CZFS

MKT CAP $392.3MP/E 9.5DIV YIELD 2.46%FCF YIELD 9.41%REV TTM $9.9M +2.5%NET INCOME $41.1M +29.9%NET CASH —52W 53.60 – 83.67SEC XBRL · TTM TO Invalid Date

How CZFS rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Index INTRODUCTION The following is management’s discussion and analysis of the significant changes in financial condition, the results of operations, capital resources and liquidity presented in the accompanying consolidated financial statements for the Company.
The Company engages in the general business of banking throughout our service area of Potter, Tioga, Clinton, Lycoming, Bradford and Centre counties in north central Pennsylvania, Lebanon, Berks, Schuylkill, Lancaster and Chester counties in south central Pennsylvania and Allegany County in southern New York.
In Delaware, the primary areas are the Cities of Wilmington and Dover and the surrounding area.
With the HVBC acquisition, we have expanded further into southeast Pennsylvania, including Montgomery, Bucks and Philadelphia Counties as well as Burlington County, New Jersey through the acquisition of five full service branches, four mortgage centers and one business banking facility.
Presently we operate 47 banking facilities, 39 of which operate as bank branches.
The mortgage centers acquired as part of the acquisition are located in Huntington Valley, PA and Mount Laurel, NJ.
Index Readers should carefully review the risk factors described in other documents the Company files with the SEC, including the annual reports on Form 10-K, the quarterly reports on Form 10-Q and any current reports on Form 8-K filed by us.
TRUST AND INVESTMENT SERVICES; OIL AND GAS SERVICES Our Investment and Trust Division is committed to helping our customers meet their financial goals.
As of December 31, 2025, and 2024, assets owned and invested by customers of the Bank through the Bank’s investment representatives totaled $317,895,000 and $395,869,000 million, respectively.
Additionally, as summarized in the table below, the Trust Department had assets under management as of December 31, 2025 and 2024 of $194,841,000 and $180,710,000, respectively.
During the year ended December 31, 2025, $3,918,000 of new trust accounts were opened, $8,312,000 of additional contributions to trust accounts were made, $15,622,000 was distributed from trust accounts, and $2,081,000 of accounts were closed.
As a result of market fluctuations, the fair value of the trust accounts increased approximately $19,604,000 during the year ended December 31, 2025.
The following table reflects trust accounts by investment type and structure: (market values - in thousands) 2025 2024 INVESTMENTS: Bonds $ 19,721 $ 18,432 Stock 30,970 32,804 Savings and Money Market Funds 22,242 21,496 Mutual Funds 105,599 91,846 Mineral interests 3,760 3,000 Mortgages Real Estate 9,807 9,812 Miscellaneous 2,024 2,582 TOTAL $ 194,841 $ 180,710 ACCOUNTS: Trusts 54,244 51,232 Guardianships Employee Benefits 74,067 67,275 Investment Management 65,784 61,871 Custodial TOTAL $ 194,841 $ 180,710 Our financial consultants offer full service brokerage and financial planning services throughout the Bank’s market areas.
RESULTS OF OPERATIONS Net income for the year ended December 31, 2025 was $36,572,000, which represents an increase of $8,754,000, or 31.5%, when compared to 2024 primarily due to an increase in net interest income after the provision for credit losses of $11, 758 ,000.
Net income for the year ended December 31, 2024 was $27,818,000, which represents an increase of $10,007,000, or 56.2%, when compared to 2023 due primarily to the absence of one-time costs associated with the HVBC acquisition that were recognized in 2023.
Basic e arnings per share were $7.62, $5.80 and $3.98 for 2025, 2024 and 2023, respectively, while diluted earnings per share were $7.62, $5.79 and $3.98 for 2025, 2024 and 2023, respectively.
Index Net Interest Income The most significant source of revenue is net interest income; the amount by which interest earned on interest-earning assets exceeds interest paid on interest-bearing liabilities.
The following table sets forth the Company’s average balances of, and the interest earned or incurred on, each principal category of assets, liabilities and stockholders’ equity, the related rates, net interest income and rate “spread” created.
Analysis of Average Balances and Interest Rates 2025 2024 2023 Average Balance (1) Interest Average Rate Average Balance (1) Interest Average Rate Average Balance (1) Interest Average Rate (dollars in thousands) $ $ % $ $ % $ $ % ASSETS Short-term investments: Interest-bearing deposits at banks 23,767 1.62 28,264 2.58 24,470 2.34 Total short-term investments 23,767 1.62 28,264 2.58 24,470 2.34 Interest bearing time deposits at banks 3,820 3.09 3,878 3.09 5,255 3.10 Investment securities: Taxable (6) 378,387 11,610 3.07 359,724 8,685 2.41 383,241 8,043 2.10 Tax-exempt (3) 109,125 3,324 3.05 105,141 2,650 2.52 112,806 2,866 2.54 Total investment securities 487,512 14,934 3.06 464,865 11,335 2.44 496,047 10,909 2.20 Loans: Residential mortgage loans 346,313 20,841 6.02 356,292 20,758 5.83 290,971 15,918 5.47 Construction loans 135,920 9,744 7.17 182,714 13,607 7.45 135,315 9,485 7.01 Commercial Loans 1,320,836 84,059 6.36 1,265,922 80,849 6.39 1,101,452 66,105 6.00 Agricultural Loans 362,880 21,227 5.85 350,588 18,978 5.41 342,980 17,061 4.97 Loans to state & political subdivisions 52,730 2,071 3.93 55,919 2,213 3.96 59,308 2,299 3.88 Other loans 96,097 6,898 7.18 83,916 6,717 8.00 74,555 5,660 7.59 Loans, net of discount (2)(3)(4) 2,314,776 144,840 6.26 2,295,351 143,122 6.24 2,004,581 116,528 5.81 Total interest-earning assets 2,829,875 160,276 5.66 2,792,358 155,308 5.56 2,530,353 128,173 5.07 Cash and due from banks 9,727 9,306 9,341 Bank premises and equipment 21,638 21,124 19,871 Other assets 180,011 183,674 139,474 Total non-interest earning assets 211,376 214,104 168,686 Total assets 3,041,251 3,006,462 2,699,039 LIABILITIES AND STOCKHOLDERS’ EQUITY Interest-bearing liabilities: Business Interest Checking 20,148 0.89 8,756 1.01 - - - NOW accounts 718,185 15,361 2.14 756,689 19,117 2.53 666,505 13,396 2.01 Savings accounts 287,162 1,336 0.47 296,275 1,532 0.52 318,299 1,314 0.41 Money market accounts 453,545 12,919 2.85 397,942 12,482 3.14 364,385 8,713 2.39 Certificates of deposit 470,285 17,255 3.67 481,862 19,107 3.97 328,553 8,276 2.52 Total interest-bearing deposits 1,949,325 47,050 2.41 1,941,524 52,326 2.70 1,677,742 31,699 1.89 Other borrowed funds 326,026 14,117 4.33 323,409 15,536 4.80 326,577 15,159 4.64 Total interest-bearing liabilities 2,275,351 61,167 2.69 2,264,933 67,862 3.00 2,004,319 46,858 2.34 Demand deposits 387,914 385,702 382,979 Other liabilities 40,650 40,593 38,419 Total non-interest-bearing liabilities 428,564 426,295 421,398 Stockholders’ equity 337,336 315,234 273,322 Total liabilities & stockholders’ equity 3,041,251 3,006,462 2,699,039 Net interest income 99,109 87,446 81,315 Net interest spread (5) 2.97 % 2.56 % 2.73 % Net interest income as a percentage of average interest-earning assets 3.50 % 3.13 % 3.21 % Ratio of interest-earning assets to interest-bearing liabilities 124.00 123.00 126.00 (1) Averages are based on daily averages.
(3) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for 2025, 2024 and 2023.
(6) Included dividend income Index For purposes of the comparison, as well as the discussion that follows, this presentation facilitates performance comparisons between taxable and tax-free assets by increasing the tax-free income by an amount equivalent to the Federal income taxes that would have been paid if this income were taxable at the Federal statutory rate for the corresponding year.
Accordingly, tax equivalent adjustments for investments and loans have been made accordingly to the previous table for the years ended December 31, 2025, 2024 and 2023, respectively (in thousands): 2025 2024 2023 Interest and dividend income from investment securities, interest bearing time deposits and short-term investments (non-tax adjusted) (GAAP) $ 14,738 $ 11,629 $ 11,043 Tax equivalent adjustment Interest and dividend income from investment securities, interest bearing time deposits and short-term investments (tax equivalent basis) (Non-GAAP) $ 15,436 $ 12,186 $ 11,645 2025 2024 2023 Interest and fees on loans (non-tax adjusted) (GAAP) $ 144,430 $ 142,688 $ 116,075 Tax equivalent adjustment Interest and fees on loans (tax equivalent basis) (Non-GAAP) $ 144,840 $ 143,122 $ 116,528 2025 2024 2023 Total interest income $ 159,168 $ 154,317 $ 127,118 Total interest expense 61,167 67,862 46,858 Net interest income (GAAP) 98,001 86,455 80,260 Total tax equivalent adjustment 1,108 1,055 Net interest income (tax equivalent basis) (Non-GAAP) $ 99,109 $ 87,446 $ 81,315 The following table shows the tax-equivalent effect of changes in volume and rates on interest income and expense (in thousands): Analysis of Changes in Net Interest Income on a Tax-Equivalent Basis 2025 vs. 2024 (1) 2024 vs. 2023 (1) Change in Volume Change in Rate Total Change Change in Volume Change in Rate Total Change Interest Income: Short-term investments: Interest-bearing deposits at banks $ (103 ) $ (243 ) $ (346 ) $ $ $ Interest bearing time deposits at banks (3 ) - (3 ) (43 ) - (43 ) Investment securities: Taxable 2,453 2,925 (438 ) 1,080 Tax-exempt (194 ) (22 ) (216 ) Total investment securities 3,025 3,599 (632 ) 1,058 Total investment income 2,782 3,250 (580 ) 1,121 Loans: Residential mortgage loans (475 ) 3,752 1,088 4,840 Construction loans (3,372 ) (491 ) (3,863 ) 3,499 4,122 Commercial Loans 3,494 (284 ) 3,210 10,314 4,430 14,744 Agricultural Loans 1,568 2,249 1,547 1,917 Loans to state & political subdivisions (125 ) (17 ) (142 ) (134 ) (86 ) Other loans (445 ) 1,057 Total loans, net of discount 1,718 18,538 8,056 26,594 Total Interest Income 1,297 3,671 4,968 17,958 9,177 27,135 Interest Expense: Interest-bearing deposits: Business Interest Checking (9 ) - NOW accounts (936 ) (2,820 ) (3,756 ) 1,974 3,747 5,721 Savings accounts (46 ) (150 ) (196 ) (90 ) Money Market accounts 1,277 (840 ) 2,915 3,769 Certificates of deposit (452 ) (1,400 ) (1,852 ) 4,861 5,970 10,831 Total interest-bearing deposits (57 ) (5,219 ) (5,276 ) 7,599 13,028 20,627 Other borrowed funds (1,545 ) (1,419 ) (151 ) Total interest expense (6,764 ) (6,695 ) 7,448 13,556 21,004 Net interest income $ 1,228 $ 10,435 $ 11,663 $ 10,510 $ (4,379 ) $ 6,131 (1) The portion of the total change attributable to both volume and rate changes during the year has been allocated to volume and rate components based upon the absolute dollar amount of the change in each component prior to allocation.
Index 2025 vs. 2024 Tax equivalent net interest income for 2025 was $99,109,000 compared to $87,446,000 for 2024, an increase of $11,663,000 or 13.3%.
Total interest income increased $4,968,000, as loan interest income increased $1,718,000, and total investment income increased $3,250,000.
Interest expense decreased $6,695,000 from 2024.
Total tax equivalent interest income from investment securities increased $3,599,000 in 2025 from 2024.
The average balance of investment securities increased $22,647,000, which had an effect of increasing interest income by $574,000 due to volume.
During 2025, the Bank made purchases to replace maturing securities, as well as making purchases to increase the size of the investment portfolio for pledging purposes, as well as enhancing yield.
The average tax-effected yield on our investment portfolio increased from 2.44% in 2024 to 3.06% in 2025.
The increase in the tax-effected yield is attributable to purchases made during 2024 and 2025, which were made in a higher market interest rate environment.
As a result of the yield on investment securities increasing 62 basis points (bps) to 3.06%, interest income on investment securities increased $3,025,000, with the increase related to taxable securities.
The investment strategy for 2025 used cashflow from the investment portfolio to increase convexity and improve yield as opportunities became available.
As the rate cycle continues to progress, the Bank will seek investments to improve portfolio yield while monitoring interest rate risk exposure under various rate environments and providing cash flow to meet liquidity needs as they arise.
During 2025, the investment purchases made were primarily in mortgage-backed securities that provided the widest spread to treasuries and municipal securities that provided convexity to the Bank’s investment portfolio.
Loan interest income increased $1,718,000 in 2025 from 2024.
The average balance of our loan portfolio increased by $19,425,000 in 2025 compared to 2024, which resulted in an increase in interest income of $829,000 due to volume.
The increase in average loans for 2025 was due to an increase in the average balance of outstanding student loans and an increase in agricultural loans.
The average tax-effected yield on our loan portfolio was 6.26% for 2025 compared to 6.24% for 2024 resulting in an increase in loan interest income of $889,000. • Interest income on residential mortgage loans increased $83,000.
The average balance of residential mortgage loans decreased $9,979,000 due to loan payments and pay-offs from individuals refinancing loans on the secondary market.
This resulted in a decrease of $475,000 due to volume.

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INTRODUCTION The following is management’s discussion and analysis of the significant changes in financial condition, the results of operations, capital resources and liquidity presented in the accompanying consolidated financial statements for the Company.
Index The Company engages in the general business of banking throughout our service area of Potter, Tioga, Clinton, Lycoming, Bradford and Centre counties in north central Pennsylvania, Lebanon, Berks, Schuylkill, Lancaster and Chester counties in south central Pennsylvania and Allegany County in southern New York and with the MidCoast acquisition, the Cities of Wilmington and Dover, Delaware.
With the recently completed HVBC acquisition, we have expanded further into southeast Pennsylvania, including Montgomery, Bucks and Philadelphia Counties as well as Burlington County, New Jersey through the acquisition of five full service branches, four mortgage centers and one business banking facility.
Presently we operate 48 banking facilities, 38 of which operate as bank branches.
The mortgage centers acquired as part of the acquisition are located in Montgomeryville, PA, Huntington Valley, PA, Philadelphia, PA and Mount Laurel, NJ.
Readers should carefully review the risk factors described in other documents the Company files with the SEC, including the annual reports on Form 10-K, the quarterly reports on Form 10-Q and any current reports on Form 8-K filed by us.
Index TRUST AND INVESTMENT SERVICES; OIL AND GAS SERVICES Our Investment and Trust Division is committed to helping our customers meet their financial goals.
As of December 31, 2024, and 2023, assets owned and invested by customers of the Bank through the Bank’s investment representatives totaled $395.9 million and $329.4 million, respectively.
Additionally, as summarized in the table below, the Trust Department had assets under management as of December 31, 2024 and 2023 of $180.7 million and $167.9 million, respectively.
During the year ended December 31, 2024, $2.2 million of new trust accounts were opened, $10.2 million of additional contributions to trust accounts were made, $11.0 million was distributed from trust accounts, and $4.0 million of accounts were closed.
As a result of market fluctuations, the fair value of the trust accounts increased approximately $15.4 million during the year ended December 31, 2024.
The following table reflects trust accounts by investment type and structure: (market values - in thousands) 2024 2023 INVESTMENTS: Bonds $ 18,432 $ 16,386 Stock 32,804 32,270 Savings and Money Market Funds 21,496 16,531 Mutual Funds 91,846 86,261 Mineral interests 3,000 4,715 Mortgages Real Estate 9,812 9,444 Miscellaneous 2,582 1,507 TOTAL $ 180,710 $ 167,894 ACCOUNTS: Trusts 51,232 46,713 Guardianships Employee Benefits 67,275 60,759 Investment Management 61,871 60,091 Custodial TOTAL $ 180,710 $ 167,894 Our financial consultants offer full service brokerage and financial planning services throughout the Bank’s market areas.
RESULTS OF OPERATIONS Net income for the year ended December 31, 2024 was $27,818,000, which represents an increase of $10,007,000, or 56.2%, when compared to 2023 due primarily to the absence of one-time costs associated with the HVBC acquisition that were recognized in 2023.
Net income for the year ended December 31, 2023 was $17,811,000, which represents a decrease of $11,249,000, or 38.7%, when compared to 2022 due primarily to the one-time costs associated with the HVBC acquisition.
Basic e arnings per share were $5.86, $4.02 and $7.17 for 2024, 2023 and 2022, respectively, while diluted earnings per share were $5.85, $4.02 and $7.17 for 2024, 2023 and 2022, respectively.
Net Interest Income The most significant source of revenue is net interest income; the amount by which interest earned on interest-earning assets exceeds interest paid on interest-bearing liabilities.
Index The following table sets forth the Company’s average balances of, and the interest earned or incurred on, each principal category of assets, liabilities and stockholders’ equity, the related rates, net interest income and rate “spread” created.
Analysis of Average Balances and Interest Rates 2024 2023 2022 Average Average Average Average Average Average Balance (1) Interest Rate Balance (1) Interest Rate Balance (1) Interest Rate (dollars in thousands) $ $ % $ $ % $ $ % ASSETS Short-term investments: Interest-bearing deposits at banks 28,264 2.58 24,470 2.34 52,655 0.32 Total short-term investments 28,264 2.58 24,470 2.34 52,655 0.32 Interest bearing time deposits at banks 3,878 3.09 5,255 3.10 8,352 2.75 Investment securities: Taxable 359,724 8,685 2.41 383,241 8,043 2.10 372,430 6,238 1.68 Tax-exempt (3) 105,141 2,650 2.52 112,806 2,866 2.54 120,592 3,106 2.58 Total investment securities 464,865 11,335 2.44 496,047 10,909 2.20 493,022 9,344 1.90 Loans: Residential mortgage loans 356,292 20,758 5.83 290,971 15,918 5.47 204,063 9,712 4.76 Construction loans 182,714 13,607 7.45 135,315 9,485 7.01 73,214 3,298 4.50 Commercial Loans 1,242,182 78,912 6.35 1,081,488 64,561 5.97 854,460 41,155 4.82 Agricultural Loans 350,588 18,978 5.41 342,980 17,061 4.97 347,420 15,387 4.43 Loans to state & political subdivisions 55,919 2,213 3.96 59,308 2,299 3.88 56,004 1,863 3.33 Other loans 107,656 8,654 8.04 94,519 7,204 7.62 58,715 3,201 5.45 Loans, net of discount (2)(3)(4) 2,295,351 143,122 6.24 2,004,581 116,528 5.81 1,593,876 74,616 4.68 Total interest-earning assets 2,792,358 155,308 5.56 2,530,353 128,173 5.07 2,147,905 84,360 3.93 Cash and due from banks 9,306 9,341 6,708 Bank premises and equipment 21,124 19,871 17,287 Other assets 183,674 139,474 84,066 Total non-interest earning assets 214,104 168,686 108,061 Total assets 3,006,462 2,699,039 2,255,966 LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: NOW accounts 765,445 19,205 2.51 666,505 13,396 2.01 520,895 2,425 0.47 Savings accounts 296,275 1,532 0.52 318,299 1,314 0.41 323,939 0.13 Money market accounts 397,942 12,482 3.14 364,385 8,713 2.39 343,288 2,004 0.58 Certificates of deposit 481,862 19,107 3.97 328,553 8,276 2.52 299,110 2,466 0.82 Total interest-bearing deposits 1,941,524 52,326 2.70 1,677,742 31,699 1.89 1,487,232 7,316 0.49 Other borrowed funds 323,409 15,536 4.80 326,577 15,159 4.64 149,661 3,907 2.61 Total interest-bearing liabilities 2,264,933 67,862 3.00 2,004,319 46,858 2.34 1,636,893 11,223 0.69 Demand deposits 385,702 382,979 374,675 Other liabilities 40,593 38,419 20,443 Total non-interest-bearing liabilities 426,295 421,398 395,118 Stockholders' equity 315,234 273,322 223,955 Total liabilities & stockholders' equity 3,006,462 2,699,039 2,255,966 Net interest income 87,446 81,315 73,137 Net interest spread (5) 2.56 % 2.73 % 3.24 % Net interest income as a percentage of average interest-earning assets 3.13 % 3.21 % 3.41 % Ratio of interest-earning assets to interest-bearing liabilities 123.00 126.00 131.00 (1) Averages are based on daily averages.
(3) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using a statutory federal income tax rate of 21% for 2024, 2023 and 2022.
For purposes of the comparison, as well as the discussion that follows, this presentation facilitates performance comparisons between taxable and tax-free assets by increasing the tax-free income by an amount equivalent to the Federal income taxes that would have been paid if this income were taxable at the Federal statutory rate for the corresponding year.
Accordingly, tax equivalent adjustments for investments and loans have been made accordingly to the previous table for the years ended December 31, 2024, 2023 and 2022, respectively (in thousands): Index 2024 2023 2022 Interest and dividend income from investment securities, interest bearing time deposits and short-term investments (non-tax adjusted) (GAAP) $ 11,629 $ 11,043 $ 9,092 Tax equivalent adjustment Interest and dividend income from investment securities, interest bearing time deposits and short-term investments (tax equivalent basis) (Non-GAAP) $ 12,186 $ 11,645 $ 9,744 2024 2023 2022 Interest and fees on loans (non-tax adjusted) (GAAP) $ 142,688 $ 116,075 $ 74,265 Tax equivalent adjustment Interest and fees on loans (tax equivalent basis) (Non-GAAP) $ 143,122 $ 116,528 $ 74,616 2024 2023 2022 Total interest income $ 154,317 $ 127,118 $ 83,357 Total interest expense 67,862 46,858 11,223 Net interest income (GAAP) 86,455 80,260 72,134 Total tax equivalent adjustment 1,055 1,003 Net interest income (tax equivalent basis) (Non-GAAP) $ 87,446 $ 81,315 $ 73,137 The following table shows the tax-equivalent effect of changes in volume and rates on interest income and expense (in thousands): Analysis of Changes in Net Interest Income on a Tax-Equivalent Basis 2024 vs. 2023 (1) 2023 vs. 2022 (1) Change in Change Total Change in Change Total Volume in Rate Change Volume in Rate Change Interest Income: Short-term investments: Interest-bearing deposits at banks $ $ $ $ (38 ) $ $ Interest bearing time deposits at banks (43 ) - (43 ) (102 ) (65 ) Investment securities: Taxable (438 ) 1,080 1,618 1,805 Tax-exempt (194 ) (22 ) (216 ) (199 ) (41 ) (240 ) Total investment securities (632 ) 1,058 (12 ) 1,577 1,565 Total investment income (580 ) 1,121 (152 ) 2,053 1,901 Loans: Residential mortgage loans 3,752 1,088 4,840 4,593 1,613 6,206 Construction loans 3,499 4,122 3,737 2,450 6,187 Commercial Loans 10,027 4,324 14,351 12,312 11,094 23,406 Agricultural Loans 1,547 1,917 (194 ) 1,868 1,674 Loans to state & political subdivisions (134 ) (86 ) Other loans 1,038 1,450 2,422 1,581 4,003 Total loans, net of discount 18,552 8,042 26,594 22,985 18,927 41,912 Total Interest Income 17,972 9,163 27,135 22,833 20,980 43,813 Interest Expense: Interest-bearing deposits: NOW accounts 2,174 3,635 5,809 10,118 10,971 Savings accounts (90 ) (7 ) Money Market accounts 2,915 3,769 6,579 6,709 Certificates of deposit 4,861 5,970 10,831 5,544 5,810 Total interest-bearing deposits 7,799 12,828 20,627 1,242 23,141 24,383 Other borrowed funds (151 ) 6,786 4,466 11,252 Total interest expense 7,648 13,356 21,004 8,028 27,607 35,635 Change in net interest income $ 10,324 $ (4,193 ) $ 6,131 $ 14,805 $ (6,627 ) $ 8,178 (1) The portion of the total change attributable to both volume and rate changes during the year has been allocated to volume and rate components based upon the absolute dollar amount of the change in each component prior to allocation. 2024 vs. 2023 Tax equivalent net interest income for 2024 was $87,446,000 compared to $81,315,000 for 2023, an increase of $6,131,000 or 7.5%.
The average balance of investment securities decreased $31.2 million, which had an effect of decreasing interest income by $632,000 due to volume.
We continually monitor interest rate trading ranges and seek to time investment security purchases when rates are in the top third of the trading range.
The average balance of our loan portfolio increased by $290.8 million in 2024 compared to 2023, which resulted in an increase in interest income of $18,552,000 due to volume, primarily due to the HVBC acquisition completed in June 2023 being included in the Company’s results for the entirety of 2024 and an increase in the average balance of student loans.
The average tax-effected yield on our loan portfolio was 6.24% for 2024 compared to 5.81% for 2023 resulting in an increase in loan interest income of $8,042,000.
The average balance of residential mortgage loans increased $65.3 million as a result of the HVBC acquisition, resulting in an increase of $3,752,000 due to volume.
The change due to rate was an increase of $1,088,000 as the average yield on residential mortgages increased from 5.47% in 2023 to 5.83% in 2023 as a result of the higher rate environment in 2023 and 2024. • The average balance of construction loans increased $47.4 million from 2023 to 2024 as a result of projects in our south eastern Pennsylvania market acquired as part of the HVBC acquisition, and Delaware market, which resulted in an increase of $3,499,000 in interest income.
The average yield on construction loans increased from 7.01% to 7.45%, which correlated to a $623,000 increase in interest income. • Interest income on commercial loans increased $14,351,000 from 2023 to 2024.
The increase in the average balance of commercial loans of $160.7 million is primarily attributable to the HVBC acquisition.
The increase in the average balance of these loans resulted in an increase in interest income due to volume of $10,027,000.
The average yield on commercial loans increased 38 bps to 6.35% in 2024, resulting in an increase in interest income due to rate of $4,324,000.
The increase in the average balance of agricultural loans of $7.6 million is primarily attributable to the south-central Pennsylvania market.
The average yield on agricultural loans increased from 4.97% in 2023 to 5.41% in 2024 due to the increase in market rates, resulting in an increase in interest income due to rate of $1,547,000.
In many cases, the Bank works with the United States Department of Agriculture’s (USDA) guaranteed loan programs to offset credit risk and to further promote economic growth in our market area.
Index • The average balance of other loans increased $13.1 million as a result of an increase in outstanding student loans.
This resulted in an increase of $1,038,000 on total interest income due to volume.
The average tax equivalent yield on other loans increased from 7.62% in 2023 to 8.04% in 2024, increasing interest income by $412,000 in other loans due to the increase in market rates in 2023 and 2024.
The average rate paid on NOW accounts increased from 2.01% to 2.51% resulting in an increase in interest expense of $3,635,000.
Average interest-bearing liabilities increased $260.6 million in 2024, with average interest-bearing deposits increasing $263.8 million and average other borrowings decreasing $3.2 million.
As a result of the increase in average deposits, interest expense increased $7,799,000 as result of the change in volume.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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