00	%	$	131,710	100.00	%	$	(13,372)	(10.15)	%

43

Short-Term Borrowings

The following table provides further information in regards to secured borrowings that have been accounted for as repurchase agreements.

	Remaining Contractual Maturity Overnight and Continuous
(In Thousands)	June 30, 2022		December 31, 2021
Investment debt securities pledged, fair value	$	8,231	$	8,881
Repurchase agreements	5,464		5,747

Capital

The adequacy of the Company’s capital is reviewed on an ongoing basis with reference to the size, composition, and quality of the Company’s resources and regulatory guidelines.  Management seeks to maintain a level of capital sufficient to support existing assets and anticipated asset growth, maintain favorable access to capital markets, and preserve high quality credit ratings.

Banking institutions are generally required to comply with risk-based capital guidelines set by bank regulatory agencies.  The risk-based capital rules are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and to minimize disincentives for holding liquid assets.  Specifically, each is required to maintain certain minimum dollar amounts and ratios of common equity tier I risk-based, tier I risk-based, total risk-based, and tier I leverage capital. In addition to the capital requirements, the Federal Deposit Insurance Corporation Improvements Act ("FDICIA") established five capital categories for banks ranging from “well capitalized” to “critically undercapitalized” for purposes of the FDIC's prompt corrective action rules. To be classified as “well capitalized” under the prompt corrective action rules, common equity tier I risk-based, tier I risked-based, total risk-based, and tier I leverage capital ratios must be at least 6.5%, 8%, 10%, and 5%, respectively.

Under existing capital rules, the minimum capital to risk-adjusted assets requirements for banking organizations are a common equity tier 1 capital ratio of 4.5% (6.5% to be considered “well capitalized”), a tier 1 capital ratio of 6.0% (8.0% to be considered “well capitalized”), and total capital ratio of 8.0% (10.0% to be considered “well capitalized”).  Under existing capital rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets. 

44

The Company's capital ratios as of June 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022				December 31, 2021
(In Thousands)	Amount		Ratio		Amount		Ratio
Common Equity Tier I Capital (to Risk-weighted Assets)
Actual	$	157,230	10.216	%	$	156,439	10.791	%
For Capital Adequacy Purposes	69,258		4.500		65,237		4.500
Minimum To Maintain Capital Conservation Buffer At Reporting Date	107,734		7.000		101,480		7.000
To Be Well Capitalized	100,039		6.500		94,232		6.500
Total Capital (to Risk-weighted Assets)
Actual	$	171,740	11.158	%	$	170,708	11.776	%
For Capital Adequacy Purposes	123,133		8.000		115,970		8.000
Minimum To Maintain Capital Conservation Buffer At Reporting Date	161,612		10.500		152,211		10.500
To Be Well Capitalized	153,916		10.000		144,963		10.000
Tier I Capital (to Risk-weighted Assets)
Actual	$	157,230	10.216	%	$	156,439	10.791	%
For Capital Adequacy Purposes	92,343		6.000		86,983		6.000
Minimum To Maintain Capital Conservation Buffer At Reporting Date	130,820		8.500		123,226		8.500
To Be Well Capitalized	123,125		8.000		115,977		8.000
Tier I Capital (to Average Assets)
Actual	$	157,230	8.274	%	$	156,439	8.397	%
For Capital Adequacy Purposes	76,012		4.000		74,521		4.000
To Be Well Capitalized	95,015		5.000		93,152		5.000

Jersey Shore State Bank's capital ratios as of June 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022				December 31, 2021
(In Thousands)	Amount		Ratio		Amount		Ratio
Common Equity Tier I Capital (to Risk-weighted Assets)
Actual	$	113,053	10.024	%	$	110,682	10.337	%
For Capital Adequacy Purposes	50,752		4.500		48,183		4.500
Minimum To Maintain Capital Conservation Buffer At Reporting Date	78,948		7.000		74,952		7.000
To Be Well Capitalized	73,309		6.500		69,598		6.500
Total Capital (to Risk-weighted Assets)
Actual	$	123,795	10.977	%	$	121,094	11.309	%
For Capital Adequacy Purposes	90,221		8.000		85,662		8.000
Minimum To Maintain Capital Conservation Buffer At Reporting Date	118,416		10.500		112,431		10.500
To Be Well Capitalized	112,777		10.000		107,078		10.000
Tier I Capital (to Risk-weighted Assets)	-				-
Actual	$	113,053	10.024	%	$	110,682	10.337	%
For Capital Adequacy Purposes	67,669		6.000		64,244		6.000
Minimum To Maintain Capital Conservation Buffer At Reporting Date	95,865		8.500		91,013		8.500
To Be Well Capitalized	90,226		8.000		85,659		8.000
Tier I Capital (to Average Assets)
Actual	$	113,053	8.276	%	$	110,682	8.326	%
For Capital Adequacy Purposes	54,641		4.000		53,174		4.000
To Be Well Capitalized	68,302		5.000		66,468		5.000

45

Luzerne Bank's capital ratios as of June 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022				December 31, 2021
(In Thousands)	Amount		Ratio		Amount		Ratio
Common Equity Tier I Capital (to Risk-weighted Assets)
Actual	$	43,269	10.487	%	$	42,291	11.164	%
For Capital Adequacy Purposes	18,567		4.500		17,047		4.500
Minimum To Maintain Capital Conservation Buffer At Reporting Date	28,882		7.000		26,517		7.000
To Be Well Capitalized	26,819		6.500		24,623		6.500
Total Capital (to Risk-weighted Assets)
Actual	$	47,037	11.400	%	$	46,148	12.182	%
For Capital Adequacy Purposes	33,008		8.000		30,306		8.000
Minimum To Maintain Capital Conservation Buffer At Reporting Date	43,324		10.500		39,776		10.500
To Be Well Capitalized	41,261		10.000		37,882		10.000
Tier I Capital (to Risk-weighted Assets)
Actual	$	43,269	10.487	%	$	42,291	11.164	%
For Capital Adequacy Purposes	24,756		6.000		22,729		6.000
Minimum To Maintain Capital Conservation Buffer At Reporting Date	35,071		8.500		32,199		8.500
To Be Well Capitalized	33,008		8.000		30,305		8.000
Tier I Capital (to Average Assets)
Actual	$	43,269	7.843	%	$	42,291	7.537	%
For Capital Adequacy Purposes	22,068		4.000		22,444		4.000
To Be Well Capitalized	27,584		5.000		28,056		5.000

Liquidity; Interest Rate Sensitivity and Market Risk

The asset/liability committee addresses the liquidity needs of the Company to ensure that sufficient funds are available to meet credit demands and deposit withdrawals as well as to the placement of available funds in the investment portfolio.  In assessing liquidity requirements, equal consideration is given to the current position as well as the future outlook.

The following liquidity measures are monitored for compliance and were within the limits cited at June 30, 2022:

1.            Net Loans to Total Assets, 85% maximum

2.              Net Loans to Total Deposits, 100% maximum

3.              Cumulative 90 day Maturity GAP %, +/- 15% maximum

4.              Cumulative 1 Year Maturity GAP %, +/- 20% maximum

Fundamental objectives of the Company’s asset/liability management process are to maintain adequate liquidity while minimizing interest rate risk. The maintenance of adequate liquidity provides the Company with the ability to meet its financial obligations to depositors, loan customers, and shareholders. Additionally, it provides funds for normal operating expenditures and business opportunities as they arise.  The objective of interest rate sensitivity management is to increase net interest income by managing interest sensitive assets and liabilities in such a way that they can be repriced in response to changes in market interest rates.

The Banks, like other financial institutions, must have sufficient funds available to meet liquidity needs for deposit withdrawals, loan commitments and originations, and expenses. In order to control cash flow, the Banks estimate future cash flows from deposits, loan payments, and investment security payments. The primary sources of funds are deposits, principal and interest payments on loans and investment securities, FHLB borrowings, and brokered deposits. Management believes the Banks have adequate resources to meet their normal funding requirements.

Management monitors the Company’s liquidity on both a long and short-term basis, thereby providing management necessary information to react to current balance sheet trends. Cash flow needs are assessed and sources of funds are determined. Funding strategies consider both customer needs and economical cost. Both short and long-term funding needs are addressed by maturities and sales of available for sale and trading investment securities, loan repayments and maturities, and liquidating

46

money market investments such as federal funds sold. The use of these resources, in conjunction with access to credit, provides core funding to satisfy depositor, borrower, and creditor needs.

Management monitors and determines the desirable level of liquidity. Consideration is given to loan demand, investment opportunities, deposit pricing and growth potential, as well as the current cost of borrowing funds. The Company has a total current maximum borrowing capacity at the FHLB of $682,627,000. In addition to this credit arrangement, the Company has additional lines of credit with correspondent banks of $100,000,000. Management believes it has sufficient liquidity to satisfy estimated short-term and long-term funding needs. FHLB borrowings totaled $105,000,000 as of June 30, 2022.

Interest rate sensitivity, which is closely related to liquidity management, is a function of the repricing characteristics of the Company’s portfolio of assets and liabilities. Asset/liability management strives to match maturities and rates between loan and investment security assets with the deposit liabilities and borrowings that fund them. Successful asset/liability management results in a balance sheet structure which can cope effectively with market rate fluctuations. The matching process segments both assets and liabilities into future time periods (usually 12 months, or less) based upon when repricing can be effected. Repriceable assets are subtracted from repriceable liabilities for a specific time period to determine the “gap”, or difference. Once known, the gap is managed based on predictions about future market interest rates. Intentional mismatching, or gapping, can enhance net interest income if market rates move as predicted.  However, if market rates behave in a manner contrary to predictions, net interest income will suffer. Gaps, therefore, contain an element of risk and must be prudently managed. In addition to gap management, the Company has an asset/liability management policy which incorporates a market value at risk calculation which is used to determine the effects of interest rate movements on shareholders’ equity and a simulation analysis to monitor the effects of interest rate changes on the Company’s consolidated balance sheet.

The Company currently maintains a gap position of being asset sensitive.  The Company has strategically taken this position as it has decreased the duration of the earning asset portfolio by adding quality short and intermediate term loans such as home equity loans and the selling of long-term municipal bonds.  Lengthening of the liability portfolio is being undertaken to build protection in a rising rate environment.

A market value at risk calculation is utilized to monitor the effects of interest rate changes on the Company’s balance sheet and more specifically shareholders’ equity.  The Company does not manage the balance sheet structure in order to maintain compliance with this calculation.  The calculation serves as a guideline with greater emphasis placed on interest rate sensitivity.  Changes to calculation results from period to period are reviewed as changes in results could be a signal of future events.  As of the most recent analysis, the results of the market value at risk calculation were within established guidelines due to the strategic direction being taken.

Interest Rate Sensitivity

In this analysis the Company examines the result of a 100, 200, 300, and 400 basis point change in market interest rates and the effect on net interest income. It is assumed that the change is instantaneous and that all rates move in a parallel manner.  Assumptions are also made concerning prepayment speeds on mortgage loans and mortgage securities.

The following is a rate shock forecast for the twelve month period ending June 30, 2023 assuming a static balance sheet as of June 30, 2022.

	Parallel Rate Shock in Basis Points
(In Thousands)	-200			-100			Static		+100			+200			+300			+400
Net interest income	$	58,925		$	62,220		$	65,407	$	68,509		$	71,676		$	74,855		$	78,037
Change from static	(6,482)			(3,187)			—		3,102			6,269			9,448			12,630
Percent change from static	-9.91		%	-4.87		%	—		4.74		%	9.58		%	14.44		%	19.31		%

The model utilized to create the report presented above makes various estimates at each level of interest rate change regarding cash flow from principal repayment on loans and mortgage-backed securities and/or call activity on investment securities.  Actual results could differ significantly from these estimates which would result in significant differences in the calculated projected change.  In addition, the limits stated above do not necessarily represent the level of change under which management would undertake specific measures to realign its portfolio in order to reduce the projected level of change.  Generally, management believes the Company is well positioned to respond expeditiously when the market interest rate outlook changes.

47

Inflation

The asset and liability structure of a financial institution is primarily monetary in nature.  Therefore, interest rates rather than inflation have a more significant impact on the Company’s performance.  Interest rates are not always affected in the same direction or magnitude as prices of other goods and services, but are reflective of fiscal policy initiatives or economic factors which are not measured by a price index.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Market risk for the Company is comprised primarily of interest rate risk exposure and liquidity risk.  Interest rate risk and liquidity risk management is performed at both the level of the Company and the Banks.  The Company’s interest rate sensitivity is monitored by management through selected interest rate risk measures produced by an independent third party.  There have been no substantial changes in the Company’s gap analysis or simulation analysis compared to the information provided in the Annual Report on Form 10-K for the period ended December 31, 2021.  Additional information and details are provided in the “Liquidity, Interest Rate Sensitivity, and Market Risk” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of that document.

Generally, management believes the Company is well positioned to respond in a timely manner when the market interest rate outlook changes.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An analysis was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2022 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

48

Part II.  OTHER INFORMATION

Item 1.                           Legal Proceedings

None.

Item 1A.  Risk Factors

Certain risk factors are set forth in Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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

The following table provides certain information with respect to the Company's repurchase of common stock during the quarter ended June 30, 2022.

Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Units) Purchased		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1 (March 1 - March 31, 2022)	—	$	—	—	354,000
Month #2 (April 1 - April 30, 2022)	20,000	23.73		20,000	334,000
Month #3 (May 1 - May 31, 2022)	10,000	22.60		10,000	324,000

Item 3.                           Defaults Upon Senior Securities

None.

Item 4.                           Mine Safety Disclosures

Not applicable.

Item 5.                           Other Information

None.

49

Item 6.                           Exhibits

3(i)	Articles of Incorporation of the Registrant, as presently in effect (incorporated by reference to Exhibit 3(i) of the Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2019).
3(ii)	Bylaws of the Registrant (incorporated by reference to Exhibit 3(ii) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2020).
10.1	Amendment to Employment Agreement, dated July 15, 2022, between Penns Woods Bancorp, Inc. and Richard A. Grafmyre (incorporated by reference to Exhibit 10.2 of the Registrant's Current Report on Form 8-K filed on July 21, 2022)
10.2	Amendment to Employment Agreement, dated July 15, 2022, between Penns Woods Bancorp, Inc. and Brian L. Knepp (incorporated by reference to Exhibit 10.4 of the Registrant's Current Report on Form 8-K filed on July 21, 2022)
31(i)	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Executive Officer.
31(ii)	Rule 13a-14(a)/Rule 15d-14(a) Certification of Chief Financial Officer.
32(i)	Section 1350 Certification of Chief Executive Officer.
32(ii)	Section 1350 Certification of Chief Financial Officer.
101	Interactive data file containing the following financial statements formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheet at June 30, 2022 and December 31, 2021; (ii) the Consolidated Statement of Income for the three and six months ended June 30, 2022 and 2021; (iii) Consolidated Statement of Comprehensive Income for the three and six months ended June 30, 2022 and 2021; (iv) the Consolidated Statement of Shareholders’ Equity for the three and six months ended June 30, 2022 and 2021; (v) the Consolidated Statement of Cash Flows for the six months ended June 30, 2022 and 2021 and (vi) the Notes to Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this interactive data file shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed “filed” or part of any registration statement or prospectus for purposes of Section 11 or 12 under the Securities Act of 1933, or otherwise subject to liability under those sections.
104	Cover page interactive data file (formatted as inline XBRL and contained in Exhibit 101).

50

SIGNATURES

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

		PENNS WOODS BANCORP, INC.
		(Registrant)
Date:	August 9, 2022	/s/ Richard A. Grafmyre
		Richard A. Grafmyre, Chief Executive Officer
		(Principal Executive Officer)
Date:	August 9, 2022	/s/ Brian L. Knepp
		Brian L. Knepp, President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting
		Officer)

51

EX-31.1

Exhibit 31(i)

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

I, Richard A. Grafmyre, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Penns Woods Bancorp, Inc.;

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 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 9, 2022	/s/ Richard A. Grafmyre
		Richard A. Grafmyre
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31(ii)

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

I, Brian L. Knepp, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Penns Woods Bancorp, Inc.;

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 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 9, 2022	/s/ Brian L. Knepp
		Brian L. Knepp
		President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32 (i)

CERTIFICATION SECTION 1350

In connection with the Quarterly Report of Penns Woods Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard A. Grafmyre, Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to 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) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Richard A. Grafmyre

Richard A. Grafmyre

Chief Executive Officer

August 9, 2022

EX-32.2

Exhibit 32 (ii)

CERTIFICATION SECTION 1350

In connection with the Quarterly Report of Penns Woods Bancorp, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian L. Knepp, Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to 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) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Brian L. Knepp

Brian L. Knepp

President and Chief Financial Officer

August 9, 2022

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Aug. 01, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	0-17077
Entity Registrant Name	PENNS WOODS BANCORP INC
Entity Incorporation, State or Country Code	PA
Entity Address, Address Line One	300 Market Street, P.O. Box 967
Entity Tax Identification Number	23-2226454
Entity Address, City or Town	Williamsport
Entity Address, State or Province	PA
Postal Zip Code	17703-0967
City Area Code	570
Local Phone Number	322-1111
Title of 12(b) Security	Common stock, $5.55 par value
Trading Symbol	PWOD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Other Identification Type	Yes
Entity Filer Category	Non-accelerated Filer
Smaller Reporting Company	true
Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		7,052,242
Entity Central Index Key	0000716605
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2

XML

CONSOLIDATED BALANCE SHEET (UNAUDITED) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
ASSETS:
Noninterest-bearing balances	$ 26,540	$ 19,233
Interest-bearing balances in other financial institutions	24,452	194,629
Federal funds sold	40,000	50,000
Total cash and cash equivalents	90,992	263,862
Investment debt securities, available for sale, at fair value	192,438	166,410
Investment equity securities, at fair value	1,186	1,288
Restricted investment in bank stock	13,458	14,531
Loans held for sale	3,857	3,725
Loans	1,489,132	1,392,147
Allowance for loan losses	(14,393)	(14,176)
Loans, net	1,474,739	1,377,971
Premises and equipment, net	32,671	34,025
Accrued interest receivable	8,246	8,048
Bank-owned life insurance	34,115	33,768
Investment in limited partnerships	4,901	4,607
Goodwill	17,104	17,104
Intangibles	396	480
Operating lease right-of-use asset	2,747	2,851
Deferred tax asset	5,689	2,946
Other assets	9,267	9,193
TOTAL ASSETS	1,891,806	1,940,809
LIABILITIES:
Interest-bearing deposits	1,065,291	1,126,955
Noninterest-bearing deposits	524,288	494,360
Total deposits	1,589,579	1,621,315
Short-term borrowings	5,464	5,747
Long-term borrowings	112,874	125,963
Accrued interest payable	452	651
Operating lease liability	2,800	2,898
Other liabilities	14,583	11,961
TOTAL LIABILITIES	1,725,752	1,768,535
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value, 3,000,000 shares authorized; no shares issued	0	0
Common stock, par value $5.55, 22,500,000 shares authorized; 7,559,165 and 7,550,272 shares issued; 7,048,940 and 7,070,047 outstanding	41,995	41,945
Additional paid-in capital	53,651	53,795
Retained earnings	92,903	89,761
Accumulated other comprehensive loss:
Net unrealized (loss) gain on available for sale securities	(6,222)	2,373
Defined benefit plan	(3,458)	(3,485)
Treasury stock at cost, 510,225 and 480,225	(12,815)	(12,115)
TOTAL SHAREHOLDERS' EQUITY	166,054	172,274
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 1,891,806	$ 1,940,809

XML

CONSOLIDATED BALANCE SHEET (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	3,000,000	3,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 5.55	$ 5.55
Common stock, shares authorized (in shares)	22,500,000	22,500,000
Common stock, shares issued (in shares)	7,559,165	7,550,272
Common stock, shares outstanding (in shares)	7,048,940	7,070,047
Treasury stock (in shares)	510,225	480,225

XML

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
INTEREST AND DIVIDEND INCOME:
Loans, including fees	$ 13,620	$ 13,099	$ 26,658	$ 26,444
Investment securities:
Taxable	864	838	1,601	1,657
Tax-exempt	194	164	358	335
Dividend and other interest income	506	305	842	565
TOTAL INTEREST AND DIVIDEND INCOME	15,184	14,406	29,459	29,001
INTEREST EXPENSE:
Deposits	710	1,489	1,498	3,173
Short-term borrowings	2	2	3	4
Long-term borrowings	625	820	1,258	1,659
TOTAL INTEREST EXPENSE	1,337	2,311	2,759	4,836
NET INTEREST INCOME	13,847	12,095	26,700	24,165
PROVISION FOR LOAN LOSSES	330	350	480	865
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	13,517	11,745	26,220	23,300
NON-INTEREST INCOME:
Net debt securities (losses) gains, available for sale	(10)	137	(12)	275
Net equity securities (losses) gains	(44)	3	(103)	(16)
Bank-owned life insurance	161	162	331	335
Gain on sale of loans	266	670	611	1,578
Other	228	307	435	401
TOTAL NON-INTEREST INCOME	2,137	2,909	4,549	5,523
NON-INTEREST EXPENSE:
Salaries and employee benefits	6,141	5,672	12,405	11,270
Occupancy	740	717	1,650	1,693
Furniture and equipment	746	971	1,638	1,780
Software amortization	219	208	472	406
Pennsylvania shares tax	396	372	785	724
Professional fees	582	684	1,120	1,267
Federal Deposit Insurance Corporation deposit insurance	228	264	430	485
Marketing	220	140	284	203
Intangible amortization	41	50	85	103
Other	1,107	1,170	2,558	2,268
TOTAL NON-INTEREST EXPENSE	10,420	10,248	21,427	20,199
INCOME BEFORE INCOME TAX PROVISION	5,234	4,406	9,342	8,624
INCOME TAX PROVISION	1,003	813	1,679	1,584
CONSOLIDATED NET INCOME	4,231	3,593	7,663	7,040
Less: Net income attributable to noncontrolling interest	0	5	0	11
NET INCOME ATTRIBUTABLE TO PENNS WOODS BANCORP, INC.	$ 4,231	$ 3,588	$ 7,663	$ 7,029
Earnings per share - basic (in dollars per share)	$ 0.60	$ 0.51	$ 1.08	$ 1.00
Earnings per share - diluted (in dollars per share)	$ 0.60	$ 0.51	$ 1.08	$ 1.00
Weighted average shares outstanding - basic (in shares)	7,059,045	7,059,667	7,065,772	7,057,404
Weighted average shares outstanding - diluted (in shares)	7,059,045	7,059,667	7,065,772	7,057,404
Service charges
NON-INTEREST INCOME:
Revenue from contract with customer	$ 509	$ 379	$ 1,004	$ 762
Insurance commissions
NON-INTEREST INCOME:
Revenue from contract with customer	107	150	277	307
Brokerage commissions
NON-INTEREST INCOME:
Revenue from contract with customer	158	207	358	426
Loan broker commissions
NON-INTEREST INCOME:
Revenue from contract with customer	371	496	912	677
Debit card income
NON-INTEREST INCOME:
Revenue from contract with customer	$ 391	$ 398	$ 736	$ 778

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CONSOLIDATED STATEMENT OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net Income	$ 4,231	$ 3,588	$ 7,663	$ 7,029
Other comprehensive income (loss):
Unrealized (loss) gain on available for sale securities	(3,995)	1,390	(10,892)	(521)
Tax effect	839	(292)	2,287	109
Net realized loss (gain) on available for sale securities included in net income	10	(137)	12	(275)
Tax effect	(2)	29	(2)	58
Amortization of unrecognized pension loss	18	47	35	93
Tax effect	(4)	(10)	(8)	(20)
Total other comprehensive (loss) income	(3,134)	1,027	(8,568)	(556)
Comprehensive (loss) income	$ 1,097	$ 4,615	$ (905)	$ 6,473

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	COMMON STOCK	ADDITIONAL PAID-IN CAPITAL	RETAINED EARNINGS	ACCUMULATED OTHER COMPREHENSIVE LOSS	TREASURY STOCK	NON-CONTROLLING INTEREST
Beginning balance (in shares) at Dec. 31, 2020		7,532,576
Beginning balance at Dec. 31, 2020	$ 164,146	$ 41,847	$ 52,523	$ 82,769	$ (882)	$ (12,115)	$ 4
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	7,040			7,029			11
Other comprehensive income	(556)				(556)
Stock-based compensation	527		527
Dividends declared	(4,517)			(4,517)
Common shares issued for employee stock purchase plan (in shares)		1,984
Common shares issued for employee stock purchase plan	45	$ 11	34
Director compensation plan (in shares)		7,067
Director Compensation Plan	160	$ 39	121
Distributions to noncontrolling interest	(10)						(10)
Ending balance (in shares) at Jun. 30, 2021		7,541,627
Ending balance at Jun. 30, 2021	166,835	$ 41,897	53,205	85,281	(1,438)	(12,115)	5
Beginning balance (in shares) at Mar. 31, 2021		7,537,242
Beginning balance at Mar. 31, 2021	164,063	$ 41,873	52,818	83,948	(2,465)	(12,115)	4
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	3,593			3,588			5
Other comprehensive income	1,027				1,027
Stock-based compensation	307		307
Dividends declared	(2,255)			(2,255)
Common shares issued for employee stock purchase plan (in shares)		1,045
Common shares issued for employee stock purchase plan	25	$ 6	19
Director compensation plan (in shares)		3,340
Director Compensation Plan	79	$ 18	61
Distributions to noncontrolling interest	(4)						(4)
Ending balance (in shares) at Jun. 30, 2021		7,541,627
Ending balance at Jun. 30, 2021	166,835	$ 41,897	53,205	85,281	(1,438)	(12,115)	5
Beginning balance (in shares) at Dec. 31, 2021		7,550,272
Beginning balance at Dec. 31, 2021	172,274	$ 41,945	53,795	89,761	(1,112)	(12,115)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	7,663			7,663
Other comprehensive income	(8,568)				(8,568)
Stock-based compensation	768		768
Cash settlement of options	(1,074)		(1,074)
Dividends declared	(4,521)			(4,521)
Common shares issued for employee stock purchase plan (in shares)		1,903
Common shares issued for employee stock purchase plan	44	$ 11	33
Director compensation plan (in shares)		6,990
Director Compensation Plan	168	$ 39	129
Purchase of treasure stock (in dollars)	(700)					(700)
Ending balance (in shares) at Jun. 30, 2022		7,559,165
Ending balance at Jun. 30, 2022	166,054	$ 41,995	53,651	92,903	(9,680)	(12,815)	0
Beginning balance (in shares) at Mar. 31, 2022		7,554,567
Beginning balance at Mar. 31, 2022	168,427	$ 41,969	54,191	90,928	(6,546)	(12,115)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	4,231			4,231
Other comprehensive income	(3,134)				(3,134)
Stock-based compensation	453		453
Cash settlement of options	(1,074)		(1,074)
Dividends declared	(2,256)			(2,256)
Common shares issued for employee stock purchase plan (in shares)		1,023
Common shares issued for employee stock purchase plan	23	$ 6	17
Director compensation plan (in shares)		3,575
Director Compensation Plan	84	$ 20	64
Purchase of treasure stock (in dollars)	(700)					(700)
Ending balance (in shares) at Jun. 30, 2022		7,559,165
Ending balance at Jun. 30, 2022	$ 166,054	$ 41,995	$ 53,651	$ 92,903	$ (9,680)	$ (12,815)	$ 0

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Stockholders' Equity [Abstract]
Dividends declared per share (in dollars per share)	$ 0.32	$ 0.32	$ 0.64	$ 0.64
Purchase of treasury stock (in shares)	30		30

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CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
OPERATING ACTIVITIES:
Net Income	$ 7,663	$ 7,040
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,833	1,644
Write down of leasehold improvements	254	0
Amortization of intangible assets	85	103
Provision for loan losses	480	865
Stock based compensation	768	527
Accretion and amortization of investment security discounts and premiums	655	531
Net securities losses (gains), available for sale	12	(275)
Originations of loans held for sale	(21,248)	(55,058)
Proceeds of loans held for sale	21,727	56,948
Gain on sale of loans	(611)	(1,578)
Net equity securities losses	99	19
Net securities losses (gains), trading	4	(3)
Security trades payable	896	0
Earnings on bank-owned life insurance	(331)	(335)
Increase in deferred tax asset	(458)	(931)
Other, net	(1,453)	(2,556)
Net cash provided by operating activities	10,375	6,941
INVESTING ACTIVITIES:
Proceeds from sales of available for sale securities	0	13,574
Proceeds from calls and maturities of available for sale securities	7,500	7,566
Purchases of available for sale securities	(43,812)	(31,714)
Net (increase) decrease in loans	(97,345)	6,150
Acquisition of premises and equipment	(157)	(513)
Proceeds from the sale of premises and equipment	137	2
Proceeds from the sale of foreclosed assets	46	246
Purchase of bank-owned life insurance	(18)	(26)
Proceeds from bank-owned life insurance death benefit	2	0
Investment in limited partnership	(554)	(851)
Proceeds from redemption of regulatory stock	4,385	1,411
Purchases of regulatory stock	(3,312)	(1,154)
Net cash used for investing activities	(133,128)	(5,309)
FINANCING ACTIVITIES:
Net (decrease) increase in interest-bearing deposits	(61,664)	41,266
Net increase in noninterest-bearing deposits	29,928	27,987
Repayment of long-term borrowings	(13,000)	(15,000)
Net (decrease) increase in short-term borrowings	(283)	2,276
Finance lease principal payments	(89)	(77)
Dividends paid	(4,521)	(4,517)
Distributions to non-controlling interest	0	(10)
Issuance of common stock	212	205
Purchases of treasury stock	(700)	0
Net cash (used for) provided by financing activities	(50,117)	52,130
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(172,870)	53,762
CASH AND CASH EQUIVALENTS, BEGINNING	263,862	213,358
CASH AND CASH EQUIVALENTS, ENDING	90,992	267,120
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	2,958	4,987
Income taxes paid	1,121	2,375
Non-cash investing and financing activities:
Right-of-use lease assets obtained in exchange for lessee finance lease liabilities	0	2,653
Transfer of loans to foreclosed real estate	$ 97	$ 0

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Basis of Presentation

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of Penns Woods Bancorp, Inc. (the “Company”) and its wholly-owned subsidiaries: Woods Investment Company, Inc., Woods Real Estate Development Company, Inc., United Insurance Solutions, LLC., Luzerne Bank, and Jersey Shore State Bank (Jersey Shore State Bank and Luzerne Bank are referred to together as the “Banks”) and Jersey Shore State Bank’s wholly-owned subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group (“The M Group”).  All significant inter-company balances and transactions have been eliminated in the consolidation.

The interim financial statements are unaudited, but in the opinion of management reflect all adjustments necessary for the fair presentation of results for such periods.  The results of operations for any interim period are not necessarily indicative of results for the full year.  These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

In reference to the attached financial statements, all adjustments are of a normal recurring nature pursuant to Rule 10-01(b) (8) of Regulation S-X.

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2022

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss by component shown net of tax and parenthesis indicating debits, as of June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
(In Thousands)	Net Unrealized (Loss) Gain on Available for Sale Securities		Defined Benefit  Plan		Total		Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total
Beginning balance	$	(3,074)	$	(3,472)	$	(6,546)	$	3,095	$	(5,560)	$	(2,465)
Other comprehensive (loss) gain before reclassifications	(3,156)		—		(3,156)		1,098		—		1,098
Amounts reclassified from accumulated other comprehensive (loss) gain	8		14		22		(108)		37		(71)
Net current-period other comprehensive (loss) income	(3,148)		14		(3,134)		990		37		1,027
Ending balance	$	(6,222)	$	(3,458)	$	(9,680)	$	4,085	$	(5,523)	$	(1,438)

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
(In Thousands)	Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total		Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total
Beginning balance	$	2,373	$	(3,485)	$	(1,112)	$	4,714	$	(5,596)	$	(882)
Other comprehensive loss before reclassifications	(8,605)		—		(8,605)		(412)		—		(412)
Amounts reclassified from accumulated other comprehensive gain (loss)	10		27		37		(217)		73		(144)
Net current-period other comprehensive (loss) income	(8,595)		27		(8,568)		(629)		73		(556)
Ending balance	$	(6,222)	$	(3,458)	$	(9,680)	$	4,085	$	(5,523)	$	(1,438)

The reclassifications out of accumulated other comprehensive loss shown, net of tax and parenthesis indicating debits to net income, as of June 30, 2022 and 2021 were as follows:

Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item  in the Consolidated  Statement of Income
	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Net unrealized (loss) gain on available for sale securities	$	(10)	$	137	Net debt securities (losses) gains, available for sale
Income tax effect	2		(29)		Income tax provision
Total reclassifications for the period	$	(8)	$	108
Net unrecognized pension costs	$	(18)	$	(47)	Other non-interest expense
Income tax effect	4		10		Income tax provision
Total reclassifications for the period	$	(14)	$	(37)

Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item  in the Consolidated  Statement of Income
	Six months ended June 30, 2022		Six months ended June 30, 2021
Net unrealized (losses) gain on available for sale securities	$	(12)	$	275	Net debt securities (losses) gains, available for sale
Income tax effect	2		(58)		Income tax provision
Total reclassifications for the period	$	(10)	$	217
Net unrecognized pension costs	$	(35)	$	(93)	Other non-interest expense
Income tax effect	8		20		Income tax provision
Total reclassifications for the period	$	(27)	$	(73)

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2022

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative-effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This Update is effective for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has contracted with a third-party software vendor to assist with the development of our approach in determining the calculations under the new guidance. The Company is currently refining the expected credit losses calculation along with process documentation and data validation testing. We expect to recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of January 1, 2023. The Company recognizes that this one-time adjustment may be material but currently the impact to the financial statements is unknown.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Update is effective for smaller reporting companies and all other entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Derivatives, and Hedging (Topic 815); and Financial Instruments (Topic 825), which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. ASU 2019-04 makes

clarifying amendments to certain financial instrument standards. For entities that have not yet adopted ASU 2016-13, the effective dates for the amendments related to ASU 2016-13 are the same as the effective dates in ASU 2016-13. For entities that have adopted ASU 2016-13, the amendments related to ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For entities that have not yet adopted ASU 2017-12 as of April 25, 2019, the effective dates for the amendments to Topic 815 are the same as the effective dates in ASU 2017-12. For entities that have adopted ASU 2017-12 as of April 25, 2019, the effective date is as of the beginning of the first annual period beginning after April 25, 2019. The amendments related to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326), which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted the credit losses standard, the ASU is effective when they implement the credit losses standard. For entities that already have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt ASU 2016-13.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. For entities that have not yet adopted ASU 2016-13 as of November 26, 2019, the effective dates for ASU 2019-11 are the same as the effective dates and transition requirements in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate reform” if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon

issuance through December 31, 2022. It is too early to predict whether a new rate index replacement and the adoption of the ASU will have a material impact on the Company’s financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium. This ASU requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The amendments in this ASU are effective for public business entities that are not smaller reporting companies, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2020, the FASB issued ASU 2020-11, Financial Services – Insurance (Topic 944), which was made in consideration of the implications of the Coronavirus Disease 2019 (COVID-19) pandemic on an insurance entity’s ability to effectively implement the amendments in Accounting Standards Update No. 2018-12, Financial Services— Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The amendments in this Update defer the effective date of LDTI for all entities by one year, as (1) for public business entities that meet the definition of an SEC filer and are not SRCs, LDTI is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years; and (2) for all other entities, LDTI is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. This Update is not expected to have a significant impact on the Company’s financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842), which amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease. Furthermore, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate. For public business entities and certain not-for-profit entities and employee benefit plans that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years. For all other entities that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. All entities that have adopted ASC 842 are permitted to early adopt the amendments in ASU 2021-05. The amendments in ASU 2021-05 are effective as of the same date as the guidance in ASC 842 for entities that have not adopted ASC 842. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This amendment clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. It also introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments are effective for fiscal years beginning after

December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The amendments will be applied prospectively, with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This Update is not expected to have a significant impact on the Company’s financial statements.

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Per Share Data

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Per Share Data

Per Share DataThere are no convertible securities which would affect the denominator in calculating basic and dilutive earnings per share. There were a total of 919,250 stock options, with an average exercise price of $25.36, outstanding on June 30, 2022. These options were excluded, on a weighted average basis, in the computation of diluted earnings per share for the period due to the average market price of common shares of $23.78 being less than the exercise price of the options issued. There were a total of 1,075,775 stock options, with an average exercise price of $27.31 that were excluded, on a weighted average basis, in the computation of diluted earnings per share for the period due to the average market price of common shares of $24.43 being less than the strike price for the period ending June 30, 2021.

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average common shares issued	7,557,402	7,539,892	7,555,113	7,537,629
Weighted average treasury stock shares	(498,357)	(480,225)	(489,341)	(480,225)
Weighted average common shares outstanding - basic and diluted	7,059,045	7,059,667	7,065,772	7,057,404

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Investment Securities

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

The amortized cost, gross unrealized gains and losses, and fair values of our investment securities portfolio at June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In Thousands)	Cost		Gains		Losses		Value
Available for sale (AFS):
U.S. Government and agency securities	$	1,007	$	—	$	(27)	$	980
Mortgage-backed securities	1,520		—		(145)		1,375
State and political securities	150,303		203		(5,358)		145,148
Other debt securities	47,484		12		(2,561)		44,935
Total debt securities	$	200,314	$	215	$	(8,091)	$	192,438
Investment equity securities:
Equity securities	$	1,350	$	—	$	(164)	$	1,186

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In Thousands)	Cost		Gains		Losses		Value
Available for sale (AFS):
Mortgage-backed securities	$	1,752	$	—	$	(5)	$	1,747
State and political securities	113,852		3,500		(694)		116,658
Other debt securities	47,802		524		(321)		48,005
Total debt securities	$	163,406	$	4,024	$	(1,020)	$	166,410
Investment equity securities:
Equity securities	$	1,350	$	—	$	(62)	$	1,288

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual debt securities have been in a continuous unrealized loss position, at June 30, 2022 and December 31, 2021.

	June 30, 2022
	Less than Twelve Months				Twelve Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In Thousands)	Value		Losses		Value		Losses		Value		Losses
Available for sale (AFS):
U.S. Government and agency securities	$	980	$	(27)	$	—	$	—	$	980	$	(27)
Mortgage-backed securities	1,375		(145)		—		—		1,375		(145)
State and political securities	100,753		(3,945)		12,228		(1,413)		112,981		(5,358)
Other debt securities	35,886		(1,937)		6,731		(624)		42,617		(2,561)
Total debt securities	$	138,994	$	(6,054)	$	18,959	$	(2,037)	$	157,953	$	(8,091)

	December 31, 2021
	Less than Twelve Months				Twelve Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In Thousands)	Value		Losses		Value		Losses		Value		Losses
Available for sale (AFS):
Mortgage-backed securities	$	1,747	$	(5)	$	—	$	—	$	1,747	$	(5)
State and political securities	34,203		(398)		7,408		(296)		41,611		(694)
Other debt securities	21,446		(301)		1,808		(20)		23,254		(321)
Total debt securities	$	57,396	$	(704)	$	9,216	$	(316)	$	66,612	$	(1,020)

At June 30, 2022, there were a total of 209 securities in a continuous unrealized loss position for less than twelve months and 30 individual securities that were in a continuous unrealized loss position for twelve months or greater.

The Company reviews its position quarterly and has determined that, at June 30, 2022, the declines outlined in the above table represent temporary declines and the Company does not intend to sell, and does not believe it will be required to sell, these securities before recovery of their cost basis, which may be at maturity.  The Company has concluded that the unrealized losses disclosed above are not other than temporary but are the result of interest rate changes, sector credit ratings changes, or company-specific ratings changes that are not expected to result in the non-collection of principal and interest during the period.

The amortized cost and fair value of debt securities at June 30, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities since borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In Thousands)	Amortized Cost		Fair Value
Due in one year or less	$	12,892	$	12,827
Due after one year to five years	116,729		112,732
Due after five years to ten years	67,668		63,997
Due after ten years	3,025		2,882
Total	$	200,314	$	192,438

Total gross proceeds from sales of debt securities available for sale for the six months ended June 30, 2022 was $0, compared to $13,574,000 for the corresponding 2021 period.

The following table represents gross realized gains and losses from the sales of debt securities available for sale:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Available for sale (AFS):
Gross realized gains:
U.S. Government and agency securities	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—
State and political securities	13		—		14		—
Other debt securities	—		137		—		275
Total gross realized gains	$	13	$	137	$	14	$	275
Gross realized losses:
State and political securities	$	23	$	—	$	26	$	—
Other debt securities	—		—		—		—
Total gross realized losses	$	23	$	—	$	26	$	—

There were no impairment charges included in gross realized losses for the three and six months ended June 30, 2022 and 2021, respectively.

Investment securities with a carrying value of approximately $171,435,000 and $139,435,000 at June 30, 2022 and December 31, 2021, respectively, were pledged to secure certain deposits, repurchase agreements, and for other purposes as required by law.

At June 30, 2022 and December 31, 2021, we had $1,186,000 and $1,288,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Net (losses) gains recognized in equity securities during the period	$	(44)	$	3	$	(103)	$	(16)
Less: Net gains realized on the sale of equity securities during the period	—		—		—		—
Unrealized (losses) gains recognized in equity securities held at reporting date	$	(44)	$	3	$	(103)	$	(16)

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Loans

6 Months Ended

Jun. 30, 2022

Loans and Leases Receivable Disclosure [Abstract]

Loans

LoansManagement segments the Banks' loan portfolio to a level that enables risk and performance monitoring according to similar risk characteristics.  Loans are segmented based on the underlying collateral characteristics.  Categories include commercial, financial, and agricultural, real estate, and installment loans.  Real estate loans are further segmented into three categories: residential, commercial, and construction, while installment loans are classified as either consumer automobile loans or other installment loans.

The following table presents the related aging categories of loans, by segment, as of June 30, 2022 and December 31, 2021:

	June 30, 2022
			Past Due		Past Due 90
			30 To 89		Days Or More		Non-
(In Thousands)	Current		Days		& Still Accruing		Accrual		Total
Commercial, financial, and agricultural	$	178,479	$	103	$	3	$	418	$	179,003
Real estate mortgage:
Residential	648,960		2,006		351		642		651,959
Commercial	459,923		141		—		3,605		463,669
Construction	47,018		—		—		—		47,018
Consumer automobile loans	136,830		759		67		14		137,670
Other consumer installment loans	9,604		29		—		—		9,633
	1,480,814		$	3,038	$	421	$	4,679	1,488,952
Net deferred loan fees and discounts	180								180
Allowance for loan losses	(14,393)								(14,393)
Loans, net	$	1,466,601							$	1,474,739

	December 31, 2021
			Past Due		Past Due 90
			30 To 89		Days Or More		Non-
(In Thousands)	Current		Days		& Still Accruing		Accrual		Total
Commercial, financial, and agricultural	$	162,571	$	139	$	—	$	575	$	163,285
Real estate mortgage:
Residential	590,240		4,083		687		837		595,847
Commercial	442,573		224		—		3,937		446,734
Construction	36,701		554		—		40		37,295
Consumer automobile loans	138,775		490		143		—		139,408
Other consumer installment loans	9,199		47		31		—		9,277
	1,380,059		$	5,537	$	861	$	5,389	1,391,846
Net deferred loan fees and discounts	301								301
Allowance for loan losses	(14,176)								(14,176)
Loans, net	$	1,366,184							$	1,377,971

 

Impaired Loans

Impaired loans are loans for which it is probable the Banks will not be able to collect all amounts due according to the contractual terms of the loan agreement.  The Banks individually evaluate such loans for impairment and do not aggregate loans by major risk classifications.  The definition of “impaired loans” is not the same as the definition of “non-accrual loans,” although the two categories overlap.  The Banks may choose to place a loan on non-accrual status due to payment delinquency or uncertain collectability, while not classifying the loan as impaired. Factors considered by management in determining impairment include payment status and collateral value.  The amount of impairment for these types of loans is determined by the difference between the present value of the expected cash flows related to the loan, using the original interest rate, and its recorded value, or as a practical expedient in the case of collateralized loans, the difference between the fair value of the collateral and the recorded amount of the loan.  When foreclosure is probable, impairment is measured based on the fair value of the collateral.

Management evaluates individual loans in all of the commercial segments for possible impairment if the loan is greater than $100,000 and if the loan is either on non-accrual status or has a risk rating of substandard or worse.  Management may also elect to measure an individual loans of less than $100,000 for impairment on a case-by-case basis.

Mortgage loans on one-to-four family properties and consumer loans are measured for impairment collectively with the exception of loans identified as troubled debt restructurings. Loans that experience insignificant payment delays, which are

defined as 90 days or less, generally are not classified as impaired.  Management determines the significance of payment delays on a case-by-case basis taking into consideration all circumstances surrounding the loan and the borrower including the length of the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed.  Interest income for impaired loans is recorded consistent to the Banks' policy.

The following table presents the recorded investment, unpaid principal balance, and related allowance of impaired loans by segment as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Recorded		Unpaid Principal		Related
(In Thousands)	Investment		Balance		Allowance
With no related allowance recorded:
Commercial, financial, and agricultural	$	316	$	316	$	—
Real estate mortgage:
Residential	3,533		3,533		—
Commercial	2,725		2,725		—
Construction	—		—		—
Consumer automobile loans	—		—		—
Installment loans to individuals	—		—		—
	6,574		6,574		—
With an allowance recorded:
Commercial, financial, and agricultural	383		383		1
Real estate mortgage:
Residential	1,177		1,177		192
Commercial	4,573		4,573		842
Construction	—		—		—
Consumer automobile loans	14		14		14
Installment loans to individuals	19		19		19
	6,166		6,166		1,068
Total:
Commercial, financial, and agricultural	699		699		1
Real estate mortgage:
Residential	4,710		4,710		192
Commercial	7,298		7,298		842
Construction	—		—		—
Consumer automobile loans	14		14		14
Installment loans to individuals	19		19		19
	$	12,740	$	12,740	$	1,068

	December 31, 2021
	Recorded		Unpaid Principal		Related
(In Thousands)	Investment		Balance		Allowance
With no related allowance recorded:
Commercial, financial, and agricultural	$	355	$	355	$	—
Real estate mortgage:
Residential	3,874		3,874		—
Commercial	3,105		3,105		—
Construction	105		105		—
Consumer automobile loans	—		—		—
Installment loans to individuals	—		—		—
	7,439		7,439		—
With an allowance recorded:
Commercial, financial, and agricultural	534		3,321		2
Real estate mortgage:
Residential	1,178		1,178		201
Commercial	4,814		4,814		800
Construction	—		—		—
Consumer automobile loans	—		—		—
Installment loans to individuals	20		20		20
	6,546		9,333		1,023
Total:
Commercial, financial, and agricultural	889		3,676		2
Real estate mortgage:
Residential	5,052		5,052		201
Commercial	7,919		7,919		800
Construction	105		105		—
Consumer automobile loans	—		—		—
Installment loans to individuals	20		20		20
	$	13,985	$	16,772	$	1,023

The following table presents the average recorded investment in impaired loans and related interest income recognized for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022						2021
(In Thousands)	Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans		Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans
Commercial, financial, and agricultural	$	758	$	5	$	—	$	1,641	$	2	$	—
Real estate mortgage:
Residential	4,773		48		—		5,504		89		—
Commercial	7,446		49		—		9,865		35		—
Construction	32		—		—		118		2		—
Consumer automobile	7		1		—		76		—		—
Other consumer installment loans	19		—		—		10		9		—
	$	13,035	$	103	$	—	$	17,214	$	137	$	—

	Six Months Ended June 30,
	2022						2021
(In Thousands)	Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans		Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans
Commercial, financial, and agricultural	$	801	$	10	$	—	$	1,382	$	30	$	—
Real estate mortgage:
Residential	4,866		94		—		5,775		98		—
Commercial	7,605		101		—		9,703		65		—
Construction	56		1		—		120		3		—
Consumer automobile	5		1		—		50		—		—
Other consumer installment loans	19		—		—		6		9		—
	$	13,352	$	207	$	—	$	17,036	$	205	$	—

Troubled Debt Restructurings

The loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring (“TDR”), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties.  These concessions typically result from loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions.  Certain TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

There were no loan modifications considered to be TDRs completed during the three and six months ended June 30, 2022, respectively. There were three and five loan modifications considered TDRs completed during the three and six months ended June 30, 2021. Loan modifications that are considered TDRs completed during the three and six months ended June 30, 2021 were as follows:

	Three Months Ended June 30,
		2021
(In Thousands, Except Number of Contracts)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial, financial, and agricultural		1	$	949	$	949
Real estate mortgage:
Residential		1	178		178
Commercial		1	730		730
Construction		—	—		—
		3	$	1,857	$	1,857

	Six Months Ended June 30,
		2021
(In Thousands, Except Number of Contracts)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial, financial, and agricultural		1	$	949	$	949
Real estate mortgage:
Residential		2	865		865
Commercial		2	855		855
Construction		—	—		—
		5	$	2,669	$	2,669

There was no loan modification considered to be a TDR made during the twelve months prior to June 30, 2022 that defaulted during the six months ended June 30, 2022. There was one loan modification considered to be a TDR made during the twelve months previous to June 30, 2021 that defaulted during the six months ended June 30, 2021. The defaulted loan type and recorded investments at June 30, 2021 were as follows: one residential real estate loan with a recorded investment of $687,000.

Troubled debt restructurings amounted to $8,692,000 and $9,410,000 as of June 30, 2022 and December 31, 2021, respectively.

The amount of foreclosed residential real estate held at June 30, 2022 and December 31, 2021, totaled $127,000 and $339,000, respectively. Consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process at June 30, 2022 and December 31, 2021, totaled $165,000 and $193,000, respectively.

The Company began offering short-term loan modifications to provide relief to borrowers during the COVID-19 national emergency. The CARES Act, along with a joint agency statement issued by federal and state banking agencies, provides that short-term modifications made in a good faith basis in response to COVID-19 to loans that are current at the time the modification program is implemented do not need to be accounted for as TDRs. Loan modifications and payment deferrals have been at historically high levels as the impact of the pandemic continues. As of June 30, 2022, the loan modification/deferral program in place has generated deferrals of up to 180 days that have been granted on 1,372 loans with no loan remaining in its deferral period. As of June 30, 2021, the loan modification/deferral program in place had generated deferrals of up to 180 days that were granted on 1,365 loans with 20 loans remaining in their deferral period with an aggregate outstanding balance of $7,931,000.These loan modifications met applicable requirements to not be considered TDRs. The Economic Aid to Hard-Hit Small Businesses, Non-profits and Venues Act (the “Economic Aid Act”) passed in December 2020 extended the CARES Act provisions permitting financial institutions to suspend TDR assessment and reporting requirements under generally accepted accounting principles until the earlier of 60 days after the date that the President terminates the COVID-19 national emergency or January 1, 2022.

Internal Risk Ratings

Management uses a ten point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first six categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a substandard classification. Loans in the substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are evaluated for substandard classification.  Loans in the doubtful category exhibit the same weaknesses found in the substandard loans; however, the weaknesses are more pronounced.  Such loans are static and collection in full is improbable.  However, these loans are not yet rated as loss because certain events may occur which would salvage the debt.  Loans classified as loss are considered uncollectible and charge-off is imminent.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Banks have a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the pass category unless a specific action, such as bankruptcy, repossession, or death occurs to raise awareness of a possible credit event.  An external semi-annual loan review of large commercial relationships is performed, as well as a sample of smaller transactions. The 2022 loan review will evaluate 55% of the Banks' average outstanding commercial portfolio which can consist of outstanding loans, commercial real estate mortgages and outstanding

commitments. Detailed reviews, including plans for resolution, are performed on loans classified as substandard, doubtful, or loss on a quarterly basis.

The following table presents the credit quality categories identified above as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment loans
(In Thousands)			Residential		Commercial		Construction						Totals
Pass	$	176,987	$	648,929	$	450,530	$	46,914	$	137,656	$	9,614	$	1,470,630
Special Mention	180		273		5,147		—		—		—		5,600
Substandard	1,836		2,757		7,992		104		14		19		12,722
	$	179,003	$	651,959	$	463,669	$	47,018	$	137,670	$	9,633	$	1,488,952

	December 31, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment loans
(In Thousands)			Residential		Commercial		Construction						Totals
Pass	$	160,899	$	592,570	$	432,158	$	36,511	$	139,408	$	9,257	$	1,370,803
Special Mention	234		284		6,108		676		—		—		7,302
Substandard	2,152		2,993		8,468		108		—		20		13,741
	$	163,285	$	595,847	$	446,734	$	37,295	$	139,408	$	9,277	$	1,391,846

Allowance for Loan Losses

An allowance for loan losses (“ALL”) is maintained to absorb losses from the loan portfolio.  The ALL is based on management’s continuing evaluation of the risk characteristics and credit quality of the loan portfolio, assessment of current economic conditions, diversification and size of the portfolio, adequacy of collateral, past and anticipated future loss experience, and the amount of non-performing loans.

The Banks' methodology for determining the ALL is based on the requirements of ASC Section 310-10-35 for loans individually evaluated for impairment (previously discussed) and ASC Subtopic 450-20 for loans collectively evaluated for impairment, as well as the Interagency Policy Statements on the Allowance for Loan and Lease Losses and other bank regulatory guidance.  The total of the two components represents the Banks' ALL.

Loans that are collectively evaluated for impairment are analyzed with general allowances being made as appropriate.  Allowances are segmented based on collateral characteristics previously disclosed, and consistent with credit quality monitoring.  Loans that are collectively evaluated for impairment are grouped into two classes for evaluation.  A general allowance is determined for “Pass” rated credits, while a separate pool allowance is provided for “Criticized” rated credits that are not individually evaluated for impairment.

For the general allowances, historical loss trends are used in the estimation of losses in the current portfolio.  These historical loss amounts are modified by other qualitative factors.  A historical charge-off factor is calculated utilizing a twelve quarter moving average.  However, management may adjust the moving average time frame by up to four quarters to adjust for variances in the economic cycle. Management has identified a number of additional qualitative factors which it uses to supplement the historical charge-off factor because these factors are likely to cause estimated credit losses associated with the existing loan pools to differ from historical loss experience.  The additional factors that are evaluated quarterly and updated using information obtained from internal, regulatory, and governmental sources are: national and local economic trends and conditions; levels of and trends in delinquency rates and non-accrual loans; trends in volumes and terms of loans; effects of changes in lending policies; experience, ability, and depth of lending staff; value of underlying collateral; and concentrations of credit from a loan type, industry and/or geographic standpoint.

Loans in the criticized pools, which possess certain qualities or characteristics that may lead to collection and loss issues, are closely monitored by management and subject to additional qualitative factors.  Management also monitors industry loss factors by loan segment for applicable adjustments to actual loss experience.

Management reviews the loan portfolio on a quarterly basis in order to make appropriate and timely adjustments to the ALL.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the ALL.

Activity in the allowance is presented for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,936	$	4,801	$	5,215	$	197	$	1,376	$	114	$	384	$	14,023
Charge-offs	—		(15)		—		—		(48)		(43)		—		(106)
Recoveries	41		42		1		28		13		21		—		146
Provision	131		(10)		179		(26)		(34)		18		72		330
Ending Balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393

	Three Months Ended June 30, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	2,606	$	4,401	$	4,176	$	142	$	1,735	$	235	$	907	$	14,202
Charge-offs	—		(129)		—		—		(127)		(28)		—		(284)
Recoveries	9		109		25		—		15		12		—		170
Provision	(769)		238		235		70		201		(175)		550		350
Ending Balance	$	1,846	$	4,619	$	4,436	$	212	$	1,824	$	44	$	1,457	$	14,438

 

t	Six Months Ended June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,946	$	4,701	$	5,336	$	179	$	1,411	$	111	$	492	$	14,176
Charge-offs	—		(15)		(155)		—		(177)		(103)		—		(450)
Recoveries	45		45		2		28		22		45		—		187
Provision	117		87		212		(8)		51		57		(36)		480
Ending Balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393

	Six Months Ended June 30, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,936	$	4,460	$	3,635	$	134	$	1,906	$	261	$	1,471	$	13,803
Charge-offs	(35)		(143)		—		—		(223)		(57)		—		(458)
Recoveries	14		112		25		5		32		40		—		228
Provision	(69)		190		776		73		109		(200)		(14)		865
Ending Balance	$	1,846	$	4,619	$	4,436	$	212	$	1,824	$	44	$	1,457	$	14,438

The shift in allocation and the decrease in the loan provision is primarily due to changes in the credit metrics within the loan portfolio and decreasing economic uncertainty caused by the COVID-19 pandemic including supply chain disruptions.

The Company grants commercial, industrial, residential, and installment loans to customers primarily throughout north-east and central Pennsylvania. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent on the economic conditions within this region.

The Company has a concentration of the following to gross loans at June 30, 2022 and 2021: 

	June 30,
	2022		2021
Owners of residential rental properties	19.65	%	18.15	%
Owners of commercial rental properties	16.11	%	13.54	%

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer Automobile		Other consumer installment		Unallocated
(In Thousands)			Residential		Commercial		Construction								Totals
Allowance for Loan Losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	192	$	842	$	—	$	14	$	19	$	—	$	1,068
Collectively evaluated for impairment	2,107		4,626		4,553		199		1,293		91		456		13,325
Total ending allowance balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393
Loans:
Individually evaluated for impairment	$	699	$	4,710	$	7,298	$	—	$	14	$	19			$	12,740
Collectively evaluated for impairment	178,304		647,249		456,371		47,018		137,656		9,614				1,476,212
Total ending loans balance	$	179,003	$	651,959	$	463,669	$	47,018	$	137,670	$	9,633			$	1,488,952

	December 31, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer Automobile		Other consumer installment		Unallocated
(In Thousands)			Residential		Commercial		Construction								Totals
Allowance for Loan Losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2	$	201	$	800	$	—	$	—	$	20	$	—	$	1,023
Collectively evaluated for impairment	1,944		4,500		4,536		179		1,411		91		492		13,153
Total ending allowance balance	$	1,946	$	4,701	$	5,336	$	179	$	1,411	$	111	$	492	$	14,176
Loans:
Individually evaluated for impairment	$	889	$	5,052	$	7,919	$	105	$	—	$	20			$	13,985
Collectively evaluated for impairment	162,396		590,795		438,815		37,190		139,408		9,257				1,377,861
Total ending loans balance	$	163,285	$	595,847	$	446,734	$	37,295	$	139,408	$	9,277			$	1,391,846

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Net Periodic Benefit Cost-Defined Benefit Plans

6 Months Ended

Jun. 30, 2022

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Net Periodic Benefit Cost-Defined Benefit Plans

Net Periodic Benefit Cost-Defined Benefit Plans

For a detailed disclosure on the Company’s pension and employee benefits plans, please refer to Note 13 of the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2021.

The following sets forth the components of the net periodic expense/(gain) of the domestic non-contributory defined benefit plan for the three and six months ended June 30, 2022 and 2021, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Interest cost	$	138	$	127	$	276	$	254
Expected return on plan assets	(413)		(386)		(825)		(772)
Amortization of net loss	18		47		35		93
Net periodic benefit	$	(257)	$	(212)	$	(514)	$	(425)

Employer Contributions

The Company previously disclosed in its consolidated financial statements, included in the Annual Report on Form 10-K for the year ended December 31, 2021, that it does not expect to contribute to its defined benefit plan in 2022.  As of June 30, 2022, there were no contributions made to the pension plan.

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Stock Purchase Plans	6 Months Ended
	Jun. 30, 2022
Share-Based Payment Arrangement [Abstract]
Stock Purchase Plans	Stock Purchase PlansThe Company maintains an Employee Stock Purchase Plan (“Plan”).  The Plan is intended to encourage employee participation in the ownership and economic progress of the Company.  The Plan allows for up to 1,500,000 shares to be purchased by employees.  The purchase price of the shares is 95% of market value with an employee eligible to purchase up to the lesser of 15% of base compensation or $12,000 in market value annually.  During the six months ended June 30, 2022 and 2021, there were 1,903 and 1,984 shares issued under the Plan, respectively, for total proceeds of $44,000 and $45,000.The Company maintains the 2020 Non-Employee Director Compensation Plan ("Director Plan"). Under this Director Plan, non-employee directors who have not attained specified stock ownership levels are required to receive a portion of their annual compensation in the form of common stock (currently 50%of total annual compensation), with the ability to elect to receive up to 100% of annual compensation in the form of common stock by making a written election prior to the calendar year to which the compensation relates. The Director Plan allows for up to 100,000 shares to be issued. As of June 30 2022, the Company has issued a total of 28,700 shares of common stock to non-employee directors under the Director Plan in lieu of otherwise payable cash compensation with 6,990 and 7,067 shares issued during the six months ended June 30, 2022 and 2021.

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Off-Balance Sheet Risk

6 Months Ended

Jun. 30, 2022

Off Balance Sheet Risk

Off-Balance Sheet Risk

Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments are primarily comprised of commitments to extend credit, standby letters of credit, and credit exposure from the sale of assets with recourse.  These instruments involve, to varying degrees, elements of credit, interest rate, or liquidity risk in excess of the amount recognized in the Consolidated Balance Sheet.  The contract amounts of these instruments express the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss from nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments.  The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.  The Company may require collateral or other security to support financial instruments with off-balance sheet credit risk.

Financial instruments whose contract amounts represent credit risk are as follows at June 30, 2022 and December 31, 2021:

(In Thousands)	June 30, 2022		December 31, 2021
Commitments to extend credit	$	211,827	$	184,364
Standby letters of credit	9,942		7,027
Credit exposure from the sale of assets with recourse	10,339		10,248
	$	232,108	$	201,639

Commitments to extend credit are legally binding agreements to lend to customers.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of fees.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future liquidity requirements.  The Company evaluates each customer’s credit worthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary by the Company, on an extension of credit is based on management’s credit assessment of the counterparty.

Standby letters of credit represent conditional commitments issued by the Company to guarantee the performance of a customer to a third party.  These instruments are issued primarily to support bid or performance related contracts.  The coverage period for these instruments is typically a one year period with an annual renewal option subject to prior approval by management.  Fees earned from the issuance of these letters are recognized upon expiration of the coverage period.  For secured letters of credit, the collateral is typically Bank deposit instruments or customer business assets.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The following disclosures show the hierarchal disclosure framework associated with the level of pricing observations utilized in measuring assets and liabilities at fair value.

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

This hierarchy requires the use of observable market data when available.

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value on a recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	June 30, 2022
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
U.S. Government and agency securities	$	—	$	980	$	—	$	980
Mortgage-backed securities	—		1,375		—		1,375
State and political securities	—		145,148		—		145,148
Other debt securities	—		44,935		—		44,935
Investment equity securities:
Equity securities	1,186		—		—		1,186

	December 31, 2021
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
Mortgage-backed securities	$	—	$	1,747	$	—	$	1,747
State and political securities	—		116,658		—		116,658
Other debt securities	—		48,005		—		48,005
Investment equity securities:
Equity securities	1,288		—		—		1,288

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value on a non-recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 

	June 30, 2022
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	2,041	$	2,041
Other real estate owned	—		—		127		127

	December 31, 2021
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	2,360	$	2,360
Other real estate owned	—		—		83		83

The following tables present a listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques as of June 30, 2022 and December 31, 2021: 

	June 30, 2022
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	2,041		Appraisal of collateral (1)	Appraisal adjustments (1)	0% to (20)%	(3)%
Other real estate owned	$	127	Appraisal of collateral (1)	Appraisal adjustments (1)	(20)%	(20)%

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

	December 31, 2021
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	2,360		Appraisal of collateral (1)	Appraisal adjustments (1)	0% to (34)%	(15)%
Other real estate owned	$	83	Appraisal of collateral (1)	Appraisal adjustments (1)	(20)%	(20)%

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

The discounted cash flow valuation technique is utilized to determine the fair value of performing impaired loans, while non-performing impaired loans utilize the appraisal of collateral method.

The significant unobservable input used in the fair value measurement of the Company’s impaired loans using the appraisal of collateral valuation technique include appraisal adjustments, which are adjustments to appraisals by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The significant unobservable input used in the fair value measurement of the Company’s other real estate owned are the same inputs used to value impaired loans using the appraisal of collateral valuation technique.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company is required to disclose fair values for its financial instruments.  Fair values are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Also, it is the Company’s general practice and intention to hold most of its financial instruments to maturity and not to engage in trading or sales activities.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.  These fair values are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions can significantly affect the fair values.

Fair values have been determined by the Company using historical data and an estimation methodology suitable for each category of financial instruments.  The Company’s fair values are set forth below for the Company’s other financial instruments.

As certain assets and liabilities, such as deferred tax assets, premises and equipment, and many other operational elements of the Company, are not considered financial instruments but have value, this fair value of financial instruments would not represent the full market value of the Company.

The fair values of the Company’s financial instruments not recorded at fair value on a recurring or nonrecurring basis are as follows at June 30, 2022 and December 31, 2021:

	Carrying		Fair		Fair Value Measurements at June 30, 2022
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:
Loans held for sale (1)	$	3,857	$	3,857	$	3,857	$	—	$	—
Loans, net	1,474,739		1,420,867		—		—		1,420,867
Financial liabilities:
Time deposits	153,679		145,812		—		—		145,812
Short-term borrowings	5,464		5,464		5,464		—		—
Long-term borrowings	112,874		108,433		—		—		108,433

(1) The financial instrument is carried at cost at, June 30, 2022 which approximate the fair value of the instruments

	Carrying		Fair		Fair Value Measurements at December 31, 2021
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:
Loans held for sale (1)	$	3,725	$	3,725	$	3,725	$	—	$	—
Loans, net	1,377,971		1,379,787		—		—		1,379,787
Financial liabilities:
Time deposits	205,367		204,512		—		—		204,512
Short-term borrowings	5,747		5,747		5,747		—		—
Long-term borrowings	125,963		127,679		—		—		127,679

(1) The financial instrument is carried at cost at, December 31, 2021 which approximate the fair value of the instruments

The methods and assumptions used by the Company in estimating fair values of financial instruments is in accordance with ASC Topic 825, Financial Instruments, as amended by ASU 2016-01 which requires public entities to use exit pricing in the calculation of the above tables.

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Stock Options

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock Options

Stock Options

In 2020, the Company adopted the 2020 Equity Incentive Plan which replaced the 2014 Equity Incentive Plan that did not have any remaining shares available for issuance. The plans are designed to help the Company attract, retain, and motivate employees and non-employee directors. Incentive stock options, non-qualified stock options, restricted stock, restricted stock units, and other equity-based awards may be granted as part of the plan.

As of January 1, 2022, the Company had a total of 1,034,525 stock options outstanding. During the period ended June 30, 2022, the Company issued 234,000 stock options with a strike price of $24.10 to a group of employees. The options granted in 2022 all expire ten years from the grant date. Of the 234,000 grants awarded in 2022, 156,000 of the options vest in three years while the 78,000 remaining options vest in five years. During the period ended June 30, 2022, a voluntary cash settlement of 346,725 outstanding stock options with an average strike price of $30.07 was initiated. The repurchase price per outstanding share ranged from $1.4770 to $3.3685 as determined by the utilization of a Black Scholes valuation methodology.

Stock Options Granted
Date	Shares	Forfeited	Cash Settlement	Outstanding	Strike Price		Vesting Period	Expiration
January 18, 2022	156,000	—	—	156,000	$	24.10	3 years	10 years
January 18, 2022	78,000	—	—	78,000	24.10		5 years	10 years
April 9, 2021	156,500	—	—	156,500	24.23		3 years	10 years
April 9, 2021	78,000	—	—	78,000	24.23		5 years	10 years
March 11, 2020	119,300	—	—	119,300	25.34		3 years	10 years
March 11, 2020	119,200	—	—	119,200	25.34		5 years	10 years
March 15, 2019	120,900	(15,600)	—	105,300	28.01		3 years	10 years
March 15, 2019	119,100	(15,150)	—	103,950	28.01		5 years	10 years
August 24, 2018	75,300	(11,850)	(63,450)	—	30.67		3 years	10 years
August 24, 2018	149,250	(23,850)	(125,400)	—	30.67		5 years	10 years
January 5, 2018	18,750	—	(18,750)	—	30.07		3 years	10 years
January 5, 2018	18,750	—	(18,750)	—	30.07		5 years	10 years
March 24, 2017	69,375	(11,250)	(58,125)	—	29.47		3 years	10 years
March 24, 2017	35,625	(2,250)	(33,375)	—	29.47		5 years	10 years
August 27, 2015	58,125	(26,250)	(28,875)	3,000	28.02		5 years	10 years

A summary of stock option activity is presented below:

	June 30, 2022
	Shares	Weighted Average Exercise Price
Outstanding, beginning of year	1,034,525	$	27.23
Granted	234,000	24.10
Cash settlement	(346,725)	30.07
Forfeited	(2,550)	29.10
Expired	—	—
Outstanding, end of period	919,250	$	25.36
Exercisable, end of period	108,300	$	28.01

The estimated fair value of options, including the effect of estimated forfeitures, is recognized as expense on a straightline basis over the options’ vesting periods while ensuring that the cumulative amount of compensation cost recognized at least equals the value of the vested portion of the award at that date.

The fair value of stock options is estimated using the Black-Scholes option pricing model. The following is a summary of the assumptions used in this model for stock options granted for the six months ended June 30, 2022:

	Six months ended June 30,
	2022
Risk-free interest rate	1.23		%
Expected volatility	33		%
Expected Annual dividend	$	1.28
Expected life	6.84 years
Weighted average grant date fair value per option	$	4.28

Compensation expense for stock options is recognized using the fair value when the stock options are granted and is amortized over the options' vesting period. Compensation expense related to stock options was $768,000 for the six months ended June 30, 2022 compared to $527,000 for the same period of 2021. The expense level for the six months ended June 30, 2022 was impacted by the voluntary cash settlement of 346,725 stock options which resulted in $183,000 in additional compensation expense and a reduction in additional paid-in capital of $1,074,000. As of June 30, 2022, a total of 108,300 stock options were exercisable and the weighted average years to expiration of these options was 7.21 years. Total unrecognized compensation cost for non-vested options was $2,088,000 and will be recognized over their weighted average remaining vesting period of 1.35 years.

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

Leases

The following table shows finance lease right of use assets and finance lease liabilities as of:

(In Thousands)	Statement of Financial Condition classification	June 30, 2022		December 31, 2021
Finance lease right of use assets	Premises and equipment, net	$	7,220	$	7,435
Finance lease liabilities	Long-term borrowings	7,874		7,963

The following table shows the components of finance and operating lease expense for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Finance Lease Cost:
Amortization of right-of-use asset	$	107	$	107	$	215	$	259
Interest expense	62		62		123		133
Operating lease cost	71		74		143		150
Variable lease cost	—		—		—		—
Total Lease Cost	$	240	$	243	$	481	$	542

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(In Thousands)	Operating		Finance
2022	$	146	$	210
2023	265		421
2024	255		427
2025	257		929
2026	260		387
2027 and thereafter	2,568		9,276
Total undiscounted cash flows	3,751		11,650
Discount on cash flows	(951)		(3,776)
Total lease liability	$	2,800	$	7,874

The following table shows the weighted average remaining lease term and weighted average discount rate for both operating and finance leases outstanding as of June 30, 2022.

	Operating		Finance
Weighted-average term (years)	17.3		23.9
Weighted-average discount rate	3.54	%	3.20	%

Leases

Leases

The following table shows finance lease right of use assets and finance lease liabilities as of:

(In Thousands)	Statement of Financial Condition classification	June 30, 2022		December 31, 2021
Finance lease right of use assets	Premises and equipment, net	$	7,220	$	7,435
Finance lease liabilities	Long-term borrowings	7,874		7,963

The following table shows the components of finance and operating lease expense for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Finance Lease Cost:
Amortization of right-of-use asset	$	107	$	107	$	215	$	259
Interest expense	62		62		123		133
Operating lease cost	71		74		143		150
Variable lease cost	—		—		—		—
Total Lease Cost	$	240	$	243	$	481	$	542

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(In Thousands)	Operating		Finance
2022	$	146	$	210
2023	265		421
2024	255		427
2025	257		929
2026	260		387
2027 and thereafter	2,568		9,276
Total undiscounted cash flows	3,751		11,650
Discount on cash flows	(951)		(3,776)
Total lease liability	$	2,800	$	7,874

The following table shows the weighted average remaining lease term and weighted average discount rate for both operating and finance leases outstanding as of June 30, 2022.

	Operating		Finance
Weighted-average term (years)	17.3		23.9
Weighted-average discount rate	3.54	%	3.20	%

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Reclassification of Comparative Amounts	6 Months Ended
	Jun. 30, 2022
Reclassification of Comparative Amounts
Reclassification of Comparative Amounts	Reclassification of Comparative AmountsCertain comparative amounts for the prior period have been reclassified to conform to current period presentations. Such reclassifications had no effect on net income or shareholders’ equity.

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Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The consolidated financial statements include the accounts of Penns Woods Bancorp, Inc. (the “Company”) and its wholly-owned subsidiaries: Woods Investment Company, Inc., Woods Real Estate Development Company, Inc., United Insurance Solutions, LLC., Luzerne Bank, and Jersey Shore State Bank (Jersey Shore State Bank and Luzerne Bank are referred to together as the “Banks”) and Jersey Shore State Bank’s wholly-owned subsidiary, The M Group, Inc. D/B/A The Comprehensive Financial Group (“The M Group”).  All significant inter-company balances and transactions have been eliminated in the consolidation.

The interim financial statements are unaudited, but in the opinion of management reflect all adjustments necessary for the fair presentation of results for such periods.  The results of operations for any interim period are not necessarily indicative of results for the full year.  These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. With certain exceptions, transition to the new requirements will be through a cumulative-effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This Update is effective for SEC filers that are eligible to be smaller reporting companies, non-SEC filers, and all other companies, to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has contracted with a third-party software vendor to assist with the development of our approach in determining the calculations under the new guidance. The Company is currently refining the expected credit losses calculation along with process documentation and data validation testing. We expect to recognize a one-time cumulative-effect adjustment to the allowance for loan losses as of January 1, 2023. The Company recognizes that this one-time adjustment may be material but currently the impact to the financial statements is unknown.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Update is effective for smaller reporting companies and all other entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Derivatives, and Hedging (Topic 815); and Financial Instruments (Topic 825), which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. ASU 2019-04 makes

clarifying amendments to certain financial instrument standards. For entities that have not yet adopted ASU 2016-13, the effective dates for the amendments related to ASU 2016-13 are the same as the effective dates in ASU 2016-13. For entities that have adopted ASU 2016-13, the amendments related to ASU 2016-13 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For entities that have not yet adopted ASU 2017-12 as of April 25, 2019, the effective dates for the amendments to Topic 815 are the same as the effective dates in ASU 2017-12. For entities that have adopted ASU 2017-12 as of April 25, 2019, the effective date is as of the beginning of the first annual period beginning after April 25, 2019. The amendments related to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326), which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted the credit losses standard, the ASU is effective when they implement the credit losses standard. For entities that already have adopted the credit losses standard, the ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt ASU 2016-13.

In November 2019, the FASB issued ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, to clarify its new credit impairment guidance in ASC 326, based on implementation issues raised by stakeholders. This Update clarified, among other things, that expected recoveries are to be included in the allowance for credit losses for these financial assets; an accounting policy election can be made to adjust the effective interest rate for existing troubled debt restructurings based on the prepayment assumptions instead of the prepayment assumptions applicable immediately prior to the restructuring event; and extends the practical expedient to exclude accrued interest receivable from all additional relevant disclosures involving amortized cost basis. For entities that have not yet adopted ASU 2016-13 as of November 26, 2019, the effective dates for ASU 2019-11 are the same as the effective dates and transition requirements in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-11 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company qualifies as a smaller reporting company and does not expect to early adopt these ASUs.

In March 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments. This ASU was issued to improve and clarify various financial instruments topics, including the current expected credit losses (CECL) standard issued in 2016. The ASU includes seven issues that describe the areas of improvement and the related amendments to GAAP; they are intended to make the standards easier to understand and apply and to eliminate inconsistencies, and they are narrow in scope and are not expected to significantly change practice for most entities. Among its provisions, the ASU clarifies that all entities, other than public business entities that elected the fair value option, are required to provide certain fair value disclosures under ASC 825, Financial Instruments, in both interim and annual financial statements. It also clarifies that the contractual term of a net investment in a lease under Topic 842 should be the contractual term used to measure expected credit losses under Topic 326. Amendments related to ASU 2019-04 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is not permitted before an entity’s adoption of ASU 2016-01. Amendments related to ASU 2016-13 for entities that have not yet adopted that guidance are effective upon adoption of the amendments in ASU 2016-13. Early adoption is not permitted before an entity’s adoption of ASU 2016-13. Amendments related to ASU 2016-13 for entities that have adopted that guidance are effective for fiscal years beginning after December 15, 2019, including interim periods within those years. Other amendments are effective upon issuance of this ASU. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, March 2020, to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls “reference rate reform” if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon

issuance through December 31, 2022. It is too early to predict whether a new rate index replacement and the adoption of the ASU will have a material impact on the Company’s financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU removes from U.S. GAAP the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt. Instead, they will account for a convertible debt instrument wholly as debt, and for convertible preferred stock wholly as preferred stock (i.e., as a single unit of account), unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC 815 or (2) a convertible debt instrument was issued at a substantial premium. This ASU requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The amendments in this ASU are effective for public business entities that are not smaller reporting companies, for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The guidance may be early adopted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In November 2020, the FASB issued ASU 2020-11, Financial Services – Insurance (Topic 944), which was made in consideration of the implications of the Coronavirus Disease 2019 (COVID-19) pandemic on an insurance entity’s ability to effectively implement the amendments in Accounting Standards Update No. 2018-12, Financial Services— Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts (LDTI). The amendments in this Update defer the effective date of LDTI for all entities by one year, as (1) for public business entities that meet the definition of an SEC filer and are not SRCs, LDTI is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years; and (2) for all other entities, LDTI is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. This Update is not expected to have a significant impact on the Company’s financial statements.

In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842), which amends ASC 842 so that lessors are no longer required to recognize a selling loss upon commencement of a lease with variable lease payments that, prior to the amendments, would have been classified as a sales-type or direct financing lease. Furthermore, a lessor must classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease and that would result in the recognition of a selling loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate. For public business entities and certain not-for-profit entities and employee benefit plans that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years. For all other entities that have adopted ASC 842, the amendments are effective for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022. All entities that have adopted ASC 842 are permitted to early adopt the amendments in ASU 2021-05. The amendments in ASU 2021-05 are effective as of the same date as the guidance in ASC 842 for entities that have not adopted ASC 842. This Update is not expected to have a significant impact on the Company’s financial statements.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings (TDRs) and Vintage Disclosures. The guidance amends ASC 326 to eliminate the accounting guidance for TDRs by creditors, while enhancing disclosure requirements for certain loan refinancing and restructuring activities by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying TDR recognition and measurement guidance, creditors will determine whether a modification results in a new loan or continuation of existing loan. These amendments are intended to enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. Additionally, the amendments to ASC 326 require that an entity disclose current-period gross writeoffs by year of origination within the vintage disclosures, which requires that an entity disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. The guidance is only for entities that have adopted the amendments in Update 2016-13 for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption using prospective application, including adoption in an interim period where the guidance should be applied as of the beginning of the fiscal year. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This amendment clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. It also introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The amendments are effective for fiscal years beginning after

December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The amendments will be applied prospectively, with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This Update is not expected to have a significant impact on the Company’s financial statements.

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2022

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Schedule of changes in accumulated other comprehensive income by component

The changes in accumulated other comprehensive loss by component shown net of tax and parenthesis indicating debits, as of June 30, 2022 and 2021 were as follows:

	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
(In Thousands)	Net Unrealized (Loss) Gain on Available for Sale Securities		Defined Benefit  Plan		Total		Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total
Beginning balance	$	(3,074)	$	(3,472)	$	(6,546)	$	3,095	$	(5,560)	$	(2,465)
Other comprehensive (loss) gain before reclassifications	(3,156)		—		(3,156)		1,098		—		1,098
Amounts reclassified from accumulated other comprehensive (loss) gain	8		14		22		(108)		37		(71)
Net current-period other comprehensive (loss) income	(3,148)		14		(3,134)		990		37		1,027
Ending balance	$	(6,222)	$	(3,458)	$	(9,680)	$	4,085	$	(5,523)	$	(1,438)

	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
(In Thousands)	Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total		Net Unrealized Gain (Loss) on Available for Sale Securities		Defined Benefit  Plan		Total
Beginning balance	$	2,373	$	(3,485)	$	(1,112)	$	4,714	$	(5,596)	$	(882)
Other comprehensive loss before reclassifications	(8,605)		—		(8,605)		(412)		—		(412)
Amounts reclassified from accumulated other comprehensive gain (loss)	10		27		37		(217)		73		(144)
Net current-period other comprehensive (loss) income	(8,595)		27		(8,568)		(629)		73		(556)
Ending balance	$	(6,222)	$	(3,458)	$	(9,680)	$	4,085	$	(5,523)	$	(1,438)

Schedule of reclassifications out of accumulated other comprehensive income

The reclassifications out of accumulated other comprehensive loss shown, net of tax and parenthesis indicating debits to net income, as of June 30, 2022 and 2021 were as follows:

Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item  in the Consolidated  Statement of Income
	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Net unrealized (loss) gain on available for sale securities	$	(10)	$	137	Net debt securities (losses) gains, available for sale
Income tax effect	2		(29)		Income tax provision
Total reclassifications for the period	$	(8)	$	108
Net unrecognized pension costs	$	(18)	$	(47)	Other non-interest expense
Income tax effect	4		10		Income tax provision
Total reclassifications for the period	$	(14)	$	(37)

Details about Accumulated Other Comprehensive Loss Components	Amount Reclassified from Accumulated Other Comprehensive Loss				Affected Line Item  in the Consolidated  Statement of Income
	Six months ended June 30, 2022		Six months ended June 30, 2021
Net unrealized (losses) gain on available for sale securities	$	(12)	$	275	Net debt securities (losses) gains, available for sale
Income tax effect	2		(58)		Income tax provision
Total reclassifications for the period	$	(10)	$	217
Net unrecognized pension costs	$	(35)	$	(93)	Other non-interest expense
Income tax effect	8		20		Income tax provision
Total reclassifications for the period	$	(27)	$	(73)

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Per Share Data (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of weighted average common shares (denominator) used in the basic and dilutive earnings per share computation

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average common shares issued	7,557,402	7,539,892	7,555,113	7,537,629
Weighted average treasury stock shares	(498,357)	(480,225)	(489,341)	(480,225)
Weighted average common shares outstanding - basic and diluted	7,059,045	7,059,667	7,065,772	7,057,404

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost, gross unrealized gains and losses, and fair values of equity and trading investment securities

The amortized cost, gross unrealized gains and losses, and fair values of our investment securities portfolio at June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In Thousands)	Cost		Gains		Losses		Value
Available for sale (AFS):
U.S. Government and agency securities	$	1,007	$	—	$	(27)	$	980
Mortgage-backed securities	1,520		—		(145)		1,375
State and political securities	150,303		203		(5,358)		145,148
Other debt securities	47,484		12		(2,561)		44,935
Total debt securities	$	200,314	$	215	$	(8,091)	$	192,438
Investment equity securities:
Equity securities	$	1,350	$	—	$	(164)	$	1,186

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In Thousands)	Cost		Gains		Losses		Value
Available for sale (AFS):
Mortgage-backed securities	$	1,752	$	—	$	(5)	$	1,747
State and political securities	113,852		3,500		(694)		116,658
Other debt securities	47,802		524		(321)		48,005
Total debt securities	$	163,406	$	4,024	$	(1,020)	$	166,410
Investment equity securities:
Equity securities	$	1,350	$	—	$	(62)	$	1,288

Schedule of gross unrealized losses and fair value

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual debt securities have been in a continuous unrealized loss position, at June 30, 2022 and December 31, 2021.

	June 30, 2022
	Less than Twelve Months				Twelve Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In Thousands)	Value		Losses		Value		Losses		Value		Losses
Available for sale (AFS):
U.S. Government and agency securities	$	980	$	(27)	$	—	$	—	$	980	$	(27)
Mortgage-backed securities	1,375		(145)		—		—		1,375		(145)
State and political securities	100,753		(3,945)		12,228		(1,413)		112,981		(5,358)
Other debt securities	35,886		(1,937)		6,731		(624)		42,617		(2,561)
Total debt securities	$	138,994	$	(6,054)	$	18,959	$	(2,037)	$	157,953	$	(8,091)

	December 31, 2021
	Less than Twelve Months				Twelve Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In Thousands)	Value		Losses		Value		Losses		Value		Losses
Available for sale (AFS):
Mortgage-backed securities	$	1,747	$	(5)	$	—	$	—	$	1,747	$	(5)
State and political securities	34,203		(398)		7,408		(296)		41,611		(694)
Other debt securities	21,446		(301)		1,808		(20)		23,254		(321)
Total debt securities	$	57,396	$	(704)	$	9,216	$	(316)	$	66,612	$	(1,020)

Schedule of amortized cost and fair value of debt securities by contractual maturity

The amortized cost and fair value of debt securities at June 30, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities since borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In Thousands)	Amortized Cost		Fair Value
Due in one year or less	$	12,892	$	12,827
Due after one year to five years	116,729		112,732
Due after five years to ten years	67,668		63,997
Due after ten years	3,025		2,882
Total	$	200,314	$	192,438

Schedule of gross realized gains and losses

The following table represents gross realized gains and losses from the sales of debt securities available for sale:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Available for sale (AFS):
Gross realized gains:
U.S. Government and agency securities	$	—	$	—	$	—	$	—
Mortgage-backed securities	—		—		—		—
State and political securities	13		—		14		—
Other debt securities	—		137		—		275
Total gross realized gains	$	13	$	137	$	14	$	275
Gross realized losses:
State and political securities	$	23	$	—	$	26	$	—
Other debt securities	—		—		—		—
Total gross realized losses	$	23	$	—	$	26	$	—

Schedule of unrealized and realized gains and losses recognized in net income

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Net (losses) gains recognized in equity securities during the period	$	(44)	$	3	$	(103)	$	(16)
Less: Net gains realized on the sale of equity securities during the period	—		—		—		—
Unrealized (losses) gains recognized in equity securities held at reporting date	$	(44)	$	3	$	(103)	$	(16)

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Loans (Tables)

6 Months Ended

Jun. 30, 2022

Loans and Leases Receivable Disclosure [Abstract]

Schedule of related aging categories of loans by segment

The following table presents the related aging categories of loans, by segment, as of June 30, 2022 and December 31, 2021:

	June 30, 2022
			Past Due		Past Due 90
			30 To 89		Days Or More		Non-
(In Thousands)	Current		Days		& Still Accruing		Accrual		Total
Commercial, financial, and agricultural	$	178,479	$	103	$	3	$	418	$	179,003
Real estate mortgage:
Residential	648,960		2,006		351		642		651,959
Commercial	459,923		141		—		3,605		463,669
Construction	47,018		—		—		—		47,018
Consumer automobile loans	136,830		759		67		14		137,670
Other consumer installment loans	9,604		29		—		—		9,633
	1,480,814		$	3,038	$	421	$	4,679	1,488,952
Net deferred loan fees and discounts	180								180
Allowance for loan losses	(14,393)								(14,393)
Loans, net	$	1,466,601							$	1,474,739

	December 31, 2021
			Past Due		Past Due 90
			30 To 89		Days Or More		Non-
(In Thousands)	Current		Days		& Still Accruing		Accrual		Total
Commercial, financial, and agricultural	$	162,571	$	139	$	—	$	575	$	163,285
Real estate mortgage:
Residential	590,240		4,083		687		837		595,847
Commercial	442,573		224		—		3,937		446,734
Construction	36,701		554		—		40		37,295
Consumer automobile loans	138,775		490		143		—		139,408
Other consumer installment loans	9,199		47		31		—		9,277
	1,380,059		$	5,537	$	861	$	5,389	1,391,846
Net deferred loan fees and discounts	301								301
Allowance for loan losses	(14,176)								(14,176)
Loans, net	$	1,366,184							$	1,377,971

Schedule of recorded investment, unpaid principal balance, and related allowance of impaired loans by segment

The following table presents the recorded investment, unpaid principal balance, and related allowance of impaired loans by segment as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Recorded		Unpaid Principal		Related
(In Thousands)	Investment		Balance		Allowance
With no related allowance recorded:
Commercial, financial, and agricultural	$	316	$	316	$	—
Real estate mortgage:
Residential	3,533		3,533		—
Commercial	2,725		2,725		—
Construction	—		—		—
Consumer automobile loans	—		—		—
Installment loans to individuals	—		—		—
	6,574		6,574		—
With an allowance recorded:
Commercial, financial, and agricultural	383		383		1
Real estate mortgage:
Residential	1,177		1,177		192
Commercial	4,573		4,573		842
Construction	—		—		—
Consumer automobile loans	14		14		14
Installment loans to individuals	19		19		19
	6,166		6,166		1,068
Total:
Commercial, financial, and agricultural	699		699		1
Real estate mortgage:
Residential	4,710		4,710		192
Commercial	7,298		7,298		842
Construction	—		—		—
Consumer automobile loans	14		14		14
Installment loans to individuals	19		19		19
	$	12,740	$	12,740	$	1,068

	December 31, 2021
	Recorded		Unpaid Principal		Related
(In Thousands)	Investment		Balance		Allowance
With no related allowance recorded:
Commercial, financial, and agricultural	$	355	$	355	$	—
Real estate mortgage:
Residential	3,874		3,874		—
Commercial	3,105		3,105		—
Construction	105		105		—
Consumer automobile loans	—		—		—
Installment loans to individuals	—		—		—
	7,439		7,439		—
With an allowance recorded:
Commercial, financial, and agricultural	534		3,321		2
Real estate mortgage:
Residential	1,178		1,178		201
Commercial	4,814		4,814		800
Construction	—		—		—
Consumer automobile loans	—		—		—
Installment loans to individuals	20		20		20
	6,546		9,333		1,023
Total:
Commercial, financial, and agricultural	889		3,676		2
Real estate mortgage:
Residential	5,052		5,052		201
Commercial	7,919		7,919		800
Construction	105		105		—
Consumer automobile loans	—		—		—
Installment loans to individuals	20		20		20
	$	13,985	$	16,772	$	1,023

Schedule of average recorded investment in impaired loans and related interest income recognized

The following table presents the average recorded investment in impaired loans and related interest income recognized for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022						2021
(In Thousands)	Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans		Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans
Commercial, financial, and agricultural	$	758	$	5	$	—	$	1,641	$	2	$	—
Real estate mortgage:
Residential	4,773		48		—		5,504		89		—
Commercial	7,446		49		—		9,865		35		—
Construction	32		—		—		118		2		—
Consumer automobile	7		1		—		76		—		—
Other consumer installment loans	19		—		—		10		9		—
	$	13,035	$	103	$	—	$	17,214	$	137	$	—

	Six Months Ended June 30,
	2022						2021
(In Thousands)	Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans		Average Investment in Impaired Loans		Interest Income Recognized on an Accrual Basis on Impaired Loans		Interest Income Recognized on a Cash Basis on Impaired Loans
Commercial, financial, and agricultural	$	801	$	10	$	—	$	1,382	$	30	$	—
Real estate mortgage:
Residential	4,866		94		—		5,775		98		—
Commercial	7,605		101		—		9,703		65		—
Construction	56		1		—		120		3		—
Consumer automobile	5		1		—		50		—		—
Other consumer installment loans	19		—		—		6		9		—
	$	13,352	$	207	$	—	$	17,036	$	205	$	—

Schedule of Loan Modifications that are Considered TDRs

Loan modifications that are considered TDRs completed during the three and six months ended June 30, 2021 were as follows:

	Three Months Ended June 30,
		2021
(In Thousands, Except Number of Contracts)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial, financial, and agricultural		1	$	949	$	949
Real estate mortgage:
Residential		1	178		178
Commercial		1	730		730
Construction		—	—		—
		3	$	1,857	$	1,857

	Six Months Ended June 30,
		2021
(In Thousands, Except Number of Contracts)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial, financial, and agricultural		1	$	949	$	949
Real estate mortgage:
Residential		2	865		865
Commercial		2	855		855
Construction		—	—		—
		5	$	2,669	$	2,669

Schedule of credit quality categories

The following table presents the credit quality categories identified above as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment loans
(In Thousands)			Residential		Commercial		Construction						Totals
Pass	$	176,987	$	648,929	$	450,530	$	46,914	$	137,656	$	9,614	$	1,470,630
Special Mention	180		273		5,147		—		—		—		5,600
Substandard	1,836		2,757		7,992		104		14		19		12,722
	$	179,003	$	651,959	$	463,669	$	47,018	$	137,670	$	9,633	$	1,488,952

	December 31, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment loans
(In Thousands)			Residential		Commercial		Construction						Totals
Pass	$	160,899	$	592,570	$	432,158	$	36,511	$	139,408	$	9,257	$	1,370,803
Special Mention	234		284		6,108		676		—		—		7,302
Substandard	2,152		2,993		8,468		108		—		20		13,741
	$	163,285	$	595,847	$	446,734	$	37,295	$	139,408	$	9,277	$	1,391,846

Schedule of activity in the allowance

Activity in the allowance is presented for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,936	$	4,801	$	5,215	$	197	$	1,376	$	114	$	384	$	14,023
Charge-offs	—		(15)		—		—		(48)		(43)		—		(106)
Recoveries	41		42		1		28		13		21		—		146
Provision	131		(10)		179		(26)		(34)		18		72		330
Ending Balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393

	Three Months Ended June 30, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	2,606	$	4,401	$	4,176	$	142	$	1,735	$	235	$	907	$	14,202
Charge-offs	—		(129)		—		—		(127)		(28)		—		(284)
Recoveries	9		109		25		—		15		12		—		170
Provision	(769)		238		235		70		201		(175)		550		350
Ending Balance	$	1,846	$	4,619	$	4,436	$	212	$	1,824	$	44	$	1,457	$	14,438

 

t	Six Months Ended June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,946	$	4,701	$	5,336	$	179	$	1,411	$	111	$	492	$	14,176
Charge-offs	—		(15)		(155)		—		(177)		(103)		—		(450)
Recoveries	45		45		2		28		22		45		—		187
Provision	117		87		212		(8)		51		57		(36)		480
Ending Balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393

	Six Months Ended June 30, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer automobile		Other consumer installment
(In Thousands)			Residential		Commercial		Construction						Unallocated		Totals
Beginning Balance	$	1,936	$	4,460	$	3,635	$	134	$	1,906	$	261	$	1,471	$	13,803
Charge-offs	(35)		(143)		—		—		(223)		(57)		—		(458)
Recoveries	14		112		25		5		32		40		—		228
Provision	(69)		190		776		73		109		(200)		(14)		865
Ending Balance	$	1,846	$	4,619	$	4,436	$	212	$	1,824	$	44	$	1,457	$	14,438

Schedule of concentration of loan

The Company has a concentration of the following to gross loans at June 30, 2022 and 2021: 

	June 30,
	2022		2021
Owners of residential rental properties	19.65	%	18.15	%
Owners of commercial rental properties	16.11	%	13.54	%

Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of June 30, 2022 and December 31, 2021:

	June 30, 2022
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer Automobile		Other consumer installment		Unallocated
(In Thousands)			Residential		Commercial		Construction								Totals
Allowance for Loan Losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	1	$	192	$	842	$	—	$	14	$	19	$	—	$	1,068
Collectively evaluated for impairment	2,107		4,626		4,553		199		1,293		91		456		13,325
Total ending allowance balance	$	2,108	$	4,818	$	5,395	$	199	$	1,307	$	110	$	456	$	14,393
Loans:
Individually evaluated for impairment	$	699	$	4,710	$	7,298	$	—	$	14	$	19			$	12,740
Collectively evaluated for impairment	178,304		647,249		456,371		47,018		137,656		9,614				1,476,212
Total ending loans balance	$	179,003	$	651,959	$	463,669	$	47,018	$	137,670	$	9,633			$	1,488,952

	December 31, 2021
	Commercial, Financial, and Agricultural		Real Estate Mortgages						Consumer Automobile		Other consumer installment		Unallocated
(In Thousands)			Residential		Commercial		Construction								Totals
Allowance for Loan Losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	2	$	201	$	800	$	—	$	—	$	20	$	—	$	1,023
Collectively evaluated for impairment	1,944		4,500		4,536		179		1,411		91		492		13,153
Total ending allowance balance	$	1,946	$	4,701	$	5,336	$	179	$	1,411	$	111	$	492	$	14,176
Loans:
Individually evaluated for impairment	$	889	$	5,052	$	7,919	$	105	$	—	$	20			$	13,985
Collectively evaluated for impairment	162,396		590,795		438,815		37,190		139,408		9,257				1,377,861
Total ending loans balance	$	163,285	$	595,847	$	446,734	$	37,295	$	139,408	$	9,277			$	1,391,846

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Net Periodic Benefit Cost-Defined Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2022

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Schedule of components of the net periodic benefit/cost of the domestic non-contributory defined benefit plan

The following sets forth the components of the net periodic expense/(gain) of the domestic non-contributory defined benefit plan for the three and six months ended June 30, 2022 and 2021, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Interest cost	$	138	$	127	$	276	$	254
Expected return on plan assets	(413)		(386)		(825)		(772)
Amortization of net loss	18		47		35		93
Net periodic benefit	$	(257)	$	(212)	$	(514)	$	(425)

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Off-Balance Sheet Risk (Tables)

6 Months Ended

Jun. 30, 2022

Off Balance Sheet Risk

Schedule of Financial instruments whose contract amounts represent credit risk

Financial instruments whose contract amounts represent credit risk are as follows at June 30, 2022 and December 31, 2021:

(In Thousands)	June 30, 2022		December 31, 2021
Commitments to extend credit	$	211,827	$	184,364
Standby letters of credit	9,942		7,027
Credit exposure from the sale of assets with recourse	10,339		10,248
	$	232,108	$	201,639

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of assets reported on the balance sheet at their fair value on a recurring basis

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value on a recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	June 30, 2022
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
U.S. Government and agency securities	$	—	$	980	$	—	$	980
Mortgage-backed securities	—		1,375		—		1,375
State and political securities	—		145,148		—		145,148
Other debt securities	—		44,935		—		44,935
Investment equity securities:
Equity securities	1,186		—		—		1,186

	December 31, 2021
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a recurring basis:
Investment securities, available for sale:
Mortgage-backed securities	$	—	$	1,747	$	—	$	1,747
State and political securities	—		116,658		—		116,658
Other debt securities	—		48,005		—		48,005
Investment equity securities:
Equity securities	1,288		—		—		1,288

Schedule of assets reported on the consolidated balance sheet at their fair value on a non-recurring basis

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value on a non-recurring basis as of June 30, 2022 and December 31, 2021, by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 

	June 30, 2022
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	2,041	$	2,041
Other real estate owned	—		—		127		127

	December 31, 2021
(In Thousands)	Level I		Level II		Level III		Total
Assets measured on a non-recurring basis:
Impaired loans	$	—	$	—	$	2,360	$	2,360
Other real estate owned	—		—		83		83

Schedule of listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques

The following tables present a listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques as of June 30, 2022 and December 31, 2021: 

	June 30, 2022
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	2,041		Appraisal of collateral (1)	Appraisal adjustments (1)	0% to (20)%	(3)%
Other real estate owned	$	127	Appraisal of collateral (1)	Appraisal adjustments (1)	(20)%	(20)%

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

	December 31, 2021
	Quantitative Information About Level III Fair Value Measurements
(In Thousands)	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
Impaired loans	2,360		Appraisal of collateral (1)	Appraisal adjustments (1)	0% to (34)%	(15)%
Other real estate owned	$	83	Appraisal of collateral (1)	Appraisal adjustments (1)	(20)%	(20)%

(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of fair value of financial instruments

The fair values of the Company’s financial instruments not recorded at fair value on a recurring or nonrecurring basis are as follows at June 30, 2022 and December 31, 2021:

	Carrying		Fair		Fair Value Measurements at June 30, 2022
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:
Loans held for sale (1)	$	3,857	$	3,857	$	3,857	$	—	$	—
Loans, net	1,474,739		1,420,867		—		—		1,420,867
Financial liabilities:
Time deposits	153,679		145,812		—		—		145,812
Short-term borrowings	5,464		5,464		5,464		—		—
Long-term borrowings	112,874		108,433		—		—		108,433

(1) The financial instrument is carried at cost at, June 30, 2022 which approximate the fair value of the instruments

	Carrying		Fair		Fair Value Measurements at December 31, 2021
(In Thousands)	Value		Value		Level I		Level II		Level III
Financial assets:
Loans held for sale (1)	$	3,725	$	3,725	$	3,725	$	—	$	—
Loans, net	1,377,971		1,379,787		—		—		1,379,787
Financial liabilities:
Time deposits	205,367		204,512		—		—		204,512
Short-term borrowings	5,747		5,747		5,747		—		—
Long-term borrowings	125,963		127,679		—		—		127,679

(1) The financial instrument is carried at cost at, December 31, 2021 which approximate the fair value of the instruments

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Stock Options (Tables)

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Share-based Compensation, Stock Options Granted

Stock Options Granted
Date	Shares	Forfeited	Cash Settlement	Outstanding	Strike Price		Vesting Period	Expiration
January 18, 2022	156,000	—	—	156,000	$	24.10	3 years	10 years
January 18, 2022	78,000	—	—	78,000	24.10		5 years	10 years
April 9, 2021	156,500	—	—	156,500	24.23		3 years	10 years
April 9, 2021	78,000	—	—	78,000	24.23		5 years	10 years
March 11, 2020	119,300	—	—	119,300	25.34		3 years	10 years
March 11, 2020	119,200	—	—	119,200	25.34		5 years	10 years
March 15, 2019	120,900	(15,600)	—	105,300	28.01		3 years	10 years
March 15, 2019	119,100	(15,150)	—	103,950	28.01		5 years	10 years
August 24, 2018	75,300	(11,850)	(63,450)	—	30.67		3 years	10 years
August 24, 2018	149,250	(23,850)	(125,400)	—	30.67		5 years	10 years
January 5, 2018	18,750	—	(18,750)	—	30.07		3 years	10 years
January 5, 2018	18,750	—	(18,750)	—	30.07		5 years	10 years
March 24, 2017	69,375	(11,250)	(58,125)	—	29.47		3 years	10 years
March 24, 2017	35,625	(2,250)	(33,375)	—	29.47		5 years	10 years
August 27, 2015	58,125	(26,250)	(28,875)	3,000	28.02		5 years	10 years

A summary of stock option activity is presented below:

	June 30, 2022
	Shares	Weighted Average Exercise Price
Outstanding, beginning of year	1,034,525	$	27.23
Granted	234,000	24.10
Cash settlement	(346,725)	30.07
Forfeited	(2,550)	29.10
Expired	—	—
Outstanding, end of period	919,250	$	25.36
Exercisable, end of period	108,300	$	28.01

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The following is a summary of the assumptions used in this model for stock options granted for the six months ended June 30, 2022:

	Six months ended June 30,
	2022
Risk-free interest rate	1.23		%
Expected volatility	33		%
Expected Annual dividend	$	1.28
Expected life	6.84 years
Weighted average grant date fair value per option	$	4.28

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Schedule of Assets and Liabilities

The following table shows finance lease right of use assets and finance lease liabilities as of:

(In Thousands)	Statement of Financial Condition classification	June 30, 2022		December 31, 2021
Finance lease right of use assets	Premises and equipment, net	$	7,220	$	7,435
Finance lease liabilities	Long-term borrowings	7,874		7,963

Schedule of Lease Cost, Term and Discount Rate

The following table shows the components of finance and operating lease expense for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
(In Thousands)	2022		2021		2022		2021
Finance Lease Cost:
Amortization of right-of-use asset	$	107	$	107	$	215	$	259
Interest expense	62		62		123		133
Operating lease cost	71		74		143		150
Variable lease cost	—		—		—		—
Total Lease Cost	$	240	$	243	$	481	$	542

The following table shows the weighted average remaining lease term and weighted average discount rate for both operating and finance leases outstanding as of June 30, 2022.

	Operating		Finance
Weighted-average term (years)	17.3		23.9
Weighted-average discount rate	3.54	%	3.20	%

Schedule of Operating Lease Liability Maturities

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(In Thousands)	Operating		Finance
2022	$	146	$	210
2023	265		421
2024	255		427
2025	257		929
2026	260		387
2027 and thereafter	2,568		9,276
Total undiscounted cash flows	3,751		11,650
Discount on cash flows	(951)		(3,776)
Total lease liability	$	2,800	$	7,874

Schedule of Finance Lease Liability Maturities

A maturity analysis of operating and finance lease liabilities and reconciliation of the undiscounted cash flows to the total operating lease liability is as follows:

(In Thousands)	Operating		Finance
2022	$	146	$	210
2023	265		421
2024	255		427
2025	257		929
2026	260		387
2027 and thereafter	2,568		9,276
Total undiscounted cash flows	3,751		11,650
Discount on cash flows	(951)		(3,776)
Total lease liability	$	2,800	$	7,874

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Accumulated Other Comprehensive Loss - Schedule of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	$ 168,427	$ 164,063	$ 172,274	$ 164,146
Ending balance	166,054	166,835	166,054	166,835
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(6,546)	(2,465)	(1,112)	(882)
Other comprehensive loss before reclassifications	(3,156)	1,098	(8,605)	(412)
Amounts reclassified from accumulated other comprehensive gain (loss)	22	(71)	37	(144)
Net current-period other comprehensive (loss) income	(3,134)	1,027	(8,568)	(556)
Ending balance	(9,680)	(1,438)	(9,680)	(1,438)
Net Unrealized Gain (Loss) on Available for Sale Securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(3,074)	3,095	2,373	4,714
Other comprehensive loss before reclassifications	(3,156)	1,098	(8,605)	(412)
Amounts reclassified from accumulated other comprehensive gain (loss)	8	(108)	10	(217)
Net current-period other comprehensive (loss) income	(3,148)	990	(8,595)	(629)
Ending balance	(6,222)	4,085	(6,222)	4,085
Defined Benefit  Plan
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning balance	(3,472)	(5,560)	(3,485)	(5,596)
Other comprehensive loss before reclassifications	0	0	0	0
Amounts reclassified from accumulated other comprehensive gain (loss)	14	37	27	73
Net current-period other comprehensive (loss) income	14	37	27	73
Ending balance	$ (3,458)	$ (5,523)	$ (3,458)	$ (5,523)

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Accumulated Other Comprehensive Loss - Schedule of Reclassifications out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Reclassifications out of accumulated other comprehensive income
Net unrealized (loss) gain on available for sale securities	$ (10)	$ 137	$ (12)	$ 275
Net unrecognized pension costs	(1,107)	(1,170)	(2,558)	(2,268)
Income tax effect	(1,003)	(813)	(1,679)	(1,584)
Net Income	4,231	3,588	7,663	7,029
Amount Reclassified from Accumulated Other Comprehensive Loss | Net Unrealized Gain (Loss) on Available for Sale Securities
Reclassifications out of accumulated other comprehensive income
Net unrealized (loss) gain on available for sale securities	(10)	137	(12)	275
Income tax effect	2	(29)	2	(58)
Net Income	(8)	108	(10)	217
Amount Reclassified from Accumulated Other Comprehensive Loss | Defined Benefit  Plan
Reclassifications out of accumulated other comprehensive income
Net unrecognized pension costs	(18)	(47)	(35)	(93)
Income tax effect	4	10	8	20
Net Income	$ (14)	$ (37)	$ (27)	$ (73)

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Per Share Data - Narrative (Details) - $ / shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Aug. 27, 2015
Earnings Per Share [Abstract]
Convertible securities which would affect denominator in calculating basic and dilutive earnings per share (in shares)	0
Options, outstanding (in shares)	919,250	1,075,775	1,034,525	3,000
Outstanding, weighted average exercise price (in dollars per share)	$ 25.36	$ 27.31	$ 27.23
Average share price (in dollars per share)	$ 23.78	$ 24.43

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Per Share Data - Composition of Weighted Average Common Shares Used in Earnings per Share Computation (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Abstract]
Weighted average common shares issued (in shares)	7,557,402	7,539,892	7,555,113	7,537,629
Weighted average treasury stock shares (in shares)	(498,357)	(480,225)	(489,341)	(480,225)
Weighted average shares outstanding - basic (in shares)	7,059,045	7,059,667	7,065,772	7,057,404
Weighted average common shares outstanding - diluted (in shares)	7,059,045	7,059,667	7,065,772	7,057,404

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Investment Securities - Amortized Cost and Fair Values of Investment Securities Available for Sale (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Available for sale (AFS):
Total	$ 200,314
Fair value	192,438	$ 166,410
Investment equity securities:
Fair value	1,186	1,288
Total debt securities
Available for sale (AFS):
Total	200,314	163,406
Gross unrealized gains	215	4,024
Gross unrealized losses	(8,091)	(1,020)
Fair value	192,438	166,410
U.S. Government and agency securities
Available for sale (AFS):
Total	1,007
Gross unrealized gains	0
Gross unrealized losses	(27)
Fair value	980
Mortgage-backed securities
Available for sale (AFS):
Total	1,520	1,752
Gross unrealized gains	0	0
Gross unrealized losses	(145)	(5)
Fair value	1,375	1,747
State and political securities
Available for sale (AFS):
Total	150,303	113,852
Gross unrealized gains	203	3,500
Gross unrealized losses	(5,358)	(694)
Fair value	145,148	116,658
Other debt securities
Available for sale (AFS):
Total	47,484	47,802
Gross unrealized gains	12	524
Gross unrealized losses	(2,561)	(321)
Fair value	44,935	48,005
Equity securities
Investment equity securities:
Amortized cost - total	1,350	1,350
Gross unrealized gains	0	0
Gross unrealized losses	(164)	(62)
Fair value	$ 1,186	$ 1,288

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Investment Securities - Gross Unrealized Losses and Fair Value by Investment Category (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Total debt securities
Investment securities
Fair value, less than twelve months	$ 138,994	$ 57,396
Gross unrealized losses, less than twelve months	(6,054)	(704)
Fair value, twelve months or greater	18,959	9,216
Gross unrealized losses, twelve months or greater	(2,037)	(316)
Fair value, total	157,953	66,612
Gross unrealized losses, total	(8,091)	(1,020)
U.S. Government and agency securities
Investment securities
Fair value, less than twelve months	980
Gross unrealized losses, less than twelve months	(27)
Fair value, twelve months or greater	0
Gross unrealized losses, twelve months or greater	0
Fair value, total	980
Gross unrealized losses, total	(27)
Mortgage-backed securities
Investment securities
Fair value, less than twelve months	1,375	1,747
Gross unrealized losses, less than twelve months	(145)	(5)
Fair value, twelve months or greater	0	0
Gross unrealized losses, twelve months or greater	0	0
Fair value, total	1,375	1,747
Gross unrealized losses, total	(145)	(5)
State and political securities
Investment securities
Fair value, less than twelve months	100,753	34,203
Gross unrealized losses, less than twelve months	(3,945)	(398)
Fair value, twelve months or greater	12,228	7,408
Gross unrealized losses, twelve months or greater	(1,413)	(296)
Fair value, total	112,981	41,611
Gross unrealized losses, total	(5,358)	(694)
Other debt securities
Investment securities
Fair value, less than twelve months	35,886	21,446
Gross unrealized losses, less than twelve months	(1,937)	(301)
Fair value, twelve months or greater	6,731	1,808
Gross unrealized losses, twelve months or greater	(624)	(20)
Fair value, total	42,617	23,254
Gross unrealized losses, total	$ (2,561)	$ (321)

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Investment Securities - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) security	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) security	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Investments, Debt and Equity Securities [Abstract]
Number of individual securities that were in a continuous unrealized loss position for less than twelve months (in securities) | security	209		209
Number of individual securities that were in a continuous unrealized loss position for greater than twelve months (in securities) | security	30		30
Gross proceeds from sales of securities			$ 0	$ 13,574,000
Impairment charges	$ 0	$ 0	0	$ 0
Carrying value of investment securities pledged	171,435,000		171,435,000		$ 139,435,000
Investment equity securities, at fair value	$ 1,186,000		$ 1,186,000		$ 1,288,000

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Investment Securities - Amortized Cost and Fair Value of Debt Securities (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Amortized Cost
Due in one year or less	$ 12,892
Due after one year to five years	116,729
Due after five years to ten years	67,668
Due after ten years	3,025
Total	200,314
Fair Value
Due in one year or less	12,827
Due after one year to five years	112,732
Due after five years to ten years	63,997
Due after ten years	2,882
Total	$ 192,438

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Investment Securities - Total Gross Proceeds from Sales of Securities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Available for sale (AFS):
Available-for-sale securities, gross realized gains	$ 13	$ 137	$ 14	$ 275
Available-for-sale securities, gross realized losses	23	0	26	0
U.S. Government and agency securities
Available for sale (AFS):
Available-for-sale securities, gross realized gains	0	0	0	0
Mortgage-backed securities
Available for sale (AFS):
Available-for-sale securities, gross realized gains	0	0	0	0
State and political securities
Available for sale (AFS):
Available-for-sale securities, gross realized gains	13	0	14	0
Available-for-sale securities, gross realized losses	23	0	26	0
Other debt securities
Available for sale (AFS):
Available-for-sale securities, gross realized gains	0	137	0	275
Available-for-sale securities, gross realized losses	$ 0	$ 0	$ 0	$ 0

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Investment Securities - Unrealized and Realized Gains and Losses Recognized in Net Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Equity Securities, FV-NI, Gain (Loss) [Abstract]
Net (losses) gains recognized in equity securities during the period	$ (44)	$ 3	$ (103)	$ (16)
Less: Net gains realized on the sale of equity securities during the period	0	0	0	0
Unrealized (losses) gains recognized in equity securities held at reporting date	$ (44)	$ 3	$ (103)	$ (16)

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Loans - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) contract component class category	Jun. 30, 2021 USD ($) contract	Jun. 30, 2022 USD ($) contract component class category	Jun. 30, 2021 USD ($) contract	Dec. 31, 2021 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable individually evaluated for impairment minimum amount | $			$ 100,000
Individually evaluated for impairment | $			$ 100,000
Payment delays limit (in days)			90 days
Period to classify TDR non performing loans to performing (in months)			6 months
Number of loan modifications (in contracts) | contract	0	3	0	5
Number of TDRs that defaulted (in contracts) | contract			0	1
Recorded investment | $	$ 8,692,000		$ 8,692,000		$ 9,410,000
Real estate acquired through foreclosure | $	127,000		127,000		339,000
Mortgage loans in process of foreclosure, amount | $	$ 165,000		$ 165,000		$ 193,000
Number of categories considered not criticized and rated as pass (in categories) | category	6		6
Minimum period after which loans are considered as substandard (in days)			90 days
Percentage of loan review evaluated			0.55
Number of components that represents the allowance for loan losses (in components) | component	2		2
Number of classes that groups of loans are collectively evaluated for impairment (in classes) | class	2		2
Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of categories in which real estate loans segmented (in categories) | category			3
Commercial, financial, and agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loan modifications (in contracts) | contract		1		1
Commercial | Real Estate Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loan modifications (in contracts) | contract		1		2
Number of TDRs that defaulted (in contracts) | contract				1
Troubled debt restructuring, default amount | $				$ 687,000
COVID-19 Modifications
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of loan modifications (in contracts) | contract			1,372	1,365
Number of loan modifications remaining (in contracts) | contract			0	20
Loan modifications, amount | $		$ 7,931,000		$ 7,931,000

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Loans - Aging Categories of Loans by Segment (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	$ 1,489,132		$ 1,392,147
Past due 90 days or more & still accruing			861
Nonaccrual	4,679		5,389
Total	1,488,952		1,391,846
Net deferred loan fees and discounts	180		301
Allowance for loan losses	(14,393)	$ (14,023)	(14,176)	$ (14,438)	$ (14,202)	$ (13,803)
Loans, net	1,466,601		1,366,184
Loans, net	1,474,739		1,377,971
Current
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	1,480,814		1,380,059
Past Due 30 to 89 Days
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	3,038		5,537
Financial Asset, 90 Days Past Due or More & Still Accruing
Aging categories of loans by segment
Past due 90 days or more & still accruing	421
Commercial, financial, and agricultural
Aging categories of loans by segment
Past due 90 days or more & still accruing			0
Nonaccrual	418		575
Total	179,003		163,285
Allowance for loan losses	(2,108)	(1,936)	(1,946)	(1,846)	(2,606)	(1,936)
Commercial, financial, and agricultural | Current
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	178,479		162,571
Commercial, financial, and agricultural | Past Due 30 to 89 Days
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	103		139
Commercial, financial, and agricultural | Financial Asset, 90 Days Past Due or More & Still Accruing
Aging categories of loans by segment
Past due 90 days or more & still accruing	3
Real Estate Mortgages | Residential
Aging categories of loans by segment
Past due 90 days or more & still accruing			687
Nonaccrual	642		837
Total	651,959		595,847
Allowance for loan losses	(4,818)	(4,801)	(4,701)	(4,619)	(4,401)	(4,460)
Real Estate Mortgages | Residential | Current
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	648,960		590,240
Real Estate Mortgages | Residential | Past Due 30 to 89 Days
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	2,006		4,083
Real Estate Mortgages | Residential | Financial Asset, 90 Days Past Due or More & Still Accruing
Aging categories of loans by segment
Past due 90 days or more & still accruing	351
Real Estate Mortgages | Commercial
Aging categories of loans by segment
Past due 90 days or more & still accruing			0
Nonaccrual	3,605		3,937
Total	463,669		446,734
Allowance for loan losses	(5,395)	(5,215)	(5,336)	(4,436)	(4,176)	(3,635)
Real Estate Mortgages | Commercial | Current
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	459,923		442,573
Real Estate Mortgages | Commercial | Past Due 30 to 89 Days
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	141		224
Real Estate Mortgages | Commercial | Financial Asset, 90 Days Past Due or More & Still Accruing
Aging categories of loans by segment
Past due 90 days or more & still accruing	0
Real Estate Mortgages | Construction
Aging categories of loans by segment
Past due 90 days or more & still accruing			0
Nonaccrual	0		40
Total	47,018		37,295
Allowance for loan losses	(199)	(197)	(179)	(212)	(142)	(134)
Real Estate Mortgages | Construction | Current
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	47,018		36,701
Real Estate Mortgages | Construction | Past Due 30 to 89 Days
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	0		554
Real Estate Mortgages | Construction | Financial Asset, 90 Days Past Due or More & Still Accruing
Aging categories of loans by segment
Past due 90 days or more & still accruing	0
Consumer automobile loans
Aging categories of loans by segment
Past due 90 days or more & still accruing			143
Nonaccrual	14		0
Total	137,670		139,408
Allowance for loan losses	(1,307)	(1,376)	(1,411)	(1,824)	(1,735)	(1,906)
Consumer automobile loans | Current
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	136,830		138,775
Consumer automobile loans | Past Due 30 to 89 Days
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	759		490
Consumer automobile loans | Financial Asset, 90 Days Past Due or More & Still Accruing
Aging categories of loans by segment
Past due 90 days or more & still accruing	67
Other consumer installment loans
Aging categories of loans by segment
Past due 90 days or more & still accruing			31
Nonaccrual	0		0
Total	9,633		9,277
Allowance for loan losses	(110)	$ (114)	(111)	$ (44)	$ (235)	$ (261)
Other consumer installment loans | Current
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	9,604		9,199
Other consumer installment loans | Past Due 30 to 89 Days
Aging categories of loans by segment
Financing receivable, before allowance for credit loss	29		$ 47
Other consumer installment loans | Financial Asset, 90 Days Past Due or More & Still Accruing
Aging categories of loans by segment
Past due 90 days or more & still accruing	$ 0

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Loans - Recorded Investment, Unpaid Principal Balance, Related Allowance of Impaired Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Credit Quality and Related Allowance for Loan Losses
Recorded investment, with no related allowance recorded	$ 6,574	$ 7,439
Recorded investment, with an allowance recorded	6,166	6,546
Recorded investment	12,740	13,985
Unpaid principal balance, with no related allowance recorded	6,574	7,439
Unpaid principal balance, with an allowance recorded	6,166	9,333
Unpaid principal balance	12,740	16,772
Related allowance	1,068	1,023
Commercial, financial, and agricultural
Credit Quality and Related Allowance for Loan Losses
Recorded investment, with no related allowance recorded	316	355
Recorded investment, with an allowance recorded	383	534
Recorded investment	699	889
Unpaid principal balance, with no related allowance recorded	316	355
Unpaid principal balance, with an allowance recorded	383	3,321
Unpaid principal balance	699	3,676
Related allowance	1	2
Real Estate Mortgages | Residential
Credit Quality and Related Allowance for Loan Losses
Recorded investment, with no related allowance recorded	3,533	3,874
Recorded investment, with an allowance recorded	1,177	1,178
Recorded investment	4,710	5,052
Unpaid principal balance, with no related allowance recorded	3,533	3,874
Unpaid principal balance, with an allowance recorded	1,177	1,178
Unpaid principal balance	4,710	5,052
Related allowance	192	201
Real Estate Mortgages | Commercial
Credit Quality and Related Allowance for Loan Losses
Recorded investment, with no related allowance recorded	2,725	3,105
Recorded investment, with an allowance recorded	4,573	4,814
Recorded investment	7,298	7,919
Unpaid principal balance, with no related allowance recorded	2,725	3,105
Unpaid principal balance, with an allowance recorded	4,573	4,814
Unpaid principal balance	7,298	7,919
Related allowance	842	800
Real Estate Mortgages | Construction
Credit Quality and Related Allowance for Loan Losses
Recorded investment, with no related allowance recorded	0	105
Recorded investment, with an allowance recorded	0	0
Recorded investment	0	105
Unpaid principal balance, with no related allowance recorded	0	105
Unpaid principal balance, with an allowance recorded	0	0
Unpaid principal balance	0	105
Related allowance	0	0
Consumer automobile loans
Credit Quality and Related Allowance for Loan Losses
Recorded investment, with no related allowance recorded	0	0
Recorded investment, with an allowance recorded	14	0
Recorded investment	14	0
Unpaid principal balance, with no related allowance recorded	0	0
Unpaid principal balance, with an allowance recorded	14	0
Unpaid principal balance	14	0
Related allowance	14	0
Installment loans to individuals
Credit Quality and Related Allowance for Loan Losses
Recorded investment, with no related allowance recorded	0	0
Recorded investment, with an allowance recorded	19	20
Recorded investment	19	20
Unpaid principal balance, with no related allowance recorded	0	0
Unpaid principal balance, with an allowance recorded	19	20
Unpaid principal balance	19	20
Related allowance	$ 19	$ 20

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Loans - Average Recorded Investment - Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Credit Quality and Related Allowance for Loan Losses
Average Investment in Impaired Loans	$ 13,035	$ 17,214	$ 13,352	$ 17,036
Interest Income Recognized on an Accrual Basis on Impaired Loans	103	137	207	205
Interest Income Recognized on a Cash Basis on Impaired Loans	0	0	0	0
Commercial, financial, and agricultural
Credit Quality and Related Allowance for Loan Losses
Average Investment in Impaired Loans	758	1,641	801	1,382
Interest Income Recognized on an Accrual Basis on Impaired Loans	5	2	10	30
Interest Income Recognized on a Cash Basis on Impaired Loans	0	0	0	0
Real Estate Mortgages | Residential
Credit Quality and Related Allowance for Loan Losses
Average Investment in Impaired Loans	4,773	5,504	4,866	5,775
Interest Income Recognized on an Accrual Basis on Impaired Loans	48	89	94	98
Interest Income Recognized on a Cash Basis on Impaired Loans	0	0	0	0
Real Estate Mortgages | Commercial
Credit Quality and Related Allowance for Loan Losses
Average Investment in Impaired Loans	7,446	9,865	7,605	9,703
Interest Income Recognized on an Accrual Basis on Impaired Loans	49	35	101	65
Interest Income Recognized on a Cash Basis on Impaired Loans	0	0	0	0
Real Estate Mortgages | Construction
Credit Quality and Related Allowance for Loan Losses
Average Investment in Impaired Loans	32	118	56	120
Interest Income Recognized on an Accrual Basis on Impaired Loans	0	2	1	3
Interest Income Recognized on a Cash Basis on Impaired Loans	0	0	0	0
Consumer automobile loans
Credit Quality and Related Allowance for Loan Losses
Average Investment in Impaired Loans	7	76	5	50
Interest Income Recognized on an Accrual Basis on Impaired Loans	1	0	1	0
Interest Income Recognized on a Cash Basis on Impaired Loans	0	0	0	0
Other consumer installment loans
Credit Quality and Related Allowance for Loan Losses
Average Investment in Impaired Loans	19	10	19	6
Interest Income Recognized on an Accrual Basis on Impaired Loans	0	9	0	9
Interest Income Recognized on a Cash Basis on Impaired Loans	$ 0	$ 0	$ 0	$ 0

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Loans - Loan Modifications (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022 contract	Jun. 30, 2021 USD ($) contract	Jun. 30, 2022 contract	Jun. 30, 2021 USD ($) contract
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of contracts (in contracts) | contract	0	3	0	5
Pre-Modification Outstanding Recorded Investment		$ 1,857		$ 2,669
Post-Modification Outstanding Recorded Investment		$ 1,857		$ 2,669
Commercial, financial, and agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of contracts (in contracts) | contract		1		1
Pre-Modification Outstanding Recorded Investment		$ 949		$ 949
Post-Modification Outstanding Recorded Investment		$ 949		$ 949
Real Estate Mortgages | Residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of contracts (in contracts) | contract		1		2
Pre-Modification Outstanding Recorded Investment		$ 178		$ 865
Post-Modification Outstanding Recorded Investment		$ 178		$ 865
Real Estate Mortgages | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of contracts (in contracts) | contract		1		2
Pre-Modification Outstanding Recorded Investment		$ 730		$ 855
Post-Modification Outstanding Recorded Investment		$ 730		$ 855
Real Estate Mortgages | Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of contracts (in contracts) | contract		0		0
Pre-Modification Outstanding Recorded Investment		$ 0		$ 0
Post-Modification Outstanding Recorded Investment		$ 0		$ 0

XML

Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Credit quality categories
Total	$ 1,488,952	$ 1,391,846
Pass
Credit quality categories
Total	1,470,630	1,370,803
Special Mention
Credit quality categories
Total	5,600	7,302
Substandard
Credit quality categories
Total	12,722	13,741
Commercial, financial, and agricultural
Credit quality categories
Total	179,003	163,285
Commercial, financial, and agricultural | Pass
Credit quality categories
Total	176,987	160,899
Commercial, financial, and agricultural | Special Mention
Credit quality categories
Total	180	234
Commercial, financial, and agricultural | Substandard
Credit quality categories
Total	1,836	2,152
Consumer automobile
Credit quality categories
Total	137,670	139,408
Consumer automobile | Pass
Credit quality categories
Total	137,656	139,408
Consumer automobile | Special Mention
Credit quality categories
Total	0	0
Consumer automobile | Substandard
Credit quality categories
Total	14	0
Other consumer installment loans
Credit quality categories
Total	9,633	9,277
Other consumer installment loans | Pass
Credit quality categories
Total	9,614	9,257
Other consumer installment loans | Special Mention
Credit quality categories
Total	0	0
Other consumer installment loans | Substandard
Credit quality categories
Total	19	20
Residential | Real Estate Mortgages
Credit quality categories
Total	651,959	595,847
Residential | Real Estate Mortgages | Pass
Credit quality categories
Total	648,929	592,570
Residential | Real Estate Mortgages | Special Mention
Credit quality categories
Total	273	284
Residential | Real Estate Mortgages | Substandard
Credit quality categories
Total	2,757	2,993
Commercial | Real Estate Mortgages
Credit quality categories
Total	463,669	446,734
Commercial | Real Estate Mortgages | Pass
Credit quality categories
Total	450,530	432,158
Commercial | Real Estate Mortgages | Special Mention
Credit quality categories
Total	5,147	6,108
Commercial | Real Estate Mortgages | Substandard
Credit quality categories
Total	7,992	8,468
Construction | Real Estate Mortgages
Credit quality categories
Total	47,018	37,295
Construction | Real Estate Mortgages | Pass
Credit quality categories
Total	46,914	36,511
Construction | Real Estate Mortgages | Special Mention
Credit quality categories
Total	0	676
Construction | Real Estate Mortgages | Substandard
Credit quality categories
Total	$ 104	$ 108

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Loans - Allowance for Credit Losses on Financing Receivables (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Allowance for Loan Losses:
Beginning Balance	$ 14,023	$ 14,202	$ 14,176	$ 13,803
Charge-offs	(106)	(284)	(450)	(458)
Recoveries	146	170	187	228
Provision for loan losses	330	350	480	865
Ending Balance	14,393	14,438	14,393	14,438
Commercial, financial, and agricultural
Allowance for Loan Losses:
Beginning Balance	1,936	2,606	1,946	1,936
Charge-offs	0	0	0	(35)
Recoveries	41	9	45	14
Provision for loan losses	131	(769)	117	(69)
Ending Balance	2,108	1,846	2,108	1,846
Real Estate Mortgages | Residential
Allowance for Loan Losses:
Beginning Balance	4,801	4,401	4,701	4,460
Charge-offs	(15)	(129)	(15)	(143)
Recoveries	42	109	45	112
Provision for loan losses	(10)	238	87	190
Ending Balance	4,818	4,619	4,818	4,619
Real Estate Mortgages | Commercial
Allowance for Loan Losses:
Beginning Balance	5,215	4,176	5,336	3,635
Charge-offs	0	0	(155)	0
Recoveries	1	25	2	25
Provision for loan losses	179	235	212	776
Ending Balance	5,395	4,436	5,395	4,436
Real Estate Mortgages | Construction
Allowance for Loan Losses:
Beginning Balance	197	142	179	134
Charge-offs	0	0	0	0
Recoveries	28	0	28	5
Provision for loan losses	(26)	70	(8)	73
Ending Balance	199	212	199	212
Consumer automobile loans
Allowance for Loan Losses:
Beginning Balance	1,376	1,735	1,411	1,906
Charge-offs	(48)	(127)	(177)	(223)
Recoveries	13	15	22	32
Provision for loan losses	(34)	201	51	109
Ending Balance	1,307	1,824	1,307	1,824
Other consumer installment loans
Allowance for Loan Losses:
Beginning Balance	114	235	111	261
Charge-offs	(43)	(28)	(103)	(57)
Recoveries	21	12	45	40
Provision for loan losses	18	(175)	57	(200)
Ending Balance	110	44	110	44
Unallocated
Allowance for Loan Losses:
Beginning Balance	384	907	492	1,471
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision for loan losses	72	550	(36)	(14)
Ending Balance	$ 456	$ 1,457	$ 456	$ 1,457

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Loans - Schedule of Concentration Risk (Details) - Owners of rental properties - Financing receivable	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Residential
Concentration Risk [Line Items]
Concentration of loans (as a percent)	19.65%	18.15%
Commercial
Concentration Risk [Line Items]
Concentration of loans (as a percent)	16.11%	13.54%

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Loans - Allowance for Loan Losses (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 1,068		$ 1,023
Collectively evaluated for impairment	13,325		13,153
Total ending allowance balance	14,393	$ 14,023	14,176	$ 14,438	$ 14,202	$ 13,803
Loans:
Individually evaluated for impairment	12,740		13,985
Collectively evaluated for impairment	1,476,212		1,377,861
Total ending loans balance	1,488,952		1,391,846
Commercial, financial, and agricultural
Ending allowance balance attributable to loans:
Individually evaluated for impairment	1		2
Collectively evaluated for impairment	2,107		1,944
Total ending allowance balance	2,108	1,936	1,946	1,846	2,606	1,936
Loans:
Individually evaluated for impairment	699		889
Collectively evaluated for impairment	178,304		162,396
Total ending loans balance	179,003		163,285
Real Estate Mortgages | Residential
Ending allowance balance attributable to loans:
Individually evaluated for impairment	192		201
Collectively evaluated for impairment	4,626		4,500
Total ending allowance balance	4,818	4,801	4,701	4,619	4,401	4,460
Loans:
Individually evaluated for impairment	4,710		5,052
Collectively evaluated for impairment	647,249		590,795
Total ending loans balance	651,959		595,847
Real Estate Mortgages | Commercial
Ending allowance balance attributable to loans:
Individually evaluated for impairment	842		800
Collectively evaluated for impairment	4,553		4,536
Total ending allowance balance	5,395	5,215	5,336	4,436	4,176	3,635
Loans:
Individually evaluated for impairment	7,298		7,919
Collectively evaluated for impairment	456,371		438,815
Total ending loans balance	463,669		446,734
Real Estate Mortgages | Construction
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	199		179
Total ending allowance balance	199	197	179	212	142	134
Loans:
Individually evaluated for impairment	0		105
Collectively evaluated for impairment	47,018		37,190
Total ending loans balance	47,018		37,295
Consumer automobile loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment	14		0
Collectively evaluated for impairment	1,293		1,411
Total ending allowance balance	1,307	1,376	1,411	1,824	1,735	1,906
Loans:
Individually evaluated for impairment	14		0
Collectively evaluated for impairment	137,656		139,408
Total ending loans balance	137,670		139,408
Other consumer installment loans
Ending allowance balance attributable to loans:
Individually evaluated for impairment	19		20
Collectively evaluated for impairment	91		91
Total ending allowance balance	110	114	111	44	235	261
Loans:
Individually evaluated for impairment	19		20
Collectively evaluated for impairment	9,614		9,257
Total ending loans balance	9,633		9,277
Unallocated
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	456		492
Total ending allowance balance	$ 456	$ 384	$ 492	$ 1,457	$ 907	$ 1,471

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Net Periodic Benefit Cost-Defined Benefit Plans (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Net periodic benefit cost of the domestic non-contributory defined benefit plan
Interest cost	$ 138,000	$ 127,000	$ 276,000	$ 254,000
Expected return on plan assets	(413,000)	(386,000)	(825,000)	(772,000)
Amortization of net loss	18,000	47,000	35,000	93,000
Net periodic benefit	$ (257,000)	$ (212,000)	(514,000)	$ (425,000)
Employer contributions made to the defined benefit plan			$ 0

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Stock Purchase Plans (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Aug. 27, 2015
Stock Purchase Plans
Common shares issued for employee stock purchase plan	$ 23,000	$ 25,000	$ 44,000	$ 45,000
Options, outstanding (in shares)	919,250	1,075,775	919,250	1,075,775	1,034,525	3,000
Non-Employee Director Compensation Plan
Stock Purchase Plans
Number of shares allowed to be purchased (in shares)	100,000		100,000
Maximum percentage of base compensation			100.00%
Current percentage of base compensation			50.00%
Options, outstanding (in shares)	28,700		28,700
Director compensation plan (in shares)			6,990	7,067
Employee Stock
Stock Purchase Plans
Number of shares allowed to be purchased (in shares)	1,500,000		1,500,000
Purchase price of the shares with respect to market value (as a percent)			95.00%
Maximum percentage of base compensation			15.00%
Maximum market value			$ 12,000
Number of shares issued under the plan (in shares)			1,903	1,984

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Off-Balance Sheet Risk (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Off Balance Sheet Risk
Contract amounts representing credit risk	$ 232,108	$ 201,639
Commitments to extend credit
Off Balance Sheet Risk
Contract amounts representing credit risk	211,827	184,364
Standby letters of credit
Off Balance Sheet Risk
Contract amounts representing credit risk	$ 9,942	7,027
Coverage period for instrument (in years)	1 year
Credit exposure from the sale of assets with recourse
Off Balance Sheet Risk
Contract amounts representing credit risk	$ 10,339	$ 10,248

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Fair Value Measurements - Recurring Assets (Details) - Recurring - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
U.S. Government and agency securities
Fair Value Measurements [Abstract]
Total assets, fair value	$ 980
Mortgage-backed securities
Fair Value Measurements [Abstract]
Total assets, fair value	1,375	$ 1,747
State and political securities
Fair Value Measurements [Abstract]
Total assets, fair value	145,148	116,658
Other debt securities
Fair Value Measurements [Abstract]
Total assets, fair value	44,935	48,005
Equity securities
Fair Value Measurements [Abstract]
Total assets, fair value	1,186	1,288
Level I | U.S. Government and agency securities
Fair Value Measurements [Abstract]
Total assets, fair value	0
Level I | Mortgage-backed securities
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Level I | State and political securities
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Level I | Other debt securities
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Level I | Equity securities
Fair Value Measurements [Abstract]
Total assets, fair value	1,186	1,288
Level II | U.S. Government and agency securities
Fair Value Measurements [Abstract]
Total assets, fair value	980
Level II | Mortgage-backed securities
Fair Value Measurements [Abstract]
Total assets, fair value	1,375	1,747
Level II | State and political securities
Fair Value Measurements [Abstract]
Total assets, fair value	145,148	116,658
Level II | Other debt securities
Fair Value Measurements [Abstract]
Total assets, fair value	44,935	48,005
Level II | Equity securities
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Level III | U.S. Government and agency securities
Fair Value Measurements [Abstract]
Total assets, fair value	0
Level III | Mortgage-backed securities
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Level III | State and political securities
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Level III | Other debt securities
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Level III | Equity securities
Fair Value Measurements [Abstract]
Total assets, fair value	$ 0	$ 0

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Fair Value Measurements - Non-Recurring Assets (Details) - Nonrecurring - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Impaired loans
Fair Value Measurements [Abstract]
Total assets, fair value	$ 2,041	$ 2,360
Impaired loans | Level I
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Impaired loans | Level II
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Impaired loans | Level III
Fair Value Measurements [Abstract]
Total assets, fair value	2,041	2,360
Other real estate owned
Fair Value Measurements [Abstract]
Total assets, fair value	127	83
Other real estate owned | Level I
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Other real estate owned | Level II
Fair Value Measurements [Abstract]
Total assets, fair value	0	0
Other real estate owned | Level III
Fair Value Measurements [Abstract]
Total assets, fair value	$ 127	$ 83

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Fair Value Measurements - Significant Unobservable Inputs (Details) - Nonrecurring - Level III - Appraisal of collateral $ in Thousands	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques
Impaired loans, fair value	$ 2,041	$ 2,360
Other real estate owned, fair value	$ 127	$ 83
Measurement input, appraised value
Listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques
Other real estate owned, measurement input percentage	(0.20)	(0.20)
Measurement input, appraised value | Minimum
Listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques
Impaired loans, measurement input percentage	0	0
Measurement input, appraised value | Maximum
Listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques
Impaired loans, measurement input percentage	(0.20)	(0.34)
Measurement input, appraised value | Weighted Average
Listing of significant unobservable inputs used in the fair value measurement process for items valued utilizing level III techniques
Impaired loans, measurement input percentage	(0.03)	(0.15)
Other real estate owned, measurement input percentage	(0.20)	(0.20)

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Level I
Financial assets:
Loans held for sale	$ 3,857	$ 3,725
Loans, net	0	0
Financial liabilities:
Time deposits	0	0
Short-term borrowings	5,464	5,747
Long-term borrowings	0	0
Level II
Financial assets:
Loans held for sale	0	0
Loans, net	0	0
Financial liabilities:
Time deposits	0	0
Short-term borrowings	0	0
Long-term borrowings	0	0
Level III
Financial assets:
Loans held for sale	0	0
Loans, net	1,420,867	1,379,787
Financial liabilities:
Time deposits	145,812	204,512
Short-term borrowings	0	0
Long-term borrowings	108,433	127,679
Carrying Value
Financial assets:
Loans held for sale	3,857	3,725
Loans, net	1,474,739	1,377,971
Financial liabilities:
Time deposits	153,679	205,367
Short-term borrowings	5,464	5,747
Long-term borrowings	112,874	125,963
Fair Value
Financial assets:
Loans held for sale	3,857	3,725
Loans, net	1,420,867	1,379,787
Financial liabilities:
Time deposits	145,812	204,512
Short-term borrowings	5,464	5,747
Long-term borrowings	$ 108,433	$ 127,679

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Stock Options - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands									1 Months Ended	3 Months Ended	6 Months Ended
	Jan. 18, 2022	Apr. 09, 2021	Mar. 11, 2020	Mar. 15, 2019	Aug. 24, 2018	Jan. 05, 2018	Mar. 24, 2017	Aug. 27, 2015	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2022	Jun. 30, 2021	Jan. 01, 2022	Dec. 31, 2021
Employee Stock Purchase Plan
Options, outstanding (in shares)								3,000	919,250	919,250	919,250	1,075,775		1,034,525
Granted (in shares)								58,125			234,000
Granted (in dollars per share)								$ 28.02			$ 24.10
Exercisable period (in years)								5 years
Cash settlement (in shares)								28,875	346,725		346,725
Cash settlement (dollars per share)											$ 30.07
Voluntary cash settlement, expense											$ 183
Cash settlement of options										$ 1,074	$ 1,074
Minimum
Employee Stock Purchase Plan
Repurchase price (dollars per share)											$ 1.4770
Maximum
Employee Stock Purchase Plan
Repurchase price (dollars per share)											$ 3.3685
Tranche One
Employee Stock Purchase Plan
Options, outstanding (in shares)	156,000	156,500	119,300	105,300	0	0	0
Granted (in shares)	156,000	156,500	119,300	120,900	75,300	18,750	69,375				156,000
Granted (in dollars per share)	$ 24.10	$ 24.23	$ 25.34	$ 28.01	$ 30.67	$ 30.07	$ 29.47
Exercisable period (in years)	3 years	3 years	3 years	3 years	3 years	3 years	3 years
Cash settlement (in shares)	0	0	0	0	63,450	18,750	58,125
Tranche Two
Employee Stock Purchase Plan
Options, outstanding (in shares)	78,000	78,000	119,200	103,950	0	0	0
Granted (in shares)	78,000	78,000	119,200	119,100	149,250	18,750	35,625				78,000
Granted (in dollars per share)	$ 24.10	$ 24.23	$ 25.34	$ 28.01	$ 30.67	$ 30.07	$ 29.47
Exercisable period (in years)	5 years	5 years	5 years	5 years	5 years	5 years	5 years
Cash settlement (in shares)	0	0	0	0	125,400	18,750	33,375
Employee Stock Option
Employee Stock Purchase Plan
Options, outstanding (in shares)													1,034,525
Exercisable period (in years)											10 years
Compensation expense											$ 768	$ 527
Number of exercisable options (in shares)									108,300	108,300	108,300
Weighted average remaining contractual term (in years)											7 years 2 months 15 days
Unrecognized compensation cost for non-vested shares									$ 2,088	$ 2,088	$ 2,088
Period for recognition (in years)											1 year 4 months 6 days
Employee Stock Option | Tranche One
Employee Stock Purchase Plan
Exercisable period (in years)											3 years
Employee Stock Option | Tranche Two
Employee Stock Purchase Plan
Exercisable period (in years)											5 years

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Stock Options - Schedule of Stock Options Granted (Details) - $ / shares									1 Months Ended	6 Months Ended
	Jan. 18, 2022	Apr. 09, 2021	Mar. 11, 2020	Mar. 15, 2019	Aug. 24, 2018	Jan. 05, 2018	Mar. 24, 2017	Aug. 27, 2015	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021
Employee Stock Purchase Plan
Shares (in shares)								58,125		234,000
Forfeited (in shares)								(26,250)		(2,550)
Exercised (in shares)								(28,875)	(346,725)	(346,725)
Outstanding (in shares)								3,000	919,250	919,250	1,034,525	1,075,775
Strike price (in dollars per share)								$ 28.02		$ 24.10
Vesting period (in years)								5 years
Expiration (in years)								10 years
Tranche One
Employee Stock Purchase Plan
Shares (in shares)	156,000	156,500	119,300	120,900	75,300	18,750	69,375			156,000
Forfeited (in shares)	0	0	0	(15,600)	(11,850)	0	(11,250)
Exercised (in shares)	0	0	0	0	(63,450)	(18,750)	(58,125)
Outstanding (in shares)	156,000	156,500	119,300	105,300	0	0	0
Strike price (in dollars per share)	$ 24.10	$ 24.23	$ 25.34	$ 28.01	$ 30.67	$ 30.07	$ 29.47
Vesting period (in years)	3 years	3 years	3 years	3 years	3 years	3 years	3 years
Expiration (in years)	10 years	10 years	10 years	10 years	10 years	10 years	10 years
Tranche Two
Employee Stock Purchase Plan
Shares (in shares)	78,000	78,000	119,200	119,100	149,250	18,750	35,625			78,000
Forfeited (in shares)	0	0	0	(15,150)	(23,850)	0	(2,250)
Exercised (in shares)	0	0	0	0	(125,400)	(18,750)	(33,375)
Outstanding (in shares)	78,000	78,000	119,200	103,950	0	0	0
Strike price (in dollars per share)	$ 24.10	$ 24.23	$ 25.34	$ 28.01	$ 30.67	$ 30.07	$ 29.47
Vesting period (in years)	5 years	5 years	5 years	5 years	5 years	5 years	5 years
Expiration (in years)	10 years	10 years	10 years	10 years	10 years	10 years	10 years

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Stock Options - Schedule of Options Outstanding (Details) - $ / shares		1 Months Ended	6 Months Ended
	Aug. 27, 2015	Jun. 30, 2022	Jun. 30, 2022
Shares
Outstanding, beginning of year (in shares)			1,034,525
Granted (in shares)	58,125		234,000
Cash settlement (in shares)	28,875	346,725	346,725
Forfeited (in shares)	(26,250)		(2,550)
Expired (in shares)			0
Outstanding, end of period (in shares)	3,000	919,250	919,250
Exercisable, end of period (in shares)		108,300	108,300
Weighted Average Exercise Price
Outstanding, weighted average exercise price (in dollars per share)			$ 27.23
Granted (in dollars per share)	$ 28.02		24.10
Cash settlement (dollars per share)			30.07
Forfeited (in dollars per share)			29.10
Expired (in dollars per share)			0
Outstanding, weighted average exercise price (in dollars per share)		$ 25.36	25.36
Exercisable, end of period (in dollars per share)		$ 28.01	$ 28.01

XML

Stock Options - Fair Value Assumptions (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares
Share-Based Payment Arrangement [Abstract]
Risk-free interest rate	1.23%
Expected volatility	33.00%
Expected Annual dividend (in dollars per share)	$ 1.28
Expected life	6 years 10 months 2 days
Weighted average grant date fair value per option (in dollars per share)	$ 4.28

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Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Premises and equipment, net	Premises and equipment, net
Finance lease right of use assets	$ 7,220	$ 7,435
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Long-term borrowings	Long-term borrowings
Finance lease liabilities	$ 7,874	$ 7,963

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Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Finance Lease Cost:
Amortization of right-of-use asset	$ 107	$ 107	$ 215	$ 259
Interest expense	62	62	123	133
Operating lease cost	71	74	143	150
Variable lease cost	0	0	0	0
Total Lease Cost	$ 240	$ 243	$ 481	$ 542

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Leases - Maturity Schedule (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Operating
2022	$ 146
2023	265
2024	255
2025	257
2026	260
2027 and thereafter	2,568
Total undiscounted cash flows	3,751
Discount on cash flows	(951)
Total lease liability	2,800	$ 2,898
Finance
2022	210
2023	421
2024	427
2025	929
2026	387
2027 and thereafter	9,276
Total undiscounted cash flows	11,650
Discount on cash flows	(3,776)
Total lease liability	$ 7,874

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Leases - Weighted Average Term and Discount Rate (Details)	Jun. 30, 2022
Operating
Weighted-average term (years)	17 years 3 months 18 days
Weighted-average discount rate	3.54%
Finance
Weighted-average term (years)	23 years 10 months 24 days
Weighted-average discount rate	3.20%

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Reclassification of Comparative Amounts (Details)	6 Months Ended
	Jun. 30, 2022 USD ($)
Reclassification of Comparative Amounts
Effect of reclassification adjustment on net income or shareholders' equity	$ 0