Third Quarter Report September 30, 2024

Dear Shareholders:

Net income for the quarter ended September 30, 2024 totaled $428,000, or $0.82 per share. This represented a decrease compared with net income of $475,000, or $0.91 per share, reported for the third quarter of 2023. The change in earnings was primarily due to a $74,000 increase in provision for credit losses and a $68,000 increase in noninterest expense offset by an $85,000 increase in noninterest income.

Net income for the nine months ended September 30, 2024 totaled $1,245,000 compared with $1,278,000 reported for the same period in 2023. Loan interest income has increased $816,000 due to higher interest rates, but interest expense also increased $893,000 mostly due to short-term borrowings, and to a lesser extent, certificates of deposit. Loan production has been modestly steady with growth just over 1% in 2024. With recent easing of monetary policy by the Federal Reserve, lower funding costs are anticipated with resulting loan demand still to be determined.

Overhead expenses in personnel, technology and facilities have been stable this year with efficiencies and lower inflation, while operational improvements and product enhancements continue to keep the bank competitive with larger institutions. Risk monitoring remains a priority with strong credit quality and asset-liability management as well as strengthening business continuity resiliency.

Earnings per share totaled $2.39 and generated 0.83% return on average assets and 7.10% return on equity for the nine months ended September 30, 2024. A dividend of $0.56 per share for the third quarter was paid October 1. Please do not hesitate to contact me if you have any questions.

Sincerely,

Nelson L. Person
President & CEO