ENB Financial Corp 10-Q for FY2025 Q1
ENB Financial Corp (ENBP)
About this 10-Q
ENB Financial Corp filed this 10-Q on May 13, 2025, covering the quarter ended March 31, 2025 (FY2025 Q1).
Headline figures
Quarter ended March 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $4.32M
- up 9.5% from net income of $3.94M a year earlier
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly
period ended
OR
For the transition period from ________________________ to ________________________
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No) | ||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code
Former name, former address, and former fiscal year, if changed since last report Not Applicable
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May
1, 2025, the registrant had
ENB FINANCIAL CORP
INDEX TO FORM 10-Q
March 31, 2025
2
ENB FINANCIAL CORP
Part I - Financial Information
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| March 31, | December 31, | March 31, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| $ | $ | $ | ||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | ||||||||||||
| Interest-bearing deposits in other banks | ||||||||||||
| Total cash and cash equivalents | ||||||||||||
| Securities available for sale (at fair value, net of allowance for credit losses of $ | ||||||||||||
| Equity securities (at fair value) | ||||||||||||
| Loans held for sale | ||||||||||||
| Loans (net of unearned income) | ||||||||||||
| Less: Allowance for credit losses | ||||||||||||
| Net loans | ||||||||||||
| Premises and equipment | ||||||||||||
| Regulatory stock | ||||||||||||
| Bank owned life insurance | ||||||||||||
| Other assets | ||||||||||||
| Total assets | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest-bearing | ||||||||||||
| Interest-bearing | ||||||||||||
| Total deposits | ||||||||||||
| Short-term borrowings | — | |||||||||||
| Long-term debt | ||||||||||||
| Subordinated debt | ||||||||||||
| Other liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Stockholders' equity: | ||||||||||||
| Common stock, par value $ | ||||||||||||
| Shares: Authorized | ||||||||||||
| Issued | ||||||||||||
| Capital surplus | ||||||||||||
| Retained earnings | ||||||||||||
| Accumulated other comprehensive loss, net of tax | ( | ) | ( | ) | ( | ) | ||||||
| Less: Treasury stock cost on | ( | ) | ( | ) | ( | ) | ||||||
| Total stockholders' equity | ||||||||||||
| Total liabilities and stockholders' equity | ||||||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
3
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| Three Months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Interest and dividend income: | ||||||||
| Interest and fees on loans | ||||||||
| Interest on securities available for sale | ||||||||
| Taxable | ||||||||
| Tax-exempt | ||||||||
| Interest on deposits at other banks | ||||||||
| Dividend income | ||||||||
| Total interest and dividend income | ||||||||
| Interest expense: | ||||||||
| Interest on deposits | ||||||||
| Interest on borrowings | ||||||||
| Total interest expense | ||||||||
| Net interest income | ||||||||
| Provision (release) for credit losses | ( | ) | ||||||
| Net interest income after provision (release) for credit losses | ||||||||
| Other income: | ||||||||
| Trust and investment services income | ||||||||
| Service fees | ||||||||
| Commissions | ||||||||
| Losses on the sale of debt securities, net | ( | ) | ( | ) | ||||
| Losses on equity securities, net | ( | ) | ( | ) | ||||
| Gains on sale of mortgages | ||||||||
| Earnings on bank-owned life insurance | ||||||||
| Other income | ||||||||
| Total other income | ||||||||
| Operating expenses: | ||||||||
| Salaries and employee benefits | ||||||||
| Occupancy | ||||||||
| Equipment | ||||||||
| Advertising & marketing | ||||||||
| Computer software & data processing | ||||||||
| Shares tax | ||||||||
| Professional services | ||||||||
| Other expense | ||||||||
| Total operating expenses | ||||||||
| Income before income taxes | ||||||||
| Provision for federal income taxes | ||||||||
| Net income | ||||||||
| Earnings per share of common stock | ||||||||
| Cash dividends paid per share | ||||||||
| Weighted average shares outstanding | ||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
4
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS)
| Three Months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Net income | ||||||||
| Other comprehensive income (loss), net of tax: | ||||||||
| Securities available for sale not other-than-temporarily impaired: | ||||||||
| Unrealized losses arising during the period | ( | ) | ( | ) | ||||
| Income tax effect | ||||||||
| ( | ) | ( | ) | |||||
| Reclassification adjustment for losses included in net income | ||||||||
| Income tax effect | ( | ) | ( | ) | ||||
| Derivative and hedging activities adjustment: | ||||||||
| Changes in unrealized holding gain on derivatives | ||||||||
| Income tax effect | ( | ) | ||||||
| Other comprehensive income (loss), net of tax | ( | ) | ||||||
| Comprehensive Income | ||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
5
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| Accumulated | ||||||||||||||||||||||||
| Other | Total | |||||||||||||||||||||||
| Common | Capital | Retained | Comprehensive | Treasury | Stockholders' | |||||||||||||||||||
| Stock | Surplus | Earnings | Loss | Stock | Equity | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balances, December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Other comprehensive loss net of tax | ( | ) | ( | ) | ||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||
| Treasury stock purchased - | ( | ) | ( | ) | ||||||||||||||||||||
| Treasury stock issued - | ( | ) | ||||||||||||||||||||||
| Cash dividends paid, $ | ( | ) | ( | ) | ||||||||||||||||||||
| Balances, March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Balances, December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Other comprehensive income net of tax | ||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||
| Treasury stock issued - | ( | ) | ||||||||||||||||||||||
| Cash dividends paid, $ | ( | ) | ( | ) | ||||||||||||||||||||
| Balances, March 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
6
ENB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Net amortization of securities premiums and discounts and loan fees | ||||||||
| Decrease (increase) in interest receivable | ( | ) | ||||||
| (Decrease) increase in interest payable | ( | ) | ||||||
| Provision (release) for credit losses | ( | ) | ||||||
| Losses on the sale of debt securities, net | ||||||||
| Losses on equity securities, net | ||||||||
| Gains on sale of mortgages | ( | ) | ( | ) | ||||
| Loans originated for sale | ( | ) | ( | ) | ||||
| Proceeds from sales of loans | ||||||||
| Earnings on bank-owned life insurance | ( | ) | ( | ) | ||||
| Depreciation of premises and equipment and amortization of software | ||||||||
| Deferred income tax | ||||||||
| Amortization of deferred fees on subordinated debt | ||||||||
| Stock-based compensation expense | ||||||||
| Other assets and other liabilities, net | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Securities available for sale: | ||||||||
| Proceeds from maturities, calls, and repayments | ||||||||
| Proceeds from sales | ||||||||
| Purchases | ( | ) | ( | ) | ||||
| Equity securities | ||||||||
| Proceeds from sales | ||||||||
| Purchases | ( | ) | ( | ) | ||||
| Purchase of regulatory bank stock | ( | ) | ( | ) | ||||
| Redemptions of regulatory bank stock | ||||||||
| Net increase in loans | ( | ) | ( | ) | ||||
| Purchases of premises and equipment, net | ( | ) | ( | ) | ||||
| Purchase of computer software | ( | ) | ( | ) | ||||
| Net cash provided by (used for) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Net increase (decrease) in demand, and savings accounts | ( | ) | ||||||
| Net (decrease) increase in time deposits | ( | ) | ||||||
| Repayments of long-term debt | ( | ) | ( | ) | ||||
| Dividends paid | ( | ) | ( | ) | ||||
| Proceeds from sale of treasury stock | ||||||||
| Treasury stock purchased | ( | ) | ||||||
| Net cash used for financing activities | ( | ) | ( | ) | ||||
| Increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | ||||||||
| Income taxes paid | ||||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Fair value adjustments for securities available for sale | ( | ) | ||||||
See Notes to the Unaudited Consolidated Interim Financial Statements
7
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and to general practices within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all significant adjustments considered necessary for fair presentation have been included. Certain items previously reported have been reclassified to conform to the current period’s reporting format. Such reclassifications did not affect net income or stockholders’ equity.
ENB Financial Corp (“the Corporation”) is the bank holding company for its wholly-owned subsidiary Ephrata National Bank (the “Bank”). Ephrata National Bank has one wholly-owned subsidiary, ENB Insurance, LLC which is consolidated into its financial statements. This Form 10-Q, for the first quarter of 2025, is reporting on the results of operations and financial condition of ENB Financial Corp on a consolidated basis.
Operating results for the three months ended March 31, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. For further information, refer to the consolidated financial statements and footnotes thereto included in ENB Financial Corp’s Annual Report on Form 10-K for the year ended December 31, 2024.
2. Revenue from Contracts with Customers
The Corporation records revenue from contracts with customers in accordance with Accounting Standards Topic 606, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Corporation must identify contracts with customers, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when the Corporation satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods.
The Corporation’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not within the scope of Topic 606. The Corporation has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Corporation generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.
8
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
3. Securities Available for Sale
The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of investment securities held at March 31, 2025 and December 31, 2024, are as follows:
| Gross | Gross | Allowance | ||||||||||||||||||
| (DOLLARS IN THOUSANDS) | Amortized | Unrealized | Unrealized | for Credit | Fair | |||||||||||||||
| Cost | Gains | Losses | Losses | Value | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| March 31, 2025 | ||||||||||||||||||||
| U.S. treasuries | ( | ) | ||||||||||||||||||
| U.S. government agencies | ( | ) | ||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ||||||||||||||||||
| Non-agency MBS/CMO | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||||||
| Obligations of states and political subdivisions | ( | ) | ||||||||||||||||||
| Total securities available for sale | ( | ) | ||||||||||||||||||
| Gross | Gross | Allowance | ||||||||||||||||||
| (DOLLARS IN THOUSANDS) | Amortized | Unrealized | Unrealized | for Credit | Fair | |||||||||||||||
| Cost | Gains | Losses | Losses | Value | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| U.S. Treasuries | ( | ) | ||||||||||||||||||
| U.S. government agencies | ( | ) | ||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ||||||||||||||||||
| Non-agency MBS/CMO | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ||||||||||||||||||
| Obligations of states and political subdivisions | ( | ) | ||||||||||||||||||
| Total securities available for sale | ( | ) | ||||||||||||||||||
The amortized cost and fair value of securities available for sale at March 31, 2025, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions.
CONTRACTUAL MATURITY OF DEBT SECURITIES
(DOLLARS IN THOUSANDS)
| Amortized | ||||||||
| Cost | Fair Value | |||||||
| $ | $ | |||||||
| Due in one year or less | ||||||||
| Due after one year through five years | ||||||||
| Due after five years through ten years | ||||||||
| Due after ten years | ||||||||
| Total debt securities | ||||||||
Securities available for sale with a par value of $
9
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Proceeds from active sales of debt securities available for sale, along with the associated gross realized gains and gross realized losses, are shown below. Realized gains and losses are computed on the basis of specific identification.
PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE
(DOLLARS IN THOUSANDS)
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Proceeds from sales | ||||||||
| Gross realized gains | ||||||||
| Gross realized losses | ( | ) | ( | ) | ||||
Information pertaining to securities with gross unrealized losses at March 31, 2025 and December 31, 2024, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:
UNREALIZED LOSSES ON DEBT SECURITIES
(DOLLARS IN THOUSANDS)
| Less than 12 months | More than 12 months | Total | ||||||||||||||||||||||
| Gross | Gross | Gross | ||||||||||||||||||||||
| Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
| Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| As of March 31, 2025 | ||||||||||||||||||||||||
| U.S. Treasuries | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. government agencies | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Non-Agency MBS/CMO | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Obligations of states & political subdivisions | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Total unrealized losses on debt securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Gross | Gross | Gross | ||||||||||||||||||||||
| Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
| Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||
| U.S. Treasuries | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. government agencies | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. agency mortgage-backed securities | ( | ) | ( | ) | ||||||||||||||||||||
| U.S. agency collateralized mortgage obligations | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Non-Agency MBS/CMO | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate bonds | ( | ) | ( | ) | ||||||||||||||||||||
| Obligations of states & political subdivisions | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Total unrealized losses on debt securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
In the debt security portfolio there were 313 positions carrying unrealized losses as of March 31, 2025.
Management evaluates all of the Corporation’s securities for expected credit losses. No securities in the portfolio required an allowance for credit losses to be recorded in the first three months of 2025 or 2024.
10
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Unrealized losses on the Corporation’s available-for-sale debt securities have not been recognized into income because the bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is solely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.
4. Equity Securities
The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of equity securities held at March 31, 2025 and December 31, 2024.
| Gross | Gross | |||||||||||||||
| (DOLLARS IN THOUSANDS) | Amortized | Unrealized | Unrealized | Fair | ||||||||||||
| Cost | Gains | Losses | Value | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| March 31, 2025 | ||||||||||||||||
| CRA-qualified mutual funds | ||||||||||||||||
| Bank stocks | ( | ) | ||||||||||||||
| Total equity securities | ( | ) | ||||||||||||||
| Gross | Gross | |||||||||||||||
| (DOLLARS IN THOUSANDS) | Amortized | Unrealized | Unrealized | Fair | ||||||||||||
| Cost | Gains | Losses | Value | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| December 31, 2024 | ||||||||||||||||
| CRA-qualified mutual funds | ||||||||||||||||
| Bank stocks | ( | ) | ||||||||||||||
| Total equity securities | ( | ) | ||||||||||||||
The following table presents the net gains and losses on the Corporation’s equity investments recognized in earnings during the three months ended March 31, 2025 and 2024, and the portion of unrealized gains and losses for the period that relates to equity investments held as of March 31, 2025 and 2024.
NET GAINS AND LOSSES ON EQUITY INVESTMENTS RECOGNIZED IN EARNINGS
(DOLLARS IN THOUSANDS)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Net losses recognized in equity securities during the period | ( | ) | ( | ) | ||||
| Less: Net gains realized on the sale of equity securities during the period | ||||||||
| Unrealized losses recognized in equity securities held at reporting date | ( | ) | ( | ) | ||||
11
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
5. Loans and Allowance for Credit Losses
The following table presents the Corporation’s loan portfolio by category of loans as of March 31, 2025 and December 31, 2024 (in thousands):
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Agriculture | ||||||||
| Business Loans | ||||||||
| Consumer | ||||||||
| Home Equity | ||||||||
| Non-Owner Occupied Commercial Real Estate | ||||||||
| Residential Real Estate (a) | ||||||||
| Gross loans prior to deferred costs | ||||||||
| Deferred loan costs, net | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Total net loans | ||||||||
| (a) |
Age Analysis of Past-Due Loans Receivable
The performance and credit quality of the loan
portfolio is monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due.
| March 31, 2025 | ||||||||||||||||||||||||
| 31-60 | 61-90 | Greater Than | ||||||||||||||||||||||
| Days | Days | 90 Days | Total | Total | ||||||||||||||||||||
| Current | Past Due | Past Due | Past Due | Past Due | Loans | |||||||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||
| Home Equity | ||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||
| 31-60 | 61-90 | Greater Than | ||||||||||||||||||||||
| Days | Days | 90 Days | Total | Total | ||||||||||||||||||||
| Current | Past Due | Past Due | Past Due | Past Due | Loans | |||||||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||
| Home Equity | ||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
12
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Nonperforming Loans
The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of March 31, 2025 and December 31, 2024, (in thousands):
| March 31, 2025 | ||||||||||||||||||||
| Nonaccrual | Nonaccrual | Loans Past | ||||||||||||||||||
| with no | with | Total | Due Over 90 Days | Total | ||||||||||||||||
| ACL | ACL | Nonaccrual | Still Accruing | Nonperforming | ||||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | |||||||||||||||
| Business Loans | ||||||||||||||||||||
| Consumer Loans | ||||||||||||||||||||
| Home Equity | ||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Nonaccrual | Nonaccrual | Loans Past | ||||||||||||||||||
| with no | with | Total | Due Over 90 Days | Total | ||||||||||||||||
| ACL | ACL | Nonaccrual | Still Accruing | Nonperforming | ||||||||||||||||
| Agriculture | $ | $ | $ | $ | $ | |||||||||||||||
| Business Loans | ||||||||||||||||||||
| Consumer Loans | ||||||||||||||||||||
| Home Equity | ||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | |||||||||||||||
The following table presents, by class of loans, the collateral-dependent nonaccrual loans and type of collateral as of March 31, 2025 and December 31, 2024 (in thousands).
| March 31, 2025 | ||||||||||||||||
| Real Estate | Other | None | Total | |||||||||||||
| Agriculture | $ | $ | $ | $ | ||||||||||||
| Business Loans | ||||||||||||||||
| Consumer Loans | ||||||||||||||||
| Home Equity | ||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||
| Residential Real Estate | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
13
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
| December 31, 2024 | ||||||||||||||||
| Real Estate | Other | None | Total | |||||||||||||
| Agriculture | $ | $ | $ | $ | ||||||||||||
| Business Loans | ||||||||||||||||
| Consumer Loans | ||||||||||||||||
| Home Equity | ||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||
| Residential Real Estate | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Credit Quality Indicators
The Corporation grades commercial credits differently than consumer credits. The following tables represent all of the Corporation’s commercial credit exposures by internally assigned grades as of March 31, 2025 and December 31, 2024. The grading analysis estimates the capability of the borrower to repay the contractual obligations under the loan agreements as scheduled. The Corporation's internal commercial credit risk grading system is based on experiences with similarly graded loans.
The Corporation's internally assigned grades for commercial credits are as follows:
| ● | Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. |
| ● | Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem, if not corrected. |
| ● | Substandard – loans that have a well-defined weakness based on objective evidence and characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. |
| ● | Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances. |
| ● | Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted. |
14
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposures as of March 31, 2025 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| March 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Cost Basis | to Term | Total | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | — | — | ||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
15
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposures as of December 31, 2024 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| December 31, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Cost Basis | to Term | Total | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Agriculture | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | — | |||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Business Loans | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Special Mention | — | |||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | — | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Risk Rating | ||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Special Mention | — | |||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||
| Doubtful | — | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
16
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
For consumer loans, the Corporation evaluates credit quality based on whether the loan is considered performing or non-performing. Non-performing loans consist of those loans greater than 90 days delinquent and nonaccrual loans.
The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of March 31, 2025 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| March 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Cost Basis | to Term | Total | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | — | — | ||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | — | $ | ||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | — | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
17
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of December 31, 2024 (in thousands):
| Revolving | Revolving | |||||||||||||||||||||||||||||||||||
| Term Loans Amortized Cost Basis by Origination Year | Loans | Loans | ||||||||||||||||||||||||||||||||||
| Amortized | Converted | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Cost Basis | to Term | Total | ||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | — | |||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Nonperforming | — | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | — | |||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||
| Payment Performance | ||||||||||||||||||||||||||||||||||||
| Performing | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Nonperforming | ||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
18
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Allowance for Credit Losses
The following table presents the activity in the allowance for credit losses (ACL) by portfolio segment for the three months ended March 31, 2025 and March 31, 2024 (in thousands):
| March 31, 2025 | Beginning | Provisions | Ending | |||||||||||||||||
| Balance | Charge-offs | Recoveries | (Reductions) | Balance | ||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||
| Agriculture | ||||||||||||||||||||
| Business Loans | ( | ) | ||||||||||||||||||
| Consumer Loans | ( | ) | ( | ) | ||||||||||||||||
| Home Equity | ( | ) | ||||||||||||||||||
| Non-Owner Occupied CRE | ||||||||||||||||||||
| Residential Real Estate | ||||||||||||||||||||
| Total | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| March 31, 2024 | Beginning | Provisions | Ending | |||||||||||||||||
| Balance | Charge-offs | Recoveries | (Reductions) | Balance | ||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||
| Agriculture | ( | ) | ||||||||||||||||||
| Business Loans | ( | ) | ||||||||||||||||||
| Consumer Loans | ( | ) | ||||||||||||||||||
| Home Equity | ||||||||||||||||||||
| Non-Owner Occupied CRE | ( | ) | ||||||||||||||||||
| Residential Real Estate | ( | ) | ||||||||||||||||||
| Total | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
During the three months ended March 31, 2025, management charged off
$
The ACL is maintained at a level determined to be adequate to absorb estimated expected credit losses within the loan portfolio over the contractual life of an instrument that considers historical loss experience, current conditions, and forecasts of future economic conditions as of the balance sheet date. The Corporation develops and documents a systematic ACL methodology based on the following portfolio segments: Agriculture, Business Loans, Consumer Loans, Home Equity, Non-Owner Occupied Commercial Real Estate (CRE), and Residential Real Estate. The following are key risks within each portfolio segment:
Agriculture – Loans made to individuals or operating companies within the Agricultural industry. These loans are generally secured by a first lien mortgage on agricultural land. The primary source of repayment is the income and assets of the borrower. The condition of the agriculture industry as well as the condition of the national economy is an important indicator of risk for this segment.
Business Loans —Loans made to operating companies or manufacturers for the purpose of production, operating capacity, accounts receivable, inventory or equipment financing. The primary source of repayment for these loans is cash flow from the operations of the company. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the industry of the company. This segment also includes loans made to finance construction of buildings or other structures, as well as to finance the acquisition and development of raw land for various purposes. While the risk of these loans is generally confined to the construction period, if there are problems, the project may not be completed, and as such, may not provide sufficient cash flow on its own to service the debt or have sufficient value in a liquidation to cover the outstanding principal. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the type of project and the experience and resources of the developer.
19
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Consumer - Loans made to individuals that may be secured by assets other than 1-4 family residences, as well as unsecured loans. This segment includes personal loans and lines of credit that may be secured or unsecured. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The value of the collateral, if there is any, is less likely to be a source of repayment due to less certain collateral values.
Home Equity– This segment generally includes lines of credit and term loans secured by the equity in the borrower’s residence. The primary source of repayment for these facilities is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.
Non-Owner Occupied CRE - Loans secured by commercial purpose real estate for various purposes such as hotels, retail, multifamily and health care. The primary sources of repayment for these loans are the operations of the individual projects and global cash flows of the debtors. The condition of the national economy is an important indicator of risk, but there are also more specific risks depending on the collateral type and the business prospects of the lessee.
Residential Real Estate—Loans secured by first liens on 1-4 family residential mortgages. The primary source of repayment for these loans is the income and assets of the borrower. The condition of the national economy, in particular the unemployment rate, is an important indicator of risk for this segment. The state of the national housing market can also have a significant impact on this segment because low demand and/or declining home values can limit the ability of borrowers to sell a property and satisfy the debt.
The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on the estimation method as of March 31, 2025:
ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE
(DOLLARS IN THOUSANDS)
| As of March 31, 2025: | Agriculture | Business Loans | Consumer Loans | Home Equity | Non-Owner Occupied CRE | Residential Real Estate | Total | |||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
| Loans receivable: | ||||||||||||||||||||||||||||
| Ending balance | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
20
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The following table presents the balance in the allowance for credit losses and the recorded investment in loans receivable by portfolio segment based on estimation method as of December 31, 2024:
ALLOWANCE FOR CREDIT LOSSES AND RECORDED INVESTMENT IN LOANS RECEIVABLE
(DOLLARS IN THOUSANDS)
| As of December 31, 2024: | Agriculture | Business Loans | Consumer | Home Equity | Non-Owner Occupied CRE | Residential Real Estate | Total | |||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
| Loans receivable: | ||||||||||||||||||||||||||||
| Ending balance | ||||||||||||||||||||||||||||
| Ending balance: individually evaluated | ||||||||||||||||||||||||||||
| Ending balance: collectively evaluated | ||||||||||||||||||||||||||||
Modifications to Borrowers Experiencing Financial Difficulty
The Corporation may grant a modification to borrowers in financial distress by providing a temporary reduction in interest rate, or an extension of a loan’s stated maturity date. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral.
The Corporation identifies loans for potential restructure primarily through direct communication with the borrower and evaluation of the borrower's financial statements, revenue projections, tax returns, and credit reports. Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future. There were no modifications of loans to borrowers experiencing financial difficulty for the quarter ended March 31, 2025 or for the quarter ended March 31, 2024.
6. Fair Value Presentation
U.S. generally accepted accounting principles establish a hierarchal disclosure framework associated with the level of observable pricing utilized in measuring assets and liabilities at fair value. The three broad levels defined by the hierarchy are as follows:
| Level I: | Quoted prices are available in active markets for identical assets or liabilities as of the reported date. | |
| Level II: | Pricing inputs are other than the quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities includes items for which quoted prices are available but traded less frequently and items that are fair-valued using other financial instruments, the parameters of which can be directly observed. | |
| Level III: | Assets and liabilities that have little to no observable pricing as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. |
The following tables provide the fair market value for assets required to be measured and reported at fair value on a recurring basis on the Consolidated Balance Sheets as of March 31, 2025, and December 31, 2024, by level within the fair value hierarchy. As required by U.S. generally accepted accounting principles, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
21
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
ASSETS MEASURED ON A RECURRING BASIS
(DOLLARS IN THOUSANDS)
| March 31, 2025 | ||||||||||||||||
| Level I | Level II | Level III | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Assets | ||||||||||||||||
| U.S. treasuries | ||||||||||||||||
| U.S. government agencies | ||||||||||||||||
| U.S. agency mortgage-backed securities | ||||||||||||||||
| U.S. agency collateralized mortgage obligations | ||||||||||||||||
| Non-agency MBS/CMO | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| Obligations of states & political subdivisions | ||||||||||||||||
| Equity securities | ||||||||||||||||
| Total securities | ||||||||||||||||
| Derivatives and hedging activities | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivatives and hedging activities | ||||||||||||||||
On March 31, 2025, the Corporation held no securities valued using level III inputs. Most of the Corporation’s debt instruments were valued using level II inputs, where quoted prices are available and observable, but not necessarily quotes on identical securities traded in active markets on a daily basis. The Corporation’s U.S. Treasury bonds, CRA fund investments, and bank stocks are fair valued utilizing level I inputs because the funds have their own quoted prices in an active market. The Corporation’s hedging assets and liabilities are valued using level II inputs as there are quoted prices available and observable, but not necessarily quotes on identical instruments traded in active markets on a daily basis.
Financial instruments are considered level III when their values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. In addition to these unobservable inputs, the valuation models for level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Level III financial instruments also include those for which the determination of fair value requires significant management judgment or estimation.
22
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
ASSETS MEASURED ON A RECURRING BASIS
(DOLLARS IN THOUSANDS)
| December 31, 2024 | ||||||||||||||||
| Level I | Level II | Level III | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| U.S. Treasuries | ||||||||||||||||
| U.S. government agencies | ||||||||||||||||
| U.S. agency mortgage-backed securities | ||||||||||||||||
| U. S. agency collateralized mortgage obligations | ||||||||||||||||
| Non-agency MBS/CMO | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Corporate bonds | ||||||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||
| Marketable equity securities | ||||||||||||||||
| Total securities | ||||||||||||||||
| Derivatives and hedging activities | ||||||||||||||||
On December 31, 2024, the Corporation held no securities valued using level III inputs. Most of the Corporation’s debt instruments were valued using level II inputs, where quoted prices are available and observable, but not necessarily quotes on identical securities traded in active markets on a daily basis. The Corporation’s U.S. Treasury bonds, CRA fund investments, and bank stocks are fair valued utilizing level I inputs because the funds have their own quoted prices in an active market.
The following tables provide the fair value for each class of assets required to be measured and reported at fair value on a nonrecurring basis on the Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024, by level within the fair value hierarchy:
ASSETS MEASURED ON A NONRECURRING BASIS
(Dollars in Thousands)
| March 31, 2025 | ||||||||||||||||
| Level I | Level II | Level III | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Assets: | ||||||||||||||||
| Individually analyzed loans | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Level I | Level II | Level III | Total | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Assets: | ||||||||||||||||
| Individually analyzed loans | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The Corporation had a total of $
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis for which the Corporation has utilized level III inputs to determine fair value:
23
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
QUANTITATIVE INFORMATION ABOUT LEVEL III FAIR VALUE MEASUREMENTS
(DOLLARS IN THOUSANDS)
| March 31, 2025 | ||||
| Fair Value | Valuation | Unobservable | Range | |
| Estimate | Techniques | Input | (Weighted Avg) | |
| Individually analyzed loans | collateral (1) | adjustments (2) | ||
expenses (2) | ||||
| December 31, 2024 | ||||
| Fair Value | Valuation | Unobservable | Range | |
| Estimate | Techniques | Input | (Weighted Avg) | |
| Individually analyzed loans | collateral (1) | adjustments (2) | ||
expenses (2) | ||||
(1)
(2)
The following tables provide the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024:
FINANCIAL INSTRUMENTS NOT REQUIRED TO BE MEASURED OR REPORTED AT FAIR VALUE
(DOLLARS IN THOUSANDS)
| March 31, 2025 | ||||||||||||||||||||
| Quoted Prices in | ||||||||||||||||||||
| Active Markets | Significant Other | Significant | ||||||||||||||||||
| for Identical | Observable | Unobservable | ||||||||||||||||||
| Carrying | Assets | Inputs | Inputs | |||||||||||||||||
| Amount | Fair Value | (Level 1) | (Level II) | (Level III) | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Financial Assets: | ||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||
| Regulatory stock | ||||||||||||||||||||
| Loans held for sale | ||||||||||||||||||||
| Loans, net of allowance | ||||||||||||||||||||
| Mortgage servicing assets | ||||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Bank owned life insurance | ||||||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||
| Demand deposits | ||||||||||||||||||||
| Interest-bearing demand deposits | ||||||||||||||||||||
| Money market deposit accounts | ||||||||||||||||||||
| Savings accounts | ||||||||||||||||||||
| Time deposits | ||||||||||||||||||||
| Total deposits | ||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| Subordinated debt | ||||||||||||||||||||
| Accrued interest payable | ||||||||||||||||||||
24
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
FINANCIAL INSTRUMENTS NOT REQUIRED TO BE MEASURED OR REPORTED AT FAIR VALUE
(DOLLARS IN THOUSANDS)
| December 31, 2024 | ||||||||||||||||||||
| Quoted Prices in | ||||||||||||||||||||
| Active Markets | Significant Other | Significant | ||||||||||||||||||
| for Identical | Observable | Unobservable | ||||||||||||||||||
| Carrying | Assets | Inputs | Inputs | |||||||||||||||||
| Amount | Fair Value | (Level 1) | (Level II) | (Level III) | ||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Financial Assets: | ||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||
| Regulatory stock | ||||||||||||||||||||
| Loans held for sale | ||||||||||||||||||||
| Loans, net of allowance | ||||||||||||||||||||
| Mortgage servicing assets | ||||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Bank owned life insurance | ||||||||||||||||||||
| Financial Liabilities: | ||||||||||||||||||||
| Demand deposits | ||||||||||||||||||||
| Interest-bearing demand deposits | ||||||||||||||||||||
| Money market deposit accounts | ||||||||||||||||||||
| Savings accounts | ||||||||||||||||||||
| Time deposits | ||||||||||||||||||||
| Total deposits | ||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| Subordinated debt | ||||||||||||||||||||
| Accrued interest payable | ||||||||||||||||||||
7. Accumulated Other Comprehensive Loss
The activity in accumulated other comprehensive loss for the three months ended March 31, 2025 and 2024 is as follows:
ACCUMULATED OTHER COMPREHENSIVE LOSS (1) (2)
(DOLLARS IN THOUSANDS)
| Accumulated Other Comprehensive Loss | ||||||||||||
| Unrealized | ||||||||||||
| Gains/(Losses) | ||||||||||||
| on Securities | ||||||||||||
| Available-for-Sale | Derivatives | Total | ||||||||||
| $ | $ | $ | ||||||||||
| $ | ||||||||||||
| Balance at December 31, 2024 | ( | ) | ( | ) | ||||||||
| Other comprehensive (loss) gain before reclassifications | ( | ) | ||||||||||
| Amount reclassified from accumulated other comprehensive income (loss) | ||||||||||||
| Period change | ( | ) | ||||||||||
| Balance at March 31, 2025 | ( | ) | ( | ) | ||||||||
| Balance at December 31, 2023 | ( | ) | ( | ) | ||||||||
| Other comprehensive loss before reclassifications | ( | ) | ( | ) | ||||||||
| Amount reclassified from accumulated other comprehensive income (loss) | ||||||||||||
| Period change | ( | ) | ( | ) | ||||||||
| Balance at March 31, 2024 | ( | ) | ( | ) | ||||||||
(1) All amounts are net of tax. Related
income tax expense or benefit is calculated using a Federal income tax rate of
(2) Amounts in parentheses indicate debits.
25
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
DETAILS ABOUT ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) COMPONENTS (1)
(DOLLARS IN THOUSANDS)
| Amount Reclassified from | ||||||||||
| Accumulated Other Comprehensive Income (Loss) | ||||||||||
| For the Three Months | ||||||||||
| Ended March 31, | ||||||||||
| 2025 | 2024 | Affected Line Item in the | ||||||||
| $ | $ | Consolidated Statements of Income | ||||||||
| Securities available-for-sale: | ||||||||||
| Net securities losses, reclassified into earnings | ( | ) | ( | ) | ||||||
| Related income tax benefit | ||||||||||
| Net effect on accumulated other comprehensive loss for the period | ( | ) | ( | ) | ||||||
| Total reclassifications for the period | ( | ) | ( | ) | ||||||
8. Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Corporation is exposed to certain risks arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity risk, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposure that arises from business activities that result in changes in the value of certain assets as a result of interest rate changes. The Corporation’s derivative financial instruments are used to manage these fair value fluctuations principally related to certain fixed rate debt securities.
Fair Values of Derivative Instruments on the Consolidated Balance Sheet
In 2024, the Corporation entered into certain interest rate swap contracts
that are matched to closed portfolios of available-for-sale investment securities. These contracts have been designated as hedging instruments
to hedge the risk of changes in the fair value of the underlying investment securities due to changes in interest rates. The related
contracts are structured so that the notional amounts reduce over time to generally match the expected amortization of the underlying
investment security.
| Carrying Amount | Cumulative Amount of Fair Value | |||||||||||||||
| of the Hedged Assets | Hedging Adjustment | |||||||||||||||
| 3/31/2025 | 12/31/2024 | 3/31/2025 | 12/31/2024 | |||||||||||||
| Investment Securities, Available-for-Sale1 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| 1 Carrying value represents amortized cost | ||||||||||||||||
These amounts were included in the fair value of closed portfolios
of available-for-sale investment securities used to designate hedging relationships in which the hedged item is in the stated amount of
assets in the closed portfolios anticipated to be outstanding for the designated hedge period. As of March 31, 2025, the fair value of
the closed portfolios used in these hedging relationships was $
26
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
The Corporation is exposed to changes in the fair value of fixed-rate assets due to changes in benchmark interest rates. The Corporation entered into pay-fixed and receive-floating interest rate swaps to manage its exposure to changes in the fair value of its available-for-sale investment securities. These interest rate swaps are designated as fair value hedges using the portfolio layer method. The Corporation receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts. The fair value hedges are recorded as components of other assets and other liabilities in the Corporation’s consolidated balance sheets. The gain or loss on these derivatives, as well as the offsetting gain or loss on the hedged items attributable to the hedged risk are recognized in interest income in the Corporation’s consolidated statements of income.
The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the Consolidated Balance Sheet as of March 31, 2025 and 2024, (in thousands).
Fair Values of Derivative Instruments on the Consolidated Balance Sheet
| Fair Values of Derivative Instruments | ||||||||||||||||||||||||
| Asset Derivatives | ||||||||||||||||||||||||
| Carrying | As of March 31, 2025 | Notional | As of December 31, 2024 | Notional | ||||||||||||||||||||
| Hedged Item | Amount | Balance Sheet Location | Fair Value | Amount | Balance Sheet Location | Fair Value | Amount | |||||||||||||||||
| MBS Bonds | $ | $ | $ | | ||||||||||||||||||||
| FHLB Advances | | |||||||||||||||||||||||
| Total derivatives designated as hedging instruments | $ | $ | $ | — | $ | $ | ||||||||||||||||||
Cash Flow Hedges of Interest Rate Risk
The Corporation’s objectives in using interest rate derivatives
are to add stability to interest income and expense and to manage its exposure to interest rate movements. To accomplish this objective,
the Corporation has entered into certain interest rate swaps as part of its interest rate risk management strategy. These interest rate
swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for the Corporation
making fixed payments. As of March 31, 2025, the Corporation had two interest rate swaps with a notional of $
For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Corporation assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The Corporation did not recognize any hedge ineffectiveness in earnings during the period ended March 31, 2025.
Amounts reported in accumulated other
comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Corporation’s
variable-rate liabilities. During the period ended March 31, 2025, the Corporation had $
The table below presents the effect of the Corporation’s cash flow hedge accounting on Accumulated Other Comprehensive Income for the periods ended March 31, 2025 and March 31, 2024 (in thousands).
The Effect of Fair Value and Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Loss)
| Amount of (Loss) Gain Recognized in OCI on Derivative | Amount of Gain Reclassified from Accumulated OCI into Income | |||||||||||||||||
| Period Ended | Period Ended | Location of Gain Reclassified | Period Ended | Period Ended | ||||||||||||||
| March 31, | March 31, | from Accumulated OCI into | March 31, | March 31, | ||||||||||||||
| 2025 | 2024 | Income | 2025 | 2024 | ||||||||||||||
| Derivatives in Cash Flow Hedging Relationships | ||||||||||||||||||
| Interest Rate Products | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||
| Total | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||
27
ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements
Credit-risk-related Contingent Features
The Corporation has agreements with its derivative counterparties that contain a provision where if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations.
The Corporation also has agreements with certain of its derivative counterparties that contain a provision where if the Corporation fails to maintain its status as a well / adequately capitalized institution, then the counterparty could terminate the derivative positions and the Corporation would be required to settle its obligations under the agreements.
As of March 31, 2025, the Corporation had derivatives in a net asset position and was not required to post collateral against its obligations under these agreements. If the Corporation had breached any of these provisions at March 31, 2025, it could have been required to settle its obligations under the agreements at the termination value.
9. Segment Reporting
ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to develop strategy, allocate resources and assess performance.
While the Corporation monitors the revenue streams of the various products and services, operations are managed, and financial performance is evaluated on an entity-wide basis. The Corporation provides a variety of financial services to individuals and small businesses in Lancaster County, southeastern Lebanon County, and southwestern Berks County through its branch network. Its primary deposit products are checking, savings and term certificate accounts, and its primary lending products are commercial, agricultural, residential and construction mortgages, small business, and consumer loans.
Operating segments are aggregated into
The Chief Operating Decision Maker assesses performance and decides how to allocate resources based on net income that also is reported on the income statement as consolidated net income. Net income is used to monitor budget versus actual results.
The Chief Operating Decision Maker uses revenue streams and significant expenses to assess performance and evaluate return on assets and return on equity. The Chief Operating Decision Maker uses consolidated net income to benchmark the Corporation against its competitors. The benchmarking analysis and budget to actual results are used in assessing performance and in establishing compensation.
The accounting policies for the Community Banking segment are the same as those of our consolidated entity. Information utilized in the performance assessment by the Chief Operating Decision Maker is consistent with the level of aggregation disclosed in the Consolidated Statement of Income. The measure of segment assets is reported on the balance sheet as total consolidated assets.
10. Recently Issued Accounting Standards
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. ASU 2023-07 became effective for our annual financial statements in 2024 and is effective for interim periods within fiscal 2025.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which provides for improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance is effective for public business entities for annual periods beginning after December 15, 2024. The Corporation does not expect the adoption of this ASU to have a material impact on the Corporation's financial statements.
28
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis represents management’s view of the financial condition and results of operations of the Corporation. This discussion and analysis should be read in conjunction with the consolidated financial statements and other financial schedules included in this quarterly report, and in conjunction with the 2024 Annual Report to Shareholders of the Corporation. The financial condition and results of operations presented are not indicative of future performance.
Forward-Looking Statements
The U.S. Private Securities Litigation Reform Act of 1995 provides safe harbor in regards to the inclusion of forward-looking statements in this document and documents incorporated by reference. Forward-looking statements pertain to possible or assumed future results that are made using current information. These forward-looking statements are generally identified when terms such as: “believe,” “estimate,” “anticipate,” “expect,” “project,” “forecast,” and other similar wordings are used. The readers of this report should take into consideration that these forward-looking statements represent management’s expectations as to future forecasts of financial performance, or the likelihood that certain events will or will not occur. Due to the very nature of estimates or predications, these forward-looking statements should not be construed to be indicative of actual future results. Additionally, management may change estimates of future performance, or the likelihood of future events, as additional information is obtained. This document may also address targets, guidelines, or strategic goals that management is striving to reach but may not be indicative of actual results.
Readers should note that many factors affect this forward-looking information, some of which are discussed elsewhere in this document and in the documents that are incorporated by reference into this document. These factors include, but are not limited to, the following:
| ● | National, regional and local economic conditions |
| ● | Interest rate and monetary policies of the Federal Reserve Board |
| ● | Inflation and monetary fluctuations and volatility |
| ● | Instability in the banking system caused by bank failures and continuous financial uncertainty of various banks which may adversely impact the corporation and its securities values, deposit stability, capital adequacy, financial condition, operations, liquidity, and results of operations |
| ● | Health of the housing market |
| ● | Volatility of the securities markets including the valuation of securities |
| ● | Real estate valuations and its impact on the loan portfolio |
| ● | Future actions or inactions of the United States government, including a failure to increase the government debt limit, a prolonged shutdown of the federal government, increase in taxes or regulations, or increasing debt balances |
| ● | Political changes and the impact of new laws and regulations |
| ● | Competitive forces |
| ● | Impact of mergers and acquisition activity in the local market and the effects thereof |
| ● | Potential impact from continually evolving cybersecurity and other technological risks and attacks, including additional costs, reputational damage, regulatory penalties, and financial losses |
| ● | Changes in customer behavior impacting deposit levels and loan demand |
| ● | Changes in accounting principles, policies, or guidelines as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standards setters |
| ● | Ineffective business strategy due to current or future market and competitive conditions |
| ● | Management’s ability to manage credit risk, liquidity risk, interest rate risk, and fair value risk |
| ● | Operational, legal, and reputational risk |
| ● | Results of the regulatory examination and supervision process |
| ● | Possible changes to the capital and liquidity requirements and other regulatory pronouncements, regulations and rules |
| ● | Large scale global disruptions such as pandemics, terrorism, trade wars, and armed conflict. |
| ● | Local market area disruptions due to flooding, severe weather, or other natural disasters |
| ● | The risk that our analyses of these risks and forces could be incorrect and/or that the strategies developed to address them could be unsuccessful |
29
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| ● | Business and competitive disruptions caused by new market and industry entrants |
Readers should be aware if any of the above factors change significantly, the statements regarding future performance could also change materially. The safe harbor provision provides that the Corporation is not required to publicly update or revise forward-looking statements to reflect events or circumstances that arise after the date of this report. Readers should review any changes in risk factors in documents filed by the Corporation periodically with the Securities and Exchange Commission, including Item 1A of Part II of this Quarterly Report on Form 10-Q, Annual Reports on Form 10-K, and Current Reports on Form 8-K.
Results of Operations
Overview
The Corporation recorded net income of $4,316,000 for the three-month period ended March 31, 2025, a $375,000, or 9.5% increase over the three months ended March 31, 2024. The earnings per share, basic and diluted, were $0.76 for the three months ended March 31, 2025, compared to $0.70 for the same period in 2024.
The Corporation’s net interest income (NII) increased by $2,816,000, or 21.1% for the three months ended March 31, 2025, compared to the same period in 2024. Interest and fees on loans increased by $1,975,000, or 11.4%, and interest income on securities increased by $2,142,000, or 59.4%, for the three months ended March 31, 2025, compared to the same period in 2024. Conversely, interest expense on deposits and borrowings increased by $1,178,000, or 14.4%, for the three months ended March 31, 2025, compared to the same period in the prior year.
The Corporation recorded a provision for credit losses of $486,000 in the first quarter of 2025, compared to a release of provision expense of $644,000 in the first quarter of 2024. The allowance as a percentage of total loans was 1.15% as of March 31, 2025, 1.13% as of December 31, 2024, and 1.06% as of March 31, 2024.
Other income decreased by $382,000, or 8.8% for the three months ended March 31, 2025, compared to the same period in the prior year. This was primarily due to a decrease in trust and investment services income as a gain on sale of trust assets was recorded in the prior year.
Total operating expenses increased by $774,000, or 5.7%, for the three months ended March 31, 2025, compared to the same period in 2024. The largest increase in operating costs was due to higher charge-off expenses recorded on deposit accounts and fraud-related charge-offs which, combined, increased by $236,000, or 311.7%. Several other categories of expenses increased from the prior year including advertising and marketing costs, computer software and data processing costs, and costs related to professional services. Salaries and benefits, the largest component of operating expenses, did not increase in the first quarter of 2025 when comparing it to the first quarter of 2024.
The financial services industry uses two primary performance measurements to gauge performance: return on average assets (ROA) and return on average equity (ROE). ROA measures how efficiently a bank generates income based on the amount of assets or size of a company. ROE measures the efficiency of a company in generating income based on the amount of equity or capital utilized. ROA remained the same and ROE decreased slightly for the quarter-to-date period due to higher levels of capital in 2025.
| Key Ratios | Three Months Ended | |||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Return on Average Assets | 0.80% | 0.80% | ||||||
| Return on Average Equity | 13.03% | 13.40% | ||||||
The results of the Corporation’s operations are best explained by addressing, in further detail, the five major sections of the income statement, which are as follows:
| ● | Net interest income |
| ● | Provision for credit losses |
30
ENB FINANCIAL CORP
Management’s Discussion and Analysis
| ● | Other income |
| ● | Operating expenses |
| ● | Provision for income taxes |
The following discussion analyzes each of these five components.
Net Interest Income (NII)
NII represents the largest portion of the Corporation’s operating income. In the first three months of 2025, NII generated 80.3% of the Corporation’s revenue stream, which consists of NII and non-interest income. This compared to 75.5% for the first three months of 2024. This increase is a result of higher levels of NII and slightly lower levels of non-interest income in the first three months of 2025 resulting in NII contributing to a larger portion of total revenue. The overall performance of the Corporation is highly dependent on the changes in NII since it comprises such a significant portion of operating income.
The following table shows a summary analysis of NII on a fully taxable equivalent (FTE) basis. For analytical purposes and throughout this discussion, yields, rates, and measurements such as NII, net interest spread, and net yield on interest earning assets are presented on an FTE basis. The FTE NII shown in both tables below will exceed the NII reported on the consolidated statements of income, which is not shown on an FTE basis. The amount of FTE adjustment totaled $107,000 for the three months ended March 31, 2025, compared to $141,000 for the same period in 2024.
NET INTEREST INCOME
(DOLLARS IN THOUSANDS)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Total interest income | 25,565 | 21,571 | ||||||
| Total interest expense | 9,377 | 8,199 | ||||||
| Net interest income | 16,188 | 13,372 | ||||||
| Tax equivalent adjustment | 107 | 141 | ||||||
| Net interest income (fully taxable equivalent) | 16,295 | 13,513 | ||||||
NII is the difference between interest income earned on assets and interest expense incurred on liabilities. Accordingly, two factors affect NII:
| ● | The rates earned on interest earning assets and paid on interest bearing liabilities |
| ● | The average balance of interest earning assets and interest bearing liabilities |
NII is impacted by yields earned on assets and rates paid on liabilities. During 2024, asset yields increased due to a higher interest rate environment despite some variable rate assets repricing to lower rates with the several decreases in the Federal Reserve overnight rates. Liability costs increased minimally as rates had increased dramatically in 2023 but then the Corporation was able to reduce deposit costs during 2024 when the Fed first started decreasing rates. Market interest rates stabilized and moderated in 2024 but the Corporation still felt the lingering effects of the prior rate movements as customers continued to move funds to higher yielding deposit products. Higher market rates have helped the Corporation’s asset yields, and the discipline around lowering the cost of funds has enabled the Corporation to increase NIM. Management believes continued improvement will be dependent on the rate at which overnight interest rates change throughout the remainder of 2025.
The Corporation’s net interest margin increased to 3.02% for the quarter ended March 31, 2025, compared to 2.81% for the same quarter in 2024. The Corporation’s NII on a fully taxable equivalent basis increased by $2,782,000, or 20.6%, for the three months ended March 31, 2025, compared to the same period in 2024.
31
ENB FINANCIAL CORP
Management’s Discussion and Analysis
The Corporation’s overall cost of funds rose significantly throughout 2024 but moderated in the first quarter of 2025. Core deposit interest rates and time deposit rates have decreased over the past year. The change in deposit rates from historical lows in prior years has resulted in some movement from low interest bearing core deposits to higher cost time deposits or other higher yielding money market deposits. This resulted in the total cost of deposits increasing by $660,000 for the quarter, compared to the same period in the prior year. The average balance of borrowings was higher for the first quarter compared to 2024, and interest rates were higher, resulting in the total cost of borrowings increasing by $518,000, for the three months ended March 31, 2025, compared to the same period in 2024.
The following table provides an analysis of year-to-date changes in NII on a FTE basis by distinguishing what changes were a result of average balance increases or decreases and what changes were a result of interest rate increases or decreases.
RATE/VOLUME ANALYSIS OF CHANGES IN NET INTEREST INCOME
(TAXABLE EQUIVALENT BASIS, DOLLARS IN THOUSANDS)
| Three Months Ended March 31, | |||||||||||||
| 2025 vs. 2024 | |||||||||||||
| Increase (Decrease) | |||||||||||||
| Due To Change In | |||||||||||||
| Net | |||||||||||||
| Average | Interest | Increase | |||||||||||
| Balances | Rates | (Decrease) | |||||||||||
| $ | $ | $ | |||||||||||
| INTEREST INCOME | |||||||||||||
| Interest on deposits at other banks | 60 | (188 | ) | (128 | ) | ||||||||
| Securities available for sale: | |||||||||||||
| Taxable | 1,508 | 666 | 2,174 | ||||||||||
| Tax-exempt | (37 | ) | (22 | ) | (59 | ) | |||||||
| Total securities | 1,471 | 644 | 2,115 | ||||||||||
| Loans | 576 | 1,375 | 1,951 | ||||||||||
| Regulatory stock | 31 | (9 | ) | 22 | |||||||||
| Total interest income | 2,138 | 1,822 | 3,960 | ||||||||||
| INTEREST EXPENSE | |||||||||||||
| Deposits: | |||||||||||||
| Demand deposits | 392 | (423 | ) | (31 | ) | ||||||||
| Savings deposits | (3 | ) | (1 | ) | (4 | ) | |||||||
| Time deposits | 403 | 292 | 695 | ||||||||||
| Total deposits | 792 | (132 | ) | 660 | |||||||||
| Borrowings: | |||||||||||||
| Total borrowings | 378 | 140 | 518 | ||||||||||
| Total interest expense | 1,170 | 8 | 1,178 | ||||||||||
| NET INTEREST INCOME | 968 | 1,814 | 2,782 | ||||||||||
The following table shows a more detailed analysis of NII on a FTE basis with all the major elements of the Corporation’s balance sheet, which consists of interest earning and non-interest earning assets and interest bearing and non-interest bearing liabilities.
32
ENB FINANCIAL CORP
Management’s Discussion and Analysis
COMPARATIVE AVERAGE BALANCE SHEETS AND NET INTEREST INCOME
(DOLLARS IN THOUSANDS)
| For the Three Months Ended March 31, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| (c) | (c) | |||||||||||||||||||||||
| Average | Annualized | Average | Annualized | |||||||||||||||||||||
| Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||||
| $ | $ | % | $ | $ | % | |||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Interest earning assets: | ||||||||||||||||||||||||
| Federal funds sold and interest on deposits at other banks | 41,065 | 215 | 2.13 | 33,932 | 344 | 4.08 | ||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||
| Taxable | 513,710 | 5,195 | 4.05 | 352,775 | 3,021 | 3.43 | ||||||||||||||||||
| Tax-exempt | 143,853 | 705 | 1.96 | 153,417 | 764 | 1.99 | ||||||||||||||||||
| Total securities (d) | 657,563 | 5,900 | 3.59 | 506,192 | 3,785 | 2.99 | ||||||||||||||||||
| Loans (a) | 1,436,318 | 19,363 | 5.40 | 1,371,478 | 17,412 | 5.09 | ||||||||||||||||||
| Regulatory stock | 10,811 | 194 | 7.14 | 8,596 | 171 | 7.97 | ||||||||||||||||||
| Total interest earning assets | 2,145,757 | 25,672 | 4.79 | 1,920,198 | 21,712 | 4.53 | ||||||||||||||||||
| Non-interest earning assets (d) | 42,215 | 49,629 | ||||||||||||||||||||||
| Total assets | 2,187,972 | 1,969,827 | ||||||||||||||||||||||
| LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||
| Interest bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 533,450 | 3,250 | 2.47 | 472,598 | 3,281 | 2.79 | ||||||||||||||||||
| Savings deposits | 285,061 | 70 | 0.10 | 302,013 | 75 | 0.10 | ||||||||||||||||||
| Time deposits | 423,197 | 4,171 | 4.00 | 340,159 | 3,475 | 4.11 | ||||||||||||||||||
| Borrowed funds | 180,925 | 1,886 | 4.23 | 139,592 | 1,368 | 3.94 | ||||||||||||||||||
| Total interest bearing liabilities | 1,422,633 | 9,377 | 2.67 | 1,254,362 | 8,199 | 2.63 | ||||||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 617,706 | 584,242 | ||||||||||||||||||||||
| Other | 13,282 | 12,906 | ||||||||||||||||||||||
| Total liabilities | 2,053,621 | 1,851,510 | ||||||||||||||||||||||
| Stockholders' equity | 134,351 | 118,317 | ||||||||||||||||||||||
| Total liabilities & stockholders' equity | 2,187,972 | 1,969,827 | ||||||||||||||||||||||
| Net interest income (FTE) | 16,295 | 13,513 | ||||||||||||||||||||||
| Net interest spread (b) | 2.12 | 1.90 | ||||||||||||||||||||||
| Effect of non-interest bearing deposits | 0.90 | 0.91 | ||||||||||||||||||||||
| Net yield on interest earning assets (c) | 3.02 | 2.81 | ||||||||||||||||||||||
(a) Includes balances of nonaccrual loans and the recognition of any related interest income. The quarter-to-date average balances include net deferred loan costs of $1,772,000 as of March 31, 2025, and $2,185,000 as of March 31, 2024. Such fees and costs recognized through income and included in the interest amounts totaled $14,000 in 2025, and ($57,000) in 2024.
(b) Net interest spread is the arithmetic difference between the yield on interest earning assets and the rate paid on interest bearing liabilities.
(c) Net yield, also referred to as net interest margin, is computed by dividing NII (FTE) by total interest earning assets.
(d) Securities recorded at amortized cost. Unrealized holding gains and losses are included in non-interest earning assets.
33
ENB FINANCIAL CORP
Management’s Discussion and Analysis
The Corporation’s average balances on securities increased by $151.4 million, or 29.9%, for the three months ended March 31, 2025, compared to the same period in 2024. This increase was related to a strategic decision to add investments during the last six months of 2024 in order to generate higher earnings with no overhead costs while offsetting interest rate risk with off-balance sheet derivative products. The tax equivalent yield on investments increased by 60 basis points for the quarter-to-date period when comparing both years. Interest income on securities increased by $2,115,000, or 55.9%, for the three months ended March 31, 2025, compared to the same period in the prior year.
Average balances on loans increased by $64.8 million, or 4.7%, for the three months ended March 31, 2025, compared to the same period in the prior year. Loan yields increased by 31 basis points for the quarter and loan interest income increased by $1,951,000, or 11.2%, due to the increase in loan balances and higher yields.
The average balance of interest-bearing deposit accounts increased by $126.9 million, or 11.4%, for the three months ended March 31, 2025, compared to the same period in the prior year. The average balance of demand deposits increased by $60.9 million, or 12.9% and the average balance of savings accounts decreased by $17.0 million, or 5.6%. The average balance of savings accounts decreased as funds moved into higher-yielding time deposit accounts. Time deposit balances increased by $83.0 million, or 24.4%, driven by the movement of funds into higher-yielding accounts discussed above. In addition, the Corporation had more brokered time deposits at March 31, 2025, compared to March 31, 2024, as this was the primary source of funding to grow investments. Brokered time deposits increased by $57.9 million, or 148.6%, during this timeframe. The interest rate paid on all interest-bearing deposits decreased minimally from the prior year with the combined rate decreasing by one basis point for the quarter ended March 31, 2025, compared to the same period in the prior year. The combination of these changes resulted in an increase in interest expense on deposits of $660,000, for the three months ended March 31, 2025, compared to the same period in 2024.
The Corporation’s average balance on borrowed funds increased by $41.3 million, or 29.6%, for the three months ended March 31, 2025, compared to the same period in 2024. The Corporation’s borrowed funds consist of FHLB advances as well as subordinated debt issued in December of 2020 and July of 2022 which was used to support capital growth for the Corporation. The rate paid on borrowed funds increased by 29 basis points for the three months ended March 31, 2025, compared to the same period in the prior year.
For the three months ended March 31, 2025, the net interest spread increased by 22 basis points to 2.12%, compared to 1.90% for the three months ended March 31, 2024. The effect of non-interest bearing funds decreased to 90 basis points for the three months ended March 31, 2025, from 91 basis points for the three months ended March 31, 2024. The effect of non-interest bearing funds refers to the benefit gained from deposits on which the Corporation does not pay interest. As rates go higher, the benefit of non-interest bearing deposits increases because there is more difference between non-interest bearing funds and interest bearing liabilities. The Corporation’s NIM for the first quarter of 2025 was 3.02%, compared to 2.81% for the first quarter of 2024.
The Asset Liability Committee (ALCO) carefully monitors the NIM because it indicates trends in NII, the Corporation’s largest source of revenue. For more information on the plans and strategies in place to protect the NIM and moderate the impact of changes in rates, refer to Item 7A: Quantitative and Qualitative Disclosures about Market Risk.
Provision for Credit Losses
The provision for credit losses includes a provision for losses on loans, available-for-sale debt securities, and unfunded loan commitments. The provision provides for losses inherent in the financial assets as determined by a quarterly analysis and calculation of various factors related to the financial assets. The amount of the provision reflects the adjustment management determines necessary to ensure the Allowance for Credit Losses (ACL) is adequate to cover any losses inherent in the financial assets. The Corporation recorded a provision expense of $426,000 for credit losses related to loans, a provision expense of $60,000 for unfunded commitments, and $0 related to available-for-sale securities for the first three months of 2025, compared to a release of provision expense of $540,000 related to loans, $104,000 for unfunded commitments, and $0 related to available-for-sale securities for the three months ended March 31, 2024. As of March 31, 2025, the allowance as a percentage of total loans was 1.15%, compared to 1.06% at March 31, 2024. More detail is provided under Allowance for Credit Losses in the Financial Condition section that follows.
34
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Other Income
Other income for the first quarter of 2025 was $3,964,000, a decrease of $382,000, or 8.8%, compared to the $4,346,000 earned during the first quarter of 2024. The following table details the categories that comprise other income.
OTHER INCOME
(DOLLARS IN THOUSANDS)
| Three Months Ended March 31, | ||||||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Trust and investment services | 864 | 1,083 | (219 | ) | (20.2 | ) | ||||||||||
| Service fees | 1,355 | 1,361 | (6 | ) | (0.4 | ) | ||||||||||
| Commissions | 1,012 | 1,017 | (5 | ) | (0.5 | ) | ||||||||||
| Net losses on debt and equity securities | (333 | ) | (258 | ) | (75 | ) | 29.1 | |||||||||
| Gains on sale of mortgages | 439 | 544 | (105 | ) | (19.3 | ) | ||||||||||
| Earnings on bank owned life insurance | 271 | 293 | (22 | ) | (7.5 | ) | ||||||||||
| Other miscellaneous income | 356 | 306 | 50 | 16.3 | ||||||||||||
| Total other income | 3,964 | 4,346 | (382 | ) | (8.8 | ) | ||||||||||
Trust and investment services income decreased for the quarter as a result of the gain on sale of a limited number of trust assets sold in the first quarter of 2024. Service fees and commissions remained relatively flat from last year’s first quarter. The Corporation incurred $333,000 of net losses on debt and equity securities in the first quarter of 2025, compared to net losses of $258,000 in the same quarter of the prior year as a result of strategic sales of debt securities to fund higher yielding loan growth. Mortgage gains decreased by $105,000, or 19.3%, in the first quarter of 2025, compared to the first quarter of 2024. This was primarily a result of compressed margins and the Corporation selling the permanent financing for construction loans with points that were recorded as income in the prior year. Earnings on bank owned life insurance were lower by $22,000, or 7.5%, for the three months ended March 31, 2025, compared to the same period in the prior year and other miscellaneous income increased by $50,000, or 16.3%.
Operating Expenses
Operating expenses for the first quarter of 2025 were $14,368,000, an increase of $774,000, or 5.7%, compared to the $13,594,000 for the first quarter of 2024. The following table provides details of the Corporation’s operating expenses for the three month period ended March 31, 2025, compared to the same period in 2024.
OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
| Three Months Ended March 31, | ||||||||||||||||
| 2025 | 2024 | Increase (Decrease) | ||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Salaries and employee benefits | 8,280 | 8,335 | (55 | ) | (0.7 | ) | ||||||||||
| Occupancy expenses | 909 | 857 | 52 | 6.1 | ||||||||||||
| Equipment expenses | 386 | 303 | 83 | 27.4 | ||||||||||||
| Advertising & marketing expenses | 367 | 241 | 126 | 52.3 | ||||||||||||
| Computer software & data processing expenses | 1,819 | 1,702 | 117 | 6.9 | ||||||||||||
| Bank shares tax | 361 | 357 | 4 | 1.1 | ||||||||||||
| Professional services | 843 | 711 | 132 | 18.6 | ||||||||||||
| Other operating expenses | 1,403 | 1,088 | 315 | 29.0 | ||||||||||||
| Total Operating Expenses | 14,368 | 13,594 | 774 | 5.7 | ||||||||||||
35
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Salaries and employee benefits are the largest category of operating expenses. For the first quarter of 2025, salaries and benefits decreased $55,000, or 0.7%, compared to the same period in 2024. This was primarily due to lower health insurance costs reflective of fewer claims during the first quarter of 2025. Occupancy and equipment costs were higher by a combined total of $135,000, or 11.6%, related to costs associated with new lease expense and higher equipment costs. Advertising and marketing expenses were higher by $126,000, or 52.3%, for the three months ended March 31, 2025, compared to the prior year. This increase was primarily related to media production costs and sponsorships as the Corporation continues to pursue marketing and sponsorship opportunities in the communities it serves. Computer software and data processing expenses increased by $117,000, or 6.9%, for the three months ended March 31, 2025, as a result of higher costs associated with the core conversion in the prior year as well as other technology initiatives. Shares tax expense is based on the Corporation’s level of shareholders’ equity and has remained relatively flat from 2024 to 2025. Professional services costs increased by $132,000, or 18.6%, related to higher accounting and legal fees as well as increased costs for other outside services. Other operating expenses increased by $315,000, or 29.0%, for the three months ended March 31, 2025, compared to the same period in the prior year due largely to checking account charge-off costs and an increased level of fraud-related charge-offs.
Income Taxes
Federal income tax expense was $982,000 for the first quarter of 2025 compared to $827,000 for the same period in 2024. The effective tax rate for the Corporation was 18.5% for the three months ended March 31, 2025, and 17.3% for the three months ended March 31, 2024. Certain items of income are not subject to Federal income tax, such as tax-exempt interest income on loans and securities, and Bank Owned Life Insurance (BOLI) income; therefore, the effective income tax rate for the Corporation is lower than the stated tax rate.
36
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Financial Condition
Investment Securities
The Corporation classifies all of its debt securities as available for sale and reports the portfolio at fair value. As of March 31, 2025, the Corporation had $595.6 million of debt securities available for sale, which accounted for 26.8% of assets, compared to 27.8% as of December 31, 2024, and 22.4% as of March 31, 2024. Based on ending balances, the debt securities portfolio increased 33.3% from March 31, 2024, and decreased 3.4% from December 31, 2024.
The debt securities portfolio was showing a net unrealized loss of $42,454,000 as of March 31, 2025, compared to $47,248,000 as of December 31, 2024, and $44,444,000 as of March 31, 2024. The valuation of the Corporation’s debt securities portfolio is impacted by both the U.S. Treasury rates and the perceived forward direction of interest rates.
Each quarter, management sets portfolio allocation guidelines and adjusts the security portfolio strategy generally based on the following factors:
| ● | ALCO positions as to liquidity, credit risk, interest rate risk, and fair value risk |
| ● | Growth of the loan portfolio |
| ● | Slope of the U.S. Treasury curve |
| ● | Relative performance of the various instruments, including spread to U.S. Treasuries |
| ● | Duration and average length of the portfolio |
| ● | Volatility of the portfolio |
| ● | Direction of interest rates |
| ● | Economic factors impacting debt securities |
The investment policy of the Corporation establishes guidelines to promote diversification within the portfolio. The diversity specifications provide opportunities to shorten or lengthen duration, maximize yield, and mitigate credit risk.
The Corporation’s U.S. Treasury and U.S. government agency sectors decreased $4.4 million during the first three months of 2025 due to the maturity of a bond in the first quarter. These sectors represent safe credits, but generally carry a lower yield due to the investments made in 2020 and 2021 when rates were lower.
The Corporation’s U.S. agency mortgage-backed securities (MBS) and collateralized mortgage obligations (CMO) have remained stable since December 31, 2024. MBS and CMOs both consist of mortgage instruments that pay monthly interest and principal, however the behavior of the two types vary according to the structure of the mortgage pool or CMO instrument. Management desires to maintain some amount of MBS and CMOs in order to assist in adding to and maintaining a stable five-year ladder of cash flows, which is important in providing stable liquidity and interest rate risk positions. U.S. agency MBS and CMO securities pay contractual monthly principal and interest, but are also subject to additional prepayment of principal. The combined effect of all of these instruments paying monthly principal and interest provides the Corporation with a reasonably stable base cash flow. Cash flows coming off of MBS and CMOs do slow down and speed up as interest rates increase or decrease, which has an impact on the portfolio’s length and yield.
The portfolio of non-agency MBS and CMO securities stood at $144.0 million as of March 31, 2025, or 24.2% of the total portfolio. This sector better structures the portfolio to achieve higher yields and shortens the duration while also protecting in a rates-up environment. The non-agency portfolio stood at $145.2 million at December 31, 2024.
The Corporation’s asset-backed securities declined slightly by $567,000, or 1.0%, from December 31, 2024, to March 31, 2025. Many of the bonds in this sector generate regular monthly principal payments which caused the value to decline. These bonds are primarily floating rate instruments, so in the current higher rate environment, they have added to the overall yield increase for the portfolio.
As of March 31, 2025, the fair value of the Corporation’s corporate bonds decreased by $5.6 million, or 10.5%, from balances at December 31, 2024. This decrease was due to one bond maturing and several bonds being sold during the first quarter. Like any security, corporate bonds have both positive and negative qualities and management must evaluate these securities on a risk versus reward basis. Corporate bonds add diversity to the portfolio and provide strong yields for short maturities; however, by their very nature, corporate bonds carry a high level of credit risk should the entity experience financial difficulties. As a result of the higher level of credit risk taken by purchasing a corporate bond, management has in place procedures to closely analyze the financial health of the company. Financial analysis is conducted prior to every corporate bond purchase with ongoing monitoring performed on all securities held.
37
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Obligations of states and political subdivisions, or municipal bonds, consist of both tax-free and taxable securities. They carry the longest duration on average of any instrument in the securities portfolio. Municipal tax-equivalent yields generally start above other taxable bonds. These instruments also experience significant fair market value gains and losses when interest rates decrease and increase. Municipal securities were purchased throughout 2020 and 2021 due to the levels of excess liquidity experienced due to deposit inflows. The balance of municipal bonds decreased by $9.3 million, or 5.2%, in the first three months of 2025, primarily due to the sale of a number of these bonds during the first quarter. Municipal bonds represented 28.4% of the securities portfolio as of March 31, 2025 and 29.0% as of December 31, 2024.
Loans
Net loans outstanding increased by 4.5%, to $1,426.9 million at March 31, 2025, from $1,365.8 million at March 31, 2024. Net loans increased by 1.1%, an annualized rate of 4.4%, from $1,411.1 million at December 31, 2024. The following table shows the composition of the loan portfolio as of March 31, 2025 and December 31, 2024.
LOANS BY MAJOR CATEGORY
(DOLLARS IN THOUSANDS)
| March 31, | December 31, | |||||||||||||||
| 2025 | 2024 | |||||||||||||||
| $ | % | $ | % | |||||||||||||
| Agriculture | 293,070 | 20.4 | 289,284 | 20.3 | ||||||||||||
| Business Loans | 360,975 | 25.0 | 360,805 | 25.3 | ||||||||||||
| Consumer | 6,346 | 0.4 | 6,603 | 0.5 | ||||||||||||
| Home Equity | 125,173 | 8.7 | 118,329 | 8.3 | ||||||||||||
| Non-Owner Occupied CRE | 149,585 | 10.4 | 136,298 | 9.6 | ||||||||||||
| Residential Real Estate (a) | 506,525 | 35.1 | 514,120 | 36.0 | ||||||||||||
| Total loans | 1,441,674 | 100 | 1,425,439 | 100 | ||||||||||||
| Less: | ||||||||||||||||
| Deferred loan costs, net | 1,788 | 1,830 | ||||||||||||||
| Allowance for credit losses | (16,537 | ) | (16,122 | ) | ||||||||||||
| Total net loans | 1,426,925 | 1,411,147 | ||||||||||||||
| (a) | Residential real estate loans do not include mortgage loans serviced for others which totaled $354,440 as of March 31, 2025 and $342,640 as of December 31, 2024. |
There was marginal growth in the loan portfolio since December 31, 2024. Agriculture loans, home equity loans, and non-owner occupied CRE loans grew since December 31, 2024, while the other categories of loans remained stagnant or decreased minimally.
The agriculture loan segment increased $3,786,000, or 1.3%, the business loan segment increased nominally, the consumer loan segment decreased $257,000, or 3.9%, the home equity segment increased $6,844,000, or 5.8%, the non-owner occupied CRE segment increased $13,287,000, or 9.7%, and the residential real estate segment decreased $7,595,000, or 1.5% from balances at December 31, 2024. The agriculture segment is concentrated primarily in loans to dairy operators, poultry operators, and crop farmers. Business loans are fairly diverse with small concentrations in lessors of residential buildings and dwellings and lessors of non-residential buildings. These concentrations are less than 10% of the total business loan portfolio.
In the first three months of 2025, mortgage production decreased 30.4% compared to the first three months of 2024. Purchase money origination constituted 95.8% of the Corporation’s mortgage originations for the three months ended March 31, 2025. The held-for-investment production is 55.1% of total originations with construction-only and construction-permanent loans making up 61.3% of the total held-for-investment production. As of March 31, 2025, adjustable-rate mortgage balances were $326.4 million, representing 64.4% of the 1-4 family residential loan portfolio of the Corporation.
38
ENB FINANCIAL CORP
Management’s Discussion and Analysis
Non-Performing Assets
Non-performing assets include:
| ● | Nonaccrual loans |
| ● | Loans past due 90 days or more and still accruing |
| ● | Other real estate owned |
NON-PERFORMING ASSETS
(DOLLARS IN THOUSANDS)
| March 31, | December 31, | March 31, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| $ | $ | $ | ||||||||||
| Nonaccrual loans | 10,727 | 11,887 | 3,671 | |||||||||
| Loans past due 90 days or more and still accruing | — | — | 660 | |||||||||
| Total non-performing loans | 10,727 | 11,887 | 4,331 | |||||||||
| Other real estate owned | — | — | — | |||||||||
| Total non-performing assets | 10,727 | 11,887 | 4,331 | |||||||||
| Non-performing assets to net loans | 0.75% | 0.83% | 0.32% | |||||||||
The total balance of non-performing assets increased by $6,396,000, or 147.7%, over balances at March 31, 2024, and decreased $1,160,000, or 9.8%, from balances at December 31, 2024. The increase from March 31, 2024 was due to the addition of a number of unrelated relationships experiencing payment defaults. The decrease from December 31, 2024 was mostly due to the payoff of a residential loan. Non-accrual loans increased by $7,056,000, or 192.2%, since March 31, 2024, and decreased $1,160,000, or 9.8%, since December 31, 2024. No loans were past due 90 days or more and still accruing interest at March 31, 2025 or December 31, 2024, compared to $660,000 at March 31, 2024. The primary reason for the increase in non-accrual loans from March 31, 2024 was the addition of a commercial loan relationship with balances of $3.6 million, another commercial loan in the amount of $748,000, a residential mortgage loan in the amount of $589,000, an agriculture mortgage in the amount of $619,000, and a number of other smaller loan relationships. The Corporation has taken a more disciplined approach to classifying loans as non-accrual when they hit 90 days past due which is why there are no loans at March 31, 2025 or December 31, 2024, that are 90 days or more past due. While non-performing asset balances have increased as of March 31, 2025 when compared to the prior year, the non-performing asset balances have decreased since December 31, 2024 and the Corporation’s total level of non-performing assets is in line with its peer group.
There was no other real estate owned (OREO) as of March 31, 2025, December 31, 2024, or March 31, 2024.
Allowance for Credit Losses
The allowance for credit losses (ACL) is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on total loans. Management reviews the adequacy of the ACL on a quarterly basis. The ACL represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date. The ACL is estimated by management using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The Corporation measures expected credit losses for loans on a pooled basis when similar risk characteristics exist. Additionally, the ACL calculation includes subjective adjustments for qualitative risk factors that are likely to cause estimated credit losses to differ from historical experience. These qualitative adjustments may increase or reduce reserve levels and include adjustments for lending policies and procedures, loan portfolio trends, lending management experience, asset quality, loan review, underlying collateral, and credit concentrations. Loans that do not share risk characteristics are evaluated on an individual basis. When management determines that foreclosure is probable and the borrower is experiencing financial difficulty, the expected credit losses are based on the fair value of collateral at the reporting date adjusted for selling costs as appropriate. Based on the quarterly calculation, management will adjust the ACL through the provision for credit losses as necessary.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
Strong credit and collateral policies have been instrumental in producing a favorable history of credit losses for the Corporation. The Net Charge-Off table below shows the net charge-offs for each segment of the Corporation’s loan portfolio as of March 31, 2025 and March 31, 2024.
Net Charge-Offs
(DOLLARS IN THOUSANDS)
| March 31, | March 31, | |||||||
| 2025 | 2024 | |||||||
| $ | $ | |||||||
| Loans charged-off: | ||||||||
| Agriculture | — | — | ||||||
| Business Loans | — | — | ||||||
| Consumer Loans | 27 | 25 | ||||||
| Home Equity | 3 | — | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | — | ||||||
| Total loans charged-off | 30 | 25 | ||||||
| Recoveries of loans previously charged-off | ||||||||
| Agriculture | 1 | — | ||||||
| Business Loans | 2 | — | ||||||
| Consumer Loans | 16 | 5 | ||||||
| Home Equity | — | — | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | — | ||||||
| Total recoveries | 19 | 5 | ||||||
| Net charge-offs (recoveries) | ||||||||
| Agriculture | (1 | ) | — | |||||
| Business Loans | (2 | ) | — | |||||
| Consumer Loans | 11 | 20 | ||||||
| Home Equity | 3 | — | ||||||
| Non-Owner Occupied CRE | — | — | ||||||
| Residential Real Estate | — | — | ||||||
| Total net charge-offs | 11 | 20 | ||||||
The Corporation has historically experienced very low net charge-off percentages due to disciplined credit practices. As of March 31, 2025, there were $30,000 in charge-offs and $19,000 of recoveries, representing a net charge-off position of $11,000 as shown above. As of March 31, 2024, there were $25,000 in charge-offs and $5,000 in recoveries, representing a net charge-off position of $20,000.
Management regularly reviews the overall risk profile of the loan portfolio and the impact that current economic trends have on the Corporation’s loans. The financial industry typically evaluates the quality of loans on a scale with “unclassified” representing healthy loans, “special mention” being the first indication of credit concern, and several successive classified ratings indicating further credit declines of “substandard,” “doubtful,” and, ultimately, “loss.”
The Corporation’s level of classified loans was $28.9 million on March 31, 2025, compared to $14.8 million on March 31, 2024. Total classified loans have increased from the prior year due to the downgrading of a number of unrelated agriculture and business relationships. Having more loans in a classified status could result in a larger allowance as higher amounts of projected historical losses and qualitative factors are attached to these loans.
Deposits
The Corporation’s total ending deposits at March 31, 2025, increased by $3.0 million, or 0.2%, from December 31, 2024, and $172.5 million, or 10.0%, from March 31, 2024. Customer deposits are the Corporation’s primary source of funding for loans and securities. The mix of the Corporation’s deposit categories has changed since March 31, 2024, as customers have moved from low-interest bearing accounts into higher yielding checking accounts and time deposits. Since March 31, 2024, there has been a $31.1 million, or 5.2% increase in non-interest bearing demand deposit accounts, a $46.0 million, or 14.6% increase in interest bearing demand balances, a $29.6 million, or 18.8% increase in money market account balances, a $9.0 million, or 3.0% decrease in savings account balances, and a $74.7 million, or 21.5% increase in time deposit balances.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
The increase in time deposit balances was partially the result of issuing brokered certificates of deposit in order to fund a leverage strategy coupled with available-for-sale investment securities purchases and interest rate swaps. Brokered CDs grew $58.0 million, from $39.0 million at March 31, 2024, to $97.0 million as of March 31, 2025. The remaining increase in time deposit balances was a result of the increased rate environment and offering promotional rates on specific time deposit terms. Time deposits are typically a more rate-sensitive product, making them a source of funding that is prone to balance variations depending on the interest rate environment and how the Corporation’s time deposit rates compare with the local market rates. Time deposits fluctuate as consumers search for the best rates in the market, with less allegiance to any particular financial institution.
As of March 31, 2025 and 2024, the total uninsured deposits of the Corporation were approximately $224,995,000 and $205,707,000, respectively or 11.9% and 12.0%, of total deposits. Total uninsured deposits is calculated based on regulatory reporting requirements and reflects the portion of any deposit of a customer at an insured depository institution that exceeds the applicable FDIC insurance coverage for that depositor at that institution and amounts in any other uninsured investment or deposit accounts that are classified as deposits and not subject to any federal or state deposit insurance regime.
The Deposits by Major Classification table, shown below, provides the balances of each category for March 31, 2025, December 31, 2024, and March 31, 2024.
DEPOSITS BY MAJOR CLASSIFICATION
(DOLLARS IN THOUSANDS)
| March 31, | December 31, | March 31, | ||||||||||
| 2025 | 2024 | 2024 | ||||||||||
| $ | $ | $ | ||||||||||
| Non-interest bearing demand | 634,110 | 631,711 | 602,975 | |||||||||
| Interest bearing demand | 362,120 | 384,236 | 316,081 | |||||||||
| Money market deposit accounts | 186,587 | 162,514 | 157,023 | |||||||||
| Savings accounts | 288,470 | 280,526 | 297,469 | |||||||||
| Time deposits | 422,200 | 431,456 | 347,463 | |||||||||
| Total deposits | 1,893,487 | 1,890,443 | 1,721,011 | |||||||||
The growth and mix of deposits is often driven by several factors including:
| ● | Convenience and service provided |
| ● | Current rates paid on deposits relative to competitor rates |
| ● | Level of and perceived direction of interest rates |
| ● | Financial condition and perceived safety of the institution |
| ● | Possible risks associated with other investment opportunities |
| ● | Level of fees on deposit products |
Borrowings
Total borrowings were $179.1 million, $183.5 million, and $136.6 million as of March 31, 2025, December 31, 2024, and March 31, 2024, respectively. Short-term borrowings with the Federal Home Loan Bank (FHLB) were $60.0 million as of March 31, 2025 and December 31, 2024. There were no short-term borrowings as of March 31, 2024. Short-term funds are used for immediate liquidity needs and are not typically part of an ongoing liquidity or interest rate risk strategy; therefore, they fluctuate more rapidly. When short-term funds are used, they are purchased through correspondent and member bank relationships as overnight borrowings or through the FHLB for terms less than one year.
Total long-term borrowings, borrowings initiated for terms longer than one year, were $79.3 million as of March 31, 2025, $83.8 million as of December 31, 2024, and $97.0 million as of March 31, 2024, respectively. The long-term borrowings for the Corporation were made up entirely of FHLB long-term advances. FHLB advances are used as a secondary source of funding and to mitigate interest rate risk. These long-term funding instruments are typically a more effective funding instrument in terms of selecting the exact amount, rate, and term of funding rather than trying to source the same through deposits. In this manner, management can efficiently meet known liquidity and interest rate risk needs. The Corporation continues to be well under the FHLB maximum borrowing capacity (MBC), which is currently $722.7 million. The Corporation’s internal policy limits are far more restrictive than the FHLB MBC, which is calculated and set quarterly by FHLB.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
In addition to the long-term advances funded through the FHLB, on December 30, 2020, the Corporation completed the sale of a subordinated debt note offering. The Corporation sold $20.0 million of subordinated debt notes with a maturity date of December 30, 2030. These notes are non-callable for 5 years and carry a fixed interest rate of 4% per year for 5 years and then convert to a floating rate for the remainder of the term. The notes can be redeemed at par beginning 5 years prior to maturity. The notes are structured to qualify as Tier 2 capital for the Corporation and any funds it invests in the Bank qualify as Tier 1 capital at the Bank. As of March 31, 2025, $16.0 million of funds were invested in the Bank. The Corporation paid an issuance fee of 2% of the total issue that will be amortized to the call date on a pro-rata basis.
On July 22, 2022, the Corporation completed the sale of an additional subordinated debt note offering. The Corporation sold $20.0 million of subordinated debt notes with a maturity date of September 30, 2032. These notes are all non-callable for 5 years and carry a fixed interest rate of 5.75% per year for the 5 years and then convert to a floating rate for the remainder of the term. The notes can be redeemed at par beginning 5 years prior to maturity. The notes are structured to qualify as Tier 2 capital for the Corporation and any funds it invests in the Bank qualify as Tier 1 capital at the Bank. As of March 31, 2025, $17.0 million of funds were invested in the Bank. The Corporation paid an issuance fee of 2% of the total issue that will be amortized to the call date on a pro-rata basis.
Stockholders’ Equity
Federal regulatory authorities require banks to meet minimum capital levels. The Corporation, as well as the Bank, as the solely owned subsidiary of the Corporation, maintains capital ratios well above those minimum levels. The risk-weighted capital ratios are calculated by dividing capital by total risk-weighted assets. Regulatory guidelines determine the risk-weighted assets by assigning assets to specific risk-weighted categories. The calculation of tier I capital to risk-weighted average assets does not include an add-back to capital for the amount of the allowance for credit losses, thereby making this ratio lower than the total capital to risk-weighted assets ratio.
The consolidated asset limit on small bank holding companies is $3 billion and a company with assets under that limit is not subject to the consolidated capital rules but may disclose capital amounts and ratios. The Corporation has elected to disclose those amounts and ratios.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
The following tables reflect the capital ratios for the Corporation and Bank compared to the regulatory capital requirements.
REGULATORY CAPITAL RATIOS:
| Regulatory Requirements | ||||||||||||
| Adequately | Well | |||||||||||
| As of March 31, 2025 | Capital Ratios | Capitalized | Capitalized | |||||||||
| Total Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 14.8% | N/A | N/A | |||||||||
| Bank | 14.6% | 8.0% | 10.0% | |||||||||
| Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 11.1% | N/A | N/A | |||||||||
| Bank | 13.4% | 6.0% | 8.0% | |||||||||
| Common Equity Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 11.1% | N/A | N/A | |||||||||
| Bank | 13.4% | 4.5% | 6.5% | |||||||||
| Tier 1 Capital to Average Assets | ||||||||||||
| Consolidated | 7.6% | N/A | N/A | |||||||||
| Bank | 9.2% | 4.0% | 5.0% | |||||||||
| As of December 31, 2024 | ||||||||||||
| Total Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 14.6% | N/A | N/A | |||||||||
| Bank | 14.4% | 8.0% | 10.0% | |||||||||
| Tier I Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 10.9% | N/A | N/A | |||||||||
| Bank | 13.2% | 6.0% | 8.0% | |||||||||
| Common Equity Tier I Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 10.9% | N/A | N/A | |||||||||
| Bank | 13.2% | 4.5% | 6.5% | |||||||||
| Tier I Capital to Average Assets | ||||||||||||
| Consolidated | 7.5% | N/A | N/A | |||||||||
| Bank | 9.1% | 4.0% | 5.0% | |||||||||
| As of March 31, 2024 | ||||||||||||
| Total Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 14.8% | N/A | N/A | |||||||||
| Bank | 14.4% | 8.0% | 10.0% | |||||||||
| Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 10.9% | N/A | N/A | |||||||||
| Bank | 13.3% | 6.0% | 8.0% | |||||||||
| Common Equity Tier 1 Capital to Risk-Weighted Assets | ||||||||||||
| Consolidated | 10.9% | N/A | N/A | |||||||||
| Bank | 13.3% | 4.5% | 6.5% | |||||||||
| Tier 1 Capital to Average Assets | ||||||||||||
| Consolidated | 7.8% | N/A | N/A | |||||||||
| Bank | 9.5% | 4.0% | 5.0% | |||||||||
As of March 31, 2025, the Bank’s Tier 1 Leverage Ratio stood at 9.2% while the Corporation’s Tier 1 Leverage Ratio was 7.6%. Tier 1 Capital at the Corporation level was not impacted by the subordinated debt issue since subordinated debt only qualifies as Tier 2 Capital at the corporate level. As such, in terms of the Corporation’s regulatory capital ratios, only the Total Capital to Risk-Weighted Assets ratio was enhanced as a result of the $40 million subordinated debt issue. Most of the marked improvement in capital ratios occurred at the Bank level.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
Off-Balance Sheet Arrangements
In the normal course of business, the Corporation typically has off-balance sheet arrangements related to loan funding commitments. These arrangements may impact the Corporation’s financial condition and liquidity if they were to be exercised within a short period of time. As discussed in the following liquidity section, the Corporation has in place sufficient liquidity alternatives to meet these obligations. The following table presents information on the commitments by the Corporation as of March 31, 2025.
OFF-BALANCE SHEET ARRANGEMENTS
(DOLLARS IN THOUSANDS)
| March 31, | ||||
| 2025 | ||||
| $ | ||||
| Commitments to extend credit: | ||||
| Revolving home equity | 268,118 | |||
| 1-4 family residential contruction loans | 24,481 | |||
| Commercial real estate, other construction and land development loans | 38,796 | |||
| Commercial and industrial loans | 106,538 | |||
| Other | 148,289 | |||
| Standby letters of credit | 15,323 | |||
| Total | 601,545 | |||
Significant Legislation
Dodd-Frank Wall Street Reform and Consumer Protection Act
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was signed into law. Dodd-Frank is intended to affect a fundamental restructuring of federal banking regulation. Among other things, Dodd-Frank creates a new Financial Stability Oversight Council to identify systemic risks in the financial system and gives federal regulators new authority to take control of and liquidate financial firms. Dodd-Frank additionally creates a new independent federal regulator to administer federal consumer protection laws. Among the provisions that have already or are likely to affect the Corporation are the following:
Holding Company Capital Requirements
Dodd-Frank requires the Federal Reserve to apply consolidated capital requirements to bank holding companies that are no less stringent than those currently applied to depository institutions. Under these standards, trust preferred securities will be excluded from tier I capital unless such securities were issued prior to May 19, 2010, by a bank holding company with less than $15 billion in assets. Dodd-Frank additionally requires that bank regulators issue countercyclical capital requirements so that the required amount of capital increases in times of economic expansion and decreases in times of economic contraction, are consistent with safety and soundness.
Deposit Insurance
Dodd-Frank permanently increased the maximum deposit insurance amount for banks, savings institutions, and credit unions to $250,000 per depositor. Additionally, on February 7, 2011, the Board of Directors of the FDIC approved a final rule based on the Dodd-Frank Act that revises the assessment base from one based on domestic deposits to one based on assets. This change, which was effective in April 2011, saved the Corporation a significant amount of FDIC insurance premiums from the significantly higher FDIC insurance premiums placed into effect after the financial crisis.
Corporate Governance
Dodd-Frank requires publicly traded companies to give stockholders a non-binding vote on executive compensation at least every three years, a non-binding vote regarding the frequency of the vote on executive compensation at least every six years, and a non-binding vote on “golden parachute” payments in connection with approvals of mergers and acquisitions unless previously voted on by shareholders. The SEC has finalized the rules implementing these requirements which took effect on January 21, 2011. The Corporation was exempt from these requirements until January 21, 2013, due to its status as a smaller reporting company.
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ENB FINANCIAL CORP
Management’s Discussion and Analysis
Consumer Financial Protection Bureau
Dodd-Frank created the Consumer Financial Protection Bureau (CFPB), which is granted broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Act, the Consumer Financial Privacy Provisions of the Gramm-Leach-Bliley Act, and certain other statutes. The CFPB has examination and primary enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions will be subject to rules promulgated by the CFPB but will continue to be examined and supervised by federal banking regulators for consumer compliance purposes. The CFPB will have authority to prevent unfair, deceptive, or abusive practices in connection with the offering of consumer financial products. Dodd-Frank authorizes the CFPB to establish certain minimum standards for the origination of residential mortgages including a determination of the borrower’s ability to repay. In addition, Dodd-Frank will allow borrowers to raise certain defenses to foreclosure if they receive any loan other than a “qualified mortgage” as defined by the CFPB. Dodd-Frank permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations.
Interstate Branching
Dodd-Frank authorizes national and state banks to establish branches in other states to the same extent as a bank chartered by that state would be permitted. Previously, banks could only establish branches in other states if the host state expressly permitted out-of-state banks to establish branches in that state. Accordingly, banks will be able to enter new markets more freely.
Limits on Interstate Acquisitions and Mergers
Dodd-Frank precludes a bank holding company from engaging in an interstate acquisition – the acquisition of a bank outside its home state – unless the bank holding company is both well capitalized and well managed. Furthermore, a bank may not engage in an interstate merger with another bank headquartered in another state unless the surviving institution will be well capitalized and well managed. The previous standard in both cases was adequately capitalized and adequately managed.
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ENB FINANCIAL CORP
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a financial institution, the Corporation is subject to three primary risks:
| ● | Credit risk |
| ● | Liquidity risk |
| ● | Interest rate risk |
The Board of Directors has established an Asset Liability Management Committee (ALCO) to measure, monitor, and manage these primary market risks. The Asset Liability Policy has instituted guidelines for all of these primary risks, as well as other financial performance measurements with target ranges. The Asset Liability goals and guidelines are consistent with the Strategic Plan goals related to financial performance.
Credit Risk
For discussion on credit risk refer to the sections in Item 2. Management’s Discussion and Analysis, on securities, non-performing assets, and allowance for credit losses.
Liquidity Risk
Liquidity refers to having an adequate supply of cash available to meet business needs. Financial institutions must ensure that there is adequate liquidity to meet a variety of funding needs, at a minimal cost. Funding new loans and covering deposit withdrawals are the primary liquidity needs of the Corporation. The Corporation uses a variety of funding sources to meet liquidity needs, such as deposits, loan repayments, cash flows from securities, borrowings, and current earnings.
As noted in the discussion on deposits, customers have historically provided the Corporation with a reliable and steadily increasing source of funds liquidity. The Corporation also has in place relationships with other banking institutions for the purpose of buying and selling Federal funds. The lines of credit with these institutions provide immediate sources of additional liquidity. The Corporation currently has unsecured lines of credit totaling $30 million. This does not include amounts available from member banks such as the Federal Reserve Discount Window or the FHLB of Pittsburgh.
The Corporation regularly reviews its liquidity position by measuring its projected net cash flows at a 30 and 90-day interval. The Corporation stresses the measurements by assuming a level of deposit out-flows that have not historically been realized. In addition to this forecast, other funding sources are reviewed as a method to provide emergency funding if necessary. The objective of this measurement is to identify the amount of cash that could be raised quickly without the need to liquidate assets. The Corporation also stresses its liquidity position utilizing different longer-term scenarios. The varying degrees of stress create pressure on deposit flows in its local market, reduce access to wholesale funding and limit access of funds available through brokered deposit channels. In addition to stressing cash flow, specific liquidity risk indicators are monitored to help identify risk areas. This analysis helps identify and quantify the potential cash surplus/deficit over a variety of time horizons to ensure the Corporation has adequate funding resources. Assumptions used for liquidity stress testing are subjective. Should an evolving liquidity situation or business cycle present new data, potential assumption changes will be considered. The Corporation believes it can meet all anticipated liquidity demands.
Historically, the Corporation has satisfied its liquidity needs from earnings, repayment of loans and amortizing investment securities, maturing investment securities, loan sales, deposit growth and its ability to access existing lines of credit. All investment securities are classified as available for sale; therefore, securities that are unencumbered can be used as collateral for borrowings and are an additional source of readily available liquidity.
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ENB FINANCIAL CORP
The Corporation analyzes the following additional liquidity measurements in an effort to monitor and mitigate liquidity risk:
| ● | On-hand Liquidity/Total Liabilities – Net liquid assets as a percentage of total liabilities |
| ● | Non-Core Funding Dependence – Non-core liabilities minus short-term investments as a percentage of long-term assets |
| ● | Reliance on Wholesale Funding – Wholesale funding as a percentage of total funding |
| ● | Net Short-term Liabilities/Total Assets – Short-term liabilities minus short-term assets as a percentage of total assets |
| ● | Loan to Deposit Ratio – Total loans as a percentage of total deposits |
| ● | Investment Securities to Assets Threshold – Total investment securities as a percentage of total assets |
These measurements are designed to prevent undue reliance on outside sources of funding and to ensure a steady stream of liquidity is available should events occur that would cause a sudden decrease in deposits or large increase in loans or both, which would in turn draw significantly from the Corporation’s available liquidity sources. As of March 31, 2025, the Corporation was in the low-risk range for all of the above measurements except for two ratios that fell in the moderate-risk range: reliance on wholesale funding and the investment securities to assets ratio. Both of these ratios were impacted by the derivative strategy undertaken in 2024 to leverage the balance sheet through wholesale borrowings and investment securities with off-balance sheet interest rate swaps. While this placed the Corporation in the moderate-risk range for the ratios mentioned above, the strategy was analyzed extensively and the risk measured.
The Corporation’s liquidity measurements are tracked and reported quarterly by management to both observe trends and ensure the measurements stay within desired ranges. Management is confident that a sufficient amount of internal and external liquidity exists to provide for significant unanticipated liquidity needs.
Interest Rate Risk
Interest rate risk is measured using two analytical tools:
| ● | Changes in net interest income |
| ● | Changes in net portfolio value |
Financial modeling is used to forecast net interest income and earnings, as well as net portfolio value, also referred to as fair value. The modeling is generally conducted under nine different interest rate scenarios that can vary according to the present level of interest rates. The scenarios consist of a projection of net interest income if rates remain flat, increase 100, 200, 300, or 400 basis points, or decrease 100, 200, 300, or 400 basis points.
The results obtained through the use of forecasting models are based on a variety of factors. Both the net interest income and fair value forecasts make use of the maturity and repricing schedules to determine the changes to the balance sheet over the course of time. Additionally, there are many assumptions that factor into the results. These assumptions include, but are not limited to, the following:
| ● | Projected forward interest rates |
| ● | Slope of the U.S. Treasury curve |
| ● | Spreads available on securities over the U.S. Treasury curve |
| ● | Prepayment speeds on loans held and mortgage-backed securities |
| ● | Anticipated calls on securities with call options |
| ● | Deposit and loan balance fluctuations |
| ● | Competitive pressures affecting loan and deposit rates |
| ● | Economic conditions |
| ● | Consumer reaction to interest rate changes |
As a result of the many assumptions, this information should not be relied upon to predict future results. Additionally, both of the analyses discussed below do not consider any action that management could take to minimize or offset the negative effect of changes in interest rates. These tools are used to assist management in identifying possible areas of risk in order to address them before a greater risk is posed. Back testing of the model is completed to compare actual results to projections to ensure the validity of the assumptions in the model. The back testing analyses indicate that the model assumptions are reliable.
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ENB FINANCIAL CORP
Changes in Net Interest Income
The change in net interest income measures the amount of net interest income fluctuation that would be experienced over one year, assuming interest rates change immediately and remain the same for one year. This is considered to be a short-term view of interest rate risk. The analysis of changes in net interest income due to changes in interest rates is commonly referred to as interest rate sensitivity. The Corporation’s interest rate sensitivity analysis indicates that if interest rates were to change immediately, the Corporation would realize less net interest income in all up and down rate scenarios. In past years, the Corporation was generally showing asset sensitivity meaning in a rates-up environment, assets would reprice faster than liabilities resulting in higher net interest income. In the past year, this increase in net interest income shifted to a decline primarily due to the increased impact from a higher cost of funds if rates continue to rise. While the Corporation would recognize higher interest income on its variable-rate assets, it would also now be repricing liabilities at a much faster pace resulting in increased interest expense that would offset the rise in interest income. Likewise, in the down-rate scenarios, asset yields would decline in conjunction with market rate moves, while deposit repricing would be slower to retain existing deposit balances.
The first quarter 2025 analysis projects net interest income expected in the nine rate scenarios over a one-year time horizon. As of March 31, 2025, the Corporation was within guidelines for the maximum amount of net interest income change in all rate scenarios.
The assumptions and analysis of interest rate risk are based on historical experience during varied economic cycles. Management believes these assumptions to be appropriate; however, actual results could vary significantly. Management uses this analysis to identify trends in interest rate sensitivity and determine if action is necessary to mitigate asset liability risk.
Changes in Net Portfolio Value
The change in net portfolio value is considered a tool to measure long-term interest rate risk. The analysis measures the exposure of the balance sheet to valuation changes due to changes in interest rates. The calculation of net portfolio value discounts future cash flows to the present value based on current market rates. The change in net portfolio value estimates the gain or loss in value that would occur on market sensitive instruments given an interest rate increase or decrease in the same nine scenarios mentioned above. As of March 31, 2025, the Corporation was within guidelines for all rate scenarios except the down 300 and 400 basis point scenarios. The Corporation shows a favorable benefit to net portfolio value in the rising rate scenarios, due primarily to the large amount of core deposits on the Corporation’s balance sheet. The non-interest bearing demand deposit accounts and low-interest bearing checking, and money market accounts provide more benefit to the Corporation when interest rates are higher and the difference between the overnight funding costs compared to the average interest bearing core deposit rates are greater. As interest rates increase, the discount rate used to value the Corporation’s interest bearing accounts increases, causing a lower net present value for these interest-bearing deposits. This improves the modeling of the Corporation’s fair value risk to higher interest rates as the liability amounts decrease causing a higher net portfolio value of the Corporation’s balance sheet. However, as interest rates decrease, the discount rate used to value the Corporation’s interest bearing accounts decreases, causing a higher net present value for these interest-bearing deposits.
The analysis shows a valuation loss in the down rate scenarios. Policy allows for a valuation decline of 30% for the down 300 and 35% for the down 400 basis point scenarios and actual projected results show a valuation decline of 44.4% and 65.9%, respectively. While this loss is outside of policy guidelines, it is unlikely that rates would move down immediately by 300 or 400 basis points. The Corporation will continue to monitor these measurements in the down-rate scenarios and adjust balance sheet structure as necessary to prepare for future potential lower rates.
The weakness with the net portfolio value analysis is that it assumes liquidation of the Corporation rather than as a going concern. For that reason, it is considered a secondary measurement of interest rate risk to “Changes in Net Interest Income” discussed above. However, the net portfolio value analysis is a more important tool to measure the impact of interest rate changes to capital. In the current regulatory climate, the focus is on ensuring adequate asset liability modeling is being done to project the impact of very large interest rate increases on capital. The asset liability modeling currently in place measures the impact of such a rate change on the valuation of the Corporation’s loans, securities, deposits, and borrowings, and the resulting impact to capital. Management continues to analyze additional scenario testing to model “worst case” scenarios to adequately plan for the possible severe impact of such events.
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ENB FINANCIAL CORP
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
Management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer (Principal Executive Officer) and Treasurer (Principal Financial Officer), of the effectiveness of the design and the operation of the Corporation’s disclosure controls and procedures (as such term as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Chief Executive Officer (Principal Executive Officer) along with the Treasurer (Principal Financial Officer) concluded that the Corporation’s disclosure controls and procedures as of March 31, 2025, are effective to ensure that information required to be disclosed in the reports that the company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
(b) Changes in Internal Controls.
There have been no changes in the Corporation’s internal controls over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
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ENB FINANCIAL CORP
PART II – OTHER INFORMATION
March 31, 2025
Item 1. Legal Proceedings
Management is not aware of any litigation that would have a material adverse effect on the consolidated financial position or results of operations of the Corporation or its subsidiaries taken as a whole. There are no proceedings pending other than ordinary routine litigation incident to the business of the Corporation. In addition, no material proceedings are pending, are known to be threatened, or contemplated against the Corporation by governmental authorities.
Item 1A. Risk Factors
The Corporation continually monitors the risks related to the Corporation’s business, other events, the Corporation’s Common Stock, and the Corporation’s industry. Other than as noted below, there have been no material changes in risk factors applicable to the Corporation from those disclosed in "Risk Factors" in Item 1A of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024.
Changes to trade policies and tariffs can have an adverse impact on our business and our customers.
Changes in trade policies, including the imposition of tariffs or the escalation of a trade war, could negatively impact the economic conditions in the markets we serve. Our customers-particularly local businesses engaged in agriculture, manufacturing, and retail-may face higher costs for imported goods and materials, reduced export demand, and supply chain disruptions due to increased tariffs. These challenges could lead to lower revenues, reduced profitability, and potential layoffs, all of which may impair our customers' ability to meet their financial obligations. Furthermore, prolonged trade tensions and economic uncertainty could lead to market volatility, declining asset values, and weakened consumer confidence. If our customers experience financial stress, we could see an increase in loan delinquencies and credit losses, negatively affecting our asset quality and overall financial performance. Additionally, any decline in local economic activity could reduce loan demand, deposit growth, and fee income, which are critical to our long-term success. While we actively monitor economic and policy developments, we cannot predict the outcome of trade negotiations or the full impact of tariffs and trade restrictions on our business, customers, and the broader economy. Any adverse effects from tariffs or a trade war could materially and negatively impact our financial condition, results of operations, and future growth prospects.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases
The following table details the Corporation’s purchase of its own common stock during the three months ended March 31, 2025.
| Issuer Purchase of Equity Securities | ||||||||||||||||
| Total Number of | Maximum Number | |||||||||||||||
| Total Number | Average | Shares Purchased | of Shares that May | |||||||||||||
| of Shares | Price Paid | as Part of Publicly | Yet be Purchased | |||||||||||||
| Period | Purchased | Per Share | Announced Plans * | Under the Plan * | ||||||||||||
| January 2025 | — | — | — | 200,000 | ||||||||||||
| February 2025 | — | — | — | 200,000 | ||||||||||||
| March 2025 | — | — | — | 200,000 | ||||||||||||
| Total | — | |||||||||||||||
* On October 16, 2024, the Board of Directors of the Corporation approved a plan to repurchase, in the open market and privately renegotiated transactions, up to 200,000 shares of its outstanding common stock. This plan replaces the 2020 plan. As of March 31, 2025, no shares had been purchased under this plan.
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ENB FINANCIAL CORP
Item 3. Defaults Upon Senior Securities – Nothing to Report
Item 4. Mine Safety Disclosures – Not Applicable
Item 5. Other Information
During the three months ended March 31, 2025, no director
or officer of the Corporation
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ENB FINANCIAL CORP
Item 6. Exhibits:
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ENB FINANCIAL CORP
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ENB Financial Corp | ||
| (Registrant) | ||
| Dated: May 13, 2025 | By: | /s/ Jeffrey S. Stauffer |
| Jeffrey S. Stauffer | ||
| Chairman of the Board | ||
| Chief Executive Officer and President | ||
| Principal Executive Officer | ||
| Dated: May 13, 2025 | By: | /s/ Rachel G. Bitner |
| Rachel G. Bitner | ||
| Treasurer | ||
| Principal Financial Officer | ||
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ENB FINANCIAL CORP
Exhibit 31.1
CERTIFICATION
I, Jeffrey S. Stauffer, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of ENB Financial Corp; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies, and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Dated: May 13, 2025 | By: | /s/ Jeffrey S. Stauffer |
| Jeffrey S. Stauffer | ||
| Chairman of the Board | ||
| Chief Executive Officer and President | ||
| Principal Executive Officer |
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ENB FINANCIAL CORP
Exhibit 31.2
CERTIFICATION
I, Rachel G. Bitner, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of ENB Financial Corp; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies, and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
| Dated: May 13, 2025 | By: | /s/ Rachel G. Bitner |
| Rachel G. Bitner | ||
| Treasurer | ||
| Principal Financial Officer |
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ENB FINANCIAL CORP
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of ENB Financial Corp (the "Corporation") for the period ended March 31, 2025, as filed with the Securities and Exchange Commission (the "Report"), I, Jeffrey S. Stauffer, Chief Executive Officer and President, of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of and for the period covered by the Report. |
| Dated: May 13, 2025 | By: | /s/ Jeffrey S. Stauffer |
| Jeffrey S. Stauffer | ||
| Chairman of the Board | ||
| Chief Executive Officer and President | ||
| Principal Executive Officer |
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ENB FINANCIAL CORP
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of ENB Financial Corp (the "Corporation") for the period ended March 31, 2025, as filed with the Securities and Exchange Commission (the "Report"), I, Rachel G. Bitner, Treasurer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of and for the period covered by the Report. |
| Dated: May 13, 2025 | By: | /s/ Rachel G. Bitner |
| Rachel G. Bitner | ||
| Treasurer | ||
| Principal Financial Officer |
57