10-Q 1 enbp-20240331.htm 10-Q

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 March 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________________________ to ________________________

 

ENB Financial Corp

(Exact name of registrant as specified in its charter)

 

Pennsylvania   000-53297   51-0661129
(State or Other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No)
         
31 E. Main St., Ephrata, PA   17522-0457    
(Address of principal executive offices)   (Zip Code)    

 

Registrant’s telephone number, including area code           (717) 733-4181          

 

Former name, former address, and former fiscal year, if changed since last report          Not Applicable         

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None.   N/A   N/A

 

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

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 and post 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

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 1, 2024, the registrant had 5,668,018 shares of $0.10 (par) Common Stock outstanding.

 

 

 

ENB FINANCIAL CORP

INDEX TO FORM 10-Q

March 31, 2024

 

Part I – FINANCIAL INFORMATION  
       
  Item 1. Financial Statements  
       
  Consolidated Balance Sheets at March 31, 2024 and 2023, and December 31, 2023 (Unaudited) 3
       
  Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023 Unaudited) 4
       
  Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 5
       
  Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 6
       
  Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (Unaudited) 7
       
  Notes to the Unaudited Consolidated Interim Financial Statements 8-26
       
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27-44
       
  Item 3. Quantitative and Qualitative Disclosures about Market Risk 45-47
       
  Item 4. Controls and Procedures 48
       
       
Part II – OTHER INFORMATION 49
       
  Item 1. Legal Proceedings 49
       
  Item 1A. Risk Factors 49
       
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 49
       
  Item 3. Defaults upon Senior Securities 49
       
  Item 4. Mine Safety Disclosures 49
       
  Item 5. Other Information 49
       
  Item 6. Exhibits 50
       
       
SIGNATURE PAGE 51

 

2 

ENB FINANCIAL CORP

Part I - Financial Information

Item 1. Financial Statements

 

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

   March 31,   December 31,   March 31, 
   2024   2023   2023 
   $   $   $ 
ASSETS               
Cash and due from banks   13,547    29,519    27,271 
Interest-bearing deposits in other banks   54,306    59,477    19,179 
Total cash and cash equivalents   67,853    88,996    46,450 
Securities available for sale (at fair value, net of allowance for credit losses of $0)   446,774    459,569    494,683 
Equity securities (at fair value)   9,401    9,451    9,014 
Loans held for sale   1,789    352    875 
Loans (net of unearned income)   1,380,459    1,360,078    1,256,599 
Less: Allowance for credit losses   14,616    15,176    16,054 
Net loans   1,365,843    1,344,902    1,240,545 
Premises and equipment   26,610    25,284    25,350 
Regulatory stock   8,549    8,540    7,318 
Bank owned life insurance   35,892    35,632    34,992 
Other assets   29,328    28,098    29,624 
Total assets   1,992,039    2,000,824    1,888,851 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
Liabilities:               
Deposits:               
Noninterest-bearing   602,975    611,968    642,136 
Interest-bearing   1,118,036    1,114,830    1,007,472 
Total deposits   1,721,011    1,726,798    1,649,608 
Short-term borrowings   
    
    5,000 
Long-term debt   96,982    101,228    78,639 
Subordinated debt   39,596    39,556    39,436 
Other liabilities   12,517    13,588    10,169 
Total liabilities   1,870,106    1,881,170    1,782,852 
Stockholders' equity:               
Common stock, par value $0.10               
Shares:  Authorized 24,000,000               
Issued 5,739,114 and Outstanding 5,673,017 as of 3/31/24,5,670,054 as of 12/31/23, and 5,646,154 as of 3/31/23   574    574    574 
Capital surplus   4,036    4,072    4,341 
Retained earnings   153,573    150,596    143,542 
Accumulated other comprehensive loss, net of tax   (35,111)   (34,355)   (40,633)
Less: Treasury stock cost on 66,097 shares as of 3/31/24, 69,060 as of 12/31/23, and 92,961 as of 3/31/23   (1,139)   (1,233)   (1,825)
Total stockholders' equity   121,933    119,654    105,999 
Total liabilities and stockholders' equity   1,992,039    2,000,824    1,888,851 

 

See Notes to the Unaudited Consolidated Interim Financial Statements

3 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

   Three Months ended March 31, 
   2024   2023 
   $   $ 
Interest and dividend income:          
Interest and fees on loans   17,315    13,697 
Interest on securities available for sale          
Taxable   2,885    3,042 
Tax-exempt   721    789 
Interest on deposits at other banks   344    34 
Dividend income   306    255 
Total interest and dividend income   21,571    17,817 
Interest expense:          
Interest on deposits   6,831    2,844 
Interest on borrowings   1,368    1,169 
Total interest expense   8,199    4,013 
Net interest income   13,372    13,804 
(Release) provision for credit losses   (644)   1,257 
Net interest income after (release) provision for credit losses   14,016    12,547 
Other income:          
Trust and investment services income   1,083    785 
Service fees   1,361    900 
Commissions   1,017    895 
Losses on the sale of debt securities, net   (91)   (410)
Losses on equity securities, net   (167)   (196)
Gains on sale of mortgages   544    122 
Earnings on bank-owned life insurance   293    226 
Other income   306    332 
Total other income   4,346    2,654 
Operating expenses:          
Salaries and employee benefits   8,335    7,455 
Occupancy   857    736 
Equipment   303    344 
Advertising & marketing   241    274 
Computer software & data processing   1,702    1,782 
Shares tax   357    300 
Professional services   711    663 
Other expense   1,088    810 
Total operating expenses   13,594    12,364 
Income before income taxes   4,768    2,837 
Provision for federal income taxes   827    396 
Net income   3,941    2,441 
Earnings per share of common stock   0.70    0.43 
Cash dividends paid per share   0.17    0.17 
Weighted average shares outstanding   5,665,074    5,631,499 

 

See Notes to the Unaudited Consolidated Interim Financial Statements

4 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(DOLLARS IN THOUSANDS)

 

   Three Months ended March 31, 
   2024   2023 
   $   $ 
Net income   3,941    2,441 
Other comprehensive (loss) income, net of tax:          
Securities available for sale not other-than-temporarily impaired:          
           
Unrealized gains (losses) arising during the period   (1,048)   9,284 
Income tax effect   220    (1,949)
    (828)   7,335 
Losses recognized in earnings   91    410 
Income tax effect   (19)   (86)
    72    324 
Other comprehensive (loss) income, net of tax   (756)   7,659 
Comprehensive Income   3,185    10,100 

 

See Notes to the Unaudited Consolidated Interim Financial Statements

5 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

 

               Accumulated         
               Other       Total 
   Common   Capital   Retained   Comprehensive   Treasury   Stockholders' 
   Stock   Surplus   Earnings   Income (Loss)   Stock   Equity 
   $   $   $   $   $   $ 
Balances, December 31, 2022   574    4,437    142,677    (48,292)   (2,061)   97,335 
Cumulative effect of adoption of ASU 2016-13   
    
    (619)   
    
    (619)
Net income   
    
    2,441    
    
    2,441 
Other comprehensive income net of tax   
    
    
    7,659    
    7,659 
Stock-based compensation expense   
    14        
    
    14 
Treasury stock purchased - 8,903 shares   
    
    
    
    (147)   (147)
Treasury stock issued - 19,523 shares   
    (110)   
    
    383    273 
Cash dividends paid, $0.17 per share   
    
    (957)   
    
    (957)
Balances, March 31, 2023   574    4,341    143,542    (40,633)   (1,825)   105,999 
                               
Balances, December 31, 2023   574    4,072    150,596    (34,355)   (1,233)   119,654 
Net income   
    
    3,941    
    
    3,941 
Other comprehensive loss net of tax   
    
    
    (756)   
    (756)
Stock-based compensation expense   
    17        
    
    17 
Treasury stock purchased - 15,699 shares   
    
    
    
    (228)   (228)
Treasury stock issued - 18,662 shares   
    (53)   
    
    322    269 
Cash dividends paid, $0.17 per share   
    
    (964)   
    
    (964)
Balances, March 31, 2024   574    4,036    153,573    (35,111)   (1,139)   121,933 

 

See Notes to the Unaudited Consolidated Interim Financial Statements

6 

ENB FINANCIAL CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(DOLLARS IN THOUSANDS)

  Three Months Ended March 31, 
   2024   2023 
   $   $ 
Cash flows from operating activities:          
Net income   3,941    2,441 
Adjustments to reconcile net income to net cash          
provided by operating activities:          
Net amortization of securities premiums and discounts and loan fees   1,123    1,196 
(Increase) decrease in interest receivable   (1,201)   91 
Increase in interest payable   480    830 
(Release) provision for credit losses   (644)   1,257 
Losses on the sale of debt securities, net   91    410 
Losses on equity securities, net   167    196 
Gains on sale of mortgages   (544)   (122)
Loans originated for sale   (16,643)   (4,252)
Proceeds from sales of loans   15,750    9,426 
Earnings on bank-owned life insurance   (293)   (226)
Depreciation of premises and equipment and amortization of software   513    467 
Deferred income tax   79    (244)
Amortization of deferred fees on subordinated debt   40    40 
Stock-based compensation expense   17    14 
Other assets and other liabilities, net   (1,466)   292 
Net cash provided by operating activities   1,410    11,816 
           
Cash flows from investing activities:          
Securities available for sale:          
Proceeds from maturities, calls, and repayments   8,663    14,544 
Proceeds from sales   5,019    28,116 
Purchases   (3,000)   
 
Equity securities          
Purchases   (117)   (92)
Purchase of regulatory bank stock   (173)   (885)
Redemptions of regulatory bank stock   164    237 
Proceeds from bank-owned life insurance   
    2,083 
Net increase in loans   (20,354)   (65,567)
Purchases of premises and equipment, net   (1,746)   (395)
Purchase of computer software   (53)   (398)
Net cash used for investing activities   (11,597)   (22,357)
Cash flows from financing activities:          
Net decrease in demand, NOW, and savings accounts   (19,550)   (14,622)
Net increase in time deposits   13,763    25,272 
Repayments of short-term debt   
    (11,000)
Proceeds from long-term debt   
    20,600 
Repayments of long-term debt   (4,246)   
 
Dividends paid   (964)   (957)
Proceeds from sale of treasury stock   269    273 
Treasury stock purchased   (228)   (147)
Net cash (used for) provided by financing activities   (10,956)   19,419 
(Decrease) increase in cash and cash equivalents   (21,143)   8,878 
Cash and cash equivalents at beginning of period   88,996    37,572 
Cash and cash equivalents at end of period   67,853    46,450 
Supplemental disclosures of cash flow information:          
Interest paid   7,719    3,183 
Supplemental disclosure of non-cash investing and financing activities:          
Fair value adjustments for securities available for sale   (957)   9,696 

 

See Notes to the Unaudited Consolidated Interim Financial Statements

7 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

1. Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and to general practices within the banking industry. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all significant adjustments considered necessary for fair presentation have been included. Certain items previously reported have been reclassified to conform to the current period’s reporting format. Such reclassifications did not affect net income or stockholders’ equity.

 

ENB Financial Corp (“the Corporation”) is the bank holding company for its wholly-owned subsidiary Ephrata National Bank (the “Bank”). Ephrata National Bank has one wholly-owned subsidiary, ENB Insurance, LLC which is consolidated into its financial statements. This Form 10-Q, for the first quarter of 2024, is reporting on the results of operations and financial condition of ENB Financial Corp on a consolidated basis.

 

Operating results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in ENB Financial Corp’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

2. Revenue from Contracts with Customers

 

The Corporation records revenue from contracts with customers in accordance with Accounting Standards Topic 606, Revenue from Contracts with Customers (Topic 606). Under Topic 606, the Corporation must identify contracts with customers, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when the Corporation satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods.

 

The Corporation’s primary sources of revenue are derived from interest and dividends earned on loans, investment securities, and other financial instruments that are not within the scope of Topic 606. The Corporation has evaluated the nature of its contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is presented in the Consolidated Statements of Income was not necessary. The Corporation generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed; charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers.

 

8 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

3. Securities Available for Sale

 

The amortized cost, gross unrealized gains and losses, approximate fair value, and allowance for credit losses of investment securities held at March 31, 2024 and December 31, 2023, are as follows:  

 

      Gross  Gross  Allowance   
(DOLLARS IN THOUSANDS)  Amortized  Unrealized  Unrealized  for Credit  Fair
   Cost  Gains  Losses  Losses  Value
   $  $  $  $  $
March 31, 2024                         
U.S. treasuries   19,877    
    (1,821)   
    18,056 
U.S. government agencies   19,400    
    (1,907)   
    17,493 
U.S. agency mortgage-backed securities   42,381    
    (3,648)   
    38,733 
U.S. agency collateralized mortgage obligations   21,342    
    (2,085)   
    19,257 
Non-agency MBS/CMO   56,399    
    (2,800)   
    53,599 
Asset-backed securities   65,326    39    (833)   
    64,532 
Corporate bonds   60,982    
    (6,106)   
    54,876 
Obligations of states and political subdivisions   205,511    
    (25,283)   
    180,228 
Total securities available for sale   491,218    39    (44,483)   
    446,774 

 

      Gross  Gross  Allowance   
(DOLLARS IN THOUSANDS)  Amortized  Unrealized  Unrealized  for Credit  Fair
   Cost  Gains  Losses  Losses  Value
   $  $  $  $  $
December 31, 2023                         
U.S. Treasuries   19,869    
    (1,710)   
    18,159 
U.S. government agencies   19,400    
    (1,862)   
    17,538 
U.S. agency mortgage-backed securities   43,753    
    (3,597)   
    40,156 
U.S. agency collateralized mortgage obligations   21,841    
    (2,004)   
    19,837 
Non-agency MBS/CMO   59,281    22    (3,116)   
    56,187 
Asset-backed securities   66,391    20    (1,106)   
    65,305 
Corporate bonds   61,122    
    (6,118)   
    55,004 
Obligations of states and political subdivisions   211,400    1    (24,018)   
    187,383 
Total securities available for sale   503,057    43    (43,531)   
    459,569 

 

The amortized cost and fair value of securities available for sale at March 31, 2024, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions.

 

CONTRACTUAL MATURITY OF DEBT SECURITIES

(DOLLARS IN THOUSANDS)

   Amortized   
   Cost  Fair Value
   $  $
Due in one year or less   10,166    9,915 
Due after one year through five years   98,813    89,972 
Due after five years through ten years   64,681    55,426 
Due after ten years   317,558    291,461 
Total debt securities   491,218    446,774 

 

9 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

Securities available for sale with a par value of $115,868,000 and $117,525,000 at March 31, 2024, and December 31, 2023, respectively, were pledged or restricted for public funds, borrowings, or other purposes as required by law. The fair value of these pledged securities was $107,244,000 at March 31, 2024, and $109,651,000 at December 31, 2023.

 

Proceeds from active sales of debt securities available for sale, along with the associated gross realized gains and gross realized losses, are shown below. Realized gains and losses are computed on the basis of specific identifications.

 

PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE

(DOLLARS IN THOUSANDS)

 

   Three Months Ended March 31,
   2024  2023
   $  $
Proceeds from sales   5,019    28,116 
Gross realized gains   
    4 
Gross realized losses   (91)   (414)

 

Information pertaining to securities with gross unrealized losses at March 31, 2024 and December 31, 2023, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

 

UNREALIZED LOSSES ON DEBT SECURITIES

(DOLLARS IN THOUSANDS)

   Less than 12 months  More than 12 months  Total
      Gross     Gross     Gross
   Fair  Unrealized  Fair  Unrealized  Fair  Unrealized
   Value  Losses  Value  Losses  Value  Losses
   $  $  $  $  $  $
As of March 31, 2024                              
U.S. Treasuries   
    
    18,056    (1,821)   18,056    (1,821)
U.S. government agencies   
    
    17,493    (1,907)   17,493    (1,907)
U.S. agency mortgage-backed securities   
    
    38,728    (3,648)   38,728    (3,648)
U.S. agency collateralized mortgage obligations   
    
    19,257    (2,085)   19,257    (2,085)
Non-Agency MBS/CMO   12,051    (59)   41,548    (2,741)   53,599    (2,800)
Asset-backed securities   4,404    (56)   53,803    (777)   58,207    (833)
Corporate bonds   
    
    54,876    (6,106)   54,876    (6,106)
Obligations of states & political subdivisions   
    
    180,198    (25,283)   180,198    (25,283)
Total unrealized losses on debt securities   16,455    (115)   423,959    (44,368)   440,414    (44,483)

 

UNREALIZED LOSSES ON DEBT SECURITIES

(DOLLARS IN THOUSANDS)

   Less than 12 months  More than 12 months  Total
      Gross     Gross     Gross
   Fair  Unrealized  Fair  Unrealized  Fair  Unrealized
   Value  Losses  Value  Losses  Value  Losses
   $  $  $  $  $  $
As of December 31, 2023                              
U.S. Treasuries   
    
    18,159    (1,710)   18,159    (1,710)
U.S. government agencies   
    
    17,538    (1,862)   17,538    (1,862)
U.S. agency mortgage-backed securities   
    
    40,147    (3,597)   40,147    (3,597)
U.S. agency collateralized mortgage obligations   
    
    19,837    (2,004)   19,837    (2,004)
Non-Agency MBS/CMO   11,189    (119)   41,966    (2,997)   53,155    (3,116)
Asset-backed securities   2,661    (47)   57,049    (1,059)   59,710    (1,106)
Corporate bonds   
    
    55,004    (6,118)   55,004    (6,118)
Obligations of states & political subdivisions   
    
    186,819    (24,018)   186,819    (24,018)
Total unrealized losses on debt securities   13,850    (166)   436,519    (43,365)   450,369    (43,531)

 

10 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

In the debt security portfolio there were 316 positions carrying unrealized losses as of March 31, 2024.

 

Management evaluates all of the Corporation’s securities for expected credit losses. No securities in the portfolio required an allowance for credit losses to be recorded in the first three months of 2024 or 2023.

 

Unrealized losses on the Corporation’s available-for-sale debt securities have not been recognized into income because the bonds are of high credit quality, management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is solely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

 

4. Equity Securities

 

The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of equity securities held at March 31, 2024 and December 31, 2023.

 

      Gross  Gross   
(DOLLARS IN THOUSANDS)  Amortized  Unrealized  Unrealized  Fair
   Cost  Gains  Losses  Value
   $  $  $  $
March 31, 2024                    
CRA-qualified mutual funds   7,851    
    
    7,851 
Bank stocks   1,754    95    (299)   1,550 
Total equity securities   9,605    95    (299)   9,401 

 

      Gross  Gross   
(DOLLARS IN THOUSANDS)  Amortized  Unrealized  Unrealized  Fair
   Cost  Gains  Losses  Value
   $  $  $  $
December 31, 2023                    
CRA-qualified mutual funds   7,734    
    
    7,734 
Bank stocks   1,754    144    (181)   1,717 
Total equity securities   9,488    144    (181)   9,451 

 

The following table presents the net gains and losses on the Corporation’s equity investments recognized in earnings during the three months ended March 31, 2024 and 2023, and the portion of unrealized gains and losses for the period that relates to equity investments held as of March 31, 2024 and 2023.

 

NET GAINS AND LOSSES ON EQUITY INVESTMENTS RECOGNIZED IN EARNINGS

(DOLLARS IN THOUSANDS)

   Three Months Ended
   March 31,
   2024  2023
   $  $
       
Net losses recognized in equity securities during the period   (167)   (196)
           
Less:  Net gains realized on the sale of equity securities during the period   
    
 
           
Unrealized losses recognized in equity securities held at reporting date   (167)   (196)

 

11 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

5. Loans and Allowance for Credit Losses

 

The following table presents the Corporation’s loan portfolio by category of loans as of March 31, 2024 (in thousands):

 

   March 31,   December 31, 
   2024   2023 
   $   $ 
         
Agriculture   258,916    257,372 
Business Loans   379,233    354,252 
Consumer   6,768    6,392 
Home Equity   108,809    107,176 
Non-Owner Occupied Commercial Real Estate   123,650    135,117 
Residential Real Estate (a)   500,937    497,553 
           
Gross loans prior to deferred costs   1,378,313    1,357,862 
           
Deferred loan costs, net   2,146    2,216 
Allowance for credit losses   (14,616)   (15,176)
Total net loans   1,365,843    1,344,902 

 

(a) Real estate loans serviced for others, which are not included in the Consolidated Balance Sheets, totaled $312,482,000 and $301,822,000 as of March 31, 2024 and December 31, 2023.

 

Age Analysis of Past-Due Loans Receivable

The performance and credit quality of the loan portfolio is monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past-due status as of March 31, 2024 and December 31, 2023 (in thousands):

 

   March 31, 2024 
       31-60   61-90   Greater Than         
       Days   Days   90 Days   Total   Total 
   Current   Past Due   Past Due   Past Due   Past Due   Loans 
                         
Agriculture  $257,502   $
   $1,100   $314   $1,414   $258,916 
Business Loans   379,006    125    1    101    227    379,233 
Consumer   6,746    13    7    2    22    6,768 
Home Equity   108,162    183    197    267    647    108,809 
Non-Owner Occupied CRE   123,650    
    
    
    
    123,650 
Residential Real Estate   498,659    1,093    35    1,150    2,278    500,937 
Total  $1,373,725   $1,414   $1,340   $1,834   $4,588   $1,378,313 

 

 

   December 31, 2023 
       31-60   61-90   Greater Than         
       Days   Days   90 Days   Total   Total 
   Current   Past Due   Past Due   Past Due   Past Due   Loans 
                         
Agriculture  $257,372   $
   $
   $
   $
   $257,372 
Business Loans   354,008    130    
    114    244    354,252 
Consumer   6,361    15    3    13    31    6,392 
Home Equity   106,787    170    69    150    389    107,176 
Non-Owner Occupied CRE   135,117    
    
    
    
    135,117 
Residential Real Estate   495,952    1,245    
    356    1,601    497,553 
Total  $1,355,597   $1,560   $72   $633   $2,265   $1,357,862 

 

12 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

Nonperforming Loans

 

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of March 31, 2024 and December 31, 2023, (in thousands):

 

March 31, 2024                    
   Nonaccrual   Nonaccrual       Loans Past     
   with no   with   Total   Due Over 90 Days   Total 
   ACL   ACL   Nonaccrual   Still Accruing   Nonperforming 
                     
Agriculture  $ 913   $
   $ 913   $ 314   $ 1,227 
Business Loans   1,685    
    1,685    
    1,685 
Consumer Loans   
    
    
    2    2 
Home Equity   
    
    
    267    267 
Non-Owner Occupied CRE   
    
    
    
    
 
Residential Real Estate   1,073    
    1,073    77    1,150 
Total  $3,671   $
   $3,671   $660   $4,331 

 

December 31, 2023                    
   Nonaccrual   Nonaccrual       Loans Past     
   with no   with   Total   Due Over 90 Days   Total 
   ACL   ACL   Nonaccrual   Still Accruing   Nonperforming 
                     
Agriculture  $ 941   $
   $ 941   $
   $ 941 
Business Loans   1,817    
    1,817    
    1,817 
Consumer Loans   
    
    
    13    13 
Home Equity   
    
    
    150    150 
Non-Owner Occupied CRE   
    
    
    
    
 
Residential Real Estate   
    
    
    356    356 
Total  $2,758   $
   $2,758   $519   $3,277 

 

The following table presents, by class of loans, the collateral-dependent nonaccrual loans and type of collateral as of March 31, 2024, and December 31, 2023 (in thousands).

 

March 31, 2024                
   Real Estate   Other   None   Total 
Agriculture  $913   $
   $
   $913 
Business Loans   1,685    
    
    1,685 
Consumer Loans   
    
    
    
 
Home Equity   
    
    
    
 
Non-Owner Occupied   
    
    
    
 
Residential Real Estate   1,073    
    
    1,073 
Total  $3,671   $
   $
   $3,671 

 

December 31, 2023                
   Real Estate   Other   None   Total 
Agriculture  $941   $
   $
   $941 
Business Loans   1,817    
    
    1,817 
Consumer Loans   
    
    
    
 
Home Equity   
    
    
    
 
Non-Owner Occupied   
    
    
    
 
Residential Real Estate   
    
    
    
 
Total  $2,758   $
   $
   $2,758 

 

13 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

Credit Quality Indicators

 

The Corporation grades commercial credits differently than consumer credits. The following tables represent all of the Corporation’s commercial credit exposures by internally assigned grades as of March 31, 2024 and December 31, 2023. The grading analysis estimates the capability of the borrower to repay the contractual obligations under the loan agreements as scheduled. The Corporation's internal commercial credit risk grading system is based on experiences with similarly graded loans.

 

The Corporation's internally assigned grades for commercial credits are as follows:

 

Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

 

Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem, if not corrected. 

 

Substandard – loans that have a well-defined weakness based on objective evidence and characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

 

Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset.  In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

 

Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

 

 

14 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposures as of March 31, 2024 (in thousands):

 

                           Revolving   Revolving     
   Term Loans Amortized Costs Basis by Origination Year   Loans   Loans     
                           Amortized   Converted     
March 31, 2024  2024   2023   2022   2021   2020   Prior   Cost Basis   to Term   Total 
Agriculture                                    
Risk Rating                                             
Pass  $2,704   $48,960   $39,484   $48,274   $18,224   $70,385   $22,841   $
   $250,872 
Special Mention   200    539        89    
    1,260    422    
    2,510 
Substandard   
    
    1,334    424    1,382    2,372    22    
    5,534 
Doubtful   
    
    
    
    
    
    
    
    
 
Total  $2,904   $49,499   $40,818   $48,787   $19,606   $74,017   $23,285   $
   $258,916 
                                              
Agriculture                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Business Loans                                             
Risk Rating                                             
Pass  $11,514   $46,088   $108,012   $64,845   $35,722   $60,134   $45,936   $
   $372,251 
Special Mention   
    
    10    422    
    267    
    
    699 
Substandard   
    2,988    1,980    
    245    971    99    
    6,283 
Doubtful   
    
    
    
    
    
    
    
    
 
Total  $11,514   $49,076   $110,002   $65,267   $35,967   $61,372   $46,035   $
   $379,233 
                                              
Business Loans                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Non-Owner Occupied CRE                                             
Risk Rating                                             
Pass  $2,222   $25,134   $35,900   $25,323   $12,706   $19,343   $
   $
   $120,628 
Special Mention   
    
    
    
    
    35    
    
    35 
Substandard   
    390    
    
    
    2,597    
    
    2,987 
Doubtful   
    
    
    
    
    
    
    
    
 
Total  $2,222   $25,524   $35,900   $25,323   $12,706   $21,975   $
   $
   $123,650 
                                              
Non-Owner Occupied CRE                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Total                                             
Risk Rating                                             
Pass  $16,440   $120,182   $183,396   $138,442   $66,652   $149,862   $68,777   $
   $743,751 
Special Mention   200    539    1,344    511    
    1,562    422    
    4,578 
Substandard   
    3,378    1,980    424    1,627    5,940    121    
    13,470 
Doubtful   
    
    
    
    
    
    
    
    
 
Total  $16,640   $124,099   $186,720   $139,377   $68,279   $157,364   $69,320   $
   $761,799 

 

15 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

Based on the most recent analysis performed, the following table presents the recorded investment by internal risk rating system for Commercial Credit exposures as of December 31, 2023 (in thousands):

 

                           Revolving   Revolving     
   Term Loans Amortized Costs Basis by Origination Year   Loans   Loans     
                           Amortized   Converted     
December 31, 2023  2023   2022   2021   2020   2019   Prior   Cost Basis   to Term   Total 
Agriculture                                    
Risk Rating                                    
Pass  $47,599   $41,741   $49,276   $18,699   $14,793   $58,459   $21,157   $
   $251,724 
Special Mention   60    9    96    697    170    1,136    204    
    2,372 
Substandard   
    
    424    719    361    1,772         
    3,276 
Doubtful   
    
    
    
    
    
    
    
    
 
Total  $47,659   $41,750   $49,796   $20,115   $15,324   $61,367   $21,361   $
   $257,372 
                                              
Agriculture                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Business Loans                                             
Risk Rating                                             
Pass  $43,670   $102,419   $64,030   $36,675   $17,785   $45,583   $37,269   $
   $347,431 
Special Mention   
    43    426    
    
    270    100    
    839 
Substandard   3,152    1,369    
    263    
    838    360    
    5,982 
Doubtful   
    
    
    
    
    
    
    
    
 
Total  $46,822   $103,831   $64,456   $36,938   $17,785   $46,691   $37,729   $
   $354,252 
                                              
Business Loans                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Non-Owner Occupied CRE                                             
Risk Rating                                             
Pass  $26,757   $43,976   $27,377   $12,849   $7,705   $12,397   $375   $
   $131,436 
Special Mention   392    639    
    
    
    37    
    
    1,068 
Substandard   
    
    
    
    2,312    301    
    
    2,613 
Doubtful   
    
    
    
        
    
    
    
 
Total  $27,149   $44,615   $27,377   $12,849   $10,017   $12,735   $375   $
   $135,117 
                                              
Non-Owner Occupied CRE                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Total                                             
Risk Rating                                             
Pass  $118,026   $188,136   $140,683   $68,223   $40,283   $116,439   $58,801   $
   $730,591 
Special Mention   452    691    522    697    170    1,443    304    
    4,279 
Substandard   3,152    1,369    424    982    2,673    2,911    360    
    11,871 
Doubtful   
    
    
    
    
    
    
    
    
 
Total  $121,630   $190,196   $141,629   $69,902   $43,126   $120,793   $59,465   $
   $746,741 

 

16 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

For consumer loans, the Corporation evaluates credit quality based on whether the loan is considered performing or non-performing. Non-performing loans consist of those loans greater than 90 days delinquent and nonaccrual loans.

 

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of March 31, 2024 (in thousands):

 

                           Revolving   Revolving     
   Term Loans Amortized Costs Basis by Origination Year   Loans   Loans     
                           Amortized   Converted     
March 31, 2024  2024   2023   2022   2021   2020   Prior   Cost Basis   to Term   Total 
Consumer                                    
Payment Performance                                             
Performing  $2,482   $1,553   $854   $248   $147   $22   $1,460   $
   $6,766 
Nonperforming   
    
    2    
    
    
    
    
    2 
Total  $2,482   $1,553   $856   $248   $147   $22   $1,460   $
   $6,768 
                                              
Consumer                                             
Current period gross charge-offs  $
   $
   $25   $
   $
   $
   $
   $
   $25 
                                              
Home equity                                             
Payment Performance                                             
Performing  $
   $7,970   $17,707   $1,014   $552   $2,243   $78,436   $620   $108,542 
Nonperforming   
    
    
    
    
    
    267    
    267 
Total  $
   $7,970   $17,707   $1,014   $552   $2,243   $78,703   $620   $108,809 
                                              
Home equity                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Residential Real Estate                                             
Payment Performance                                             
Performing  $10,292   $122,409   $147,102   $104,035   $43,236   $72,713   $
   $
   $499,787 
Nonperforming   
    1,073    
    
    
    77    
    
    1,150 
Total  $10,292   $123,482   $147,102   $104,035   $43,236   $72,790   $
   $
   $500,937 
                                              
Residential Real Estate                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Total                                             
Payment Performance                                             
Performing  $12,774   $131,932   $165,663   $105,297   $43,935   $74,978   $79,896   $620   $615,095 
Nonperforming   
    1,073    2        
    77    267    
    1,419 
Total  $12,774   $133,005   $165,665   $105,297   $43,935   $75,055   $80,163   $620   $616,514 

 

17 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

The following table presents the balances of consumer loans by classes of the loan portfolio based on payment performance as of December 31, 2023 (in thousands):

 

                                     
                           Revolving   Revolving     
   Term Loans Amortized Costs Basis by Origination Year   Loans   Loans     
                           Amortized   Converted     
   2023   2022   2021   2020   2019   Prior   Cost Basis   to Term   Total 
Consumer                                    
Payment Performance                                             
Performing  $3,251   $1,085   $351   $176   $31   $3   $1,482   $
   $6,379 
Nonperforming   
    13    
    
    
    
    
    
    13 
Total  $3,251   $1,098   $351   $176   $31   $3   $1,482   $
   $6,392 
                                              
Consumer                                             
Current period gross charge-offs  $
   $40   $17   $1   $1   $6   $
   $
   $65 
                                              
Home equity                                             
Payment Performance                                             
Performing  $7,086   $18,476   $1,049   $564   $529   $1,847   $76,076    1,399   $107,026 
Nonperforming   
    
    
    
    
    
    150    
    150 
Total  $7,086   $18,476   $1,049   $564   $529   $1,847   $76,226   $1,399   $107,176 
                                              
Home equity                                             
Current period gross charge-offs  $
   $
   $
   $   $
   $
   $
   $
   $
 
                                              
Residential Real Estate                                             
Payment Performance                                             
Performing  $123,368   $148,835   $105,283   $43,961   $31,514   $44,236   $
   $
   $497,197 
Nonperforming   
    
    356    
    
    
    
    
    356 
Total  $123,368   $148,835   $105,639   $43,961   $31,514   $44,236   $
   $
   $497,553 
                                              
Residential Real Estate                                             
Current period gross charge-offs  $
   $
   $
   $
   $
   $
   $
   $
   $
 
                                              
Total                                             
Payment Performance                                             
Performing  $133,705   $168,396   $106,683   $44,701   $32,074   $46,086   $77,558   $1,399   $610,602 
Nonperforming   
    13    356    
    
    
    150    
    519 
Total  $133,705   $168,409   $107,039   $44,701   $32,074   $46,086   $77,708   $1,399   $611,121 

 

18 

ENB FINANCIAL CORP
Notes to the Unaudited Consolidated Interim Financial Statements

Allowance for Credit Losses

 

The following table presents the activity in the allowance for credit losses (ACL) by portfolio segment for the three months ended March 31, 2024 (in thousands):

 

   Beginning           Provisions   Ending 
   Balance