Equibles

10-Q

YORK WATER CO (YORW)

10-Q 2025-08-12 For: 2025-06-30
View Original
Added on April 12, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
---

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
---

Commission file number 001-34245

THE YORK WATER COMPANY

(Exact name of registrant as specified in its charter)

graphic

Pennsylvania 23-1242500
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
130 East Market Street, York, Pennsylvania 17401
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (717) 845-3601

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

Common Stock, No par value YORW The Nasdaq Global Select Market
(Title of Class) (Trading Symbol) (Name of Each Exchange on Which Registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

⌧ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

⌧ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the 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 ☐ Non-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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common stock, No par value 14,421,177 Shares outstanding<br><br> <br>as of August 12, 2025

TABLE OF CONTENTS

PART I Financial Information
Item 1. Financial Statements 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of<br> Operations 16
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
Item 4. Controls and Procedures 24
PART II Other Information
Item 5. Other Information 25
Item 6. Exhibits 26
Signatures 27

Page 2

THE YORK WATER COMPANY

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Balance Sheets (Unaudited)

(In thousands of dollars, except per share amounts)

Dec. 31, 2024
ASSETS
UTILITY PLANT, at original cost 687,929 $ 664,927
Plant acquisition adjustments (9,800 ) (9,838 )
Accumulated depreciation (129,414 ) (124,082 )
Net utility plant 548,715 531,007
OTHER PHYSICAL PROPERTY, net of accumulated depreciation<br> of 555<br> in 2025 and 536<br> in 2024 1,518 1,534
CURRENT ASSETS:
Cash and cash equivalents 1 1
Accounts receivable, net of reserves of 1,610 in 2025<br> and 1,610 in 2024 7,484 7,249
Unbilled revenues 3,493 3,604
Recoverable income taxes 824 587
Materials and supplies inventories, at cost 3,448 3,413
Prepaid expenses 1,921 1,597
Total current assets 17,171 16,451
OTHER LONG-TERM ASSETS:
Prepaid pension cost 25,293 25,009
Note receivable 255 255
Deferred regulatory assets 55,475 54,061
Other assets 5,304 5,156
Total other long-term assets 86,327 84,481
Total Assets 653,731 $ 633,473

All values are in US Dollars.

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Balance Sheets (Unaudited)

(In thousands of dollars, except per share amounts)

Jun. 30, 2025 Dec. 31, 2024
STOCKHOLDERS’ EQUITY AND LIABILITIES
COMMON STOCKHOLDERS’ EQUITY:
Common stock, no par value, authorized 46,500,000 shares,<br><br> <br>issued and outstanding 14,420,319 shares in 2025<br><br> <br>and 14,386,282<br> shares in 2024 $ 139,071 $ 138,089
Retained earnings 95,480 93,103
Total common stockholders’ equity 234,551 231,192
PREFERRED STOCK, authorized 500,000 shares, no shares issued – –
LONG-TERM DEBT 218,056 205,561
COMMITMENTS – –
CURRENT LIABILITIES:
Current portion of long-term debt 330 –
Accounts payable 8,517 9,525
Dividends payable 2,897 2,892
Accrued compensation and benefits 1,708 1,806
Accrued interest 2,483 2,490
Deferred regulatory liabilities 858 864
Other accrued expenses 446 712
Total current liabilities 17,239 18,289
DEFERRED CREDITS:
Customers’ advances for construction 21,812 20,546
Deferred income taxes 63,743 61,157
Deferred employee benefits 3,541 3,526
Deferred regulatory liabilities 43,924 43,947
Other deferred credits 525 386
Total deferred credits 133,545 129,562
Contributions in aid of construction 50,340 48,869
Total Stockholders’ Equity and Liabilities $ 653,731 $ 633,473

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Statements of Income (Unaudited)

(In thousands of dollars, except per share amounts)

Three Months<br><br> <br>Ended June 30 Six Months<br><br> <br>Ended June 30
2025 2024 2025 2024
OPERATING REVENUES: $ 19,199 $ 18,750 $ 37,655 $ 36,378
OPERATING EXPENSES:
Operation and maintenance 4,823 4,862 10,034 9,674
Administrative and general 3,338 3,157 6,261 6,231
Depreciation and amortization 3,506 3,267 7,070 6,350
Taxes other than income taxes 446 402 921 846
12,113 11,688 24,286 23,101
Operating income 7,086 7,062 13,369 13,277
OTHER INCOME (EXPENSES):
Interest on debt (2,521 ) (2,183 ) (4,940 ) (4,306 )
Allowance for funds used during construction 191 347 376 1,481
Other pension costs 132 436 265 206
Other income (expenses), net (203 ) (148 ) (275 ) (215 )
(2,401 ) (1,548 ) (4,574 ) (2,834 )
Income before income taxes 4,685 5,514 8,795 10,443
Income tax expense (benefit) (367 ) 521 105 1,123
Net Income $ 5,052 $ 4,993 $ 8,690 $ 9,320
Basic Earnings Per Share $ 0.35 $ 0.35 $ 0.60 $ 0.65
Diluted Earnings Per Share $ 0.35 $ 0.35 $ 0.60 $ 0.65

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Statements of Common Stockholders’ Equity (Unaudited)

(In thousands of dollars, except per share amounts)

For the Periods Ended June 30, 2025 and 2024

Common<br><br> <br>Stock<br><br> <br>Amount Retained<br><br> <br>Earnings Total
Balance, March 31, 2025 14,399,650 $ 138,556 $ 93,587 $ 232,143
Net income – – 5,052 5,052
Cash dividends declared, 0.2192 per share – – (3,159 ) (3,159 )
Issuance of common stock under<br> dividend reinvestment, direct stock and<br> employee stock purchase plans 13,412 417 – 417
Stock-based compensation 7,257 98 – 98
Balance, June 30, 2025 14,420,319 $ 139,071 $ 95,480 $ 234,551
Balance, December 31, 2024 14,386,282 $ 138,089 $ 93,103 $ 231,192
Net income – – 8,690 8,690
Cash dividends declared, 0.4384 per share – – (6,313 ) (6,313 )
Issuance of common stock under<br> dividend reinvestment, direct stock and<br> employee stock purchase plans 25,797 812 – 812
Stock-based compensation 8,240 170 – 170
Balance, June 30, 2025 14,420,319 $ 139,071 $ 95,480 $ 234,551

All values are in US Dollars.

Common<br><br> <br>Stock<br><br> <br>Amount Retained<br><br> <br>Earnings Total
Balance, March 31, 2024 14,343,500 $ 136,622 $ 86,309 $ 222,931
Net income – – 4,993 4,993
Cash dividends declared, 0.2108 per share – – (3,025 ) (3,025 )
Issuance of common stock under<br> dividend reinvestment, direct stock and<br> employee stock purchase plans 11,855 419 – 419
Stock-based compensation 5,870 97 – 97
Balance, June 30, 2024 14,361,225 $ 137,138 $ 88,277 $ 225,415
Balance, December 31, 2023 14,332,245 $ 136,174 $ 85,004 $ 221,178
Net income – – 9,320 9,320
Cash dividends declared, 0.4216 per share – – (6,047 ) (6,047 )
Issuance of common stock under<br> dividend reinvestment, direct stock and<br> employee stock purchase plans 23,623 824 – 824
Stock-based compensation 5,357 140 – 140
Balance, June 30, 2024 14,361,225 $ 137,138 $ 88,277 $ 225,415

All values are in US Dollars.

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Statements of Cash Flows (Unaudited)

(In thousands of dollars, except per share amounts)
2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 8,690 $ 9,320
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,070 6,350
Stock-based compensation 170 140
Increase (decrease) in deferred income taxes (155 ) 220
Other 244 (73 )
Changes in assets and liabilities:
Increase in accounts receivable and unbilled revenues (440 ) (557 )
(Increase) decrease in recoverable income taxes (237 ) 332
Increase in materials and supplies inventories, prepaid expenses, prepaid pension cost,<br> <br> deferred regulatory and other assets (3,319 ) (5,316 )
Increase in accounts payable, accrued compensation and benefits, other accrued expenses,<br> deferred employee benefits, deferred regulatory liabilities, and other deferred credits 1,587 1,444
Increase (decrease) in accrued interest and taxes (7 ) 981
Net cash provided by operating activities 13,603 12,841
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during<br> construction of 210<br> in 2025 and 827<br> in 2024 (22,182 ) (20,867 )
Acquisitions of water and wastewater systems – (52 )
Net cash used in investing activities (22,182 ) (20,919 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Customers’ advances for construction and contributions in aid of construction 2,984 1,928
Repayments of customer advances (247 ) (262 )
Proceeds of long-term debt issues 26,423 56,565
Debt issuance costs – (167 )
Repayments of long-term debt (13,692 ) (45,377 )
Changes in cash overdraft position (1,393 ) 607
Issuance of common stock 812 824
Dividends paid (6,308 ) (6,040 )
Net cash provided by financing activities 8,579 8,078
Net change in cash and cash equivalents – –
Cash and cash equivalents at beginning of period 1 1
Cash and cash equivalents at end of period 1 $ 1
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized 4,588 $ 2,744
Income taxes 470 300
Supplemental disclosure of non-cash investing and financing activities:
Accounts payable includes 5,016 in 2025 and 7,771 in 2024 for the construction of utility plant.

All values are in US Dollars.

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Notes to Interim Financial Statements

(In thousands of dollars, except per share amounts)

1.  Basis of Presentation

The interim financial statements are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of results for such periods.  Because the financial statements cover an interim period, they do not include all disclosures and notes normally provided in annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

2.  Accounts Receivable and Unbilled Revenue

Accounts receivable are summarized in the following table:

As of As of
Jun. 30, 2025 Dec. 31, 2024 Change
Accounts receivable – customers $ 8,725 $ 8,392 $ 333
Other receivables 369 467 (98 )
9,094 8,859 235
Less: allowance for doubtful accounts (1,610 ) (1,610 ) –
Accounts receivable, net $ 7,484 $ 7,249 $ 235
Unbilled revenue $ 3,493 $ 3,604 $ (111 )

Differences in timing of revenue recognition, billings, and cash collections result in receivables.  Generally, billing occurs subsequent to revenue recognition, resulting in unbilled revenue on the balance sheet.  The Company does not receive advances or deposits from customers before revenue is recognized so no contract liabilities are reported.  Accounts receivable are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheet.  The changes in accounts receivable – customers and in unbilled revenue were primarily due to the normal timing difference between performance and the customer’s payments.

3.  Common Stock and Earnings Per Share

Net income of $5,052 and $4,993 for the three months ended June 30, 2025 and 2024, respectively, and $8,690 and $9,320 for the six months ended June 30, 2025 and 2024, respectively, is used to calculate both basic and diluted earnings per share.  Basic earnings per share is based on the weighted average number of common shares outstanding.  Diluted earnings per share is based on the weighted average number of common shares outstanding plus potentially dilutive shares.  The dilutive effect of employee stock-based compensation is included in the computation of diluted earnings per share and is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation.

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The following table summarizes the shares used in computing basic and diluted earnings per share:

Three Months<br><br> <br>Ended June 30 Six Months<br><br> <br>Ended June 30
2025 2024 2025 2024
Weighted average common shares, basic 14,396,648 14,340,575 14,388,712 14,332,727
Effect of dilutive securities:
Employee stock-based compensation – 257 – 214
Weighted average common shares, diluted 14,396,648 14,340,832 14,388,712 14,332,941

On March 11, 2013, the Board of Directors, or the Board, authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company’s common stock from time to time.  The stock repurchase program has no specific end date and the Company may repurchase shares in the open market or through privately negotiated transactions.  The Company may suspend or discontinue the repurchase program at any time.  No shares were repurchased during the three or six months ended June 30, 2025 and 2024.  As of June 30, 2025, 618,004 shares remain authorized for repurchase.

4.  Debt

For the six months ended June 30, 2025, the Company did not enter into any new long-term debt arrangements or modify its outstanding long-term debt, which is summarized in the table below.

As of<br><br> <br>Jun. 30, 2025 As of<br><br> <br>Dec. 31, 2024
Variable Rate Pennsylvania Economic Development Financing Authority<br><br> <br>Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029 $ 12,000 $ 12,000
3.00%<br> Pennsylvania Economic Development Financing Authority Exempt<br><br> <br>Facilities Revenue Refunding Bonds, Series A of 2019, due 2036 10,500 10,500
3.10%<br> Pennsylvania Economic Development Financing Authority Exempt<br><br> <br>Facilities Revenue Refunding Bonds, Series B of 2019, due 2038 14,870 14,870
3.23%<br> Senior Notes, due 2040 15,000 15,000
4.00%<br> - 4.50% York County Industrial Development Authority Exempt<br><br> <br>Facilities Revenue Bonds, Series 2015, due 2029 – 2045 10,000 10,000
4.54%<br> Senior Notes, due 2049 20,000 20,000
3.24% Senior Notes, due 2050 30,000 30,000
5.50% Senior Notes, due 2053 40,000 40,000
5.67% Senior Notes, due 2054 40,000 40,000
Committed Line of Credit, due September 2026 28,539 15,808
Total long-term debt 220,909 208,178
Less discount on issuance of long-term debt (130 ) (136 )
Less unamortized debt issuance costs (2,393 ) (2,481 )
Less current maturities (330 ) –
Long-term portion $ 218,056 $ 205,561

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5.  Interest Rate Swap Agreement

The Company is exposed to certain risks relating to its ongoing business operations.  The primary risk managed by using derivative instruments is interest rate risk.  The Company utilizes an interest rate swap agreement to effectively convert the Company’s $12,000 variable-rate debt issue to a fixed rate.  Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period.  The notional amount on which the interest payments are based ($12,000) is not exchanged.  The interest rate swap provides that the Company pays the counterparty a fixed interest rate of 3.16% on the notional amount of $12,000.  In exchange, the counterparty pays the Company a variable interest rate based on 59% of the daily simple Secured Overnight Financing Rate plus a spread adjustment of 11.448 basis points on the notional amount.  The intent is for the variable rate received from the swap counterparty to approximate the variable rate the Company pays to bondholders on its variable rate debt issue, resulting in a fixed rate being paid to the swap counterparty and reducing the Company’s interest rate risk.  The Company’s net payment rate on the swap averaged 0.54% and (0.04)% for the three months ended June 30, 2025 and 2024, respectively, and 0.53% and (0.04)% for the six months ended June 30, 2025 and 2024, respectively.

The interest rate swap agreement is classified as a financial derivative used for non-trading activities.  The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet.  In accordance with the standards, the interest rate swap is recorded on the balance sheet in other deferred credits at fair value (see Note 6).

The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap.  These unrealized gains and losses are recorded as a regulatory asset or regulatory liability.  Based on current ratemaking treatment, the Company expects the unrealized gains and losses to be recognized in rates as a component of interest expense as the swap settlements occur.  Swap settlements are recorded in the income statement with the hedged item as interest expense.  Swap settlements resulted in the reclassification from regulatory assets to interest expense of $16 and $(1) for the three months ended June 30, 2025 and 2024, respectively, and $32 and $(2) for the six months ended June 30, 2025 and 2024, respectively. The overall swap result was a (gain) loss of $55 and $(62) for the three months ended June 30, 2025 and 2024, respectively, and $169 and $(237) for the six months ended June 30, 2025 and 2024, respectively. The Company expects to reclassify $101 before tax from regulatory assets to interest expense as a result of swap settlements over the next 12 months.

The interest rate swap agreement contains provisions that require the Company to maintain a credit rating of at least BBB- with Standard & Poor’s.  If the Company’s rating were to fall below this rating, it would be in violation of these provisions, and the counterparty to the derivative could request immediate payment if the derivative was in a liability position.  On July 30, 2025, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.  The Company’s interest rate swap was in a liability position as of June 30, 2025.  If a violation due to credit rating, or some other default provision, were triggered on June 30, 2025, the Company would have been required to pay the counterparty approximately $535.

The interest rate swap will expire on October 1, 2029.  Other than the interest rate swap, the Company has no other derivative instruments.

6.  Fair Value of Financial Instruments

The accounting standards regarding fair value measurements establish a fair value hierarchy which indicates the extent to which inputs used in measuring fair value are observable in the market.  Level 1 inputs include quoted prices for identical instruments and are the most observable.  Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, commodity rates and yield curves.  Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability.

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The Company has recorded its interest rate swap liability at fair value in accordance with the standards.  The liability is recorded under the caption “Other deferred credits” on the balance sheet.  The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.

Description June 30, 2025 Fair Value Measurements<br><br> <br>at Reporting Date Using<br><br> <br>Significant Other Observable Inputs (Level 2)
Interest Rate Swap $525 $525

Fair values are measured as the present value of all expected future cash flows based on the swap yield curve as of the date of the valuation.  These inputs to this calculation are deemed to be Level 2 inputs.  The balance sheet carrying value reflects the Company’s credit quality as of June 30, 2025.

  The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year
  debt on utilities rated A- as of June 30, 2025.  The use of the Company’s credit quality resulted in a reduction in the swap liability
  of $10 as of June 30, 2024.  The fair value of the swap reflecting the Company’s credit quality as of December 31, 2024 is shown in the table below.
Description December 31, 2024 Fair Value Measurements<br><br> <br>at Reporting Date Using<br><br> <br>Significant Other Observable Inputs (Level 2)
Interest Rate Swap $386 $386

The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented.  The Company’s total long-term debt, with a carrying value of $220,909 at June 30, 2025, and $208,178 at December 31, 2024, had an estimated fair value of approximately $197,000 and $189,000, respectively.  The estimated fair value of debt was calculated using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration and risk profile.  These inputs to this calculation are deemed to be Level 2 inputs.  The Company recognized its credit rating in determining the yield curve and did not factor in third-party credit enhancements including the letter of credit on the 2008 Pennsylvania Economic Development Financing Authority Series A issue.

Customers’ advances for construction and note receivable had carrying values at June 30, 2025 of $21,812 and $255, respectively.  At December 31, 2024, customers’ advances for construction and note receivable had carrying values of $20,546 and $255, respectively.  The relative fair values of these amounts cannot be accurately estimated since the timing of future payment streams is dependent upon several factors, including new customer connections, customer consumption levels and future rate increases.

7.  Commitments

The Company was granted approval by the Pennsylvania Public Utility Commission, or PPUC, to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the date of the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $2,018 and $1,961 through June 30, 2025 and December 31, 2024, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $2,100.  This estimate is subject to adjustment as more facts become available.

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8.  Revenue

The following table shows the Company’s revenues disaggregated by service and customer type.

Three Months<br><br> <br>Ended June 30 Six Months<br><br> <br>Ended June 30
2025 2024 2025 2024
Water utility service:
Residential $ 10,626 $ 10,422 $ 20,876 $ 20,266
Commercial and industrial 5,214 5,109 10,150 9,765
Fire protection 1,214 1,123 2,404 2,204
Wastewater utility service:
Residential 1,614 1,502 3,196 2,976
Commercial and industrial 349 352 694 668
Billing and revenue collection services 17 122 43 252
Collection services 30 – 33 3
Other revenue 19 6 29 16
Total Revenue from Contracts with Customers 19,083 18,636 37,425 36,150
Rents from regulated property 116 114 230 228
Total Operating Revenue $ 19,199 $ 18,750 $ 37,655 $ 36,378

Utility Service

The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers.  The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available.  There is no variable consideration and no free service, special rates, or subnormal charges to any customer.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer.  The Company uses an output method to recognize the utility service revenue over time.  The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter.  Each customer is invoiced every month and the invoice is due within twenty days.  The utility service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period.  The methodology is standardized and consistently applied to reduce bias and the need for judgment.

Billing and Revenue Collection Service

The Company provides billing and revenue collection service as distinct performance obligations to two municipalities within the service territory of the Company.  The municipalities provide service to their residents and the Company acts as the billing and revenue collection agent for the municipalities.  The transaction price is a fixed amount per bill prepared as established in the contract.  There is no variable consideration.  Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations.  The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bear all of the risk of non-collection at that time.  Each municipality is invoiced when the bills are complete and the invoice is due within thirty days.  The billing and revenue collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.

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Collection Service

The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company.  The municipalities provide wastewater service to their residents.  If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents.  When the resident is no longer delinquent, the Company will restore water service to the premises.  The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service.  Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days.  The collection service has no returns or warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.  A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.

Service Line Protection Plan

The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate.  The transaction price is detailed in the plan’s terms and conditions and made publicly available.  There is no variable consideration.  Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price.  The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform.  The Company uses an output method to recognize the service line protection revenue over time.  The stand-ready obligation is recognized through the passage of time.  A customer has a choice to prepay for an entire year or to pay in advance each month.  The service line protection plan has no returns or extended warranties associated with it.  No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.

9.  Rate Matters

From time to time, the Company files applications for rate increases with the PPUC and is granted rate relief as a result of such requests.  The most recent rate request was filed by the Company on May 30, 2025 and seeks an annual increase in water rates of $20,312, which would represent a 28.9% increase, and an annual increase in wastewater rates of $3,858, which would represent a 44.5% increase.  The request is currently under review by the PPUC and other interested parties.  Any rate increase approved by the PPUC will be effective no later than March 1, 2026.  There can be no assurance that the PPUC will grant the Company’s rate increase in the amount requested, if at all.

The PPUC permits water utilities to collect a distribution system improvement charge, or DSIC.  The DSIC allows the Company to add a charge to customers’ bills for qualified replacement costs of certain infrastructure without submitting a rate filing.  This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period.  The DSIC is capped at 5% of base rates and is reset to zero when new base rates that reflect the costs of those additions become effective or when a utility’s earnings exceed a regulatory benchmark.  The Company’s earnings are currently below the regulatory benchmark, thus allowing the Company to collect DSIC.  The DSIC provided revenues of $531 and $34 for the three months ended June 30, 2025 and 2024, respectively, and $917 and $34 for the six months ended June 30, 2025 and 2024, respectively.

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10.  Pensions

Components of Net Periodic Pension Cost

Three Months<br><br> <br>Ended June 30 Six Months<br><br> <br>Ended June 30
2025 2024 2025 2024
Service cost $ 132 $ 158 $ 265 $ 317
Interest cost 496 465 991 928
Expected return on plan assets (767 ) (792 ) (1,534 ) (1,583 )
Amortization of prior service cost (3 ) (3 ) (6 ) (6 )
Rate-regulated adjustment 142 (106) 284 455
Net periodic pension cost $ – $ (278) $ – $ 111

Pension service cost is recorded in operating expenses.  All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).

Employer Contributions

The Company previously disclosed in its financial statements for the year ended December 31, 2024 that it did not expect to contribute to its pension plans in 2025.

      For the six months ended June 30, 2025, no contributions have been made.  The Company does not expect to contribute
    any amounts in the final two quarters of 2025.

11.  Stock-Based Compensation

The Company has a Long-Term Incentive Plan, or LTIP.  The LTIP was approved by the Company’s shareholders to provide the incentive of long-term stock-based awards to officers, directors, and key employees.  The LTIP provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants.  The maximum number of shares of common stock subject to awards that may be granted to any participant in any one calendar year is 10,000.  Shares of common stock issued under the LTIP may be treasury shares or authorized but unissued shares.  The LTIP will be administered by the Compensation and Human Capital Committee of the Board, or the full Board, provided that the full Board will administer the LTIP as it relates to awards to non-employee directors of the Company.  The LTIP was originally effective on July 1, 2016 (“2016 LTIP”), and was amended, restated, and renamed the 2025 LTIP effective on May 6, 2025 (“2025 LTIP”).  The Company filed a registration statement with the Securities and Exchange Commission on May 6, 2025 covering the offering of stock under the 2025 LTIP.  The registration statement added 150,000 shares to the unissued shares from the 2016 LTIP, which may be issued under the 2025 LTIP over ten years.

On November 25, 2024, the Board awarded stock to an officer effective January 1, 2025.  This stock award vested immediately.

On May 5, 2025, the Board awarded stock to non-employee directors effective May 5, 2025.  This stock award vested immediately.  On May 5, 2025, the Compensation and Human Capital Committee awarded restricted stock to officers and key employees effective May 5, 2025.  The stock award vests ratably over three years beginning May 5, 2025.

The restricted stock awards provide the grantee with the rights of a shareholder, including the right to receive dividends, subject to vesting restrictions, and to vote such shares, but not the right to sell or otherwise transfer the shares during the restriction period.  As a result, the awards are included in common shares outstanding on the balance sheet.  Restricted stock awards result in compensation expense valued at the fair market value of the stock on the date of the grant and are amortized ratably over the requisite service period.

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The following tables summarize the stock grant amounts and activity for the six months ended June 30, 2025.

Number of Shares Grant Date Weighted<br><br> <br>Average Fair Value
Nonvested at beginning of the period 8,117 $38.62
Granted 8,240 $34.36
Vested (6,690 ) $36.98
Forfeited – $–
Nonvested at end of the period 9,667 $36.12

For the three months ended June 30, 2025 and 2024, the statement of income includes $98 and $97 of stock-based compensation, respectively, and related recognized tax benefits of $26 and $27, respectively. For the six months ended June 30, 2025 and 2024, the statement of income includes $170 and $140 of stock-based compensation, respectively, and related recognized tax benefits of $46 and $39, respectively. Total stock-based compensation related to nonvested awards not yet recognized is $349 at June 30, 2025 which will be recognized over the remaining three year vesting period.

12.  Income Taxes

Under the Internal Revenue Service tangible property regulations, or TPR, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return.  This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

The Company’s effective tax rate was (7.8)% and 9.4% for the three months ended June 30, 2025 and 2024, respectively, and 1.2% and 10.8% for the six months ended June 30, 2025 and 2024, respectively.  The effective tax rate will vary depending on income before income taxes and the level of eligible asset improvements expensed for tax purposes under TPR each period.

On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law.  The Company is currently reviewing the provisions of the OBBBA but does not expect the impact to be material as most of the provisions applicable to the Company from the Tax Cuts and Jobs Act of 2017 were not changed in the OBBBA and new provisions do not apply to the Company.

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Item 2. Management’s Discussion and Analysis of<br><br> <br>Financial Condition and Results of Operations.<br><br> <br>(In thousands of dollars, except per share amounts)

Forward-looking Statements

Certain statements contained in this report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933.  Words such as “may,” “should,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “objective” and similar expressions are intended to identify forward-looking statements.  These forward-looking statements include certain information relating to the Company’s business strategy and future prospects; including, but not limited to:

• the amount and timing of rate changes and other regulatory matters including the recovery of costs<br> recorded as regulatory assets;
• expected profitability and results of operations;
• trends;
• goals, priorities and plans for, and cost of, growth and expansion;
• strategic initiatives;
• availability of water supply;
• water usage by customers; and
• the ability to pay dividends on common stock and the rate of those dividends.

The forward-looking statements in this report reflect what the Company currently anticipates will happen.  What actually happens could differ materially from what it currently anticipates will happen and caution should be exercised against placing undue reliance upon such statements, which are based only on information currently available to the Company and speak only as of the date hereof.  The Company does not intend to make a public announcement when forward-looking statements in this report are no longer accurate, whether as a result of new information, what actually happens in the future or for any other reason.  Important matters that may affect what will actually happen include, but are not limited to:

• changes in weather or climate, including drought conditions or extended periods of heavy precipitation;
• natural disasters, including pandemics and the effectiveness of the Company’s pandemic plans;
• levels of rate relief granted;
• the level of commercial and industrial business activity within the Company’s service territory;
• construction of new housing within the Company’s service territory and increases in population;
• changes in government policies or regulations, including the tax code;
• the ability to obtain permits for expansion projects;
• material changes in demand from customers, including the impact of conservation efforts which may impact the demand of customers for water;
• changes in economic and business conditions, including interest rates;
• loss of customers;
• changes in, or unanticipated, capital requirements;
• the impact of acquisitions;
• changes in accounting pronouncements;
• changes in the Company’s credit rating or the market price of its common stock; and
• the ability to obtain financing.

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General Information

The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water.  The Company also owns and operates three wastewater collection systems and eleven wastewater collection and treatment systems.  The Company operates within its franchised water and wastewater territory, which covers portions of 57 municipalities within four counties in south-central Pennsylvania.  The Company is regulated by the Pennsylvania Public Utility Commission, or PPUC, for both water and wastewater in the areas of billing, payment procedures, dispute processing, terminations, service territory, debt and equity financing and rate setting.  The Company must obtain PPUC approval before changing any practices associated with the aforementioned areas.

Water service is supplied through the Company’s own distribution system.  The Company obtains the bulk of its water supply for its primary system for York and Adams Counties from both the South Branch and East Branch of the Codorus Creek, which together have an average daily flow of approximately 73.0 million gallons from a combined watershed area of approximately 117 square miles.  The Company has two reservoirs on this primary system, Lake Williams and Lake Redman, which together hold up to approximately 2.5 billion gallons of water.  The Company supplements these reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day.  The Company obtains its water supply for its system for Franklin County from the Roxbury Dam on the Conodoguinet Creek, which has an average daily flow of approximately 26.0 million gallons from a watershed area of approximately 33 square miles.  The Company has a reservoir on this system which holds up to approximately 330 million gallons of water.  The Company also owns fifteen wells which are capable of providing a safe yield of approximately 923,000 gallons per day to supply water to the customers of its groundwater satellite systems in York, Adams, and Lancaster Counties.  As of June 30, 2025, the Company’s average daily availability was 41.1 million gallons, and average daily consumption was approximately 23.6 million gallons.  The Company’s service territory had an estimated population of 212,000 as of December 31, 2024.  Industry within the Company’s service territory is diversified, manufacturing such items as fixtures and furniture, electrical machinery, food products, paper, ordnance units, textile products, air conditioning systems, laundry detergent, barbells, and motorcycles.

The Company’s water business is somewhat dependent on weather conditions, particularly the amount and timing of precipitation.  Revenues are particularly vulnerable to weather conditions in the summer months.  Prolonged periods of hot and dry weather generally cause increased water usage for watering lawns, washing cars, and keeping golf courses and sports fields irrigated.  Conversely, prolonged periods of dry weather could lead to drought restrictions from governmental authorities.  Despite the Company’s adequate water supply, customers may be required to cut back water usage under such drought restrictions which would negatively impact revenues.  The Company has addressed some of this vulnerability by instituting minimum customer charges which are intended to cover fixed costs of operations under all likely weather conditions.

The Company’s business does not require large amounts of working capital and is not dependent on any single customer or a very few customers for a material portion of its business.  Increases in revenues are generally dependent on the Company’s ability to obtain rate increases from the PPUC in a timely manner and in adequate amounts and to increase volumes of water sold through increased consumption and increases in the number of customers served.  The Company continuously looks for water and wastewater acquisition and expansion opportunities both within and outside its current service territory as well as additional opportunities to enter into bulk water contracts with municipalities and other entities to supply water.

The Company has agreements with several municipalities to provide billing and collection services.  The Company also has a service line protection program on a targeted basis in order to further diversify its business.  Under this optional program, customers pay a fixed monthly fee, and the Company will repair or replace damaged customer service lines, as needed, subject to an annual maximum dollar amount.  The Company continues to review and consider opportunities to expand both initiatives.

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Results of Operations

Three Months Ended June 30, 2025 Compared

With Three Months Ended June 30, 2024

Net income for the second quarter of 2025 was $5,052, an increase of $59, or 1.2%, from net income of $4,993 for the same period of 2024.  The primary contributing factors to the increase were higher operating revenues and lower income taxes, which were partially offset by higher operating expenses, higher interest on debt, and lower allowance for funds used during construction.

Operating revenues for the second quarter of 2025 increased $449, or 2.4%, from $18,750 for the three months ended June 30, 2024 to $19,199 for the corresponding 2025 period.  The primary reason for the increase was growth in the customer base and increased revenues from the distribution system improvement charge, or DSIC, allowed by the PPUC of $497.  The DSIC allows the Company to add a charge to customers’ water bills for qualified replacement costs of certain infrastructure without submitting a rate filing.  The average number of water customers served in 2025 increased as compared to 2024 by 1,155 customers, from 72,304 to 73,459 customers.  The average number of wastewater customers served in 2025 increased as compared to 2024 by 518 customers, from 6,499 to 7,017 customers, primarily due to acquisitions.  Total per capita consumption for 2025 was approximately 2.8% lower than the same period of last year.

Operating expenses for the second quarter of 2025 increased $425, or 3.6%, from $11,688 for the second quarter of 2024 to $12,113 for the corresponding 2025 period.  The increase was primarily due to higher expenses of approximately $272 for insurance, $239 for depreciation and amortization, $155 for wages and benefits, and $114 for water treatment.  Other operating expenses increased by a net of $180.  The increase was partially offset by reduced expenses of $234 for distribution system maintenance, $198 for the provision for uncollectible accounts, and $103 for wastewater treatment.

Interest on debt for the second quarter of 2025 increased $338, or 15.5%, from $2,183 for the second quarter of 2024 to $2,521 for the corresponding 2025 period.  The increase was primarily due to higher interest rates.  The average debt outstanding under the line of credit was $25,762 for the second quarter of 2025 and $712 for the second quarter of 2024.  The weighted average interest rate on the line of credit was 5.49% for the quarter ended June 30, 2025 and 4.50% for the quarter ended June 30, 2024.

Allowance for funds used during construction decreased $156, from $347 in the second quarter of 2024 to $191 in the corresponding 2025 period due to a lower volume of eligible construction.

Other income (expenses), net for the second quarter of 2025 reflects increased expenses of $55 as compared to the same period of 2024.  The increase was primarily due to higher retirement expenses of approximately $52.  Other expenses increased by a net of $3.

Income tax expense for the second quarter of 2025 decreased $888 as compared to the same period of 2024 due to higher deductions for the Internal Revenue Service, or IRS, tangible property regulations, or TPR.  The Company’s effective tax rate was (7.8)% for the second quarter of 2025 and 9.4% for the second quarter of 2024.

Six Months Ended June 30, 2025 Compared

With Six Months Ended June 30, 2024

Net income for the first six months of 2025 was $8,690, a decrease of $630, or 6.8%, from net income of $9,320 for the same period of 2024.  The primary contributing factors to the decrease were higher operating expenses, higher interest on debt, and lower allowance for funds used during construction, which were partially offset by higher operating revenues and lower income taxes.

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Operating revenues for the first six months of 2025 increased $1,277, or 3.5%, from $36,378 for the six months ended June 30, 2024 to $37,655 for the corresponding 2025 period.  The increase was primarily due to growth in the customer base and revenues from the DSIC of $883.  The average number of water customers served in 2025 increased as compared to 2024 by 1,196 customers, from 72,126 to 73,322 customers.  The average number of wastewater customers served in 2025 increased as compared to 2024 by 438 customers, from 6,427 to 6,865 customers, primarily due to acquisitions.  Total per capita consumption for 2025 was the same as last year.  For the remainder of the year, the Company expects revenues to show a modest increase due to the DSIC, higher summer demand, and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory.  Other regulatory actions, weather patterns, and economic conditions could impact results.

Operating expenses for the first six months of 2025 increased $1,185, or 5.1%, from $23,101 for the first six months of 2024 to $24,286 for the corresponding 2025 period.  The increase was primarily due to higher expenses of approximately $720 for depreciation and amortization, $220 for wages and benefits, $190 for water treatment, $81 for insurance, and $81 for purchased power.  Other operating expenses increased by a net of $302.  The increase was partially offset by reduced expenses of $172 for the provision for uncollectible accounts, $128 for distribution system maintenance, and $109 for wastewater treatment.  For the remainder of the year, the Company expects depreciation and amortization expense to continue to rise due to additional investment in utility plant, and other expenses to increase as costs to treat water and wastewater, and to maintain and extend the distribution system, continue to rise.  Weather patterns could further increase operating expenses.

Interest on debt for the first six months of 2025 increased $634, or 14.7%, from $4,306 for the first six months of 2024 to $4,940 for the corresponding 2025 period.  The increase was primarily due to an increase in long-term debt outstanding and higher interest rates.  The average debt outstanding under the line of credit was $22,481 for the first six months of 2025 and $10,794 for the first six months of 2024.  The weighted average interest rate on the line of credit was 5.49% for the six months ended June 30, 2025 and 4.29% for the six months ended June 30, 2024.  Interest expense for the remainder of the year is expected to increase due to the increase in long-term debt outstanding.

Allowance for funds used during construction decreased $1,105, from $1,481 in the first six months of 2024 to $376 in the corresponding 2025 period due to a lower volume of eligible construction.  Allowance for funds used during construction for the remainder of the year is expected to remain consistent based on the projected amount of eligible construction being similar in the second half of the year to the first half of the year.

Other income (expenses), net for the first six months of 2025 reflects increased expenses of $60 as compared to the same period of 2024.  The increase was primarily due to higher retirement expenses of approximately $63, which were partially offset by higher earnings on life insurance policies of approximately $12.  Other expenses increased by a net of $9.  For the remainder of the year, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.

Income tax expense for the first six months of 2025 decreased $1,018 as compared to the same period of 2025 due to higher deductions for the IRS TPR.  The Company’s effective tax rate was 1.2% for the first six months of 2025 and 10.8% for the first six months of 2024.  The Company’s effective tax rate for the remainder of 2025 will be largely determined by the level of eligible asset improvements expensed for tax purposes under IRS TPR each period.  The Company expects the level to be lower in the remainder of the year than the first six months, increasing the effective tax rate.

Rate Matters

See Note 9 to the financial statements included herein for a discussion of rate matters.

Effective July 1, 2025, the Company’s tariff included a DSIC on revenues of 3.90%.

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Acquisitions and Growth

On June 13, 2025, the Company signed an agreement to purchase the wastewater collection and treatment assets of Pine Run Retirement Community in Hamilton Township, Adams County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in the first half of 2026 at which time the Company will add approximately 100 wastewater customers.

On January 24, 2025, the Company signed an agreement to purchase the water assets of Eagle View Manufactured Housing Community in Berwick Township, Adams County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in the second half of 2025 at which time the Company will add approximately 140 water customers.

On June 27, 2024, the Company signed an agreement to purchase the wastewater

  collection and treatment assets of CMV Sewage Co., Inc. in Chanceford Township, York County, Pennsylvania.  Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities.  Closing is expected in the
  second half of 2025 at which time the Company will add approximately 280 wastewater customers.

On February 7, 2024, the Company signed an agreement to purchase the wastewater collection assets of Margaretta Mobile Home Park in Lower Windsor Township, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in the second half of 2025 at which time the Company will add approximately 65 wastewater customers.

In total, these acquisitions are expected to be immaterial to Company results.  The Company is also pursuing other bulk water contracts and acquisitions in and around its service territory to help offset any potential declines in per capita water consumption and to grow its business.

Capital Expenditures

For the three months ended June 30, 2025, the Company invested $22,182 in construction expenditures for main extensions and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items.  The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions from developers, municipalities, customers, or builders.

The Company anticipates construction expenditures for the remainder of 2025 of approximately $23,800 exclusive of any potential acquisitions not yet approved.  In addition to routine transmission and distribution projects, a portion of the anticipated expenditures will be for additional main extensions, wastewater treatment plant construction, and an upgrade to the enterprise software system, as well as various replacements and improvements to infrastructure and routine items.  The Company intends to use primarily internally-generated funds for its anticipated construction and fund the remainder through line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions.  Customer advances and contributions are expected to account for between 5% and 10% of funding requirements during the remainder of 2025.  The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, during 2025 and 2026, to fund anticipated construction and acquisition expenditures.

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Liquidity and Capital Resources

Cash

The Company manages its cash through a cash management account that is directly connected to its line of credit.  Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement.  If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees.  Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit.  As of June 30, 2025, the Company borrowed $28,539 on its line of credit and incurred a cash overdraft on its cash management account of $1,035.  The cash management facility connected to the line of credit is expected to provide the necessary liquidity and funding for the Company’s operations, capital expenditures, and acquisitions for the foreseeable future.

Accounts Receivable

The accounts receivable balance tends to follow the change in revenues but is also affected by the timeliness of payments by customers and the level of the reserve for doubtful accounts.  In the three months ended June 30, 2025, slightly higher revenue levels as compared to the three months ended December 31, 2024, resulted in a slight increase in accounts receivable – customers.  A reserve is maintained at a level considered adequate to provide for expected credit losses.  Expected credit losses are based on historical write-offs combined with an evaluation of current conditions and reasonable and supportable forecasts including inactive accounts with outstanding balances, the aging of balances in payment agreements, adverse situations that may affect a customer’s ability to pay, economic conditions, and other relevant factors applied to the current aging of receivables.  Customer accounts are written off when collection efforts have been exhausted.  If the status of the evaluated factors deteriorate, the Company may incur additional expenses for uncollectible accounts and experience a reduction in its internally-generated funds.

Internally-generated Funds

The amount of internally-generated funds available for operations and construction depends on the Company’s ability to obtain timely and adequate rate relief, changes in regulations including taxes, customers’ water usage, weather conditions, customer growth and controlled expenses.  During the first six months of 2025, the Company generated $13,603 internally from operations as compared to the $12,841 it generated during the first six months of 2024.  The increase was primarily due to increased cash receipts from customers and the timing of payments to vendors partially offset by higher interest paid.

Common Stock

Common stockholders’ equity as a percent of the total capitalization was 51.5% as of June 30, 2025, compared with 52.6% as of December 31, 2024.  The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward until it approaches fifty percent before considering additional equity.  It is the Company’s general intent to target equity between fifty and fifty-five percent of total capitalization.

The Company has an effective “shelf” Registration Statement on Form S-3 on file with the Securities and Exchange Commission, pursuant to which the Company may offer an aggregate remaining amount of up to $60,000 of its common stock or debt securities subject to market conditions at the time of any such offering.

Credit Line

Historically, the Company has borrowed under its line of credit before refinancing with long-term debt or equity capital.  As of June 30, 2025, the Company maintained an unsecured line of credit in the amount of $50,000 at an interest rate of the Secured Overnight Financing Rate plus 1.17% with an unused commitment fee and an interest rate floor.  The Company had $28,539 in borrowings under its line of credit as of June 30, 2025.  The interest rate on the line of credit borrowing as of June 30, 2025 was 5.49%.  The Company expects to extend the maturity for this line of credit into 2027 under similar terms and conditions.

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The Company has taken steps to manage the risk of reduced credit availability.  It has established a committed line of credit with a 2-year revolving maturity that cannot be called on demand.  There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future.  If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity when necessary, it may have to eliminate or postpone capital expenditures.  Management believes the Company will have adequate capacity under its current line of credit to meet anticipated financing needs throughout 2025 and 2026.

Long-term Debt

The Company’s loan agreements contain various covenants and restrictions.  Management believes it is currently in compliance with all of these restrictions.  See Note 6 to the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding these restrictions.

The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 48.5% as of June 30, 2025, compared with 47.4% as of December 31, 2024.  The Company expects to use long-term debt for its future financing needs and allow the debt percentage to trend upward.  A debt to total capitalization ratio between forty-five and fifty percent has historically been acceptable to the PPUC in rate filings.

Income Taxes, Deferred Income Taxes and Uncertain Tax Positions

Under the IRS TPR, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return.  This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable.  It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.  The Company expects to continue to expense these asset improvements in the future.

The Company’s effective tax rate will largely be determined by income before income taxes and the level of eligible asset improvements expensed for tax purposes that would have been capitalized for tax purposes prior to the implementation of TPR.

On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law.  The Company is currently reviewing the provisions of the OBBBA but does not expect the impact to be material as most of the provisions applicable to the Company from the Tax Cuts and Jobs Act of 2017 were not changed in the OBBBA and new provisions do not apply to the Company.

The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from the Tax Cuts and Jobs Act of 2017 and the differences between the book and tax balances of the customers’ advances for construction and contributions in aid of construction and deferred compensation plans.  The Company does not believe a valuation allowance is required due to the expected generation of future taxable income during the periods in which those temporary differences become deductible.

The Company has seen an increase in its deferred income tax liability amounts primarily as a result of the accelerated depreciation deduction available for federal tax purposes which creates differences between book and tax depreciation expense.  The Company expects this trend to continue as it makes significant investments in capital expenditures subject to accelerated depreciation or TPR.

The Company has determined there are no uncertain tax positions that require recognition as of June 30, 2025.

Credit Rating

On July 30, 2025, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity.  The Company’s ability to maintain its credit rating depends, among other things, on adequate and timely rate relief, which it has been successful in obtaining, its ability to fund capital expenditures in a balanced manner using both debt and equity and its ability to generate cash flow.  The Company’s objectives are to continue to maximize its funds provided by operations and maintain a strong capital structure in order to be able to attract capital.

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Physical and Cyber Security

The Company maintains security measures at its facilities, and collaborates with federal, state, and local authorities and industry trade associations regarding information on possible threats and security measures for water and wastewater utility operations.  The costs incurred are expected to be recoverable in water and wastewater rates and are not expected to have a material impact on its business, financial condition, or results of operations.

The Company relies on information technology systems in connection with the operation of the business, especially with respect to customer service, billing, accounting, and in some cases, the monitoring and operation of treatment, storage, and pumping facilities.  In addition, the Company relies on these systems to track utility assets and to manage maintenance and construction projects, materials and supplies, and human resource functions.  The information technology systems may be vulnerable to damage or interruption from cyber security attacks or other cyber-related events, including, but not limited to, power loss, computer systems failures, internet, telecommunications or data network failures, physical and electronic loss of data, computer viruses, intentional security breaches, hacking, denial of service actions, misappropriation of data, and similar events.  In some cases, administration of certain functions may be outsourced to third-party service providers that could also be targets of cyber security attacks.  A loss of these systems, or major problems with the operation of these systems, could harm the business, financial condition, and results of operations of the Company through the loss or compromise of customer, financial, employee, or operational data, disruption of billing, collections or normal field service activities, disruption of electronic monitoring and control of operational systems, and delays in financial reporting and other normal management functions.

Possible impacts associated with a cyber security attack or other events may include remediation costs related to lost, stolen, or compromised data, repairs to data processing systems, increased cyber security protection costs, adverse effects on the Company’s compliance with regulatory and environmental laws and regulation, including standards for drinking water, litigation, and reputational damage.

The Company has implemented processes, procedures, and controls to prevent or limit the effect of these possible events and maintains insurance to help defray costs associated with cyber security attacks.  The Company has not experienced a material impact on business or operations from these attacks.  Although the Company does not believe its systems are at a materially greater risk of cyber security attacks than other similar organizations and despite the implementation of robust security measures, the Company cannot provide assurance that the insurance will fully cover the costs of a cyber security event, and its robust security measures do not guarantee that reputation and financial results will not be adversely affected by such an incident.

Environmental Matters

The Company was granted approval by the PPUC to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the date of the agreement.  The tariff modification allows the Company to replace customer-owned service lines at its own initial cost.  The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period.  The cost for the customer-owned lead service line replacements was approximately $2,018 and $1,961 through June 30, 2025 and December 31, 2024, respectively, and is included as a regulatory asset.  Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $2,100.  This estimate is subject to adjustment as more facts become available.

Drought

On June 9, 2025, Pennsylvania state officials returned Adams, York, and Lancaster Counties to normal status and on July 2, 2025, Pennsylvania state officials returned Franklin County to normal status.  Measures taken during a drought could potentially impact future revenues, operating expenses, and net income depending on the length and severity of the dry conditions.

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Critical Accounting Estimates

The methods, estimates, and judgments the Company used in applying its accounting policies have a significant impact on the results reported in its financial statements.  The Company’s accounting policies require management to make subjective judgments because of the need to make estimates of matters that are inherently uncertain.  The Company’s most critical accounting estimates include regulatory assets and liabilities, revenue recognition, accounting for its pension plans, and income taxes.  There has been no significant change in accounting estimates or the method of estimation during the quarter ended June 30, 2025.

Off-Balance Sheet Arrangements

The Company does not use off-balance sheet transactions, arrangements or obligations that may have a material current or future effect on financial condition, results of operations, liquidity, capital expenditures, capital resources or significant components of revenues or expenses.  The Company does not use securitization of receivables or unconsolidated entities. For risk management purposes, the Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 5 to the financial statements included herein.  The Company does not engage in trading or other risk management activities, does not use other derivative financial instruments for any purpose, has no material lease obligations, no guarantees and does not have material transactions involving related parties.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s President and Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report.  Based upon this evaluation, the Company’s President and Chief Executive Officer along with the Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report are effective such that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

No change in the Company’s internal control over financial reporting occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 5. Other Information.

During the quarter ended June 30, 2025, no director or officer of the Company, nor the Company itself, adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.
Exhibit No. Description
--- ---
3 Amended and Restated Articles of Incorporation.  Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K<br> filed with the Securities and Exchange Commission on May 4, 2010.
3.1 Amended and Restated By-Laws.  Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the<br> Securities and Exchange Commission on January 26, 2012.
10.1 Form of Amended and Restated<br> Change in Control Agreement made as of August 1, 2022 between The York Water Company and each of the individuals listed on a schedule attached thereto, which plans are identical in all material respects except as indicated in the attached<br> schedule.
31.1 Certification of Chief Executive<br> Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
31.2 Certification of Chief Financial<br> Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
32.1 Certification of Chief Executive<br> Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial<br> Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the<br> Inline XBRL document).
101.SCH Inline XBRL Taxonomy Extension Schema.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase.
104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

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SIGNATURES

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

THE YORK WATER COMPANY
/s/ Joseph T. Hand
Date: August 12, 2025 Joseph T. Hand<br><br> <br>Principal Executive Officer
/s/ Matthew E. Poff
Date: August 12, 2025 Matthew E. Poff<br><br> <br>Principal Financial and Accounting Officer

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EXHIBIT 10-1

CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement (this “Agreement”) is made as of this _____ day of ________, 2022 (the “Effective Date”) by and between The York Water Company, a Pennsylvania corporation (the “Company”) and ________________________ (the “Executive”).

RECITALS

WHEREAS, the Company wishes to retain the Executive and to assure the present and future continuity, objectivity and dedication of the Executive in the event of any Change of Control and to protect short and long term interests of our investors through a Change of Control; and

WHEREAS, the Company believes it is imperative to diminish the inevitable distraction of Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control; and

WHEREAS, the Company wishes to provide Executive with compensation and benefits upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows:

  1. Termination of Prior Agreement. Company and Executive agree that by entering into this Agreement the parties are terminating that Amended and Restated Agreement (the “Prior Agreement”) dated as of ___________, 20__ by and between the Company and Executive.

  2. Definitions.  For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly requires otherwise:

(a) “Accrued Benefits” has the meaning given to it at Section 3(b).

(b) “Affiliate” and “Associate” have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

(c) A Person is the “Beneficial Owner” of any securities: (i) that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the “Beneficial Owner” of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation, pursuant to any agreement, arrangement or understanding, whether or not in writing; provided, however, that a Person shall not be deemed the “Beneficial Owner” of any security under this clause (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to clause (ii) above) or disposing of any voting securities of the Company; provided, however, that nothing in this Section 1(b) shall cause a Person engaged in business as an underwriter of securities to be the “Beneficial Owner” of any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition.

(d) “Board” means the Board of Directors of the Company.

(e) “Business Combination” means a reorganization, merger or consolidation of the Company.

(f) “Cause” means (i) Executive’s misappropriation of funds or any act of common law fraud, (ii) Executive’s habitual insobriety or substance abuse, (iii) Executive’s conviction of a felony or any crime involving moral turpitude, (iv) willful misconduct or gross negligence by Executive in the performance of Executive’s duties, (v) the willful failure of Executive to perform a material function of Executive’s duties hereunder, or (vi) Executive engaging in a conflict of interest or other breach of fiduciary duty.

(g) “Change of Control” means:

(i) Any Person (except Executive, Executive’s Affiliates and Associates, the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner in the aggregate of 50 percent or more of either (A) the Outstanding Company Common Stock or (B) the Company Voting Securities , in either case unless a majority of the members of the Board in office immediately prior to such acquisition determine within five business days of the receipt of actual notice of such acquisition that the circumstances do not warrant the implementation of the provisions of this Agreement;

(ii) The Incumbent Board ceases for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the beginning of such period whose election or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then constituting the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Company (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);

(iii) Consummation by the Company of a Business Combination, in each case, with respect to which all or substantially all of the individuals and entities who were the respective Beneficial Owners of the Outstanding Company Common Stock and Company Voting Securities immediately prior to such Business Combination are not, following such Business Combination, Beneficial Owners, directly or indirectly, of more than 50 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination in substantially the same proportion as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Company Voting Securities, as the case may be, in any such case unless a majority of the members of the Board in office immediately prior to such Business Combination determines at the time of such Business Combination that the circumstances do not warrant the implementation of the provisions of this Agreement; or

(iv) (A) Consummation of a complete liquidation or dissolution of the Company or (B) sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, following such sale or disposition, individuals and entities that are the Beneficial Owners of more than 50 percent of, respectively, the Outstanding Company Common Stock and the Company Voting Securities are substantially the same as the individuals and entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Company Voting Securities immediately prior to such sale or disposition in substantially the same proportion as their ownership of the Outstanding Company Common Stock and Company Voting Securities, as the case may be, immediately prior to such sale or disposition, in any such case unless a majority of the members of the Incumbent Board in office immediately prior to such sale or disposition determines at the time of such sale or disposition that the circumstances do not warrant the implementation of the provisions of this Agreement.

Provided that a Change of Control under this Agreement must, in all events, constitute a change in the ownership or effective control of, or in the ownership of a substantial portion of the assets of, the Company (as determined in accordance with Treas. Reg. Sec. 1.409A-3(i)(5)(v), (vi) and (vii)).

(h) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

(i) “Company Voting Securities” means the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors.

(j) “Compensation” means the sum of the Executive’s current annual base rate of pay and the Executive’s annual bonus compensation at target level of achievement payable in cash to the Executive.

(k) “Disability” means, in the good faith judgment of the Company’s Board of Directors, despite reasonable accommodation, the Executive is unable due to a physical or mental incapacity to perform the essential functions of Executive’s most recent position for: (x) a period of one hundred eighty (180) consecutive days or (y) an aggregate of six (6) months in any twelve (12) consecutive month period.

(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(m) “Good Reason Termination” means a Termination of Employment initiated by the Executive following a Change of Control and based on the occurrence of one or more of the following events or circumstance, or such Termination of Employment occurs within six (6) months prior to a Change of Control if such event or circumstance occurred at the insistence of a third party in connection with the Change of Control or was otherwise made in connection with the Change of Control, in each case without the consent of the Executive:

(i) any action or inaction that constitutes a material breach by the Company of this Agreement;

(ii) any material reduction by the Company of the authority, duties or responsibilities of Executive’s principal assignment with the Company;

(iii) any material reduction in Executive's Compensation;

(iv) any removal by the Company of Executive from the employment grade or officer positions the Executive holds as of the Effective Date hereof, except in connection with promotions to higher office; provided, however, that such removal results in a material diminution in Executive's authority, duties or responsibilities; or

(v) a material adverse change in the principal geographic location at which Executive must perform services; provided that a transfer of Executive to a location that is more than seventy (70) miles from the Executive’s principal place of business immediately preceding a Change of Control shall constitute a material adverse change in the geographic location.

Notwithstanding the preceding definition of Good Reason Termination, Executive shall have a Good Reason Termination for purposes of this Agreement only if (i) Executive provides written notice to the Company identifying the event or circumstance constituting the basis for the Good Reason Termination not more than sixty (60) days following the initial occurrence of such event or circumstance, (ii) the notice provides the Company the opportunity (but the Company shall have no obligation) to cure such events or conditions that give rise to the Good Reason Termination within not less than thirty (30) days following such notice, and (iii) if the Company fails to cure the events or conditions giving rise to Executive’s Good Reason Termination, Executive actually terminates within ninety (90) days after the Company’s period to cure.

(n) “Incumbent Board” means those individuals who, as of any date of determination under the Agreement, are individuals who have constituted the Board during the preceding 12-month period.

(o) “Outstanding Company Common Stock” means the then outstanding shares of common stock of the Company.

(p) “Person” means any natural person, business trust, corporation, partnership, limited liability company, joint stock company, proprietorship, association, trust, joint venture, unincorporated association or any other legal entity of whatever nature.

(q) “Subsidiary” means any corporation in which the Company, directly or indirectly, owns at least a 50 percent interest or an unincorporated entity of which the Company, directly or indirectly, owns at least 50 percent of the profits or capital interests.

(r) “Termination Date” means the date of Executive’s Termination of Employment.

(s) “Termination of Employment” means Executive’s “separation from service” (within the meaning of such term under Section 409A of the Code) with the Company.

  1. Termination of Employment.

(a) Notice of Termination.  Any Termination of Employment subject to this Agreement shall be communicated by a Notice of Termination in accordance with Section 9 hereof. For purposes of this Agreement, a “Notice of Termination” means a written notice which, in the case of a Good Reason Termination by Executive (i) indicates the specific reasons for the termination, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of Executive’s employment, and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the Termination Date (which date shall not be more than ninety (90) days after the Company’s cure period ends).

(b) Accrued Benefits. In all events Executive shall be entitled to receive any payments or benefits accrued for Executive through the Termination Date under any plan, policy or program of the Company, including the Supplemental Retirement Plan and the Deferred Compensation Agreement, except that no payments shall be due to Executive under any severance pay plan for the Company’s employees (collectively, the “Accrued Benefits”).

  1. Compensation Upon Termination.  In the event of Executive’s Termination of Employment following a Change of Control, or six months prior to a Change of Control, Executive shall be entitled to the Executive’s Accrued Benefits and, and subject to Section 4(e), the payments and benefits provided in this Section 4, as applicable.

(a) Termination by the Company without Cause or Executive’s Good Reason Termination.  In the event of Executive’s Termination of Employment by the Company without Cause or the Executive’s Good Reason Termination, in either case, (i) following a Change of Control or (ii) if such Termination of Employment was at the insistence of a third party in connection with the Change of Control or otherwise was in connection with the Change of Control, during the period six months prior to a Change of Control, the Company shall pay or provide to the Executive:

(i) Severance Pay.  An amount equal to [3x for CEO; 2x for C Suite; 1x for VPs] times the Executive’s Compensation, payable in equal periodic payments in accordance with the Company’s normal and customary payroll procedures over [24 for CEO/C Suite; 12 for VPs] months following the later of the Executive’s Termination Date or the date of the Change of Control.

(ii) Pro-rated annual bonus.  If the Executive has completed at least six (6) months of employment during the fiscal year, a lump sum amount equal to the annual bonus that would have become payable in cash to the Executive for that fiscal year if Executive’s employment had not terminated and based on achievement at the target level of performance, multiplied by a fraction, the numerator of which is the number of days the Executive was employed in the fiscal year of termination and the denominator of which is the total number of days in the fiscal year of termination, payable within 60 days of Executive’s Termination Date, or if later, the date of the Change of Control.

(iii) Equity Awards. All unvested equity-based incentive compensation awards held by Executive on Executive’s Termination Date will immediately vest, provided that with respect to any performance-based awards such awards will vest and be determined by assuming achievement at the target level of performance, with payments made in accordance with the terms of the applicable award.

(iv) COBRA. If the Executive is eligible for and timely and properly elects group health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for the Executive and the Executive’s dependents. Such reimbursement shall be paid to the Executive no later than the end of the month immediately following the month in which the Executive timely remits the COBRA premium payment. The Executive shall be eligible to receive such reimbursement for up to eighteen (18) months following the Termination Date, to the extent permitted under the terms of the Company’s group health plans; provided, however, that if the Executive becomes eligible to receive healthcare coverage from a subsequent employer (and Executive agrees to promptly notify the Company of such eligibility) or the Executive is no longer eligible to receive COBRA continuation coverage, then the Company’s obligation to reimburse COBRA premiums described herein shall be terminated.

(v) Stipend. Beginning with the month following the end of the Executive’s eighteen-month COBRA continuation coverage period, Executive shall receive an amount equal to $3,000 times [18 for CEO; 6 for C suite and VPs] payable in equal periodic payments in accordance with the Company’s normal and customary payroll procedures over [18 months for CEO; 6 months for C suite and VPs] months following the end of Executive’s eighteen-month COBRA continuation coverage period.

(vi) Notwithstanding the foregoing provisions of this Section 4(a), the Company shall not be obligated to make any payment or provide the benefits described in this Section 4(a) after the date the Executive first violates any of the restrictive covenants set forth in this Agreement, including Section 10 and Section 12 hereof.

(b) Termination by the Company for Cause.  If the Executive’s employment is terminated by the Company for Cause, the Company will only be required to pay the Executive such Executive’s Accrued Benefits.

(c) Termination by Executive in the Twenty Fifth Month after Change of Control. [NOTE THIS CAUSES ALL OF THE SEVERANCE TO BE SUBJECT TO THE DEFERRED COMPENSATION RULES OF SECTION 409A, INCLUDING THE 6 MONTH SUSPENSION FOR SPECIFIED EMPLOYEES.] In the event Executive incurs a Termination of Employment (other than on account of the Executive’s death or Disability, or by the Company for Cause) following the twenty four (24) month anniversary of a Change of Control but not later than the twenty five (25) month anniversary of a Change of Control, the Company shall pay or provide to the Executive:

(i) Severance Pay.  An amount equal to [3x for CEO; 2x for C suite; 1x for VPs] times the Executive’s Compensation, payable in equal periodic payments in accordance with the Company’s normal and customary payroll procedures over [24 for CEO/C Suite; 12 for VPs] months following the Executive’s Termination Date.

(ii) Pro-rated annual bonus.  If the Executive has completed at least six (6) months of employment during the fiscal year, a lump sum amount equal to the annual bonus that would have become payable in cash to the Executive for that fiscal year if Executive’s employment had not terminated and based on achievement at the target level of performance, multiplied by a fraction, the numerator of which is the number of days the Executive was employed in the fiscal year of termination and the denominator of which is the total number of days in the fiscal year of termination, payable within 60 days of Executive’s Termination Date.

(iii) Equity Awards. All unvested equity-based incentive compensation awards held by Executive on Executive’s Termination Date will immediately vest, provided that with respect to any performance-based awards such awards will vest and be determined by assuming achievement at the target level of performance, with payments made in accordance with the terms of the applicable award.

(iv) COBRA. If the Executive is eligible for and timely and properly elects group health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Executive for the monthly COBRA premium paid by the Executive for the Executive and the Executive’s dependents. Such reimbursement shall be paid to the Executive no later than the end of the month immediately following the month in which the Executive timely remits the COBRA premium payment. The Executive shall be eligible to receive such reimbursement for up to eighteen (18) months following the Termination Date, to the extent permitted under the terms of the Company’s group health plans; provided, however, that if the Executive becomes eligible to receive healthcare coverage from a subsequent employer (and Executive agrees to promptly notify the Company of such eligibility) or the Executive is no longer eligible to receive COBRA continuation coverage, then the Company’s obligation to reimburse COBRA premiums described herein shall be terminated.

(v) Stipend. Beginning with the month following the end of the Executive’s eighteen-month COBRA continuation coverage period, Executive shall receive an amount equal to $3,000 times [18 months for CEO; 6 for C suite and VPs] payable in equal periodic payments in accordance with the Company’s normal and customary payroll procedures over [18 months for CEO; 6 months for C suite and VPs] months following the end of Executive’s eighteen-month COBRA continuation coverage period.

(vi) Notwithstanding the foregoing provisions of this Section 4(c), the Company shall not be obligated to make any payment or provide the benefits described in this Section 4(c) after the date the Executive first violates any of the restrictive covenants set forth in this Agreement, including Section 10 and Section 12 hereof.

(d) Termination on Account of Death or Disability.  If the Executive’s employment is terminated on account of the Executive’s Disability or death, the Company shall pay or provide to the Executive the following:

(i) Pro-rated annual bonus.   If the Executive has completed at least six (6) months of employment during the fiscal year, a lump sum amount equal to the annual bonus that would have become payable in cash to the Executive for that fiscal year if Executive’s employment had not terminated and based on achievement at the target level of performance, multiplied by a fraction, the numerator of which is the number of days the Executive was employed in the fiscal year of termination and the denominator of which is the total number of days in the fiscal year of termination, payable within 60 days of Executive’s Termination Date.

(ii) Equity awards.  All unvested equity-based incentive compensation awards held by Executive on Executive’s Termination Date will immediately vest, provided that with respect to any performance-based awards such awards will vest and be determined by assuming achievement at the target level of performance, with payments made in accordance with the terms of the applicable award.

(iii) COBRA.  If the Executive is (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents are) eligible for and timely and properly elects group health plan continuation coverage under COBRA, the Company shall reimburse the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents) for the monthly COBRA premium paid by the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents) for the Executive and the Executive’s spouse/dependents. Such reimbursement shall be paid to the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents) no later than the end of the month immediately following the month in which the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents) timely remits the COBRA premium payment. The Executive (or in the event of the Executive’s death, the Executive’s surviving spouse and/or dependents) shall be eligible to receive such reimbursement for up to eighteen (18) months following the Termination Date, to the extent permitted under the terms of the Company’s group health plans; provided, however, that if the Executive becomes eligible to receive healthcare coverage from a subsequent employer (and Executive agrees to promptly notify the Company of such eligibility) or the Executive is (or the Executive’s surviving spouse and/or dependents in the event of the Executive’s death are) no longer eligible to receive COBRA continuation coverage, then the Company’s obligation to reimburse COBRA premiums described herein shall be terminated.

(e) Release.  The payments and benefits provided under Sections 4(a), (c) and (d) are subject to and conditioned upon (A) the Executive (or, in the event of the Executive’s death, the representative of the Executive’s estate) executing a timely and valid release of claims (“Release”), in substantially the form attached hereto as Exhibit A, waiving all claims the Executive (or, in the event of the Executive’s death, the representative of the Executive’s estate) may have against the Company, it successors, assigns, affiliates, executives, officers and directors, (B) the Executive (or, in the event of the Executive’s death, the representative of the Executive’s estate) delivering the executed Release to the Company within sixty (60) days following the Executive’s Termination Date (the “Release Period”), (C) such Release and the waiver contained therein becoming effective, and (D) the Executive’s (or, in the event of the Executive’s death, the representative of the Executive’s estate) compliance with the restrictive covenants contained in Section 10 and Section 12 of this Agreement.  In the event that the Release Period spans two calendar years and such payments or benefits are treated as deferred compensation subject to Section 409A of the Code, such payments and benefits provided under Section 4(a), (c) and (d) must be made in the second of the two calendar years. Any severance payments or reimbursements under Section 4(a), (c) or (d) accruing during the period from the Termination Date through the date the Company makes the first periodic payment will be paid with such first payment.

(f) Tax Withholding.  The Company shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes the Company reasonably determines are required in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.

(g) Payment to Beneficiary.  In the event Executive dies after the Executive is entitled to payment of severance, bonus, or stipend amounts under Section 4(a), (c) or (d) but prior to completion of the payment, such payments will continue to the Executive’s Beneficiary. For this purpose, the Executive’s “Beneficiary” is the Executive’s surviving spouse, and if no surviving spouse, then the Executive’s surviving children, and if there is no surviving child, the Executive’s estate.

  1. No Mitigation.  Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation earned by other employment or otherwise.

  2. Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which Executive may qualify, from the date hereof through the Termination Date.

  3. Code Section 409A.  This Agreement is intended to be exempt from, or comply with, the requirements of Section 409A of the Code, and shall be interpreted, construed and administered in a manner consistent with such intent. In that regard:

(a)  The payments to the Executive pursuant to this Agreement are intended to be exempt from Section 409A of the Code to the maximum extent possible, under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4).

(b) If any payment is or becomes subject to the requirements of Section 409A, the Agreement, as it relates to such payment, is intended to comply with the requirements of Section 409A. In the event the terms of this Agreement would subject the Executive to taxes or penalties under Section 409A of the Code (“409A Penalties”), the Company and the Executive shall cooperate diligently to amend the terms of the Agreement to avoid such 409A Penalties, to the extent possible; provided that such amendment shall not increase or reduce (in the aggregate) the amounts payable to the Executive hereunder.

(c) Any taxable reimbursement payable to the Executive pursuant to this Agreement shall be paid to the Executive no later than the last day of the calendar year following the calendar year in which the Executive incurred the reimbursable expense. Any amount of expenses eligible for taxable reimbursement, during a calendar year shall not affect the amount of such expenses eligible for reimbursement, during any other calendar year. The right to such reimbursement pursuant to this Agreement shall not be subject to liquidation or exchange for any other benefit.

(d) Any right to a series of installment payments pursuant to this Agreement is to be treated as a right to a series of separate payments.

(e) If any payment is deferred compensation subject to Section 409A of the Code that is payable on account of the Executive’s “separation from service,” and the Executive is a “specified employee” under Section 409A of the Code, such payment will not be made until the date that is one day following the six (6) month anniversary of the Executive’s “separation from service”, or if earlier, upon the Executive’s death.

  1. Code Section 280G.  Notwithstanding anything to the contrary in this Agreement, in any other agreement between or among the Executive, the Company or any of its Affiliates or in any plan maintained by the Company or any Affiliate, if there is a 280G Change in Control (as defined in Section 8(g)(i) below), the following rules shall apply:

(a) Except as otherwise provided in Section 8(b) below, if it is determined in accordance with Section (d) below that any portion of the Payments (as defined in Section 8(g)(ii) below) that otherwise would be paid or provided to the Executive or for the Executive’s benefit in connection with the 280G Change in Control would be subject to the excise tax imposed under Section 4999 of the Code (“Excise Tax”), then such Payments shall be reduced by the smallest total amount necessary in order for the aggregate present value of all such Payments after such reduction, as determined in accordance with the applicable provisions of Section 280G of the Code and the regulations issued thereunder, not to exceed the Excise Tax Threshold Amount (as defined in Section 8(g)(iii) below).

(b) No reduction in any of the Executive’s Payments shall be made pursuant to Section 8(a) above if it is determined in accordance with Section 8(d) below that the After Tax Amount of the Payments payable to the Executive without such reduction would exceed the After Tax Amount of the reduced Payments payable to the Executive in accordance with Section 8(a) above.  For purposes of the foregoing, (i) the “After Tax Amount” of the Payments, as computed with, and as computed without, the reduction provided for under Section 8(a) above, shall mean the amount of the Payments, as so computed, that the Executive would retain after payment of all taxes (including without limitation any federal, state or local income taxes, the Excise Tax or any other excise taxes, any Medicare or other employment taxes, and any other taxes) imposed on such Payments in the year or years in which payable; and (ii) the amount of such taxes shall be computed at the rates in effect under the applicable tax laws in the year in which the 280G Change in Control occurs, or if then ascertainable, the rates in effect in any later year in which any Payment is expected to be paid following the 280G Change in Control, and in the case of any income taxes, by using the maximum combined federal, state and (if applicable) local income tax rates then in effect under such laws.

(c) Any reduction in the Executive’s Payments required to be made pursuant to Section 8(a) above (the “Required Reduction”) shall be made as follows: first, any  Payments  that became fully vested prior to the 280G Change in Control and that pursuant to paragraph 8(b) of  Treas. Reg. §1.280G-1, Q/A 24 are treated as Payments solely by reason of the acceleration of their originally scheduled dates of payment shall be reduced, by cancellation of the acceleration of their dates of payment; second, any severance payments or benefits, performance-based cash or performance-based equity incentive awards, or other Payments, in all cases the full amounts of which are treated as contingent on the 280G Change in Control pursuant to paragraph 8(a) of Treas. Reg. §1.280G-1, Q/A 24,  shall be reduced; and third, any cash or equity incentive awards, or non-qualified deferred compensation amounts, that vest solely based on the Executive’s  continued service with the Company or any of its Affiliates, and that pursuant to paragraph (c) of Treas. Reg. §1.280G-1, Q/A 24 are treated as contingent on the 280G Change in Control because they become vested as a result of the 280G Change in Control, shall be reduced,  first by cancellation of any acceleration of their originally scheduled dates of payment (if payment with respect to such items is not treated as automatically occurring upon the vesting of such items for purposes of Section 280G) and then, if necessary, by canceling the acceleration of their vesting. In each case, the amounts of the Payments shall be reduced in the inverse order of their originally scheduled dates of payment or vesting, as applicable, and shall be so reduced only to the extent necessary to achieve the Required Reduction.

(d) A determination as to whether any Excise Tax is payable with respect to the Executive’s Payments and if so, as to the amount thereof, and a determination as to whether any reduction in the Executive’s Payments is required pursuant to the provisions of Sections 8(a) and 8(b) above, and if so, as to the amount of the reduction so required, shall be made by no later than fifteen (15) days prior to the closing of the transaction or the occurrence of the event that constitutes the 280G Change in Control, or as soon thereafter as administratively practicable. Such determinations, and the assumptions to be utilized in arriving at such determinations, shall be made by an independent auditor (the “Auditor”) selected by the Company, all of whose fees and expenses shall be borne and directly paid solely by the Company.  The Auditor shall provide a written report of its determinations, including detailed supporting calculations, both to the Executive and to the Company. If the Auditor determines that no Excise Tax is payable with respect to the Executive’s Payments, either as a result of any Required Reduction the Auditor has determined should be made thereto or because the Auditor has determined that no Required Reduction must be made thereto, the written report which the auditor furnishes to the Executive and to the Company pursuant to the preceding sentence shall be accompanied by an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to the Executive’s Payments.  Except as otherwise provided in Section 8(e) or Section 8(f) below, the determinations made by the Auditor pursuant to this Section 8(d) shall be binding upon the Executive and the Company and its Affiliates.

(e) If, notwithstanding (i) any determination made pursuant to Section 8(d) above that a reduction in the Executive’s Payments is not required pursuant to Section 8(a) above or (ii) any reduction in the Executive’s Payments made pursuant to Section 8(a) above, the United States Internal Revenue Service (the “IRS”) subsequently asserts that the Executive is liable for the Excise Tax with respect to such Payments, the Payments then remaining to be paid or provided to the Executive shall be reduced as provided in Sections 8(a) and 8(b) above or shall be further reduced as provided in Section 8(a) above, and (if still necessary after such reduction or further reduction) any Payments already made to the Executive shall be repaid to the Company or its Affiliates, to the extent necessary to eliminate the Excise Tax asserted by the IRS to be payable by the Executive. Any such reduction or further reduction or repayment (i) shall be made only if the IRS agrees that such reduction or further reduction or repayment will be effective to avoid the imposition of any Excise Tax with respect to the Executive’s Payments as so reduced or repaid and agrees not to impose such Excise Tax against the Executive if such reduction or further reduction or repayment is made, and (ii) shall be made in the manner described in Section 8(c) above.

(f) Notwithstanding anything to the contrary in the foregoing provisions of this Section 8, if (i) the Executive’s Payments have been reduced pursuant to Section 8(a) above and the IRS nevertheless subsequently determines that Excise Tax is payable with respect to the Executive’s Payments, and (ii) if the After Tax Amount of the Payments payable to the Executive, determined without any further reduction or repayment as provided in Section 8(e) above, and without any initial reduction as provided in Section 8(a) above, would exceed the After Tax Amount of the Payments payable to the Executive as reduced in accordance with Section 8(a), then (A) no such further reduction or repayment shall be made with respect to the Executive’s Payments pursuant to Section 8(e) above, and (B) the Company or its Affiliate shall pay to the Executive an amount equal to the reduction in the Executive’s Payments that was initially made pursuant to Section 8(a). Such amount shall be paid to the Executive in a cash lump sum by no later than the fifteenth (15^th^) day of the third (3^rd^) month following the close of the calendar year in which the IRS makes its final determination that Excise Tax is due with respect to the Executive’s Payments, provided that by such day the Executive has paid the Excise Tax so determined to be due.

(g) For purposes of the foregoing, the following terms shall have the following respective meanings:

(i) “280G Change in Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company, as determined in accordance with Section 280G(b)(2) of the Code and the regulations issued thereunder.

(ii) “Payment” shall mean any payment or benefit in the nature of compensation that is to be paid or provided to the Executive or for the Executive’s benefit in connection with a 280G Change in Control, to the extent that such payment or benefit is “contingent” on the 280G Change in Control within the meaning of Section 280G(b)(2)(A)(i) of the Code and the regulations issued thereunder.

(iii) “Excise Tax Threshold Amount” means an amount equal to three (3) times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations issued thereunder, less $1,000.

  1. Notice.  All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows:

If to the Company, to:

The York Water Company

130 East Market Street

York, PA  17405-7089

Attention:  Chairman of the Board

If to Executive, to:

[name]

[Address]

or to such other names or addresses as the Company or Executive, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service

  1. Restrictive Covenants.

(a) Confidential Information. Executive recognizes and acknowledges that, by reason of Executive’s employment by and service to the Company, Executive has had and will continue to have access to confidential information of the Company, including, without limitation, information and knowledge pertaining to products and services offered, innovations, designs, ideas, plans, trade secrets, proprietary information, distribution and sales methods and systems, sales and profit figures, customer and client lists, and relationships between the Company and its Subsidiaries and Affiliates and other distributors, customers, clients, suppliers and others who have business dealings with the Company (“Confidential Information”).  Executive acknowledges that such Confidential Information is a valuable and unique asset and covenants that Executive will not, either during or after Executive’s Termination of Employment, disclose or use any such Confidential Information to any person for any reason whatsoever without the prior written authorization of the Board, unless such information is in the public domain through no fault of Executive or except as may be required by law.

(b) Limitation on Restrictions.  The restrictions in Paragraph (b) and (c) shall not be construed to prohibit the ownership by Executive of less than five percent of any class of securities of any corporation which is engaged in any of the foregoing businesses having a class of securities registered pursuant to the Exchange Act, provided that such ownership represents a passive investment and that neither Executive nor any group of persons including Executive, either directly or indirectly, manages or exercises control of any such corporation, guarantees any of its financial obligations, otherwise takes any part in its business, other than exercising her rights as a shareholder, or seeks to do any of the foregoing.

  1. Equitable Relief.

(a) Executive acknowledges that the restrictions contained in Sections 10 and 12 hereof are reasonable and necessary to protect the legitimate interests of the Company and its Affiliates, that the Company would not have entered into this Agreement in the absence of such restrictions, and that any violation of any provision of that Section will result in irreparable injury to the Company.  Executive represents that Executive’s experience and capabilities are such that the restrictions contained in Section 10 hereof will not prevent Executive from obtaining employment or otherwise earning a living at the same general level of economic benefit as anticipated by this Agreement.  Executive further represents and acknowledges that (i) Executive has been advised by the Company to consult Executive’s own legal counsel in respect of this Agreement, and (ii) that Executive has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement and understands its terms and conditions.

(b) Executive agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of Section 10 hereof, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled.  In the event that any of the provisions of Section 10 hereof should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum time, geographic, service, or other limitations permitted by applicable law.

(c) Executive irrevocably and unconditionally (i) agrees that any suit, action or other legal proceeding arising out of Section 10 hereof, including, without limitation, any action commenced by the Company for preliminary and permanent injunctive relief or other equitable relief, may be brought in the United States District Court for the Middle District of Pennsylvania, or if such court does not have jurisdiction or will not accept jurisdiction, in any court of general jurisdiction in York County, Pennsylvania, consents to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii) waives any objection Executive may have to the laying of venue of any such suit, action or proceeding in any such court.  Executive also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Section 9 hereof.

(d) Executive agrees that Executive will provide, and that the Company may similarly provide, a copy of Section 10 hereof to any business or enterprise (i) which Executive may directly or indirectly own, manage, operate, finance, join, control or participate in the ownership, management, operation, financing, control or control of, or (ii) with which Executive may be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise, or in connection with which she may use or permit her name to be used; provided, however, that this provision shall not apply in respect of Section 10 hereof after expiration of the time period set forth therein.

  1. Mutual Non-Disparagement.  Executive shall not, while employed by the Company or during the five (5) years following the Executive’s Termination of Employment, make, directly or indirectly, any public or private statements, gestures, signs, signals or other verbal or nonverbal communications that belittle, disparage or otherwise express disapproval of the Company or any of its Affiliates or their respective businesses, or any of their past or present officers, directors, employees, advisors, agents, policies, procedures, practices, decision-making, conduct, professionalism or compliance with standards. The Company shall not, and shall use commercially reasonably efforts to make a one-time instruction to its executive officers and directors to not, during the five (5) years following the Executive’s Termination of Employment, make, directly or indirectly, any public or private statements, gestures, signs, signals or other verbal or nonverbal communications that belittle, disparage or otherwise express disapproval of the Executive.

  2. Enforcement.

(a) In the event that the Company shall fail or refuse to make payment of any amounts due Executive under Section 4 hereof within the respective time periods provided therein, the Company shall pay to an escrow agent, who shall invest such sum with interest to be paid to the prevailing party, any amount remaining unpaid under Section 4.  In such event, the parties shall engage in arbitration in the City of Harrisburg, Pennsylvania, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association, before a panel of three arbitrators, one of whom shall be selected by the Company and one by Executive, and the third of whom shall be selected by the other two arbitrators.  Any award entered by the arbitrators shall be final, binding and non-appealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction.  This arbitration provision shall be specifically enforceable.  The arbitrators shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by virtue of the Agreement.  The delayed payment will be treated as paid on the date specified under this Agreement if Executive accepts any portion of the payment that the Company is willing to make, Executive makes prompt and reasonable, good faith efforts to collect the remaining portion of the payment and the remainder of the payment is made no later than the end of the Company’s first taxable year in which the arbitrators reach a decision, the Company and Executive enter into a legally binding settlement of the dispute over the payment or the date the Company concedes the payment is due to Executive.  For Executive’s efforts to collect payment to be considered prompt, reasonable and in good faith, Executive must provide notice to the Company within 90 days of the latest date that payment could have been made in accordance with the terms of this Agreement and, if not paid, Executive must take further enforcement measures within 180 days after such date.

(b) The Company shall pay Executive on demand the amount necessary to reimburse Executive in full for all reasonable expenses (including reasonable attorneys’ fees and expenses) incurred by Executive in enforcing any of the obligations of the Company under this Agreement subject to Executive’s duty to repay such sums to the Company in the event that Executive does not prevail on any material issue which is the subject of such arbitration.  If Executive prevails on at least one material issue which is the subject of such arbitration, the Company shall be responsible for all of the fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration (including Executive’s reasonable attorneys’ fees and expenses).  Otherwise, each party shall be responsible for their own expenses relating to the conduct of the arbitration (including reasonable attorneys’ fees and expenses) and shall equally share the fees of the American Arbitration Association.  Any reimbursement or in-kind benefits under this Section 13 shall be paid or provided to Executive within 30 days of the date Executive is finally determined to have prevailed on at least one material issue, which was the subject of the arbitration.

  1. Amendment.  This Agreement may be amended or modified only by a written instrument signed by the Executive and by an expressly authorized officer of the Company.

  2. General.

(a) Successor.  The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to Executive, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as herein defined and any such successor or successors to its business and/or assets, jointly and severally. This Agreement shall inure to the benefit of and be binding upon the Company and its successors, and assigns. This Agreement is personal to the Executive and shall not be assignable by the Executive other than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

(b) Governing law.  This Agreement shall be governed by and interpreted under the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws provisions.

(c) No Right of Employment.  Nothing in this Agreement shall be construed as giving the Executive any right to be retained in the employ of the Company or shall interfere in any way with the right of the Company to terminate the Executive’s employment at any time, with or without Cause.

(d) Unfunded Obligation.  The obligations under this Agreement shall be unfunded.  Benefits payable under this Agreement shall be paid from the general assets of the Company.  The Company shall have no obligation to establish any fund or to set aside any assets to provide benefits under this Agreement.

(e) Severability.  If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement, which can be given effect without the invalid or unenforceable provision or application.

(f) No Set-Off.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against Executive or others.

(g) Non-waiver. The waiver by any Party of a breach of any provision of this Separation Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach.

(h) Counterparts. This Agreement may be executed in duplicate counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. Facsimile, electronic (Adobe Acrobat, etc.) and other copies or duplicates of this Agreement are valid and enforceable as originals. This Agreement may be executed with an ink or electronic signature, including via DocuSign.

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

THE YORK WATER COMPANY EXECUTIVE
By: ___________________________________<br><br> <br>Name: ________________________________<br><br> <br>Title: __________________________________ _________________________________<br><br> <br>Title: _____________________________

Exhibit A

You should consult with an attorney before signing this release of claims.

Release

  1. In consideration of the payments and benefits to be made under the Change of Control Agreement, dated as of [_______], 2022 (the “Change of Control Agreement”), by and between ________________(the “Executive”) and The York Water Company (the “Company”) thereof (each of the Executive and the Company, a “Party” and collectively, the “Parties”), the sufficiency of which the Executive acknowledges, the Executive, with the intention of binding the Executive and the Executive’s heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company and each of its subsidiaries and affiliates (the “Company Affiliated Group”), their present and former officers, directors, executives, shareholders, agents, attorneys, employees and employee benefit plans (and the fiduciaries thereof), and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which the Executive, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or held, arising on or prior to the date hereof, against any Company Released Party, including claims arising out of, or relates to, the Change of Control Agreement and any employment agreement or other similar agreement between the Executive and the Company, the Executive’s employment with the Company or any of its subsidiaries and affiliates, or any termination of such employment, including claims (i) for severance or vacation benefits, unpaid wages, salary or incentive payments, (ii) for breach of contract, wrongful discharge, impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, (iii) for any violation of applicable state and local labor and employment laws (including, without limitation, all laws concerning unlawful and unfair labor and employment practices) and (iv) for employment discrimination under any applicable federal, state or local statute, provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities Act (“ADA”), the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Age Discrimination in Employment Act (“ADEA”), the Genetic Information Nondiscrimination Act (“GINA”), the Family and Medical Leave Act (“FMLA”), and any similar or analogous state statute or local ordinance, excepting only:
A. rights of the Executive arising under, or preserved by, this Release;
B. the right of the Executive to receive COBRA continuation coverage in accordance with applicable law;
--- ---
C. claims for benefits under any health, disability, retirement, life insurance or other, similar employee benefit plan<br> (within the meaning of Section 3(3) of ERISA) of the Company Affiliated Group;
--- ---
D. rights to indemnification the Executive has or may have under the organizing documents of any member of the Company<br> Affiliated Group or as an insured under any director’s and officer’s liability insurance policy now or previously in force; and
--- ---
E. rights granted to the Executive as an equity holder of the Company, if any.
--- ---

  1. The Executive acknowledges and agrees that this Release is not to be construed in any way as an admission of any liability whatsoever by any Company Released Party, any such liability being expressly denied.

  2. This Release applies to any relief no matter how called, including, without limitation, wages, back pay, front pay, compensatory damages, liquidated damages, punitive damages, damages for pain or suffering, costs, and attorneys’ fees and expenses.

  3. The Executive specifically acknowledges that the Executive’s acceptance of the terms of this Release is, among other things, a specific waiver of the Executive’s rights, claims and causes of action under Title VII, ADEA, ADA, GINA, FMLA and any state or local law or regulation in respect of discrimination of any kind; provided, however, that nothing herein shall be deemed, nor does anything contained herein purport, to be a waiver of any right or claim or cause of action which by law the Executive is not permitted to waive.

  4. The Executive acknowledges that the Executive has been given a period of [twenty-one (21)] [forty-five (45)] days to consider whether to execute this Release.  If the Executive accepts the terms hereof and executes this Release, the Executive may thereafter, for a period of seven (7) days following (and not including) the date of execution, revoke this Release.  If the seventh day falls on a weekend or federal holiday, the revocation period is extended to the next business day. If no such revocation occurs, this Release shall become irrevocable in its entirety, and binding and enforceable against the Executive, on the day next following the day on which the foregoing seven-day period has elapsed.  If such a revocation occurs, the Executive shall irrevocably forfeit any right to payment of the compensation under the Change of Control Agreement.

  5. The Executive acknowledges and agrees that the Executive has not, with respect to any transaction or state of facts existing prior to the date hereof, filed any complaints, charges or lawsuits against any Company Released Party with any governmental agency, court or tribunal.

  6. The Executive acknowledges that the Executive has been advised to seek, and has had the opportunity to seek, the advice and assistance of an attorney with regard to this Release and has been given a sufficient period within which to consider this Release.

  7. The Executive acknowledges that this Release relates only to claims that exist as of the date of this Release.

  8. The Executive acknowledges that the benefits the Executive is receiving in connection with this Release and the Executive’s obligations under this Release are in addition to anything of value to which the Executive is entitled from the Company.

  9. Each provision hereof is severable from this Release, and if one or more provisions hereof are declared invalid, the remaining provisions shall nevertheless remain in full force and effect.  If any provision of this Release is so broad, in scope, or duration or otherwise, as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

  10. This Release constitutes the complete agreement of the Parties in respect of the subject matter hereof and shall supersede all prior agreements between the Parties in respect of the subject matter hereof except to the extent set forth herein. For the avoidance of doubt, however, nothing in this Release shall constitute a waiver of any Company Released Party’s right to enforce any obligations of the Executive under the Change of Control Agreement and any employment agreement or other similar agreement between the Executive and the Company that survive the termination of Executive’s employment, including without limitation, any non-competition covenant, non-solicitation covenant or any other restrictive covenants contained therein.

  11. The failure to enforce at any time any of the provisions of this Release or to require at any time performance by another party of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect the validity of this Release, or any part hereof, or the right of any party thereafter to enforce each and every such provision in accordance with the terms of this Release.

  12. This Release may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.  Signatures delivered by facsimile or .pdf shall be deemed effective for all purposes.

  13. This Release shall be binding upon any and all successors and assigns of the Executive and the Company.

  14. Except for issues or matters as to which federal law is applicable, this Release shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the conflicts of law principles thereof.

[signature page follows]

IN WITNESS WHEREOF, this Release has been signed by or on behalf of each of the Parties, all as of ____________________.

The York Water Company
By:
Name:
Title:
Executive

Name:

Title:

Schedule 10.1

Name Agreement Date
Suzanne M. Becker May 29, 2025
Alexandra C. Chiaruttini August 1, 2022
Ashley M. Grimm January 15, 2025
Joseph T. Hand August 1, 2022
Matthew E. Poff August 1, 2022
Matthew J. Scarpato July 31, 2023
Mark S. Snyder August 1, 2022

EXHIBIT 31.1

CERTIFICATIONS

I, Joseph T. Hand, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The York Water Company;
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<br> 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<br> 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<br> 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<br> 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<br> 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<br> 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<br> 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<br> the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably<br> 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<br> financial reporting.
Date: August 12, 2025 /s/ Joseph T. Hand
--- ---
Joseph T. Hand
President and CEO

EXHIBIT 31.2

CERTIFICATIONS

I, Matthew E. Poff, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The York Water Company;
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<br> 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<br> 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<br> 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<br> 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<br> 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<br> 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<br> 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,<br> to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably<br> 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<br> over financial reporting.
Date: August 12, 2025 /s/ Matthew E. Poff
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Matthew E. Poff
Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The York Water Company (the “Company”) on Form 10-Q for the period ending June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph T. Hand, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
THE YORK WATER COMPANY
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Date: August 12, 2025 /s/ Joseph T. Hand
Joseph T. Hand
Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The York Water Company (the “Company”) on Form 10-Q for the period ending June 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew E. Poff, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
THE YORK WATER COMPANY
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Date: August 12, 2025 /s/ Matthew E. Poff
Matthew E. Poff
Chief Financial Officer

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