Citizens Financial Services Inc 10-Q for FY2020 Q1

Citizens Financial Services Inc (CZFS)

10-Q 2020-05-07 For: 2020-03-31

Added on April 09, 2026

About this 10-Q

Citizens Financial Services Inc filed this 10-Q on May 7, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.73M; down 0.5% from $1.74M a year earlier
Net income: $4.53M; up 2.9% from net income of $4.41M a year earlier
Diluted EPS: $1.29; up 3.2% from $1.25 a year earlier

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		PAGE
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Consolidated Balance Sheet as of March 31, 2020 and December 31, 2019	1
	Consolidated Statement of Income for the Three months Ended March 31, 2020 and 2019	2
	Consolidated Statement of Comprehensive Income for the Three months ended March 31, 2020 and 2019	3
	Consolidated Statement of Changes in Stockholders’ Equity for the Three months ended March 31, 2020 and 2019	4
	Consolidated Statement of Cash Flows for the Three months ended March 31, 2020 and 2019	5
	Notes to Consolidated Financial Statements	6-28
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29-48
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48

Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	49-50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Defaults Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	51-52
	Signatures	53

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)

	March 31,			December 31,
(in thousands except share data)	2020			2019
ASSETS:
Cash and due from banks:
Noninterest-bearing	$	20,663		$	17,727
Interest-bearing		858			793
Total cash and cash equivalents		21,521			18,520
Interest bearing time deposits with other banks		14,506			14,256
Equity securities		649			701
Available-for-sale securities		257,788			240,706
Loans held for sale		2,006			815

Loans (net of allowance for loan losses:
2020, $14,247 and 2019, $13,845)		1,079,473			1,101,724

Premises and equipment		16,222			15,933
Accrued interest receivable		4,587			4,555
Goodwill		23,296			23,296
Bank owned life insurance		28,284			28,128
Other intangibles		1,294			1,346
Other assets		15,103			16,359

TOTAL ASSETS	$	1,464,729		$	1,466,339

LIABILITIES:
Deposits:
Noninterest-bearing	$	204,489		$	203,793
Interest-bearing		1,000,661			1,007,325
Total deposits		1,205,150			1,211,118
Borrowed funds		83,563			85,117
Accrued interest payable		906			1,088
Other liabilities		15,187			14,242
TOTAL LIABILITIES		1,304,806			1,311,565
STOCKHOLDERS' EQUITY:
Preferred Stock
$1.00 par value; authorized 3,000,000 shares at March 31, 2020 and
December 31, 2019; none issued in 2020 or 2019		-			-
Common stock
$1.00 par value; authorized 25,000,000 shares at March 31, 2020 and December 31, 2019;
issued 3,938,668 at March 31, 2020 and December 31, 2019		3,939			3,939
Additional paid-in capital		55,129			55,089
Retained earnings		113,374			110,800
Accumulated other comprehensive income (loss)		2,918			(629	)
Treasury stock, at cost: 432,659 shares at March 31, 2020
and 413,607 shares at December 31, 2019		(15,437	)		(14,425	)
TOTAL STOCKHOLDERS' EQUITY		159,923			154,774
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,464,729		$	1,466,339

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
	Three Months Ended
	March 31,
(in thousands, except share and per share data)	2020			2019
INTEREST INCOME:
Interest and fees on loans	$	13,638		$	13,314
Interest-bearing deposits with banks		95			104
Investment securities:
Taxable		1,107			1,108
Nontaxable		389			357
Dividends		110			134
TOTAL INTEREST INCOME		15,339			15,017
INTEREST EXPENSE:
Deposits		1,987			2,314
Borrowed funds		462			788
TOTAL INTEREST EXPENSE		2,449			3,102
NET INTEREST INCOME		12,890			11,915
Provision for loan losses		400			400
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		12,490			11,515
NON-INTEREST INCOME:
Service charges		1,081			1,099
Trust		198			232
Brokerage and insurance		340			293
Gains on loans sold		167			99
Equity security (losses) gains, net		(254	)		11
Earnings on bank owned life insurance		156			151
Other		163			148
TOTAL NON-INTEREST INCOME		1,851			2,033
NON-INTEREST EXPENSES:
Salaries and employee benefits		5,414			5,029
Occupancy		526			592
Furniture and equipment		131			155
Professional fees		325			442
FDIC insurance		71			111
Pennsylvania shares tax		275			275
Amortization of intangibles		50			66
Merger and acquisition		376			-
Software expenses		247			227
ORE expenses		32			107
Other		1,474			1,318
TOTAL NON-INTEREST EXPENSES		8,921			8,322
Income before provision for income taxes		5,420			5,226
Provision for income taxes		889			821
NET INCOME	$	4,531		$	4,405

PER COMMON SHARE DATA:
Net Income – Basic	$	1.29		$	1.25
Net Income – Diluted	$	1.29		$	1.25

Number of shares used in computation – basic		3,515,500			3,528,466
Number of shares used in computation – diluted		3,515,500			3,528,466

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
	Three Months Ended
	March 31,
(in thousands)				2020				2019
Net income				$	4,531			$	4,405
Other comprehensive income (loss):
Change in unrealized gains (losses) on available
for sale securities		4,334				1,328
Income tax effect		(910	)			(280	)
Change in unrecognized pension cost		156				61
Income tax effect		(33	)			(13	)
Other comprehensive income (loss), net of tax					3,547				1,096
Comprehensive income				$	8,078			$	5,501

The accompanying notes are an integral part of these unaudited consolidated financial statements.

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive			Treasury
(in thousands, except share data)	Shares		Amount		Capital			Earnings			Income (Loss)			Stock			Total
Balance, December 31, 2019		3,938,668	$	3,939	$	55,089		$	110,800		$	(629	)	$	(14,425	)	$	154,774
Comprehensive income:
Net income									4,531									4,531
Net other comprehensive income (loss)												3,547						3,547
Purchase of treasury stock (23,412 shares)															(1,279	)		(1,279	)
Restricted stock, executive and Board of Director awards (204 shares)						1									12			13
Restricted stock vesting						40												40
Cash dividend reinvestment paid from treasury stock (4,156 shares)						(1	)		-						255			254
Cash dividends, $0.55 per share									(1,957	)								(1,957	)
Balance, March 31, 2020		3,938,668	$	3,939	$	55,129		$	113,374		$	2,918		$	(15,437	)	$	159,923

Balance, December 31, 2018		3,904,212	$	3,904	$	53,099		$	99,727		$	(3,921	)	$	(13,580	)	$	139,229
Comprehensive income:
Net income									4,405									4,405
Net other comprehensive income (loss)												1,096						1,096
Purchase of treasury stock (5,762 shares)															(330	)		(330	)
Restricted stock vesting						3												3
Cash dividends, $0.441 per share									(1,558	)								(1,558	)
Balance, March 31, 2019		3,904,212	$	3,904	$	53,102		$	102,574		$	(2,825	)	$	(13,910	)	$	142,845


Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered

CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)	Three Months Ended
	March 31,
(in thousands)	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	4,531		$	4,405
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses		400			400
Depreciation and amortization		150			183
Amortization and accretion of investment securities		120			175
Deferred income taxes		(284	)		464
Equity securities losses (gains), net		254			(11	)
Earnings on bank owned life insurance		(156	)		(151	)
Originations of loans held for sale		(7,043	)		(3,880	)
Proceeds from sales of loans held for sale		5,973			4,885
Realized gains on loans sold		(167	)		(99	)
Increase in accrued interest receivable		(32	)		(317	)
(Decrease) increase in accrued interest payable		(182	)		16
Other, net		1,169			(1,313	)
Net cash provided by operating activities		4,733			4,757
CASH FLOWS FROM INVESTING ACTIVITIES:
Available-for-sale securities:
Proceeds from maturity and principal repayments		29,045			10,581
Purchase of securities		(41,915	)		(12,855	)
Purchase of equity securities		(202	)		-
Purchase of interest bearing time deposits with other banks		(250	)		-
Proceeds from redemption of regulatory stock		3,300			2,580
Purchase of regulatory stock		(2,798	)		(2,782	)
Net decrease (increase) in loans		22,003			(12,908	)
Purchase of premises and equipment		(507	)		(105	)
Proceeds from sale of premises and equipment		-			1
Proceeds from sale of foreclosed assets held for sale		350			89
Net cash provided by (used in) investing activities		9,026			(15,399	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		(5,968	)		(3,502	)
Proceeds from long-term borrowings		5,000			5,000
Repayments of long-term borrowings		-			(2,589	)
Net (decrease) increase in short-term borrowed funds		(6,554	)		14,658
Purchase of treasury and restricted stock		(1,279	)		(330	)
Dividends paid		(1,957	)		(1,558	)
Net cash (used in) provided by financing activities		(10,758	)		11,679
Net increase in cash and cash equivalents		3,001			1,037
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		18,520			16,797
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	21,521		$	17,834

Supplemental Disclosures of Cash Flow Information:
Interest paid	$	2,631		$	3,086
Income taxes paid	$	-		$	-
Loans transferred to foreclosed property	$	-		$	3,805
Right of use asset and liability	$	-		$	1,454

The accompanying notes are an integral part of these unaudited consolidated financial statements.

	Three Months Ended
	March 31,
Revenue stream	2020		2019
Service charges on deposit accounts
Overdraft fees	$	359		358
Statement fees		56		51
Interchange revenue		522		540
ATM income		83		91
Other service charges		61		59
Total Service Charges		1,081		1,099
Trust		198		232
Brokerage and insurance		340		293
Other		107		111
Total	$	1,726	$	1,735

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
March 31, 2020	Cost		Gains		Losses			Value
Available-for-sale securities:
U.S. agency securities	$	74,681	$	2,869	$	(40	)	$	77,510
U.S. treasury securities		27,406		907		-			28,313
Obligations of state and
political subdivisions		73,276		1,650		(148	)		74,778
Corporate obligations		3,250		97		-			3,347
Mortgage-backed securities in
government sponsored entities		71,942		1,919		(21	)		73,840
Total available-for-sale securities	$	250,555	$	7,442	$	(209	)	$	257,788

December 31, 2019
Available-for-sale securities:
U.S. agency securities	$	83,410	$	1,523	$	(70	)	$	84,863
U.S. treasury securities		27,394		267		-			27,661
Obligations of state and
political subdivisions		60,667		865		(77	)		61,455
Corporate obligations		3,250		78		-			3,328
Mortgage-backed securities in
government sponsored entities		63,086		468		(155	)		63,399
Total available-for-sale securities	$	237,807	$	3,201	$	(302	)	$	240,706

	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
March 31, 2020	Value		Losses			Value		Losses			Value		Losses
U.S. agency securities	$	3,765	$	(40	)	$	-	$	-		$	3,765	$	(40	)
Obligations of state and
political subdivisions		13,631		(148	)		-		-			13,631		(148	)
Mortgage-backed securities in
government sponsored entities		3,870		(6	)		3,886		(15	)		7,756		(21	)
Total securities	$	21,266	$	(194	)	$	3,886	$	(15	)	$	25,152	$	(209	)


December 31, 2019
U.S. agency securities	$	14,587	$	(63	)	$	13,094	$	(7	)	$	27,681	$	(70	)
Obligations of states and
political subdivisions		7,508		(75	)		1,507		(2	)		9,015		(77	)
Mortgage-backed securities in
government sponsored entities		27,737		(97	)		9,559		(58	)		37,296		(155	)
Total securities	$	49,832	$	(235	)	$	24,160	$	(67	)	$	73,992	$	(302	)

	Amortized
	Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	17,816	$	17,979
Due after one year through five years		71,725		75,025
Due after five years through ten years		49,897		51,081
Due after ten years		111,117		113,703
Total	$	250,555	$	257,788

March 31, 2020	Total Loans		Individually evaluated for impairment		Loans acquired with deteriorated credit quality (PCI)		Collectively evaluated for impairment
Real estate loans:
Residential	$	216,179	$	1,220	$	23	$	214,936
Commercial		338,490		11,480		1,195		325,815
Agricultural		300,606		3,893		-		296,713
Construction		17,926		-		-		17,926
Consumer		9,533		3		-		9,530
Other commercial loans		71,038		1,842		30		69,166
Other agricultural loans		46,170		1,293		-		44,877
State and political subdivision loans		93,778		-		-		93,778
Total		1,093,720		19,731		1,248		1,072,741
Less: allowance for loan losses		14,247		753		-		13,494
Net loans	$	1,079,473	$	18,978	$	1,248	$	1,059,247

December 31 , 2019
Real estate loans:
Residential	$	217,088	$	1,166	$	23	$	215,899
Commercial		342,023		11,537		1,210		329,276
Agricultural		311,464		3,782		-		307,682
Construction		15,519		-		-		15,519
Consumer		9,947		4		-		9,943
Other commercial loans		69,970		1,902		49		68,019
Other agricultural loans		55,112		1,281		-		53,831
State and political subdivision loans		94,446		-		-		94,446
Total		1,115,569		19,672		1,282		1,094,615
Less: allowance for loan losses		13,845		735		-		13,110
Net loans	$	1,101,724	$	18,937	$	1,282	$	1,081,505

	Three months ended
	March 31
	2020			2019
Balance at beginning of period	$	89		$	104
Accretion		(1	)		(2	)
Balance at end of period	$	88		$	102

	March 31, 2020		December 31, 2019
Outstanding balance	$	4,057	$	4,072
Carrying amount		1,248		1,282

			Recorded		Recorded
	Unpaid		Investment		Investment		Total
	Principal		With No		With		Recorded		Related
March 31, 2020	Balance		Allowance		Allowance		Investment		Allowance
Real estate loans:
Mortgages	$	1,282	$	776	$	300	$	1,076	$	20
Home Equity		166		80		64		144		11
Commercial		12,000		10,668		812		11,480		335
Agricultural		4,046		1,549		2,344		3,893		86
Consumer		3		3		-		3		-
Other commercial loans		2,459		1,499		343		1,842		148
Other agricultural loans		1,381		129		1,164		1,293		153
Total	$	21,337	$	14,704	$	5,027	$	19,731	$	753

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Loan		Greater and
March 31, 2020	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	559	$	212	$	345	$	1,116	$	156,429	$	23	$	157,568	$	-
Home Equity		165		89		53		307		58,304		-		58,611		-
Commercial		2,044		350		3,905		6,299		330,996		1,195		338,490		55
Agricultural		201		-		413		614		299,992		-		300,606		98
Construction		-		-		-		-		17,926		-		17,926		-
Consumer		115		25		19		159		9,374		-		9,533		11
Other commercial loans		63		77		1,715		1,855		69,153		30		71,038		-
Other agricultural loans		50		-		20		70		46,100		-		46,170		-
State and political
subdivision loans		-		-		-		-		93,778		-		93,778		-
Total	$	3,197	$	753	$	6,470	$	10,420	$	1,082,052	$	1,248	$	1,093,720	$	164

Loans considered non-accrual	$	786	$	5	$	6,306	$	7,097	$	4,205	$	-	$	11,302
Loans still accruing		2,411		748		164		3,323		1,077,847		1,248		1,082,418
Total	$	3,197	$	753	$	6,470	$	10,420	$	1,082,052	$	1,248	$	1,093,720

													Total		90 Days or
	30-59 Days		60-89 Days		90 Days		Total Past						Loan		Greater and
December 31, 2019	Past Due		Past Due		Or Greater		Due		Current		PCI		Receivables		Accruing
Real estate loans:
Mortgages	$	581	$	57	$	319	$	957	$	156,098	$	23	$	157,078	$	1
Home Equity		334		11		56		401		59,609		-		60,010		1
Commercial		750		573		3,720		5,043		335,770		1,210		342,023		-
Agricultural		118		-		785		903		310,561		-		311,464		299
Construction		-		-		-		-		15,519		-		15,519		-
Consumer		113		10		8		131		9,816		-		9,947		2
Other commercial loans		217		71		1,946		2,234		67,687		49		69,970		184
Other agricultural loans		29		32		-		61		55,051		-		55,112		-
State and political
subdivision loans		-		-		-		-		94,446		-		94,446		-
Total	$	2,142	$	754	$	6,834	$	9,730	$	1,104,557	$	1,282	$	1,115,569	$	487

Loans considered non-accrual	$	90	$	95	$	6,347	$	6,532	$	5,004	$	-	$	11,536
Loans still accruing		2,052		659		487		3,198		1,099,553		1,282		1,104,033
Total	$	2,142	$	754	$	6,834	$	9,730	$	1,104,557	$	1,282	$	1,115,569

	For the Three Months Ended
	March 31, 2020						March 31, 2019
					Interest						Interest
	Average		Interest		Income		Average		Interest		Income
	Recorded		Income		Recognized		Recorded		Income		Recognized
	Investment		Recognized		Cash Basis		Investment		Recognized		Cash Basis
Real estate loans:
Mortgages	$	1,031	$	5	$	-	$	1,103	$	4	$	-
Home Equity		146		2		-		85		1		-
Commercial		11,486		104		2		12,548		119		6
Agricultural		3,777		21		-		5,575		32		-
Consumer		3		-		-		-		-		-
Other commercial loans		1,839		1		-		2,137		1		-
Other agricultural loans		1,276		2		-		1,431		2		-
Total	$	19,558	$	135	$	2	$	22,879	$	159	$	6

March 31, 2020	Pass		Special Mention		Substandard		Doubtful		Loss		Ending Balance
Real estate loans:
Commercial	$	326,415	$	4,256	$	7,780	$	39	$	-	$	338,490
Agricultural		276,091		14,648		9,867		-		-		300,606
Construction		17,926		-		-		-		-		17,926
Other commercial loans		68,042		986		1,948		62		-		71,038
Other agricultural loans		42,917		1,030		2,223		-		-		46,170
State and political
subdivision loans		93,369		-		409		-		-		93,778
Total	$	824,760	$	20,920	$	22,227	$	101	$	-	$	868,008

March 31, 2020	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	156,630	$	915	$	23	$	157,568
Home Equity		58,555		56		-		58,611
Consumer		9,514		19		-		9,533
Total	$	224,699	$	990	$	23	$	225,712

December 31, 2019	Performing		Non-performing		PCI		Total
Real estate loans:
Mortgages	$	156,151	$	904	$	23	$	157,078
Home Equity		59,950		60		-		60,010
Consumer		9,939		8		-		9,947
Total	$	226,040	$	972	$	23	$	227,035

	For the Three Months Ended March 31, 2020
	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification

Real estate loans:
Agricultural		-		1	$	-	$	150	$	-	$	150
Total		-		1	$	-	$	150	$	-	$	150

	For the Three Months Ended March 31, 2019
	Number of contracts				Pre-modification Outstanding Recorded Investment				Post-Modification Outstanding Recorded Investment
	Interest Modification		Term Modification		Interest Modification		Term Modification		Interest Modification		Term Modification
Real estate loans:
Commercial		-		1	$	-	$	548	$	-	$	548
Total		-		1	$	-	$	548	$	-	$	548

	For the three months ended March 31, 2020
	Balance at December 31, 2019		Charge-offs			Recoveries		Provision			Balance at March 31, 2020
Real estate loans:
Residential	$	1,114	$	-		$	-	$	40		$	1,154
Commercial		4,549		(1	)		1		180			4,729
Agricultural		5,022		-			-		(144	)		4,878
Construction		43		-			-		13			56
Consumer		112		(8	)		8		5			117
Other commercial loans		1,255		-			2		40			1,297
Other agricultural loans		961		-			-		(126	)		835
State and political
subdivision loans		536		-			-		22			558
Unallocated		253		-			-		370			623
Total	$	13,845	$	(9	)	$	11	$	400		$	14,247

	For the three months ended March 31, 2019
	Balance at December 31, 2018		Charge-offs			Recoveries		Provision			Balance at March 31, 2019
Real estate loans:
Residential	$	1,105	$	-		$	-	$	(16	)	$	1,089
Commercial		4,115		(200	)		-		215			4,130
Agricultural		4,264		-					128			4,392
Construction		58		-			-		(26	)		32
Consumer		120		(14	)		11		7			124
Other commercial loans		1,354		-			3		(74	)		1,283
Other agricultural loans		752		-			-		4			756
State and political
subdivision loans		762		-			-		(197	)		565
Unallocated		354		-			-		359			713
Total	$	12,884	$	(214	)	$	14	$	400		$	13,084

	March 31, 2020							December 31, 2019
	Gross carrying value		Accumulated amortization			Net carrying value		Gross carrying value		Accumulated amortization			Net carrying value
Amortized intangible assets (1):
Mortgage servicing rights (MSRs)	$	1,764	$	(1,125	)	$	639	$	1,718	$	(1,077	)	$	641
Core deposit intangibles		1,786		(1,131	)		655		1,786		(1,081	)		705
Covenant not to compete		125		(125	)		-		125		(125	)		-
Total amortized intangible assets	$	3,675	$	(2,381	)	$	1,294	$	3,629	$	(2,283	)	$	1,346
Unamortized intangible assets:
Goodwill	$	23,296						$	23,296

	MSRs		Core deposit intangibles		Covenant not to compete		Total
Three months ended March 31, 2020 (actual)	$	48	$	50	$	-	$	98
Three months ended March 31, 2019 (actual)		48		58		8		114
Estimate for year ending December 31,
Remaining 2020		138		147		-		285
2021		141		165		-		306
2022		108		133		-		241
2023		80		100		-		180
2024		57		68		-		125
Thereafter		115		42		-		157
Total	$	639	$	655	$	-	$	1,294

	Three months
				Weighted
	Unvested			Average
	Shares			Market Price
Outstanding, beginning of period		10,877		$	60.11
Granted		-			-
Forfeited		-			-
Vested		(680	)		(59.85	)
Outstanding, end of period		10,197		$	60.12

	Three months ended March 31, 2020
	Unrealized gain (loss) on available for sale securities (a)		Defined Benefit Pension Items (a)			Total
Balance as of December 31, 2019	$	2,290	$	(2,919	)	$	(629	)
Other comprehensive income (loss) before reclassifications (net of tax)		3,424		-			3,424
Amounts reclassified from accumulated other
comprehensive income (loss) (net of tax)		-		123			123
Net current period other comprehensive income (loss)		3,424		123			3,547
Balance as of March 31, 2020	$	5,714	$	(2,796	)	$	2,918

	Three months ended March 31, 2019
	Unrealized gain (loss) on available for sale securities (a)			Defined Benefit Pension Items (a)			Total
Balance as of December 31, 2018	$	(973	)	$	(2,948	)	$	(3,921	)
Other comprehensive income (loss) before reclassifications (net of tax)		1,048			-			1,048
Amounts reclassified from accumulated other
comprehensive income (loss) (net of tax)		-			48			48
Net current period other comprehensive income (loss)		1,048			48			1,096
Balance as of March 31, 2019	$	75		$	(2,900	)	$	(2,825	)

Details about accumulated other comprehensive income (loss)	Amount reclassified from accumulated comprehensive income (loss) (a)						Affected line item in the Consolidated Statement of Income
	Three Months Ended March 31, 2020
	2020			2019
Defined benefit pension items
	$	(156	)	$	(61	)	Other expenses
		33			13		Provision for income taxes
	$	(123	)	$	(48	)	Net of tax
Total reclassifications	$	(123	)	$	(48	)

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

Level III:	Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

March 31, 2020	Level I		Level II		Level III		Total
Fair value measurements on a recurring basis:
Assets
Equity securities	$	649	$	-	$	-	$	649
Available for sale securities:
U.S. Agency securities		-		77,510		-		77,510
U.S. Treasury securities		28,313		-		-		28,313
Obligations of state and
political subdivisions		-		74,778		-		74,778
Corporate obligations		-		3,347		-		3,347
Mortgage-backed securities in
government sponsored entities		-		73,840		-		73,840

December 31, 2019	Level I		Level II		Level III		Total
Fair value measurements on a recurring basis:
Assets
Equity securities	$	701	$	-	$	-	$	701
Available for sale securities:
U.S. Agency securities		-		84,863		-		84,863
U.S. Treasuries securities		27,661		-		-		27,661
Obligations of state and
political subdivisions		-		61,455		-		61,455
Corporate obligations		-		3,328		-		3,328
Mortgage-backed securities in
government sponsored entities		-		63,399		-		63,399

March 31, 2020	Fair Value		Valuation Technique(s)	Unobservable input	Range			Weighted average
Impaired Loans	$	4,178	Appraised Collateral Values	Discount for time since appraisal		0-100	%		15.54	%
				Selling costs		5%-10	%		9.34	%
				Holding period	0 - 12 months			11.93 months

Other real estate owned		2,951	Appraised Collateral Values	Discount for time since appraisal		5-33	%		16.27	%

Deceber 31, 2020	Fair Value		Valuation Technique(s)	Unobservable input	Range			Weighted average
Impaired Loans	$	3,860	Appraised Collateral Values	Discount for time since appraisal		0-100	%		19.22	%
				Selling costs		5%-10	%		9.26	%
				Holding period	6- 12 months			11.76 months

Other real estate owned		3,299	Appraised Collateral Values	Discount for time since appraisal		5-43	%		16.37	%

	Carrying
March 31, 2020	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Interest bearing time deposits with other banks	$	14,506	$	14,962	$	-	$	-	$	14,962
Loans held for sale		2,006		2,006		-		-		2,006
Net loans		1,079,473		1,073,943		-		-		1,073,943

Financial liabilities:
Deposits		1,205,150		1,209,221		946,724		-		262,497
Borrowed funds		83,563		84,101		-		-		84,101

	Carrying
December 31, 2019	Amount		Fair Value		Level I		Level II		Level III
Financial assets:
Interest bearing time deposits with other banks	$	14,256	$	14,635	$	-	$	-	$	14,635
Loans held for sale		815		815		-		-		815
Net loans		1,101,724		1,091,006		-		-		1,091,006

Financial liabilities:
Deposits		1,211,118		1,211,200		938,387		-		272,813
Borrowed funds		85,117		84,581		-		-		84,581

	Analysis of Average Balances and Interest Rates
	Three Months Ended
	March 31, 2020							March 31, 2019
	Average				Average			Average				Average
	Balance (1)		Interest		Rate			Balance (1)		Interest		Rate
(dollars in thousands)	$				$	%		$				$	%
ASSETS
Short-term investments:
Interest-bearing deposits at banks		9,538		3		0.17			8,759		7		0.32
Total short-term investments		9,538		3		0.17			8,759		7		0.32
Interest bearing time deposits at banks		14,272		92		2.59			15,498		97		2.54
Investment securities:
Taxable		179,893		1,217		2.71			196,187		1,242		2.53
Tax-exempt (3)		62,555		493		3.15			55,866		451		3.23
Total investment securities		242,448		1,710		2.82			252,053		1,693		2.69
Loans (2)(3)(4):
Residential mortgage loans		215,838		2,843		5.30			215,670		2,825		5.31
Construction		17,726		223		5.06			28,439		357		5.09
Commercial Loans		415,199		5,534		5.36			401,813		5,423		5.47
Agricultural Loans		360,179		4,112		4.59			334,520		3,739		4.53
Loans to state & political subdivisions		94,122		939		0.01			100,922		978		3.93
Other loans		9,461		171		7.27			9,768		184		7.64
Loans, net of discount		1,112,525		13,822		5.00			1,091,132		13,506		5.05
Total interest-earning assets		1,378,783		15,627		4.56			1,367,442		15,303		4.54
Cash and due from banks		6,263							6,741
Bank premises and equipment		16,062							16,263
Other assets		56,983							54,278
Total non-interest earning assets		79,308							77,282
Total assets		1,458,091							1,444,724
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts		332,068		437		0.53			328,357		578		0.71
Savings accounts		225,985		184		0.33			211,149		184		0.35
Money market accounts		174,294		393		0.91			161,424		505		1.27
Certificates of deposit		261,278		973		1.50			293,385		1,047		1.45
Total interest-bearing deposits		993,625		1,987		0.93			994,315		2,314		0.94
Other borrowed funds		93,849		462		1.98			113,829		788		2.81
Total interest-bearing liabilities		1,087,474		2,449		0.91			1,108,144		3,102		1.14
Demand deposits		196,604							176,989
Other liabilities		16,082							14,199
Total non-interest-bearing liabilities		212,686							191,188
Stockholders' equity		157,931							145,392
Total liabilities & stockholders' equity		1,458,091							1,444,724
Net interest income				13,178							12,201
Net interest spread (5)						3.65	%						3.40	%
Net interest income as a percentage
of average interest-earning assets						3.84	%						3.62	%
Ratio of interest-earning assets
to interest-bearing liabilities						127	%						123	%

(1) Averages are based on daily averages.
(2) Includes loan origination and commitment fees.
(3) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using
a statutory federal income tax rate of 21%.
(4) Income on non-accrual loans is accounted for on a cash basis, and the loan balances are included in interest-earning assets.
(5) Interest rate spread represents the difference between the average rate earned on interest-earning assets
and the average rate paid on interest-bearing liabilities.

	For the Three Months
	Ended March 31,
	2020		2019
Interest and dividend income from investment securities
and interest bearing deposits at banks (non-tax adjusted)	$	1,701	$	1,703
Tax equivalent adjustment		104		94
Interest and dividend income from investment securities
and interest bearing deposits at banks (tax equivalent basis)	$	1,805	$	1,797



Interest and fees on loans (non-tax adjusted)	$	13,638	$	13,314
Tax equivalent adjustment		184		192
Interest and fees on loans (tax equivalent basis)	$	13,822	$	13,506



Total interest income	$	15,339	$	15,017
Total interest expense		2,449		3,102
Net interest income		12,890		11,915
Total tax equivalent adjustment		288		286
Net interest income (tax equivalent basis)	$	13,178	$	12,201