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目錄

美國

證券交易委員會

華盛頓市20549

表格 10-Q

（標記一）

x根據1934年證券交易法第13或15(d)節的季度報告

截至季度末 2024年9月30日

¨根據1934年證券交易法第13或15(d)節的轉型報告書

過渡期從 到______

委員會檔案編號 001-35021

EVANS BANCORP，INC。

(根據其章程規定的註冊人準確名稱)

紐約 16-1332767

(州或其他司法管轄區 (I.R.S. 僱主

註冊或組織) 識別號。）

6460 主街。 Williamsville, NY 14221

（主要執行辦公室地址）（郵政編碼）

(716) 926-2000

（註冊人的電話號碼，包括區號）

不適用

（如有變更，前名稱，前地址和前財年）

自上次報告以來）

在法案第12(b)條的規定下注冊的證券：

每一類的名稱

交易標誌

在其上註冊的交易所的名稱

普通股，面值$0.50

EVBN

紐交所美國

請勾選以下選項以表明註冊人：（1）已在過去的12個月內根據《證券交易所法》第13或15（d）條規定提交了所有要求提交的報表（或者在所需提交此類報表的更短期限內），並且（2）在過去的90天內一直遵守了這些申報要求。是 x 沒有 ¨

請用勾號勾選以下內容：c註冊人是否已在過去的12個月內（或c註冊人需要提交此類文件的更短期限內）按照S-T法規第405條規定的要求遞交了每份互動數據文件。是的 x No ¨

請勾選此項，指示註冊人是否爲大型加速申報人、加速申報人、非加速申報人、小型報告公司或新興增長公司。有關「大型加速申報人」、「加速申報人」、「小型報告公司」和「新興增長公司」的定義，請參見《交易法規1.2》條。

大型加速歸檔人¨

加速報告人¨

非加速文件提交人 x

小型報告公司x

新興成長公司 ¨

如果是新興增長型公司，請在表格上打勾，表示申報人選擇不使用根據《交易所法案》第13(a)條項下提供的任何新的或修訂的財務會計準則遵守的延長過渡期。 ¨

請在複選標誌處註明公司是否爲殼公司（根據交易所法令第12b-2條的定義）。

是¨ 否 x

請指明截至最新可行日期，各類普通股的流通股數：普通股，面值0.50美元， 5,534,239 截至2024年10月31日的股份。


‎

目錄

指數

EVANS BANCORP，INC.及其子公司

第1部分。財務信息

頁碼

項目 1。

基本報表

未經審計的合併資產負債表–2024年9月30日和2023年12月31日

1

未經審計的合併利潤表–2024年9月30日和2023年的三個月

2

截至2024年9月30日和2023年的未經審計的合併利潤表

3

截至2024年9月30日和2023年的未經審計的綜合（損失）損益表

4

截至2024年9月30日和2023年的未經審計的綜合（損失）損益表

4

截至2024年9月30日和2023年的未經審計的股東權益變動表

5

截至2024年9月30日和2023年的未經審計的股東權益變動表

6

截至2024年9月30日的未經審計的現金流量表3

7

未經審計的綜合財務報表註釋

9

項目2。

Management's Discussion and Analysis of Financial Condition and Results of Operations

32

項目3。

有關市場風險的定量和定性披露

41

項目 4.

控制和程序

42

第二部分。其他信息

項目1。

法律訴訟

43

1A項目。

風險因素

45

項目2。

未註冊的股權證券銷售，款項使用以及發行人購買的股權

45

項目3。

對優先證券的違約

45

項目4。

礦山安全披露。

45

項目5。

其他信息

45

項目6。

展示資料

46

簽名

47

目錄

第一部分 - 財務信息

基本報表 - 項目1

埃文斯銀行集團及其子公司

未經審計的合併資產負債表

2024年9月30日和2023年12月31日

(以千爲單位，除每股金額和每股股份除外)

2022年9月30日

12月31日，

2024

2023

資產

現金和存放在銀行的款項

$

20,786 

$

19,669 

人形機器人-軸承銀行存款

107,296 

3,798 

證券:

可供出售，公允價值

271,232 

275,680 

持有至到期，攤銷成本

4,376 

2,059 

(公允價值：$4,351 於2024年9月30日；$1,988 在2023年12月31日

聯邦住房貸款銀行普通股，成本價

4,396 

4,914 

聯儲局銀行普通股，成本價

3,690 

3,097 

貸款淨額，扣除2024年6月30日撥備爲$23,091 到2024年9月30日

和美元22,114

1,764,866 

1,698,832 

物業和設備，減去累計折舊$13,747 於2024年9月30日

和$12,538 於2023年12月31日

14,467 

15,397 

商譽

1,768 

1,768 

無形資產

82 

94 

銀行擁有的人壽保險

43,509 

42,758 

經營租賃權資產

4,062 

3,781 

其他資產

39,476 

36,816 

資產總計

$

2,280,006 

$

2,108,663 

負債和股東權益

負債

存款：

需求

$

435,358 

$

390,238 

活期存款帳戶

372,462 

345,279 

儲蓄

706,849 

649,621 

時間

386,049 

333,623 

存款總額

1,900,718 

1,718,761 

按協議出售的證券回購

8,282 

9,475 

其他借款

128,000 

145,123 

經營租賃負債

4,314 

4,063 

其他負債

21,591 

21,845 

從屬債務

31,254 

31,177 

負債總額

2,094,159 

1,930,444 

股東權益：

普通股，每股面值爲 $0.0001；0.50 面值， 10,000,000 授權股份數 5,609,507 和 5,601,308 分別於2024年9月30日和2023年12月31日發行的股份

分別爲2024年9月30日和2023年12月31日， 5,534,239 和 5,499,772 尚未流通的股份爲

分別是2024年9月30日和2023年12月31日。

2,807 

2,803 

資本剩餘

83,009 

82,712 

截至2024年3月31日和2023年12月31日，公司的庫藏股票分別有2,279,784股和2,693,653股。75,268 和 101,536 2024年9月30日開多 股份

，分別於2023年12月31日

(2,576)

(3,656)

保留盈餘

139,297 

138,631 

累計其他綜合損失，減稅後

(36,690)

(42,271)

股東權益合計

185,847 

178,219 

負債合計及股東權益總計

$

2,280,006 

$

2,108,663 

查看未經審計的合併財務報表附註

1

Table of Contents

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands, except share and per share amounts)

Three Months Ended September 30,

2024

2023

INTEREST INCOME

Loans

$

25,393 

$

21,936 

Interest-bearing deposits at banks

1,567 

132 

Securities:

Taxable

1,673 

2,173 

Non-taxable

65 

51 

Total interest income

28,698 

24,292 

INTEREST EXPENSE

Deposits

11,495 

7,544 

Other borrowings

1,600 

1,932 

Subordinated debt

559 

560 

Total interest expense

13,654 

10,036 

NET INTEREST INCOME

15,044 

14,256 

PROVISION FOR (RECAPTURE OF) CREDIT LOSSES

570 

506 

NET INTEREST INCOME AFTER

PROVISION FOR CREDIT LOSSES

14,474 

13,750 

NON-INTEREST INCOME

Deposit service charges

699 

665 

Insurance service and fees

186 

3,498 

Bank-owned life insurance

253 

239 

Interchange fee income

529 

516 

Gain on sale of other real estate owned

598 

-

Other

729 

638 

Total non-interest income

2,994 

5,556 

NON-INTEREST EXPENSE

Salaries and employee benefits

7,539 

8,735 

Occupancy

1,088 

1,109 

Advertising and public relations

327 

348 

Professional services

992 

869 

Technology and communications

1,423 

1,517 

Amortization of intangibles

4 

100 

FDIC insurance

340 

350 

Merger related

600 

-

Other

1,274 

1,379 

Total non-interest expense

13,587 

14,407 

INCOME BEFORE INCOME TAXES

3,881 

4,899 

INCOME TAX PROVISION

938 

1,281 

NET INCOME

$

2,943 

$

3,618 

Net income per common share-basic

$

0.53 

$

0.66 

Net income per common share-diluted

$

0.53 

$

0.66 

Weighted average number of common shares outstanding

5,527,343 

5,481,566 

Weighted average number of diluted shares outstanding

5,542,694 

5,490,600 

See Notes to Unaudited Consolidated Financial Statements


‎

2

Table of Contents

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands, except share and per share amounts)

Nine Months Ended September 30,

2024

2023

INTEREST INCOME

Loans

$

72,931 

$

64,424 

Interest-bearing deposits at banks

3,650 

308 

Securities:

Taxable

5,128 

6,719 

Non-taxable

178 

194 

Total interest income

81,887 

71,645 

INTEREST EXPENSE

Deposits

32,112 

17,840 

Other borrowings

4,839 

4,917 

Subordinated debt

1,665 

1,626 

Total interest expense

38,616 

24,383 

NET INTEREST INCOME

43,271 

47,262 

PROVISION FOR (RECAPTURE OF) CREDIT LOSSES

1,133 

(264)

NET INTEREST INCOME AFTER

PROVISION FOR CREDIT LOSSES

42,138 

47,526 

NON-INTEREST INCOME

Deposit service charges

2,047 

1,923 

Insurance service and fees

511 

8,648 

Bank-owned life insurance

751 

702 

Interchange fee income

1,500 

1,537 

Gain on sale of other real estate owned

598 

-

Other

2,254 

1,561 

Total non-interest income

7,661 

14,371 

NON-INTEREST EXPENSE

Salaries and employee benefits

22,706 

26,796 

Occupancy

3,334 

3,428 

Advertising and public relations

752 

911 

Professional services

2,757 

2,560 

Technology and communications

4,428 

4,414 

Amortization of intangibles

12 

300 

FDIC insurance

965 

1,050 

Merger related

600 

-

Other

3,518 

3,623 

Total non-interest expense

39,072 

43,082 

INCOME BEFORE INCOME TAXES

10,727 

18,815 

INCOME TAX PROVISION

2,504 

4,465 

NET INCOME

$

8,223 

$

14,350 

Net income per common share-basic

$

1.49 

$

2.63 

Net income per common share-diluted

$

1.49 

$

2.62 

Weighted average number of common shares outstanding

5,520,291 

5,464,741 

Weighted average number of diluted shares outstanding

5,531,680 

5,481,514 

See Notes to Unaudited Consolidated Financial Statements


‎

3

Table of Contents

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands)

Three Months Ended September 30,

2024

2023

NET INCOME

$

2,943 

$

3,618 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Unrealized gain (loss) on available-for-sale securities:

8,370 

(8,813)

Defined benefit pension plans:

Amortization of prior service cost

-

-

Amortization of actuarial loss

17 

20 

Total

17 

20 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

8,387 

(8,793)

COMPREHENSIVE INCOME (LOSS)

$

11,330 

$

(5,175)

See Notes to Unaudited Consolidated Financial Statements

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands)

Nine Months Ended September 30,

2024

2023

NET INCOME

$

8,223 

$

14,350 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Unrealized gain (loss) on available-for-sale securities

5,530 

(9,472)

Defined benefit pension plans:

Amortization of prior service cost

-

-

Amortization of actuarial loss

51 

60 

Total

51 

60 

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX

5,581 

(9,412)

COMPREHENSIVE INCOME

$

13,804 

$

4,938 

See Notes to Unaudited Consolidated Financial Statements


‎

4

Table of Contents

 

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands, except share and per share amounts)

Accumulated

Other

Common

Capital

Retained

Comprehensive

Treasury

Stock

Surplus

Earnings

Loss

Stock

Total

Balance, June 30, 2023

$

2,795 

$

81,777 

$

128,465 

$

(49,897)

$

(3,656)

$

159,484 

Net Income

3,618 

3,618 

Other comprehensive loss

(8,793)

(8,793)

Cash dividends ($0.66 per common share)

(3,615)

(3,615)

Stock compensation expense

238 

238 

Issued 2,360 restricted shares/units, net of forfeitures

-

-

-

Issued 113 shares in stock option exercises

1 

2 

3 

Balance, September 30, 2023

$

2,796 

$

82,017 

$

128,468 

$

(58,690)

$

(3,656)

$

150,935 

Balance, June 30, 2024

$

2,807 

$

82,700 

$

140,107 

$

(45,077)

$

(2,888)

$

177,649 

Net Income

2,943 

2,943 

Other comprehensive income

8,387

8,387

Cash dividends ($0.66 per common share)

(3,648)

(3,648)

Stock compensation expense

292 

292 

Reissued 8,250 shares in stock option exercises

-

-

(105)

312 

207 

Issued 832 shares in stock option exercises

17

17

Forfeitures of 680 shares of restricted stock

-

Balance, September 30, 2024

$

2,807 

$

83,009

$

139,297 

$

(36,690)

$

(2,576)

$

185,847 

See Notes to Unaudited Consolidated Financial Statements


‎

5

Table of Contents

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands, except share and per share amounts)

Accumulated

Other

Common

Capital

Retained

Comprehensive

Treasury

Stock

Surplus

Earnings

Loss

Stock

Total

Balance, December 31, 2022

$

2,775 

$

81,031 

$

123,356 

$

(49,278)

$

(3,891)

$

153,993 

Cumulative effect of change in accounting principle— credit losses

-

-

(2,026)

-

-

(2,026)

Beginning balance after cumulative effect adjustment

$

2,775 

$

81,031 

$

121,330 

$

(49,278)

$

(3,891)

$

151,967 

Net Income

14,350 

14,350 

Other comprehensive loss

(9,412)

(9,412)

Cash dividends ($1.32 per common share)

(7,212)

(7,212)

Stock compensation expense

772 

772 

Reissued 6,228 restricted shares

(235)

235 

-

Issued 12,534 shares in stock option exercises

7 

116 

123 

Issued 14,135 restricted shares, net of forfeitures

6 

(6)

-

Issued 4,545 shares in Dividend Reinvestment Plan

2 

152 

154 

Issued 9,101 shares in Employee Stock Purchase Plan

6 

187 

193 

Balance, September 30, 2023

$

2,796 

$

82,017 

$

128,468 

$

(58,690)

$

(3,656)

$

150,935 

Balance, December 31, 2023

$

2,803 

$

82,712 

$

138,631 

$

(42,271)

$

(3,656)

$

178,219 

Net Income

8,223 

8,223 

Other comprehensive income

5,581 

5,581 

Cash dividends ($1.32 per common share)

(7,282)

(7,282)

Stock compensation expense

913 

913 

Repurchased 7,000 shares of Common Stock

-

(204)

(204)

Issued 3,365 shares in stock option exercises

2 

48 

50 

Reissued 26,803 restricted shares, net of forfeitures

-

(798)

(170)

968 

-

Reissued 8,404 shares in stock option exercises

-

(4)

(105)

316 

207 

Issued 4,834 shares in Dividend Reinvestment Plan

2 

138 

140 

Balance, September 30, 2024

$

2,807 

$

83,009 

$

139,297 

$

(36,690)

$

(2,576)

$

185,847 

See Notes to Unaudited Consolidated Financial Statements


‎

6

Table of Contents

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands)

Nine Months Ended September 30,

2024

2023

OPERATING ACTIVITIES:

Interest received

$

81,035 

$

71,171 

Fees received

6,283 

12,501 

Interest paid

(38,125)

(23,372)

Cash paid to employees and vendors

(39,387)

(43,228)

Income taxes paid

(8,963)

(7,669)

Proceeds from sale of loans held for sale

15,089 

7,498 

Originations of loans held for sale

(14,732)

(7,341)

Net cash provided by operating activities

$

1,200 

$

9,560 

INVESTING ACTIVITIES:

Available for sales securities:

Purchases

$

(2,616)

$

-

Proceeds from sales, maturities, calls, and payments

14,697 

24,278 

Held to maturity securities:

Purchases

(3,816)

(2,292)

Proceeds from maturities, calls, and payments

1,499 

-

Purchases of Federal Reserve Bank Stock

(593)

(18)

Redemption of FHLB Stock

518 

7,089

Additions to properties and equipment

(279)

(575)

Cash investment in tax credit

(674)

-

Proceeds from sales of assets

-

370 

Proceeds from tax credit investment

155 

12 

Proceeds from the sale of other real estate owned

598 

-

Net increase in loans

(66,324)

(31,528)

Net cash used by investing activities

$

(56,835)

$

(2,664)

FINANCING ACTIVITIES:

Proceeds from long-term borrowings

$

40,000 

$

-

Repayments from long-term borrowings

(6,078)

(13,374)

Repayments from short-term borrowings, net

(52,196)

(21,900)

Net increase in deposits

181,965 

33,745 

Dividends paid

(3,634)

(3,597)

Repurchase of treasury stock

(204)

-

Issuance of common stock

190

470 

Reissuance of treasury stock

207

-

Net cash provided (used) in financing activities

$

160,250 

$

(4,656)

Net increase in cash and cash equivalents

104,615 

2,240 

CASH AND CASH EQUIVALENTS:

Beginning of period

23,467 

23,054 

End of period

$

128,082 

$

25,294 

See Notes to Unaudited Consolidated Financial Statements


‎

7

Table of Contents

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(in thousands)

Nine Months Ended September 30,

2024

2023

RECONCILIATION OF NET INCOME TO NET CASH

PROVIDED BY OPERATING ACTIVITIES:

Net income

$

8,223 

$

14,350 

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization

952 

1,216 

Deferred tax (benefit) expense

(457)

136 

Provision for credit losses

1,133 

(264)

Loss on sales of assets

-

31 

Gain on the sale of other real estate owned

(598)

-

Gain on loans sold

(355)

(156)

Stock compensation expense

913 

772 

Proceeds from sale of loans held for sale

15,089 

7,498 

Originations of loans held for sale

(14,732)

(7,341)

Changes in assets and liabilities affecting cash flow:

Other assets

(3,091)

(2,042)

Other liabilities

(5,877)

(4,640)

NET CASH PROVIDED BY OPERATING ACTIVITIES

$

1,200 

$

9,560 

See Notes to Unaudited Consolidated Financial Statements


‎

8

Table of Contents

EVANS BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2024 AND 2023

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies followed by Evans Bancorp, Inc. (the “Company”), a financial holding company, and its two direct, wholly-owned subsidiaries: (i) Evans Bank, National Association (the “Bank”), and the Bank’s subsidiary, Evans National Holding Corp. (“ENHC”); and (ii) Evans National Financial Services, LLC (“ENFS”), and ENFS’s subsidiary, The Evans Agency, LLC (“TEA”), in the preparation of the accompanying interim unaudited consolidated financial statements conform with U.S. generally accepted accounting principles (“GAAP”) and with general practice within the industries in which it operates. Unless the context otherwise requires, the term “Company” refers collectively to Evans Bancorp, Inc. and its subsidiaries. The Company conducts its business through its subsidiaries. It does not engage in other substantial business.

On September 9, 2024, Evans Bancorp, Inc. entered into an agreement and plan of merger with NBT Bancorp Inc. (“NBT”) and NBT Bank, National Association, pursuant to which NBT will acquire Evans Bancorp, Inc. Under the terms of the merger agreement, each outstanding share of Evans common stock will be converted into the right to receive 0.91 shares of NBT common stock. The merger is subject to customary closing conditions, including the receipt of regulatory approvals and approval by the shareholders of Evans, and is expected to close in the second quarter of 2025. Expenses related to the merger are included on the “merger related” expense line in the consolidated statements of income for the three and nine month periods ended September 30, 2024. For further information on the merger agreement, see the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on September 9, 2024.

On November 30, 2023 the Company sold substantially all of the assets of TEA to Gallagher and ceased TEA’s insurance business. For comparative purposes it should be noted that insurance business activity from TEA is included within prior year balances throughout this Quarterly Report on Form 10-Q. For further information on the sale of TEA see Note 2 to the Company’s Consolidated Financial Statements included under Item 8 of the 2023 Annual Report on Form 10-K.

The Financial Accounting Standards Board (“FASB”) establishes changes to GAAP in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs when they are issued by FASB. ASUs adopted by the Company during the current fiscal year are not expected to have a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures.

The results of operations for the nine month period ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.

The accompanying unaudited consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “10-K”).


‎

9

Table of Contents

2. SECURITIES

The amortized cost of securities and their approximate fair value at September 30, 2024 and December 31, 2023 were as follows:

September 30, 2024

(in thousands)

Amortized

Unrealized

Fair

Cost

Gains

Losses

Value

Available for Sale:

Debt securities:

U.S. treasuries and government agencies

$

109,290

$

-

$

(14,888)

$

94,402

States and political subdivisions

5,499

1

(136)

5,364

Total debt securities

$

114,789

$

1

$

(15,024)

$

99,766

Mortgage-backed securities:

FNMA

$

63,317

$

4

$

(9,570)

$

53,751

FHLMC

36,409

24

(4,879)

31,554

GNMA

38,977

1

(6,986)

31,992

SBA

19,122

-

(1,757)

17,365

CMO

46,080

-

(9,276)

36,804

Total mortgage-backed securities

$

203,905

$

29

$

(32,468)

$

171,466

Total securities designated as available for sale

$

318,694

$

30

$

(47,492)

$

271,232

Held to Maturity:

Debt securities

States and political subdivisions

$

4,376

$

23

$

(48)

$

4,351

Total securities designated as held to maturity

$

4,376

$

23

$

(48)

$

4,351

December 31, 2023

(in thousands)

Amortized

Unrealized

Fair

Cost

Gains

Losses

Value

Available for Sale:

Debt securities:

U.S. treasuries and government agencies

$

114,152

$

-

$

(17,912)

$

96,240

States and political subdivisions

6,258

2

(231)

6,029

Total debt securities

$

120,410

$

2

$

(18,143)

$

102,269

Mortgage-backed securities:

FNMA

$

66,262

$

2

$

(11,294)

$

54,970

FHLMC

36,743

-

(5,569)

31,174

GNMA

38,793

-

(7,683)

31,110

SBA

20,776

-

(2,291)

18,485

CMO

47,741

-

(10,069)

37,672

Total mortgage-backed securities

$

210,315

$

2

$

(36,906)

$

173,411

Total securities designated as available for sale

$

330,725

$

4

$

(55,049)

$

275,680

Held to Maturity:

Debt securities

States and political subdivisions

$

2,059

$

1

$

(72)

$

1,988

Total securities designated as held to maturity

$

2,059

$

1

$

(72)

$

1,988

Available for sale securities with a total fair value of $100 million and $172 million were pledged as collateral to secure public deposits and for other purposes required or permitted by law at September 30, 2024 and December 31, 2023, respectively.

The scheduled maturities of debt and mortgage-backed securities at September 30, 2024 are summarized below. All maturity amounts are contractual maturities. Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call premiums.

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September 30, 2024

Amortized

Estimated

cost

fair value

(in thousands)

Debt securities available for sale:

Due in one year or less

$

737

$

733

Due after one year through five years

46,954

44,103

Due after five years through ten years

43,102

37,201

Due after ten years

23,996

17,729

$

114,789

$

99,766

Mortgage-backed securities

available for sale

$

203,905

$

171,466

Total

$

318,694

$

271,232

Debt securities held to maturity:

Due in one year or less

$

2,751

$

2,760

Due after one year through five years

497

489

Due after five years through ten years

1,128

1,102

Due after ten years

-

-

Total

$

4,376

$

4,351

Contractual maturities of the Company’s mortgage-backed securities generally exceed ten years; however, the effective lives may be significantly shorter due to prepayments of the underlying loans and due to the nature of these securities.

There were no gross realized gains or losses from sales of investment securities for the three and nine month periods ended September 30, 2024 and 2023.

Management has assessed the securities available for sale in an unrealized loss position at September 30, 2024 and determined that it expected to recover the amortized cost basis of its securities. As of September 30, 2024, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its impaired securities before recovery of their amortized cost. Management believes the decline in fair value is primarily related to market interest rate fluctuations and not to the credit deterioration of the individual issuers. As a result, the Company does not hold an allowance for credit losses relating to securities. The Company holds no securities backed by sub-prime or Alt-A residential mortgages or commercial mortgages and also does not hold any trust-preferred securities.

The creditworthiness of the Company’s portfolio is largely reliant on the ability of U.S. government agencies such as Federal Home Loan Bank (“FHLB”), Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and municipalities throughout New York State to meet their obligations. In addition, dysfunctional markets could materially alter the liquidity, interest rate, and pricing risk of the portfolio. The stable past performance is not a guarantee for similar performance going forward.


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Table of Contents

Information regarding unrealized losses within the Company’s available for sale and held to maturity securities at September 30, 2024 and December 31, 2023 is summarized below. The securities are primarily U.S. government sponsored entities securities or municipal securities. All unrealized losses are related to market interest rate fluctuations and not indicative of credit loss.

September 30, 2024

Less than 12 months

12 months or longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Losses

Value

Losses

Value

Losses

(in thousands)

Available for Sale:

Debt securities:

U.S. treasuries and government agencies

$

-

$

-

$

94,402

$

(14,888)

$

94,402

$

(14,888)

States and political subdivisions

-

-

4,683

(136)

4,683

(136)

Total debt securities

$

-

$

-

$

99,085

$

(15,024)

$

99,085

$

(15,024)

Mortgage-backed securities:

FNMA

$

-

$

-

$

53,397

$

(9,570)

$

53,397

$

(9,570)

FHLMC

-

-

29,811

(4,879)

29,811

(4,879)

GNMA

1,263

(4)

30,594

(6,982)

31,857

(6,986)

SBA

-

-

17,364

(1,757)

17,364

(1,757)

CMO

-

-

36,803

(9,276)

36,803

(9,276)

Total mortgage-backed securities

$

1,263

$

(4)

$

167,969

$

(32,464)

$

169,232

$

(32,468)

Held to Maturity:

Debt securities:

States and political subdivisions

$

-

$

-

$

512

$

(48)

$

512

$

(48)

Total temporarily impaired

securities

$

1,263

$

(4)

$

267,566

$

(47,536)

$

268,829

$

(47,540)

December 31, 2023

Less than 12 months

12 months or longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Losses

Value

Losses

Value

Losses

(in thousands)

Available for Sale:

Debt securities:

U.S. treasuries and government agencies

$

-

$

-

$

95,240

$

(17,912)

$

95,240

$

(17,912)

States and political subdivisions

878

(2)

4,194

(229)

5,072

(231)

Total debt securities

$

878

$

(2)

$

99,434

$

(18,141)

$

100,312

$

(18,143)

Mortgage-backed securities:

FNMA

$

-

$

-

$

54,831

$

(11,294)

$

54,831

$

(11,294)

FHLMC

-

-

31,174

(5,569)

31,174

(5,569)

GNMA

-

-

31,110

(7,683)

31,110

(7,683)

SBA

-

-

18,485

(2,291)

18,485

(2,291)

CMO

-

-

37,674

(10,069)

37,674

(10,069)

Total mortgage-backed securities

$

-

$

-

$

173,274

$

(36,906)

$

173,274

$

(36,906)

Held to Maturity:

Debt securities:

States and political subdivisions

$

444

$

(1)

$

643

$

(71)

$

1,087

$

(72)

Total temporarily impaired

securities

$

1,322

$

(3)

$

273,351

$

(55,118)

$

274,673

$

(55,121)


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3. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES

Loan Portfolio Composition

The following table presents selected information on the composition of the Company’s loan portfolio as of the dates indicated:

September 30, 2024

December 31, 2023

Mortgage loans on real estate:

(in thousands)

Residential mortgages

$

438,731

$

443,788

Commercial and multi-family

880,014

854,565

Construction-Residential

5,579

3,255

Construction-Commercial

128,569

114,623

Home equities

78,916

81,412

Total real estate loans

1,531,809

1,497,643

Commercial and industrial loans

256,333

223,100

Consumer and other loans

1,006

1,066

Unaccreted yield adjustments*

(1,191)

(863)

Total gross loans

1,787,957

1,720,946

Allowance for credit losses

(23,091)

(22,114)

Loans, net

$

1,764,866

$

1,698,832

* Includes net premiums and discounts on acquired loans and net deferred fees and costs on loans originated.

As of September 30, 2024, the outstanding principal balance and the carrying amount of acquired credit-deteriorated loans totaled $0.8 million and $0.7 million, respectively. There were no valuation allowances for specifically identified impairment attributable to acquired credit-deteriorated loans at September 30, 2024.

There were $920 million and $566 million in residential and commercial mortgage loans pledged to FHLBNY to serve as collateral for potential borrowings as of September 30, 2024 and December 31, 2023, respectively.

The Company may also sell certain fixed rate residential mortgages to FNMA, FHLMC and FHLB while maintaining the servicing rights for those mortgages. At September 30, 2024 and December 31, 2023, the Company had loan servicing portfolio principal balances of $118 million and $113 million, respectively, upon which it earned servicing fees. In the three and nine month periods ended September 30, 2024, the Company sold $9.2 million and $14.7 million, respectively, of residential mortgages. In the three and nine month period ended September 30, 2023, the Company sold $2.8 million and $7.3 million, respectively, of residential mortgages.

The fair value of the mortgage servicing rights for that portfolio was $1.0 million at September 30, 2024 and $1.1 million at December 31, 2023. There were no residential mortgages held for sale at September 30, 2024 and December 31, 2023.

Credit Quality Indicators

The Company monitors the credit risk in its loan portfolio by reviewing certain credit quality indicators (“CQI”). The primary CQI for the commercial mortgage and commercial and industrial portfolios is the individual loan’s credit risk rating. The following list provides a description of the credit risk ratings that are used internally by the Bank when assessing the adequacy of its allowance for credit losses:

Acceptable or better

Watch

Special Mention

Substandard

Doubtful

Loss

“Special mention” and “substandard” loans are weaker credits with a higher risk of loss and are categorized as “criticized” assets.

The Company’s consumer loans, including residential mortgages and home equities, are not individually risk rated or reviewed in the Company’s loan review process. Unlike commercial customers, consumer loan customers are not required to provide the Company with updated financial information. Consumer loans also carry smaller balances. Given the lack of updated information after the initial

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underwriting of the loan and small size of individual loans, the Company uses delinquency status as the primary credit quality indicator for consumer loans. However, once a consumer loan is identified as nonaccrual, it is individually evaluated for impairment.

The following tables summarize amortized cost of loans by year of origination and internally assigned credit grades:

(in thousands)

Term Loans Amortized Cost Basis by Origination Year

As of September 30, 2024

2024

2023

2022

2021

2020

Prior

Revolving Loans Amortized Cost Basis

Total

Commercial and industrial loans

Risk rating

Pass

$

43,661 

$

25,187 

$

31,532 

$

17,007 

$

10,133 

$

9,886 

$

89,118 

$

226,524 

Special Mention

-

840 

3,325 

793 

299 

913 

19,471 

25,641 

Substandard

68 

-

420 

141 

10 

399 

3,148 

4,186 

Doubtful/Loss

-

-

-

-

-

-

-

-

Total

$

43,729 

$

26,027 

$

35,277 

$

17,941 

$

10,442 

$

11,198 

$

111,737 

$

256,351 

Current period gross writeoffs

$

-

$

59 

$

-

$

-

$

-

$

8 

$

-

$

67 

Commercial real estate mortgages*

Risk rating

Pass

$

96,703 

$

150,015 

$

189,900 

$

137,319 

$

93,621 

$

297,693 

$

-

$

965,251 

Special Mention

-

351 

1,990 

6,470 

-

16,757 

-

25,568 

Substandard

-

-

5,415 

11,939 

-

524 

-

17,878 

Doubtful/Loss

-

-

-

-

-

-

-

-

Total

$

96,703 

$

150,366 

$

197,305 

$

155,728 

$

93,621 

$

314,974 

$

-

$

1,008,697 

Current period gross writeoffs

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

Consumer and other

Payment performance

Performing

$

325 

$

376 

$

109 

$

18 

$

6 

$

12 

$

124 

$

970 

Nonperforming

-

-

-

-

-

-

-

-

Total

$

325 

$

376 

$

109 

$

18 

$

6 

$

12 

$

124 

$

970 

Current period gross writeoffs

$

139 

$

27 

$

-

$

-

$

-

$

1 

$

-

$

167 

Residential mortgages*

Payment performance

Performing

$

24,885 

$

37,212 

$

68,505 

$

94,023 

$

65,047 

$

149,362 

$

-

$

439,034 

Nonperforming

-

303 

652 

660 

243 

3,249 

-

5,107 

Total

$

24,885 

$

37,515 

$

69,157 

$

94,683 

$

65,290 

$

152,611 

$

-

$

444,141 

Current period gross writeoffs

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

Home equities

Payment performance

Performing

$

2,803 

$

6,169 

$

2,348 

$

388 

$

489 

$

2,267 

$

62,799 

$

77,263 

Nonperforming

-

-

-

-

-

-

535 

535 

Total

$

2,803 

$

6,169 

$

2,348 

$

388 

$

489 

$

2,267 

$

63,334 

$

77,798 

Current period gross writeoffs

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

*Includes construction loans
‎

14

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(in thousands)

Term Loans Amortized Cost Basis by Origination Year

As of December 31, 2023

2023

2022

2021

2020

2019

Prior

Revolving Loans Amortized Cost Basis

Total

Commercial and industrial loans

Risk rating

Pass

$

24,338 

$

42,967 

$

21,614 

$

12,174 

$

5,686 

$

6,539 

$

86,459 

$

199,777 

Special Mention

10 

1,955 

2,739 

510 

268 

1,867 

11,705 

19,054 

Substandard

-

2 

3 

460 

-

838 

2,955 

4,258 

Doubtful/Loss

-

-

-

-

-

-

-

-

Total

$

24,348 

$

44,924 

$

24,356 

$

13,144 

$

5,954 

$

9,244 

$

101,119 

$

223,089 

Current period gross writeoffs

$

-

$

-

$

-

$

-

$

4 

$

3 

$

-

$

7 

Commercial real estate mortgages*

Risk rating

Pass

$

132,525 

$

194,197 

$

169,943 

$

95,264 

$

66,243 

$

263,628 

$

-

$

921,800 

Special Mention

-

6,634 

397 

861 

9,988 

8,094 

-

25,974 

Substandard

-

-

11,737 

-

6,733 

3,617 

-

22,087 

Doubtful/Loss

-

-

-

-

-

-

-

-

Total

$

132,525 

$

200,831 

$

182,077 

$

96,125 

$

82,964 

$

275,339 

$

-

$

969,861 

Current period gross writeoffs

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

Consumer and other

Payment performance

Performing

$

597 

$

176 

$

27 

$

12 

$

13 

$

20 

$

144 

$

989 

Nonperforming

-

-

-

-

-

-

-

-

Total

$

597 

$

176 

$

27 

$

12 

$

13 

$

20 

$

144 

$

989 

Current period gross writeoffs

$

145 

$

18 

$

1 

$

-

$

-

$

1 

$

-

$

165 

Residential mortgages*

Payment performance

Performing

$

37,536 

$

72,624 

$

100,308 

$

69,454 

$

17,829 

$

144,499 

$

-

$

442,250 

Nonperforming

156 

270 

576 

351 

204 

3,044 

-

4,601 

Total

$

37,692 

$

72,894 

$

100,884 

$

69,805 

$

18,033 

$

147,543 

$

-

$

446,851 

Current period gross writeoffs

$

-

$

-

$

-

$

1 

$

-

$

-

$

-

$

1 

Home equities

Payment performance

Performing

$

7,833 

$

2,768 

$

590 

$

588 

$

571 

$

2,126 

$

65,165 

$

79,641 

Nonperforming

-

-

-

-

-

1 

514 

515 

Total

$

7,833 

$

2,768 

$

590 

$

588 

$

571 

$

2,127 

$

65,679 

$

80,156 

Current period gross writeoffs

$

-

$

-

$

-

$

-

$

-

$

25 

$

-

$

25 

*Includes construction loans

The amortized cost of criticized assets of $73 million included $6 million of loans in the Company’s hotel loan portfolio at September 30, 2024. At December 31, 2023 the amortized cost of criticized assets was $72 million including $19 million of loans in the Company’s hotel loan portfolio.


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15

Table of Contents

Past Due Loans

The following tables provide an analysis of the age of the amortized cost of loans that are past due as of the dates indicated:

September 30, 2024

(in thousands)

Current

Non-accruing

Total

Balance

30-59 days

60-89 days

90+ days

Loans

Balance

Commercial and industrial

$

248,252

$

13

$

-

$

6,500

$

1,586

$

256,351

Residential real estate:

Residential

431,914

-

1,527

-

5,107

438,548

Construction

5,593

-

-

-

-

5,593

Commercial real estate:

Commercial

858,890

-

2,046

4,957

13,877

879,770

Construction

128,927

-

-

-

-

128,927

Home equities

76,114

870

279

-

535

77,798

Consumer and other

954

13

3

-

-

970

Total Loans

$

1,750,644

$

896

$

3,855

$

11,457

$

21,105

$

1,787,957

December 31, 2023

(in thousands)

Current

Non-accruing

Total

Balance

30-59 days

60-89 days

90+ days

Loans

Balance

Commercial and industrial

$

220,602

$

518

$

130

$

-

$

1,839

$

223,089

Residential real estate:

Residential

437,471

1,173

341

-

4,602

443,587

Construction

3,264

-

-

-

-

3,264

Commercial real estate:

Commercial

831,375

4,360

-

134

19,000

854,869

Construction

110,727

2,326

671

-

1,268

114,992

Home equities

77,080

1,906

655

-

515

80,156

Consumer and other

959

27

3

-

-

989

Total Loans

$

1,681,478

$

10,310

$

1,800

$

134

$

27,224

$

1,720,946

Allowance for Credit Losses

ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments requires an allowance for credit losses to be deducted from the amortized cost basis of financial assets to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset. In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. The Company utilizes discounted cash flow models considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount to project principal balances over the remaining contractual lives of the loan portfolios and to determine estimated credit losses through a reasonable and supportable forecast period. The models have been statistically developed based on historical correlations of credit losses with prevailing economic metrics, including unemployment and gross domestic product. The Company utilizes a reasonable and supportable forecast period of one year. Subsequent to this forecast period the Company reverts, on a straight-line basis over a one-year period, to historical loss experience to inform its estimate of losses for the remaining contractual life of each portfolio. Model forecasts may be adjusted for inherent limitations of biases that have been identified through independent validation and back-testing of model performance to actual realized results. The Company also considered the impact of qualitative factors, including portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, geopolitical conditions and other risk factors that might influence its loss estimation process.

The Company also estimates losses attributable to specific troubled credits identified through both normal and targeted credit review processes and includes all loans on nonaccrual status. The amounts of individually analyzed losses are determined through a loan-by-loan analysis. Such loss estimates are typically based on expected future cash flows, collateral values and other factors that may impact the borrower’s ability to pay. To the extent that those loans are collateral-dependent, they are evaluated based on recent estimations of the fair value of the loan’s collateral. In those cases where current appraisals may not yet be available, prior appraisals are utilized with adjustments, as deemed necessary, for estimates of subsequent declines in values as determined by line of business and/or loan workout personnel. Those adjustments are reviewed and assessed for reasonableness by the Company’s credit risk personnel. Accordingly, for real estate collateral securing larger nonaccrual commercial loans and commercial real estate loans, estimated collateral values are based

16

Table of Contents

on current appraisals and estimates of value. For non-real estate loans, collateral is assigned a discounted estimated liquidation value and, depending on the nature of the collateral, is verified through field exams or other procedures. In assessing collateral, real estate and non-real estate values are reduced by an estimate of selling costs. Charge-offs are based on recent indications of value from external parties that are generally obtained shortly after a loan becomes nonaccrual. Loans to consumers that file for bankruptcy are generally charged-off to estimated net collateral value shortly after the Company is notified of such filings. When evaluating individual home equity loans and lines of credit for charge off and for purposes of estimating losses in determining the allowance for credit losses, the Company considers the required repayment of any first lien positions related to collateral property.

The following tables present the activity in the allowance for credit losses according to portfolio segment for the three month periods ended September 30, 2024 and 2023.

Three months ended September 30, 2024

(in thousands)

Commercial and Industrial

Commercial Real Estate Mortgages*

Consumer and Other

Residential Mortgages*

Home Equities

Total

Allowance for credit losses:

Beginning balance

$

5,755

$

12,623

$

8

$

3,773

$

403

$

22,562

Charge-offs

-

-

(50)

-

-

(50)

Recoveries

2

-

5

2

-

9

Provision

592

(92)

45

54

(29)

570

Ending balance

$

6,349

$

12,531

$

8

$

3,829

$

374

$

23,091

*Includes construction loans

Three months ended September 30, 2023

(in thousands)

Commercial and Industrial

Commercial Real Estate Mortgages*

Consumer and Other

Residential Mortgages*

Home Equities

Total

Allowance for credit losses:

Beginning balance

$

4,973 

$

12,633 

$

7 

$

3,465 

$

290 

$

21,368 

Charge-offs

(4)

-

(47)

-

-

(51)

Recoveries

6 

-

5 

7 

5 

23 

Provision

61 

280 

42 

102 

21 

506 

Ending balance

$

5,036 

$

12,913 

$

7 

$

3,574 

$

316 

$

21,846 

* Includes construction loans


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Table of Contents

The following tables present the activity in the allowance for credit losses according to portfolio segment for the nine month periods ended September 30, 2024 and 2023.

Nine months ended September 30, 2024

(in thousands)

Commercial and Industrial

Commercial Real Estate Mortgages*

Consumer and Other

Residential Mortgages*

Home Equities

Total

Allowance for credit losses:

Beginning balance

$

5,241 

$

12,548 

$

8 

$

3,883 

$

434 

$

22,114 

Charge-offs

(67)

-

(167)

-

-

(234)

Recoveries

5 

-

11 

62 

-

78 

Provision

1,170 

(17)

156 

(116)

(60)

1,133 

Ending balance

$

6,349 

$

12,531 

$

8 

$

3,829 

$

374 

$

23,091 

Nine months ended September 30, 2023

(in thousands)

Commercial and Industrial

Commercial Real Estate Mortgages*

Consumer and Other

Residential Mortgages*

Home Equities

Total

Allowance for credit losses:

Beginning balance

$

4,980 

$

11,595 

$

153 

$

2,102 

$

608 

$

19,438 

Adoption of new accounting

standard

324 

1,145 

(147)

1,618 

(205)

2,735 

Beginning balance after

cumulative effect adjustment

$

5,304 

$

12,740 

$

6 

$

3,720 

$

403 

$

22,173 

Charge-offs

(4)

-

(126)

(1)

(25)

(156)

Recoveries

59 

-

23 

6 

5 

93 

Provision

(323)

173 

104 

(151)

(67)

(264)

Ending balance

$

5,036 

$

12,913 

$

7 

$

3,574 

$

316 

$

21,846 

*Includes construction loans


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18

Table of Contents

The following tables present the allowance for credit losses and recorded investment on loans by segment as of September 30, 2024 and December 31, 2023:

September 30, 2024

(in thousands)

Commercial and Industrial

Commercial Real Estate Mortgages*

Consumer and Other

Residential Mortgages*

Home Equities

Total

Allowance for credit

losses:

Ending balance:

Individually evaluated for impairment

208

540

-

12

-

760

Collectively evaluated for impairment

6,141

11,991

8

3,817

374

22,331

Total

$

6,349

$

12,531

$

8

$

3,829

$

374

$

23,091

Loans:

Ending balance:

Individually evaluated for impairment

1,961

15,921

-

5,855

816

24,553

Collectively evaluated for impairment

254,372

992,662

1,006

438,455

78,100

1,764,595

Total

$

256,333

$

1,008,583

$

1,006

$

444,310

$

78,916

$

1,789,148

* Includes construction loans

December 31, 2023

(in thousands)

Commercial and Industrial

Commercial Real Estate Mortgages*

Consumer and Other

Residential Mortgages*

Home Equities

Total

Allowance for credit

losses:

Ending balance:

Individually evaluated for impairment

36 

719 

-

-

-

755 

Collectively evaluated for impairment

5,205 

11,829 

8 

3,883 

434 

21,359 

Total

$

5,241 

$

12,548 

$

8 

$

3,883 

$

434 

$

22,114 

Loans:

Ending balance:

Individually evaluated for impairment

1,869 

23,044 

-

5,146 

761 

30,820 

Collectively evaluated for impairment

221,231 

946,144 

1,066 

441,897 

80,651 

1,690,989 

Total

$

223,100 

$

969,188 

$

1,066 

$

447,043 

$

81,412 

$

1,721,809 

* Includes construction loans


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Nonaccrual Loans

The following tables provide amortized costs, at the class level, for nonaccrual loans as of the dates indicated:

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2024

September 30, 2024

Amortized Cost with Allowance

Amortized Cost without Allowance

Total

Interest Income Recognized

Interest Income Recognized

(in thousands)

Commercial and industrial

$

468 

$

1,118 

$

1,586 

$

30 

$

31 

Residential real estate:

Residential

303 

4,804 

5,107 

14 

27 

Construction

-

-

-

-

-

Commercial real estate:

Commercial

6,570 

7,307 

13,877 

11 

35 

Construction

-

-

-

-

-

Home equities

-

535 

535 

-

3 

Consumer and other

-

-

-

-

-

Total nonaccrual loans

$

7,341 

$

13,764 

$

21,105 

$

55 

$

96 

Three Months Ended

Nine Months Ended

December 31, 2023

September 30, 2023

September 30, 2023

Amortized Cost with Allowance

Amortized Cost without Allowance

Total

Interest Income Recognized

Interest Income Recognized

(in thousands)

Commercial and industrial

$

73 

$

1,766 

$

1,839 

$

1 

$

13 

Residential real estate:

Residential

-

4,602 

4,602 

22 

34 

Construction

-

-

-

-

-

Commercial real estate:

Commercial

6,568 

12,432 

19,000 

147 

219 

Construction

1,268 

-

1,268 

-

-

Home equities

-

515 

515 

7 

7 

Consumer and other

-

-

-

-

-

Total nonaccrual loans

$

7,909 

$

19,315 

$

27,224 

$

177 

$

273 

Collateral-dependent loans are loans that we expect the repayment to be provided substantially through the operation or sale of the collateral of the loan and we have determined that the borrower is experiencing financial difficulty. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for selling costs. As of September 30, 2024 and December 31, 2023 there were $19 million and $27 million, respectively, of collateral-dependent loans secured mainly by real estate and equipment.
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Modifications to Borrowers Experiencing Financial Difficulty

The amendments in ASU 2022-02 eliminated the recognition and measurement of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

The tables below detail the amortized cost of gross loans held for investment made to borrowers experiencing financial difficulty that were modified during the three and nine month periods ended September 30, 2024 and September 30, 2023:

Three months ended

Nine months ended

September 30, 2024

September 30, 2024

(in thousands)

Term Extension

Total Class of Receivable

Term Extension

Total Class of Receivable

Commercial and industrial

$

-

-

%

$

-

-

%

Residential real estate:

Residential

78 

0.02

625 

0.14 

Construction

-

-

-

-

Commercial real estate

Home equities

-

-

-

-

Consumer and other

-

-

-

-

Total nonaccrual loans

$

78 

0.00

%

$

625 

0.03 

%

Three months ended

Nine months ended

September 30, 2023

September 30, 2023

(in thousands)

Term Extension

Total Class of Receivable

Term Extension

Total Class of Receivable

Commercial and industrial

$

451 

0.20

%

$

451 

0.20

%

Residential real estate:

Residential

454 

0.10

558 

0.13

%

Construction

-

-

-

-

Commercial real estate

Home equities

-

-

-

-

Consumer and other

-

-

-

-

Total nonaccrual loans

$

905 

0.05

%

$

1,009 

0.06

%

The financial impacts of the residential mortgage modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2024 was a maturity extensions of 67 months. Residential mortgage modifications made to borrowers experiencing financial difficulties during the nine months ended September 30, 2024 were maturity extensions ranging from 6 months to 67 months. Commercial and industrial loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023, was a maturity extension of six months. Residential mortgage loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023 were maturity extensions ranging from 159 months to 164 months.

The company has not committed to lend any additional amounts to the borrowers included in the previous table.

As of September 30, 2024 and September 30, 2023, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the first nine months of 2024 and 2023 that subsequently defaulted. Payment default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The payment status of all loans modified to borrowers experiencing financial difficulties were current during the three and nine month periods of 2024 and 2023.
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21

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4. COMMON EQUITY AND EARNINGS PER SHARE DATA

The common stock per share information is based upon the weighted average number of shares outstanding during each period. For the three and nine month periods ended September 30, 2024 the Company had an average of 15,351 and 11,389 dilutive shares outstanding, respectively. For the three and nine month periods ended September 30, 2023 the company had an average of 9,034 and 16,773 diluted shares outstanding, respectively.

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and not included in calculating diluted earnings per share. For the three and nine month periods ended September 30, 2024, there was an average of 77,550 and 77,807 potentially anti-dilutive shares outstanding, respectively. Potentially anti-dilutive shares outstanding were not included in calculating diluted earnings per share because their effect was anti-dilutive.

5. OTHER COMPREHENSIVE INCOME (LOSS)

The following tables summarize the changes in the components of accumulated other comprehensive income (loss) during the three and nine month periods ended September 30, 2024 and 2023:

Balance at June 30, 2024

Net Change

Balance at September 30, 2024

(in thousands)

Net unrealized loss on investment securities

$

(43,581)

$

8,370

$

(35,211)

Net defined benefit pension plan adjustments

(1,496)

17

(1,479)

Total

$

(45,077)

$

8,387

$

(36,690)

Balance at June 30, 2023

Net Change

Balance at September 30, 2023

(in thousands)

Net unrealized loss on investment securities

$

(48,007)

$

(8,813)

$

(56,820)

Net defined benefit pension plan adjustments

(1,890)

20

(1,870)

Total

$

(49,897)

$

(8,793)

$

(58,690)

Balance at December 31, 2023

Net Change

Balance at September 30, 2024

(in thousands)

Net unrealized loss on investment securities

$

(40,741)

$

5,530

$

(35,211)

Net defined benefit pension plan adjustments

(1,530)

51

(1,479)

Total

$

(42,271)

$

5,581

$

(36,690)

Balance at December 31, 2022

Net Change

Balance at September 30, 2023

(in thousands)

Net unrealized loss on investment securities

$

(47,348)

$

(9,472)

$

(56,820)

Net defined benefit pension plan adjustments

(1,930)

60

(1,870)

Total

$

(49,278)

$

(9,412)

$

(58,690)


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Table of Contents

Three months ended September 30, 2024

Three months ended September 30, 2023

(in thousands)

(in thousands)

Before-Tax Amount

Income Tax (Provision) Benefit

Net-of-Tax Amount

Before-Tax Amount

Income Tax (Provision) Benefit

Net-of-Tax Amount

Unrealized gain (loss) on investment

securities:

Unrealized gain (loss) on investment

securities

$

11,291 

$

(2,921)

$

8,370 

$

(11,904)

$

3,091 

$

(8,813)

Defined benefit pension plan

adjustments:

Amortization of prior service cost

-

-

-

-

-

-

Amortization of actuarial loss

25 

(8)

17 

27 

(7)

20 

Net change

25 

(8)

17 

27 

(7)

20 

Other comprehensive income (loss)

$

11,316 

$

(2,929)

$

8,387 

$

(11,877)

$

3,084 

$

(8,793)

Nine months ended September 30, 2024

Nine months ended September 30, 2023

(in thousands)

(in thousands)

Before-Tax Amount

Income Tax (Provision) Benefit

Net-of-Tax Amount

Before-Tax Amount

Income Tax (Provision) Benefit

Net-of-Tax Amount

Unrealized gain (loss) on investment

securities:

Unrealized gain (loss) on investment

securities

$

7,583 

$

(2,053)

$

5,530 

$

(12,822)

$

3,350 

$

(9,472)

Defined benefit pension plan

adjustments:

Amortization of prior service cost

-

-

-

-

-

-

Amortization of actuarial loss

75 

(24)

51 

81 

(21)

60 

Net change

75 

(24)

51 

81 

(21)

60 

Other comprehensive income (loss)

$

7,658 

$

(2,077)

$

5,581 

$

(12,741)

$

3,329 

$

(9,412)


‎

23

Table of Contents

6. NET PERIODIC BENEFIT COSTS

On January 31, 2008, the Bank froze its defined benefit pension plan. The plan covered substantially all Bank employees. The plan provides benefits that are based on the employees’ compensation and years of service. Under the freeze, eligible employees will receive, at retirement, the benefits already earned through January 31, 2008, but have not accrued any additional benefits since then. As a result, service cost is no longer incurred.

The Bank uses an actuarial method of amortizing prior service cost and unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank used recognized the prior service cost and net gains or losses over the average remaining service period of active employees.

The Bank also maintains a nonqualified supplemental executive retirement plan covering certain members of the Company’s senior management. The Bank uses an actuarial method of amortizing unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank uses recognizes the net gains or losses over the average remaining service period of active employees.

The following table presents the net periodic cost for the Bank’s defined benefit pension plan and supplemental executive retirement plan for the three and nine month periods ended September 30, 2024 and 2023:

Three months ended September 30,

(in thousands)

Supplemental Executive

Pension Benefits

Retirement Plan

2024

2023

2024

2023

Service cost

$

-

$

-

$

31

$

36

Interest cost

57

62

63

62

Expected return on plan assets

(64)

(67)

-

-

Amortization of prior service cost

-

-

-

-

Amortization of the net loss

25

27

-

-

Net periodic cost

$

18

$

22

$

94

$

98

Nine months ended September 30,

(in thousands)

Supplemental Executive

Pension Benefits

Retirement Plan

2024

2023

2024

2023

Service cost

$

-

$

-

$

93

$

108

Interest cost

171

187

188

187

Expected return on plan assets

(191)

(201)

-

-

Amortization of prior service cost

-

-

-

-

Amortization of the net loss

75

81

-

-

Net periodic cost

$

55

$

67

$

281

$

295

The components of net periodic cost other than the service cost component are included in the line item “other expense” in the income statement.


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24

Table of Contents

7. REVENUE RECOGNITION OF NON-INTEREST INCOME

Insurance Service and Fees: Insurance services revenue relates to various revenue streams from services provided by TEA and the Bank.

As a result of the sale of TEA in November 2023, insurance services revenue recognized during 2024 is a result of services provided by the Banks’ wealth management department. TEA and the Bank’s wealth management activity are both included in the comparative 2023 balances. See Note 2 to the Company’s Consolidated Financial Statements included under Item 8 of the 2023 Annual Report on Form 10-K for more information on the sale of TEA.

A description of the Company’s material revenue streams in non-interest income accounted for under ASC 606 follows:

 

 

TEA earned commission revenue from selling commercial and personal property and casualty (“P&C”) insurance as well as employee benefits solutions to commercial customers.

TEA had agreements with various insurance companies to sell policies to customers on behalf of the carriers. The performance obligation for TEA was to sell annual P&C policies to commercial customers and consumers. This performance obligation was met when a new policy was sold or when an existing policy renewed. The policies were generally one year terms. In the agreements with the respective insurance companies, a commission rate was agreed upon.  The commission was recognized at the time of the sale of the policy or when a policy renewed.

 

TEA had signed contracts with insurance carriers that enabled TEA to sell benefit plans to commercial customers on behalf of the insurance carriers. The performance obligation for TEA was to sell the plans to commercial customers. After the initial sale when the customer signed an agreement to purchase the offered benefit plan, the performance obligation was met each month when a customer continues utilizing benefit plans from the carrier. The customer did not commit to a specific length of time with the carrier. In the agreements with the respective insurance companies, a commission rate was agreed upon. Revenue was recognized each month when the customer continued with the benefit plan sold by TEA.

TEA earned contingent profit sharing revenue. The insurance companies measured the loss ratio for TEA’s customers and pay TEA according to how profitable TEA customers were. 

TEA had signed written agreements with insurance carriers that documented payouts to TEA based on the loss ratios of its customers. The performance obligation for TEA was to maintain a customer base with loss ratios below the agreed upon thresholds. In the contracts with the insurance companies, payout rates based on loss ratios were documented. The consideration was variable as loss ratios vary based on customer experience.  TEA’s performance obligation was over the course of the year as its customers’ performance with insurance carriers was measured throughout the year as losses occur. Due to the variable nature of contingent profit sharing revenue, TEA accrued contingent profit sharing revenue throughout the year based on historical results. As loss events occurred and overall performance became known to TEA, accrual adjustments were made until the cash was ultimately received. 

Financial services commission revenue from the Bank related to wealth management such as life insurance, annuities, and mutual funds sales is also included in the “insurance service and fees” line of the income statement.

The Company earns wealth management fees from its contracts with customers for certain financial services.  Fees that are transaction-based are recognized at the point in time that the transaction is executed.  Other related services provided include financial planning services and the fees the Bank earns are recognized when the services are rendered. 

 




‎

25

Table of Contents

A disaggregation of the total insurance service and other fees for the three and nine months ended September 30, 2024 and 2023 is provided in the tables below:

Three months ended September 30,

2024

2023

(in thousands)

Commercial property and casualty insurance commissions

$

-

$

1,670

Personal property and casualty insurance commissions

-

978

Employee benefits sales commissions

-

279

Profit sharing and contingent revenue

-

398

Wealth management and other financial services

186

147

Other insurance-related revenue

-

26

Total insurance service and other fees

$

186

$

3,498

Nine months ended September 30,

2024

2023

(in thousands)

Commercial property and casualty insurance commissions

$

-

$

3,723

Personal property and casualty insurance commissions

-

2,716

Employee benefits sales commissions

-

640

Profit sharing and contingent revenue

-

1,024

Wealth management and other financial services

511

436

Other insurance-related revenue

-

109

Total insurance service and other fees

$

511

$

8,648


‎

26

Table of Contents

8. FAIR VALUE MEASUREMENT

Fair value is defined in ASC Topic 820 “Fair Value Measurement” as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

There are three levels of inputs to fair value measurement:

Level 1 inputs are quoted prices for identical instruments in active markets;

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 inputs are unobservable inputs.

Observable market data should be used when available.

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table presents, for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, respectively:

(in thousands)

Level 1

Level 2

Level 3

Fair Value

September 30, 2024

Securities available-for-sale:

US treasuries and government agencies

$

-

$

94,402

$

-

$

94,402

States and political subdivisions

-

5,364

-

5,364

Mortgage-backed securities

-

171,466

-

171,466

December 31, 2023

Securities available-for-sale:

US treasuries and government agencies

$

-

$

96,240

$

-

$

96,240

States and political subdivisions

-

6,029

-

6,029

Mortgage-backed securities

-

173,411

-

173,411

Securities available for sale

Fair values for available for sale securities are determined using independent pricing services and market-participating brokers. The Company utilizes a third-party for these pricing services. The third-party utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information for structured securities, cash flow and, when available, loan performance data. Because many fixed income securities do not trade on a daily basis, the third-party service provider’s evaluated pricing applications apply information as applicable through processes, such as benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations. In addition, our third-party pricing service provider uses model processes, such as the Option Adjusted Spread model, to assess interest rate impact and develop prepayment scenarios. The models and the process take into account market convention. For each asset class, a team of evaluators gathers information from market sources and integrates relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models. The third-party, at times, may determine that it does not have sufficient verifiable information to value a particular security. In these cases the Company will utilize valuations from another pricing service.

On a quarterly basis the Company reviews changes, as submitted by our third-party pricing service provider, in the market value of its securities portfolio. Individual changes in valuations are reviewed for consistency with general interest rate movements and any known credit concerns for specific securities. Additionally, on a quarterly basis the Company has its entire securities portfolio priced by a second pricing service to determine consistency with another market evaluator. If, on the Company’s review or in comparing with another servicer, a material difference between pricing evaluations were to exist, the Company may submit an inquiry to our third-party pricing service provider regarding the data used to value a particular security. If the Company determines it has market information that would support a different valuation than our third-party service provider’s evaluation it can submit a challenge for a change to that security’s valuation.

Securities available for sale are classified as Level 2 in the fair value hierarchy as the valuation provided by the third-party provider uses observable market data.


‎

27

Table of Contents

ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements. The following table presents qualitative information about Level 3 fair value measurements for financial instruments which are measured at fair value on a nonrecurring basis at September 30, 2024 and December 31, 2023:

September 30, 2024

(In thousands)

Fair Value

Valuation Technique

Unobservable Input(s)

Range

(Weighted Average)

Individually evaluated collateral dependent loans:

Commercial Real Estate

$

6,030 

Income approach

Capitalization rate

8.50%

8.50%

Commercial and industrial

$

261 

Cost approach

Book value

50.00%

50.00%

Residential Real Estate

$

296 

Sales comparison approach

Adjustment to comparables

(14%) - 1%

-4.60%

December 31, 2023

(In thousands)

Fair Value

Valuation Technique

Unobservable Input

Range

(Weighted Average)

Individually evaluated collateral dependent loans:

Commercial Real Estate

$

7,110 

Sales comparison approach

Adjustment to comparables

(0.6%) - 16%

8.82%

Income approach

Capitalization rate

8.50%

8.50%

Commercial and industrial

$

37 

Sales comparison approach

Adjustment to comparables

N/A

N/A


‎

28

Table of Contents

Individually evaluated collateral dependent loans

When a loan is individually evaluated, it is valued at the lower of cost or fair value. Collateral dependent loans which are individually evaluated and carried at fair value have been partially charged off or receive provisions in the allowance for credit losses. For collateral dependent loans, fair value is generally based on appraisal values performed by licensed appraisers, except for certain circumstances in which book value is used. Appraisals have multiple valuation methodologies to arrive at the fair value, these methodologies include the sales comparison approach, cost approach, and the income capitalization approach. The methodology chosen is reliant on the data available, and adjustments are made by independent appraisers to reflect differences between the asset valued and the comparable data used. These adjustments result in Level 3 classification for determining fair value. Collateral may be adjusted or discounted based on management's historical knowledge, changes in market conditions, management's expertise, and knowledge of the customer and related business. Individually analyzed loans are evaluated on a quarterly basis for additional impairment, and valuations for collateral dependent loans are updated by a new independent appraisal or a validation of the existing appraisal by an internal licensed appraiser, in accordance with Company policy. Appraisals are obtained upon a commercial loan being downgraded on the Company’s internal loan rating scale to a special mention or a substandard depending on the amount of the loan, the type of loan and the type of collateral.  All individually analyzed commercial loans are graded substandard or worse on the internal loan rating scale.  For consumer loans, the Company obtains appraisals when a loan becomes 90 days past due or is determined to be individually analyzed, whichever occurs first.  Subsequent to the downgrade or reaching 90 days past due, if the loan remains outstanding and individually analyzed for at least one year or more, management may require another follow-up appraisal.  Between receipts of updated appraisals, if necessary, management may perform an internal valuation based on any known changing conditions in the marketplace such as sales of similar properties, a change in the condition of the collateral, or feedback from local appraisers.  

Three types of valuation techniques generally used: 1. Income approach valuations typically use the net operating income of the business divided by the capitalization rate as determined by the appraiser. Management applies a 10% discount to income approach values which management expects will cover disposition costs, including selling costs. 2. Sales comparison approach valuations typically use the values of similar sales of listings in the market area, adjusted for differences in the assets sold as determined by the appraiser. Management applies a 10% discount to income approach values which management expects will cover disposition costs, including selling costs. 3. Cost comparison approach valuations are based on either the existing book value in which appraisals are not obtained, or the cost necessary to replace or reproduce the asset based on current prices. Management applies a discount dependent on the underlying asset, according to policy which ranges from 10%-50%.

Collateral dependent individually evaluated loans had a gross value of $7.3 million, with an allowance for credit loss of $0.8 million, at September 30, 2024 compared with $7.9 million and $0.8 million, respectively, at December 31, 2023.

The table below depicts the estimated fair values of the Company’s financial instruments, including those that are not measured and reported at fair value on a recurring basis or nonrecurring basis.

September 30, 2024

December 31, 2023

Carrying

Fair

Carrying

Fair

Amount

Value

Amount

Value

(in thousands)

(in thousands)

Financial assets:

Level 1:

Cash and cash equivalents

$

128,082

$

128,082

$

23,467

$

23,467

Level 2:

Available for sale securities

271,232

271,232

275,680

275,680

FHLB and FRB stock

8,086

N/A

8,011

N/A

Level 3:

Held to maturity securities

4,376

4,351

2,059

1,988

Loans, net

1,764,866

1,689,406

1,698,832

1,606,666

Financial liabilities:

Level 1:

Demand deposits

$

435,358

$

435,358

$

390,238

$

390,238

NOW deposits

372,462

372,462

345,279

345,279

Savings deposits

706,849

706,849

649,621

649,621

Level 2:

Securities sold under agreement to

repurchase

8,282

8,282

9,475

9,475

Other borrowed funds

128,000

129,231

145,123

145,055

Subordinated debt

31,254

30,462

31,177

29,563

Level 3:

Time deposits

386,049

384,850

333,623

331,675


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9. SEGMENT INFORMATION

Prior to the sale of TEA, the Company was comprised of two primary business segments, banking and insurance agency activities. For comparative purposes the following tables set forth information regarding these segments for the three and nine month periods ended September 30, 2024 and 2023. For further information on the sale of TEA see Note 2 to the Company’s Consolidated Financial Statements included under Item 8 of the 2023 Annual Report on Form 10-K.

Three months ended September 30, 2024

Banking

Insurance Agency

Activities

Activities

Total

(in thousands)

Net interest income

$

15,044

$

-

$

15,044

Provision for credit losses

570

-

570

Net interest income after

provision for credit losses

14,474

-

14,474

Insurance service and fees

186

-

186

Other non-interest income

2,808

-

2,808

Amortization expense

4

-

4

Other non-interest expense

13,583

-

13,583

Income before income taxes

3,881

-

3,881

Income tax provision

938

-

938

Net income

$

2,943

$

-

$

2,943

Three months ended September 30, 2023

Banking

Insurance Agency

Activities

Activities

Total

(in thousands)

Net interest income

$

14,256

$

-

$

14,256

Provision for credit losses

506

-

506

Net interest income after

provision for credit losses

13,750

-

13,750

Insurance service and fees

121

3,377

3,498

Other non-interest income

2,058

-

2,058

Amortization expense

5

95

100

Other non-interest expense

12,527

1,780

14,307

Income before income taxes

3,397

1,502

4,899

Income tax provision

890

391

1,281

Net income

$

2,507

$

1,111

$

3,618


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Table of Contents

Nine months ended September 30, 2024

Banking

Insurance Agency

Activities

Activities

Total

(in thousands)

Net interest income

$

43,271 

$

-

$

43,271 

Provision for credit losses

1,133 

-

1,133 

Net interest income after

provision for credit losses

42,138 

-

42,138 

Insurance service and fees

511 

-

511 

Other non-interest income

7,150 

-

7,150 

Amortization expense

12 

-

12 

Other non-interest expense

39,060 

-

39,060 

Income before income taxes

10,727 

-

10,727 

Income tax provision

2,504 

-

2,504 

Net income

$

8,223 

$

-

$

8,223 

Nine months ended September 30, 2023

Banking

Insurance Agency

Activities

Activities

Total

(in thousands)

Net interest income

$

47,262 

$

-

$

47,262 

Provision for credit losses

(264)

-

(264)

Net interest income after

provision for credit losses

47,526 

-

47,526 

Insurance service and fees

398 

8,250 

8,648 

Other non-interest income

5,723 

-

5,723 

Amortization expense

14 

286 

300 

Other non-interest expense

37,311 

5,471 

42,782 

Income before income taxes

16,322 

2,493 

18,815 

Income tax provision

3,847 

618 

4,465 

Net income

$

12,475 

$

1,875 

$

14,350 


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10. CONTINGENT LIABILITIES AND COMMITMENTS

The unaudited consolidated financial statements do not reflect various commitments and contingent liabilities, which arise in the normal course of business, and which involve elements of credit risk, interest rate risk and liquidity risk. These commitments and contingent liabilities consist of commitments to extend credit and standby letters of credit. A summary of the Bank’s commitments and contingent liabilities is as follows:

September 30,

December 31,

2024

2023

(in thousands)

Commitments to extend credit

$

446,348

$

431,085

Standby letters of credit

2,598

3,883

Total

$

448,946

$

434,968

Commitments to extend credit and standby letters of credit include some exposure to credit loss in the event of nonperformance by the customer. The Bank’s credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded on the Company’s unaudited consolidated balance sheets. Because these instruments have fixed maturity dates, and because they may expire without being drawn upon, they do not necessarily represent cash requirements of the Bank. The Bank did not incur any losses on its commitments during the first nine months of 2024 and 2023.

Certain lending commitments for construction residential mortgage loans are considered derivative instruments under the guidelines of GAAP. The changes in the fair value of these commitments, due to interest rate risk, are not recorded on the consolidated balance sheets as the fair value of these derivatives is not considered to be material.

11. RECENT ACCOUNTING PRONOUNCEMENTS

The FASB establishes changes to U.S. GAAP in the form of accounting standards updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs when they are issued by FASB. The Company did not adopt any accounting pronouncements during its current fiscal year that had a material impact on the Company’s consolidated financial position, results of operations, cash flows or disclosures. The following accounting standards have been recently issued but are not yet required to be adopted as of September 30, 2024. Management is currently evaluating the effect of the updated guidance these accounting standards will have on the Company’s financial statement disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The updated accounting guidance requires expanded reportable segment disclosures, primarily related to significant segment expenses which are regularly provided to the company’s Chief Operating Decision Maker. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within annual periods beginning after December 15, 2024. Retrospective application is required.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The updated accounting guidance requires expanded income tax disclosures, including the disaggregation of existing disclosures related to the tax rate reconciliation and income taxes paid. The guidance is effective for annual periods beginning after December 15, 2024. Prospective application is required, with retrospective application permitted.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. When used in this report, or in the documents incorporated by reference herein, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” and similar expressions identify such forward-looking statements. These forward-looking statements include statements regarding the Company’s business plans, prospects, growth and operating strategies, statements regarding the asset quality of the Company’s loan and investment portfolios, and estimates of the Company’s risks and future costs and benefits.

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These forward-looking statements are based largely on the expectations of the Company’s management and are subject to a number of risks and uncertainties, including but not limited to: our proposed merger with NBT Bancorp Inc. (“NBT”), which may not be consummated or may take longer or be more expensive to accomplish than expected, and which may divert our resources and management’s attention from ongoing business operations and opportunities; adverse changes in general economic conditions, either nationally or in the Company’s market areas; increased competition among depository or other financial institutions; inflation and changes in the interest rate environment which affect the Company’s margins or the fair value of financial instruments; the cost and availability of funds; changes in laws or government regulations affecting financial institutions, including changes in regulatory fees, monetary policy, and capital requirements; the Company’s ability to enter new markets successfully and capitalize on growth opportunities; the Company’s ability to successfully integrate acquired entities; credit losses in excess of the Company’s allowance for credit losses; changes in accounting pronouncements and practices, as adopted by financial institution regulatory agencies, the Financial Accounting Standards Board and the Public Company Accounting Oversight Board; the impact of such changes in accounting pronouncements and practices being greater than anticipated; the ability to realize the benefit of deferred tax assets; changes in tax policies, rates and regulations of federal, state and local tax authorities; changes in consumer spending, borrowing and saving habits; changes in the Company’s organization, compensation and benefit plans; and other factors discussed elsewhere in this Quarterly Report on Form 10-Q, as well as in the Company’s periodic reports filed with the Securities and Exchange Commission (the “SEC”), in particular the “Risk Factors” discussed in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and this Quarterly Report on Form 10-Q. Many of these factors are beyond the Company’s control and are difficult to predict.

Because of these and other uncertainties, the Company’s actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new, updated information, future events or otherwise, except to the extent required by law.

Management’s Discussion and Analysis of Financial Condition and Results of Operations that follows includes comparisons of the quarter ended September 30, 2024 to the quarter ended September 30, 2023 as well as the trailing quarter ended June 30, 2024. Financial information for the quarters ended September 30, 2023 and June 30, 2024 can be found in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, as filed with the SEC on October 30, 2023, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, as filed with the SEC on August 8, 2024, respectively.

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

The Company’s Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are prepared in accordance with U.S. GAAP and follow general practices within the industries in which it operates. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the Company’s Unaudited Consolidated Financial Statements and Notes. These estimates, assumptions, and judgments are based on information available as of the date of the Unaudited Consolidated Financial Statements. Accordingly, as this information changes, the Unaudited Consolidated Financial Statements could reflect different estimates, assumptions, and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments, and as such, have a greater possibility of producing results that could be materially different than originally reported.

Significant accounting policies followed by the Company are presented in Note 1 – “Organization and Summary of Significant Accounting Policies” to the Audited Consolidated Financial Statements included in Item 8 in its Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on March 4, 2024. These policies, along with the disclosures presented in the other Notes to the Company's Audited Consolidated Financial Statements contained in its Annual Report on Form 10-K and in this financial review, provide information on how significant assets and liabilities are presented in the Company’s Unaudited Consolidated Financial Statements and how those values are determined.

The more significant areas in which management of the Company applies critical assumptions and estimates includes the allowance for credit losses.

Allowance for Credit Losses

The ACL on loans is management’s estimate of expected lifetime credit losses on loans carried at amortized cost. The ACL on loans is established through a provision for credit losses recognized in the Consolidated Statements of Income. Additionally, the ACL on loans is reduced by charge-offs on loans and increased by recoveries of amounts previously charged-off. At September 30, 2024 the ACL on loans totaled $23.1 million, compared to $21.8 million at September 30, 2023. A significant portion of our ACL is allocated to the commercial portfolio (both commercial real estate and commercial and industrial (“C&I”) loans). As of September 30, 2024, December 31, 2023 and September 30, 2023, the ACL allocated to the total commercial portfolio was $18.9 million, $17.8 million and $17.9 million, respectively.

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Table of Contents

Management employs a process and methodology to estimate the ACL on loans that evaluates both quantitative and qualitative factors. The methodology for evaluating quantitative factors consists of two basic components: pooling loans into portfolio segments for loans that share similar risk characteristics and identifying individually analyzed loans that do not share similar risk characteristics with loans that are pooled into portfolio segments.

For pooled loan portfolio segments, the Company utilizes a discounted cash flow (“DCF”) methodology to estimate credit losses over the expected life of the loan. The methodology incorporates a probability of default and loss given default framework. Loss given default is estimated based on historical credit loss experience. Probability of default is estimated utilizing a regression model that incorporates econometric factors. The model utilizes forecasted econometric factors with a one-year reasonable and supportable forecast period and one-year straight-line reversion period in order to estimate the probability of default for each loan portfolio segment. The DCF methodology combines the probability of default, the loss given default, prepayment speeds and the remaining life of the loan to estimate a reserve for each loan.

The ACL for individually analyzed loans is measured using a DCF method based upon the loan’s contractual effective interest rate, or at the loan’s observable market price, or, if the loan was collateral dependent, at the fair value of the collateral.

Quantitative loss factors are also supplemented by certain qualitative risk factors reflecting management’s view of how losses may vary from those represented by quantitative loss rates. Qualitative loss factors are applied to each portfolio segment with the amounts determined by historical loan charge-offs of a peer group of similar-sized regional banks.

Because the methodology is based upon historical experience and trends, current economic data, reasonable and supportable forecasts, as well as management’s judgment, factors may arise that result in different estimations. Deteriorating conditions or assumptions could lead to further increases in the ACL on loans; conversely, improving conditions or assumptions could lead to further reductions in the ACL on loans.

In estimating the ACL on loans, management considers the sensitivity of the model and significant judgments and assumptions that could result in an amount that is materially different from management’s estimate. Given the concentration of ACL allocation to the total commercial portfolio and the significant judgments made by management in deriving the qualitative loss factors, management analyzed the impact that changes in judgments could have. The result was an ACL allocated to the total commercial loan portfolio that ranged between $14.0 million and $29.9 million at September 30, 2024. The sensitivity and related range of impact is a hypothetical analysis and is not intended to represent management’s judgments or assumptions of qualitative loss factors that were utilized at September 30, 2024 in estimation of the ACL on loans recognized on the Consolidated Balance Sheet.

If the assumptions underlying the determination of the ACL prove to be incorrect, the ACL may not be sufficient to cover actual loan losses and an increase to the ACL may be necessary to allow for different assumptions or adverse developments. In addition, a problem with one or more loans could require a significant increase to the ACL.

Proposed Merger

On September 9, 2024, Evans Bancorp, Inc. and the Bank entered into an agreement and plan of merger with NBT and NBT Bank, National Association, pursuant to which NBT will acquire Evans Bancorp, Inc. Under the terms of the merger agreement, each outstanding share of Evans common stock will be converted into the right to receive 0.91 shares of NBT common stock. As of September 9, 2024, based on NBT’s closing stock price of $46.28 on September 6, 2024, the aggregate transaction value was approximately $236 million. The proposed merger is subject to customary closing conditions, including the receipt of regulatory approvals and approval by the shareholders of Evans, and is expected to close in the second quarter of 2025. Expenses related to the merger are included on the “merger related” expense line in the consolidated statements of income for the three and nine months periods ended September 30, 2024. For further information on the merger agreement, see the Current Report on Form 8-K filed with the SEC on September 9, 2024. For the three and nine months ended September 30, 2024, merger related expenses were $0.6 million.


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ANALYSIS OF FINANCIAL CONDITION

Loan Activity

Total gross loans were $1.8 billion at September 30, 2024, and $1.7 billion at December 31, 2023 and September 30, 2023. Loans secured by real estate were $1.5 billion at September 30, 2024, December 31, 2023 and September 30, 2023. Residential real estate loans, including construction loans, were $444 million at September 30, 2024 and September 30, 2023, compared with $447 million at December 31, 2023, a $3 million, or less than 1%, decrease. Commercial real estate loans, including construction loans, were $1 billion at September 30, 2024, $39 million or 4% higher than at December 31, 2023, and $52 million, or 5% higher than at September 30, 2023.

In the third quarter of 2024, residential mortgage originations were $16 million compared with originations of $15 million in the sequential quarter and $16 million in the third quarter of 2023. The Company originated $41 million in residential mortgages in the first nine months of 2024, compared with $34 million in the first nine months of 2023. The Company sold $9 million of residential mortgages in the third quarter of 2024 compared with $2 million in the second quarter of 2024 and $3 million in the third quarter of 2023. During the first nine months of 2024 and 2023 the Company sold $15 million and $7 million, respectively, of residential mortgages. Management decides whether to keep or sell residential mortgage loans at the time of origination based on interest rate risk management and the risk-adjusted return of alternative investment sources such as mortgage-backed securities.

The C&I portfolio was $256 million at September 30, 2024, representing a $33 million, or 15%, increase from December 31, 2023. When compared with September 30, 2023, C&I loans increased $33 million or 15%. Funding levels of C&I lines of credit have increased during the first nine months of 2024, contributing to the growth in the C&I portfolio.

Credit Quality of Loan Portfolio

Non-performing loans, defined as accruing loans greater than 90 days past due and nonaccrual loans, totaled $33 million, or 1.82% of total loans outstanding at September 30, 2024, compared with $27 million, or 1.59% of total loans outstanding, as of December 31, 2023 and $27 million, or 1.60% of total loans outstanding, as of September 30, 2023. Included in non-performing loans at September 30, 2024 was one C&I loan of $6.5 million that was 90 days past due and still accruing as it is expected to be renewed in early fourth quarter.

During the third quarter of 2024 the Company sold $6.9 million of other real estate owned that was acquired during the second quarter of 2024. The sale resulted in a gain on sale of other real estate owned of $0.6 million.

Internal risk ratings are the credit quality indicators used by management to monitor credit risk in the Company’s commercial loan portfolio. “Special mention” and “substandard” loans are weaker credits with a higher risk of loss and are categorized as “criticized” credits rather than “pass” or “watch” credits. Commercial credits graded as “special mention” and “substandard” were $73 million at September 30, 2024, a $2 million increase from $71 million at December 31, 2023, and a $3 million decrease from $76 million at September 30, 2023. The level of criticized loans can fluctuate as new information is constantly received on the Company’s borrowers and their financial circumstances change over time.

The Company recorded a $0.6 million provision for credit losses during the three months ended September 30, 2024, primarily due to loan growth as well as slower prepayment rates.

The allowance for credit losses totaled $23.1 million or 1.29% of total loans outstanding at September 30, 2024, compared with $22.1 million, or 1.28% of total loans outstanding as of December 31, 2023, and $21.8 million, or 1.28% of total loans outstanding at September 30, 2023.


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Table of Contents

Investing Activities

Total investment securities were $276 million at September 30, 2024, compared with $278 million at December 31, 2023 and $337 million at September 30, 2023. The decrease from the third quarter of 2023 was mainly due to the sale of $78 million of securities during the fourth quarter of 2023 as the company strategically repositioned the balance sheet. Interest-bearing deposits at banks, which consist of overnight funds kept at correspondent banks and the Federal Reserve, were $107 million at September 30, 2024 compared with $4 million at December 31, 2023, and $7 million at September 30, 2023. During the first quarter of 2024 management strategically strengthened the balance sheet by adding $55 million of brokered deposits at favorable rates and lengthened maturities of approximately $40 million in overnight borrowings to manage interest rate risk. As a result, interest-bearing deposits at banks increased significantly compared with the prior periods. The primary objectives of the Company’s investment portfolio are to provide liquidity, provide collateral to secure municipal deposits, and maximize income while preserving safety of principal. Average investment securities and interest-bearing cash were 19% of average interest-earning assets in each of the third and second quarters of 2024, compared with 18% in the third quarter of 2023.

The Company’s highest concentration in its securities portfolio was in available for sale U.S. government sponsored mortgage-backed securities which comprised 62% of total investment securities at each of September 30, 2024 and December 31, 2023, and 54% at September 30, 2023. Tax-advantaged debt securities issued by state and political subdivisions as a percent of the total investment securities portfolio were 4% in the third quarter of 2024, 3% in the second quarter of 2024, and 2% in the third quarter of 2023.

The total net unrealized loss position of the available for sale investment portfolio was $47 million at September 30, 2024, compared with $55 million at December 31, 2023 and $77 million at September 30, 2023. The securities in an unrealized loss position at the end of the third quarter of 2024 generally reflected increased market interest rates.  Management believes that the credit quality of the securities portfolio as a whole is strong. In addition, the Company has the ability and intent to hold these securities until their fair value recovers to their amortized cost. 

The Company monitors extension and prepayment risk in the securities portfolio to limit potential exposures. The Company has no direct exposure to subprime mortgages, nor does the Company hold private mortgage-backed securities, credit default swaps, or FNMA or FHLMC preferred stock investments in its investment portfolio.

Funding Activities

Total deposits at September 30, 2024 were $1.9 billion, a $182 million, or 11%, increase from December 31, 2023, and an increase of $95 million, or 5%, from September 30, 2023. From a product perspective, when compared to December 31, 2023, deposit increases were in demand deposits of $45 million, brokered time deposits of $44 million, municipal saving deposits of $27 million, NOW deposits of $27 million, consumer savings of $17 million, consumer time deposits of $9 million, and commercial savings deposits of $13 million. When compared to last year’s third quarter, there were increases in NOW deposits of $48 million, brokered time deposits of $44 million, consumer time deposits of $6 million and consumer savings deposits of $9 million, offset by lower demand deposits of $12 million.

Total other borrowings decreased from $145 million at December 31, 2023 to $128 million at September 30, 2024. At September 30, 2024 the Bank had $40 million in long-term Federal Home Loan Bank of New York (“FHLBNY”) advances compared with $6 million at each of December 31, 2023 and September 30, 2023. As of September 30, 2024 the Bank did not have overnight borrowings at the FHLB compared with $53 million at December 31, 2023 and $19 million at September 30, 2023. As of September 30, 2024, advances up to $373 million could be drawn from the FHLB via the Company’s overnight line of credit. Additionally, the Bank has the ability to borrow from the Federal Reserve. The Bank had $88 million, $86 million, and $126 million in short-term borrowings with the Federal Reserve at September 30, 2024, December 31, 2023, and September 30, 2023, respectively.


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Table of Contents

ANALYSIS OF RESULTS OF OPERATIONS

Average Balance Sheets

The following tables present the significant categories of the assets and liabilities of the Company, interest income and interest expense, and the corresponding yields earned and rates paid for the periods indicated. The assets and liabilities are presented as daily averages. The average loan balances include both performing and non-performing loans. Interest income on loans does not include interest on loans for which the Bank has ceased to accrue interest. Investments are included at book value. Yields are presented on a non-tax-equivalent basis.

Three months ended September 30, 2024

Three months ended September 30, 2023

Average

Interest

Average

Interest

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Balance

Paid

Rate

Balance

Paid

Rate

(dollars in thousands)

(dollars in thousands)

ASSETS

Interest-earning assets:

Loans, net(1)

$

1,743,042 

$

25,392 

5.80 

%

$

1,658,132 

$

21,936 

5.25 

%

Taxable securities

271,979 

1,673 

2.45 

%

349,593 

2,173 

2.47 

%

Tax-exempt securities

6,977 

66 

3.76 

%

6,277 

51 

3.22 

%

Interest bearing deposits at banks

117,326 

1,567 

5.31 

%

9,883 

132 

5.29 

%

Total interest-earning assets

2,139,324 

$

28,698 

5.34 

%

2,023,885 

$

24,292 

4.76 

%

Non interest-earning assets:

Cash and due from banks

18,319 

17,563 

Premises and equipment, net

14,694 

16,075 

Other assets

93,043 

102,258 

Total Assets

$

2,265,380 

$

2,159,781 

LIABILITIES & STOCKHOLDERS' EQUITY

Interest-bearing liabilities:

NOW

$

381,054 

$

2,508 

2.62 

%

$

311,624 

$

1,408 

1.79 

%

Savings

707,742 

4,561 

2.56 

%

708,724 

3,301 

1.85 

%

Time deposits

399,180 

4,426 

4.41 

%

325,667 

2,835 

3.45 

%

Other borrowed funds

128,243 

1,554 

4.82 

%

143,546 

1,855 

5.13 

%

Subordinated debt

31,238 

559 

7.12 

%

31,137 

560 

7.14 

%

Securities sold U/A to repurchase

9,149 

46 

2.00 

%

17,594 

77 

1.74 

%

Total interest-bearing liabilities

1,656,606 

$

13,654 

3.28 

%

1,538,292 

$

10,036 

2.59 

%

Noninterest-bearing liabilities:

Demand deposits

403,182 

441,149 

Other

22,792 

20,529 

Total liabilities

$

2,082,580 

$

1,999,970 

Stockholders' equity

182,800 

159,811 

Total Liabilities and Equity

$

2,265,380 

$

2,159,781 

Net interest income

$

15,044 

$

14,256 

Net interest margin

2.80 

%

2.79 

%

Interest rate spread

2.06 

%

2.17 

%

(1) Other loan fees included in interest earned were not material during the three months ended September 30, 2024 and 2023.
‎

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Nine months ended September 30, 2024

Nine months ended September 30, 2023

Average

Interest

Average

Interest

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Balance

Paid

Rate

Balance

Paid

Rate

(dollars in thousands)

(dollars in thousands)

ASSETS

Interest-earning assets:

Loans, net(1)

$

1,720,630 

$

72,931 

5.66 

%

$

1,648,660 

$

64,424 

5.22 

%

Taxable securities

272,046 

5,128 

2.52 

%

362,241 

6,719 

2.48 

%

Tax-exempt securities

6,550 

178 

3.63 

%

8,368 

194 

3.10 

%

Interest bearing deposits at banks

91,312 

3,650 

5.34 

%

8,356 

308 

4.93 

%

Total interest-earning assets

2,090,538 

$

81,887 

5.23 

%

2,027,625 

$

71,645 

4.72 

%

Non interest-earning assets:

Cash and due from banks

17,919 

16,597 

Premises and equipment, net

15,027 

16,465 

Other assets

88,158 

99,805 

Total Assets

$

2,211,642 

$

2,160,492 

LIABILITIES & STOCKHOLDERS' EQUITY

Interest-bearing liabilities:

NOW

$

368,005 

$

6,825 

2.48 

%

$

284,780 

$

2,761 

1.30 

%

Regular savings

695,055 

12,766 

2.45 

%

760,190 

8,219 

1.45 

%

Time deposits

380,407 

12,521 

4.40 

%

296,240 

6,860 

3.10 

%

Other borrowed funds

128,776 

4,723 

4.90 

%

131,629 

4,780 

4.86 

%

Subordinated debt

31,213 

1,665 

7.13 

%

31,111 

1,626 

6.99 

%

Securities sold U/A to repurchase

8,157 

116 

1.90 

%

13,553 

137 

1.35 

%

Total interest-bearing liabilities

1,611,613 

$

38,616 

3.20 

%

1,517,503 

$

24,383 

2.15 

%

Noninterest-bearing liabilities:

Demand deposits

401,044 

465,464 

Other

20,912 

18,875 

Total liabilities

$

2,033,569 

$

2,001,842 

Stockholders' equity

178,073 

158,650 

Total Liabilities and Equity

$

2,211,642 

$

2,160,492 

Net interest income

$

43,271 

$

47,262 

Net interest margin

2.76 

%

3.12 

%

Interest rate spread

2.03 

%

2.57 

%

(1) Other loan fees included in interest earned were not material during the nine months ended September 30, 2024 and 2023.
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Net Income

Net income was $2.9 million, or $0.53 per diluted share, in the third quarter of 2024 and the second quarter of 2024, compared with $3.6 million, or $0.66 per diluted share, in last year’s third quarter. Net income for the third quarter of 2024, when compared to the sequential second quarter of 2024, reflected an increase in net interest income of $0.7 million and an increase in non-interest income of $0.6 million, offset by higher provision for credit losses of $0.3 million and an increase in non-interest expense of $1.0 million, which included $0.6 million of merger related costs associated with our proposed merger with NBT. The change in net income from the prior-year period primarily reflected a decrease in non-interest income of $2.6 million, resulting from the sale of TEA in 2023, partially offset by higher net interest income of $0.8 million and a decrease in non-interest expense of $0.8 million.

Return on average equity was 6.44% for the third quarter of 2024, compared with 6.76 % in the second quarter of 2024 and 9.06% in the third quarter of 2023.

Net income was $8.2 million, or $1.49 per diluted share, in the first nine months of 2024, compared with $14.4 million, or $2.62 per diluted share in the first nine months of 2023. The decrease from last year’s comparative period was due to lower net interest income of $4.0 million, a reduction of non-interest income of $6.7 million, and higher provision for credit losses of $1.4 million, partially offset by a decrease in non-interest expense of $4.0 million.

Other Results of Operations – Quarterly Comparison

Net interest income of $15.0 million for the third quarter of 2024 increased $0.7 million, or 5%, from the second quarter of 2024, and increased $0.8 million, or 6%, when compared with the prior year’s third quarter. The increase in net interest income over the second quarter was due to higher average loans and the Company’s investment strategy to strengthen the balance sheet at the end of the first quarter of 2024. The increase in net interest income when compared to the prior year’s third quarter was due to higher average loan balances and the stabilization of net interest margin.

Third quarter net interest margin of 2.80% increased 9 basis points from the second quarter of 2024 and 1 basis point from the third quarter of 2023. The yield on loans increased 17 basis points compared with the sequential quarter and 55 basis points year-over-year. The cost of interest-bearing liabilities was 3.28% compared with 3.27 % in the second quarter of 2024 and 2.59% in the third quarter of 2023.

The $0.6 million provision for credit losses during the third quarter of 2024 was largely due to loan growth as well as slower prepayment speeds.

Non-interest income was $3.0 million in the third quarter of 2024 compared with $2.4 million in the second quarter of 2024, and $5.6 million in the prior year’s third quarter. The increase of $0.6 million from the sequential quarter was due to a gain on the sale of one property that the company had in other real estate owned at the end of the second quarter. The decrease from the third quarter of 2023 was due to lower insurance service and fee revenue of $3.3 million mostly driven by the sale of TEA, partially offset by the sale of the other real estate owned.

Non-interest expense was $13.6 million in the third quarter of 2024 compared with $12.6 million in the second quarter of 2024 and $14.4 million in the third quarter of 2023. The $1.0 million increase from the second quarter of 2024 included merger related expenses of $0.6 million, and higher salaries and employee benefits expense due to the funding of employee health savings accounts during the third quarter.

The $0.8 million, or 6%, decrease in non-interest expense from the third quarter of 2023 was mostly due to a decrease of $1.5 million of salaries and employee benefits expense related to the sale of TEA, offset by merit increases given in the beginning of the current year.

The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 75.32% in the third quarter of 2024, 75.11% in the second quarter of 2024, and 72.72% in the third quarter of 2023.

Income tax expense was $0.9 million, for an effective tax rate of 24.2 % in the third quarter of 2024 compared with 23.8% in the second quarter of 2024 and 26.2% in last year’s third quarter.

Other Results of Operations – Year-to-Date Comparison 

Net interest income was $43.3 million for the first nine months of 2024, a $4.0 million or 8% decrease from the first nine months of 2023.  The decrease from last year’s comparative period was due to higher cost of interest-bearing liabilities, partially offset by higher interest earned on loans and interest-bearing deposits at banks. Average loans and average interest-bearing deposits at banks increased $72 million and $83 million, respectively, during the first nine months of 2024 when compared to the prior year period.



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The Company’s net interest margin of 2.76% in the first nine months of 2024 was 36 basis points lower than the 3.12% margin in the first nine months of 2023. The yield on loans during the first nine months of 2024 increased 44 basis points, from 5.22% to 5.66% when compared with the first nine months of 2023. In the first nine months of 2024 the cost of interest-bearing liabilities increased 105 basis points to 3.20% when compared with the first nine months of 2023. The rate paid on average time deposits increased from 3.10% in the first nine months of 2023 to 4.40% during the first nine months of 2024. The rate paid on NOW deposits increased 118 basis points to 2.48% when compared with the first nine months of 2023.

The Company recorded a $1.1 million provision for credit losses in the nine-month period ended September 30, 2024 largely due to loan growth and slow down of prepayment rates, compared to a release of allowance for credit losses of $0.3 million for the nine-month period ended September 30, 2023.

  

Non-interest income for the first nine months of 2024 was $7.7 million compared with $14.4 million for the first nine months of 2023. The prior year period included insurance service and fee revenue of $8.3 million earned by TEA. Partially offsetting the decrease in insurance service and fee income were a gain on sale of other real estate owned of $0.6 million, $0.2 million revenue from loans sold and income from a historic tax credit investment of $0.2 million during the first nine months of 2024.

Total non-interest expense decreased to $39.1 million in the first nine months of 2024, $4.0 million, or 9%, lower than the nine-month period ended September 30, 2023. Included in the prior-year period was $4.5 million of salaries and employee benefits costs attributed to TEA. Partially offsetting the decrease in salaries and employee benefits were $0.6 million of merger related expenses incurred during the first nine months of 2024.

The Company’s GAAP efficiency ratio, or noninterest expenses divided by the sum of net interest income and noninterest income, was 76.7% in the first nine months of 2024, compared with 69.6% during the prior-year period.

  

The Company recorded income tax expense of $2.5 million for the nine-month period ended September 30, 2024, compared with $4.5 million in the first nine months of 2023. The effective tax rate for the first nine months of 2024 and 2023 was 23.3% and 23.7%, respectively.



CAPITAL

The Company consistently maintains regulatory capital ratios above the federal “well capitalized” standard, including a Tier 1 leverage ratio of 10.01% at September 30, 2024, compared with 10.04% at June 30, 2024 and 9.40% at September 30, 2023.

Book value per share was $33.58 at June 30, 2024 compared with $32.15 at June 30, 2024 and $27.52 at September 30, 2023. Reflected in the book value changes are the Federal Reserve’s aggressive interest rate hikes, which have resulted in significant changes in unrealized gains and losses on investment securities. As of September 30, 2024, this amounted to $6.36 per share impact to book value. Such unrealized gains and losses are generally due to changes in interest rates and represent the difference, net of applicable income tax effect, between the estimated fair value and amortized cost of investment securities classified as available-for-sale.

The Company has issued subordinated capital notes and junior subordinated debentures associated with trust preferred securities to provide liquidity and enhance regulatory capital. As of September 30, 2024, the Company had $11.3 million of junior subordinated debentures associated with trust preferred securities outstanding, which are considered Tier 1 capital and includable in total regulatory capital. As of September 30, 2024, the Company also had $20 million of its 6.00% Fixed-to-Floating Rate Subordinated Notes due 2030 outstanding. During 2020, $15 million of the proceeds from the sale of the notes was contributed to Evans Bank as Tier 1 capital.

While we are currently classified as “well capitalized”, an extended economic recession could adversely impact our reported and regulatory capital ratios. The Company relies on cash on hand as well as dividends from its subsidiary bank to service its debt. If the Company’s subsidiary bank’s capital deteriorates such that it is unable to pay dividends to the Company for an extended period of time, the Company may not be able to service its debt that was issued.

LIQUIDITY

The Bank utilizes cash flows from the investment portfolio and federal funds sold balances to manage the liquidity requirements related to loan demand and deposit fluctuations. The Bank also has many borrowing options. The Company uses the FHLBNY as its primary source of overnight funds and has long-term advance with FHLBNY. The Company’s use of its overnight line of credit with FHLBNY varies depending on its ability to fund investment and loan growth with core deposits along with the line usage’s impact on interest rate risk. The Company has pledged sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meets FHLB collateral requirements. As a member of the FHLB, the Bank is able to borrow funds at competitive rates. As of September 30, 2024, advances of up to $373 million could be drawn on the FHLB via an Overnight Line of Credit Agreement between the Bank and

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the FHLB. The Bank also has the ability to borrow from the Federal Reserve. At September 30, 2024 the Bank had $8 million in additional availability to borrow against collateral at the Federal Reserve. By placing sufficient collateral in safekeeping at the Federal Reserve Bank, the Bank could borrow at the discount window. The Bank’s liquidity needs also can be met by more aggressively pursuing time deposits, or accessing the brokered time deposit market, including the Certificate of Deposit Account Registry Service (“CDARS”) network.

Cash flows from the Bank’s investment portfolio are laddered, so that securities mature at regular intervals, to provide funds from principal and interest payments at various times as liquidity needs may arise. Contractual maturities are also laddered, with consideration as to the volatility of market prices. At September 30, 2024, approximately 1% of the Bank’s securities had contractual maturity dates of one year or less and approximately 17% had maturity dates of five years or less. Additionally, mortgage-backed securities, which comprised 62% of the investment portfolio at September 30, 2024, provide consistent cash flows for the Bank.

The Company’s primary source of liquidity is dividends from the Bank. Additionally, the Company has access to capital markets as a funding source.

Management, on an ongoing basis, closely monitors the Company’s liquidity position for compliance with internal policies and believes that available sources of liquidity are adequate to meet funding needs in the normal course of business. As part of that monitoring process, management calculates the 90-day liquidity position each month by analyzing the cash needs of the Bank. Included in the calculation are assumptions of some significant deposit run-off as well as funds needed for loan closings and investment purchases. In the Company’s internal stress test at September 30, 2024, the Company had net short-term liquidity of $351 million as compared with $333 million at December 31, 2023.

Management does not anticipate engaging in any activities, either currently or in the long term, for which adequate funding would not be available and which would therefore result in significant pressure on liquidity.

However, an economic recession could negatively impact the Company’s liquidity.  The Bank relies heavily on FHLBNY as a source of funds, particularly with its overnight line of credit.  In past economic recessions, some FHLB branches have suspended dividends, cut dividend payments, and not bought back excess FHLB stock that members hold in an effort to conserve capital.  FHLBNY has stated that it expects to be able to continue to pay dividends, redeem excess capital stock, and provide competitively priced advances in the future.  The 11 FHLB branches are jointly liable for the consolidated obligations of the FHLB system.  To the extent that one FHLB branch cannot meet its obligations to pay its share of the system’s debt, other FHLB branches can be called upon to make the payment.

Systemic weakness in the FHLB could result in higher costs of FHLB borrowings and increased demand for alternative sources of liquidity that are more expensive, such as brokered time deposits, the discount window at the Federal Reserve, or lines of credit with correspondent banks.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Additional information responsive to this Item is contained in the Liquidity section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which information is incorporated herein by reference.

Market risk is the risk of loss from adverse changes in market prices and/or interest rates of the Bank’s financial instruments. The primary market risk that the Company is exposed to is interest rate risk. The core banking activities of lending and deposit-taking expose the Bank to interest rate risk, which occurs when assets and liabilities reprice at different times and by different amounts as interest rates change. As a result, net interest income earned by the Bank is subject to the effects of changing interest rates. The Bank measures interest rate risk by calculating the variability of net interest income in future periods under various interest rate scenarios using projected balances for interest-earning assets and interest-bearing liabilities. Management’s philosophy toward interest rate risk management is to limit the variability of net interest income to changes in net interest rates. The balances of financial instruments used in the projections are based on expected growth from forecasted business opportunities, anticipated prepayments of loans, and expected maturities of investment securities, loans, and deposits. Management supplements the modeling technique described above with analysis of market values of the Bank’s financial instruments and changes to such market values given changes in the interest rates.

The Bank’s Asset-Liability Committee, which includes members of senior management, monitors the Bank’s interest rate sensitivity with the aid of a model that considers the impact of ongoing lending and deposit taking activities, as well as interrelationships in the magnitude and timing of the repricing of financial instruments, including the effect of changing interest rates on expected prepayments and maturities. When deemed prudent, management has taken actions, and intends to do so in the future, to mitigate exposure to interest rate risk through the use of on- or off-balance sheet financial instruments. Possible actions include, but are not limited to, changing the

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pricing of loan and deposit products, and modifying the composition of interest-earning assets and interest-bearing liabilities, and reliance on other financial instruments used for interest rate risk management purposes.

The following table demonstrates the possible impact of changes in interest rates on the Bank’s net interest income over a 12-month period of time:

SENSITIVITY OF NET INTEREST INCOME TO CHANGES IN INTEREST RATES

Calculated increase (decrease)

in projected annual net interest income

(in thousands)

September 30, 2024

December 31, 2023

Changes in interest rates

+200 basis points

$

(3,542)

$

(4,618)

+100 basis points

1,074

219

-100 basis points

(1,132)

(168)

-200 basis points

(2,416)

(310)

Many assumptions were utilized by management to calculate the impact that changes in interest rates may have on the Bank’s net interest income. The more significant assumptions related to the rate of prepayments of mortgage-related assets, loan and deposit volumes and pricing, and deposit maturities. The Bank assumed immediate changes in rates including 200 basis point rate changes. In the 200 basis point rate reduction scenario, the applicable rate changes may be limited to lesser amounts such that interest rates are not less than zero. The assumptions in the Company’s projections are inherently uncertain and, as a result, the Bank cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly due to the timing, magnitude, and frequency of interest rate changes in market conditions and interest rate differentials (spreads) between maturity/repricing categories, as well as any actions such as those previously described, which management may take to counter such changes. In light of the uncertainties and assumptions associated with the process, the amounts presented in the table and changes in such amounts are not considered significant to the Bank’s projected net interest income.

ITEM 4 - CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2024 (the end of the period covered by this Report). Based on that evaluation, the Company’s principal executive and principal financial officers concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2024.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in the Company’s internal control over financial reporting were identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the fiscal quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


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PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The nature of the Company’s business generates a certain amount of litigation involving matters arising in the ordinary course of business.

In the opinion of management, there are no proceedings pending to which the Company is a party or to which its property is subject, which, if determined adversely, would have a material effect on the Company’s results of operations or financial condition.

ITEM 1A – RISK FACTORS

The following risk factors relating to the Company’s proposed merger with NBT Bancorp Inc. (“NBT”) represent a material update and addition to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on March 4, 2024:

The Company will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on the Company’s employees, suppliers and customers may have an adverse effect on the Company. These uncertainties may impair our ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers, suppliers and others who deal with the Company to seek to change existing business relationships. Employee retention and recruitment may be particularly challenging prior to the effective time of the merger, as employees and prospective employees may experience uncertainty about their future roles with NBT.

The pursuit of the merger and the preparation for the integration may place a significant burden on management and internal resources. Any significant diversion of management attention away from ongoing business and any difficulties encountered in the transition and integration process could affect the financial results of the Company. In addition, the merger agreement requires that the Company operate in the ordinary course of business consistent with past practice and restricts the Company from taking certain actions prior to the effective time of the merger or termination of the merger agreement without NBT’s written consent. These restrictions may prevent the Company from retaining existing customers or pursuing attractive business opportunities that may arise prior to the completion of the merger.

The merger agreement contains provisions that limit the Company’s ability to pursue alternatives to the merger and may discourage other companies from trying to acquire the Company.

The merger agreement contains covenants that restrict the Company’s ability to, directly or indirectly, initiate, solicit, induce, knowingly encourage, or knowingly facilitate inquiries, offers or proposals with respect to, or, subject to certain exceptions generally related to the exercise of fiduciary duties by the Company’s Board of Directors, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any alternative acquisition proposals. Additionally, the merger agreement provides for an $8.4 million termination fee payable by the Company to NBT under certain circumstances. Such provisions may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of the Company from pursuing such acquisition.

The merger agreement may be terminated in accordance with its terms and the merger may not be completed.

NBT and the Company can mutually agree to terminate the merger agreement at any time before the merger has been completed, and either company can terminate the merger agreement if:

any regulatory approval required for consummation of the merger and the other transactions contemplated by the merger agreement has been denied by final, nonappealable action of any regulatory authority, or an application for regulatory approval has been permanently withdrawn at the request of a governmental authority;

the required approval of the merger agreement by the Company’s shareholders is not obtained;

the other party materially breaches any of its representations, warranties, covenants or other agreements set forth in the merger agreement (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement), which breach is not cured within 30 days of written notice of the breach, or by its nature cannot be cured prior to the closing of the merger, and such breach would entitle the non-breaching party not to consummate the merger; or

merger is not consummated by September 15, 2025, unless the failure to consummate the merger by such date is due to a material breach of the merger agreement by the terminating party.

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In addition, NBT may terminate the merger agreement if:

the Company materially breaches the non-solicitation provisions in the merger agreement; or

the Company’s Board of Directors:

ofails to recommend approval of the merger agreement, or withdraws, modifies or changes such recommendation in a manner adverse to NBT’s interests;

orecommends, proposes or publicly announces its intention to recommend or propose to engage in an acquisition transaction with any person other than NBT or any of its subsidiaries; or

ofails to call, give notice of, convene and hold its special meeting.

The merger is subject to a number of conditions, including the receipt of waivers and/or approvals from governmental authorities, that may delay the merger or adversely impact NBT’s and the Company’s ability to complete the merger.

The completion of the merger is subject to the satisfaction or waiver of a number of conditions. Before the merger may be completed, certain approvals, waivers or consents must be obtained from federal governmental authorities, including the Federal Reserve Bank of New York and the Office of the Comptroller of the Currency. Satisfying the requirements of these governmental authorities may delay the date of completion of the merger. In addition, these governmental authorities may include conditions on the completion of the merger or require changes to the terms of the merger. While it is currently anticipated that the merger will be completed promptly following the receipt of all required regulatory and shareholder approvals, there can be no assurance that the conditions to closing will be satisfied in a timely manner or at all, or that an effect, event, development or change will not transpire that could delay or prevent these conditions from being satisfied. The parties are not obligated to complete the merger should any regulatory approval contain a condition, restriction or requirement that NBT reasonably determines in good faith would, individually or in the aggregate, materially reduce the benefits of the merger to such a degree that NBT would not have entered into the merger agreement had such condition, restriction or requirement been known at the date of the merger agreement.

NBT and the Company cannot provide any assurances with respect to the timing of the closing of the merger, whether the merger will be completed at all and when Company shareholders would receive the consideration for the merger, if at all.

Failure to complete the merger could negatively impact the stock prices and future business and financial results of the Company.

Completion of the merger is subject to the satisfaction or waiver of a number of conditions, including approval by the Company’s shareholders of the merger. The Company cannot guarantee when or if these conditions will be satisfied or that the merger will be successfully completed. The consummation of the merger may be delayed, the merger may be consummated on terms different than those contemplated by the merger agreement, or the merger may not be consummated at all. If the merger is not completed, the ongoing businesses of the Company may be adversely affected, and the Company will be subject to several risks, including the following:

the Company may be required, under certain circumstances, to pay NBT a termination fee of $8.4 million;

the Company could incur substantial costs relating to the proposed merger, such as legal, accounting, financial advisor, filing, printing and mailing fees;

the Company is subject to certain restrictions on the conduct of its business prior to completing the merger, which may adversely affect its ability to execute certain of its business strategies; and

the Company’s management’s and employees’ attention may be diverted from our day-to-day business and operational matters as a result of efforts relating to the attempt to consummate the merger.

In addition, if the merger is not completed, the Company may experience negative reactions from the financial markets and from their respective customers and employees. The Company also could be subject to litigation related to any failure to complete the merger or to enforcement proceedings commenced against the Company to perform their respective obligations under the merger agreement. Such events could materially affect the Company’s stock prices and business and financial results.

Shareholder litigation could prevent or delay the closing of the merger or otherwise negatively affect the business and operations of the Company.

The Company may incur costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the proposed merger. Such litigation could have an adverse effect on the financial condition and results of operations of the Company and could prevent or delay the consummation of the merger.

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ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Issuer Purchases of Equity Securities

Period

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Number of Shares that may yet be Purchased Under the Plans or Programs

July 1, 2024 - July 31, 2024

Repurchase program(1)

-

$

-

-

180,932 

Employee transactions

-

$

-

N/A

N/A

August 1, 2024 - August 31, 2024

Repurchase program(1)

-

$

-

-

180,932 

Employee transactions

272 

$

33.71 

N/A

N/A

September 1, 2024 - September 30, 2024

Repurchase program(1)

-

$

-

-

180,932 

Employee transactions

-

$

-

N/A

N/A

Total:

Repurchase program(1)

-

$

-

-

180,932 

Employee transactions

272 

$

33.71 

N/A

N/A

On February 25, 2021, the Board of Directors authorized the Company to repurchase up to 300,000 shares of the Company’s common stock (the “2021 Repurchase Program”). The 2021 Repurchase program does not expire and may be suspended or discontinued by the Board of Directors at any time. The remaining number of shares that may be purchased under the 2021 Repurchase Program as of September 30, 2024 was 180,932.

ITEM 3 – DEFAULTS UPON SENIOR SECURITIES

(Not Applicable.)

ITEM 4 – MINE SAFETY DISCLOSURE

(Not Applicable.)

ITEM 5 – OTHER INFORMATION

During the three month period ended September 30, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.


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ITEM 6 – EXHIBITS

The following exhibits are filed as a part of this report:

EXHIBIT INDEX

Exhibit No.

Name

2.1

Agreement and Plan of Merger, dated September 9, 2024, by and among NBT Bancorp Inc., NBT Bank, National Association, Evans Bancorp, Inc. and Evans Bank, National Association (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (Registration No. 001-35021) filed on September 9, 2024).

3.1

Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3a to the Company’s Registration Statement on Form S-4 (Registration No. 33-25321), as filed on November 7, 1988). (Filed on paper – hyperlink is not required pursuant to Rule 105 of Regulation S-T)

3.1.1

Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3a to the Company’s Registration Statement on Form S-4 (Registration No. 33-25321), as filed on November 7, 1988). (Filed on paper – hyperlink is not required pursuant to Rule 105 of Regulation S-T)

3.2

Amended and Restated Bylaws of the Company, effective as of January 24, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (Registration No. 001-35021) filed on January 30, 2023).

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
‎

32.1

Certification of Principal Executive Officer pursuant to 18 USC Section 1350 Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Principal Financial Officer pursuant to 18 USC Section 1350 Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following materials from Evans Bancorp, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets – September 30, 2024 and December 31, 2023; (ii) Unaudited Consolidated Statements of Income – Three months ended September 30, 2024 and 2023; (iii) Unaudited Consolidated Statements of Income – Nine months ended September 30, 2024 and 2023; (iv) Unaudited Statements of Consolidated Comprehensive Income (Loss) – Three months ended September 30, 2024 and 2023; (v) Unaudited Statements of Consolidated Comprehensive Income (Loss) – Nine months ended September 30, 2024 and 2023; (vi) Unaudited Consolidated Statements of Stockholders' Equity – Three months ended September 30, 2024 and 2023; (vii) Unaudited Consolidated Statements of Stockholders' Equity – Nine months ended September 30, 2024 and 2023; (viii) Unaudited Consolidated Statements of Cash Flows – Nine months ended September 30, 2024 and 2023; and (ix) Notes to Unaudited Consolidated Financial Statements.

104

The cover page from the Evans Bancorp, Inc’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL.


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Table of Contents

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.

Evans Bancorp, Inc.

DATE

November 8, 2024

/s/ David J. Nasca

David J. Nasca

President and CEO

(Principal Executive Officer)

DATE

November 8, 2024

/s/ John B. Connerton

John B. Connerton

Treasurer

(Principal Financial Officer and Principal Accounting Officer)

47