Executive Summary

Q2 2024 EPS was $0.66 and net income was $3.03M; sequential EPS declined 14.3% vs Q1 ($0.77) while net income fell 9.8% q/q; EPS was flat YoY vs $0.68 in Q2 2023 .
Net interest margin improved sequentially to 2.99% from 2.88% in Q1, though it remains below 3.30% in Q2 2023; net interest income rose to $14.21M (+4.9% q/q, +7.7% YoY) .
Total deposits grew to $1.586B (+$48.5M YTD), with mix shifting toward time and money management accounts; cost of deposits was 1.78% in Q2 and ~90% of deposits were FDIC insured or collateralized .
Borrowings totaled $280.0M (FHLB $240.0M; BTFP $40.0M) with $40.0M FHLB maturing in Q3 2024 and BTFP due Q1 2025; management expects earnings improvement as borrowings fund loan growth in 2H24 .
Board declared a $0.32 per-share regular quarterly dividend for Q3 2024; no formal financial guidance was issued .

What Went Well and What Went Wrong

Net interest margin expanded q/q to 2.99% (from 2.88%), supporting NII growth to $14.21M; noninterest income also rose to $4.35M (+3.9% q/q, +23.3% YoY) .
Loan growth continued: net loans reached $1.301B (+$61.3M YTD); commercial real estate balances increased, led by apartments ($134.8M), hotels/motels ($92.2M), and office ($90.3M) .
Credit quality remained strong with nonperforming loans/gross loans at 0.07% and nonperforming assets/total assets at 0.04% .
CEO emphasized momentum: “We are poised to improve earnings as those borrowings are used to fund continued loan growth going into the third and fourth quarters of the year.”

EPS and net income declined sequentially (EPS $0.66 vs $0.77 q/q; net income $3.03M vs $3.36M q/q) amid higher operating expenses .
Noninterest expense climbed to $14.34M (+8.5% q/q, +13.3% YoY) driven by salaries/benefits, data processing, and FDIC premiums .
Funding costs remain elevated with deposit mix shift into higher-cost categories; year-to-date cost of deposits was 1.74% vs 1.04% in the same period of 2023, pressuring margins vs prior year .

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Net interest income	13,195	13,900	13,553	14,211
Noninterest income	3,529	4,085	4,188	4,350
Noninterest expense	12,648	13,148	13,304	14,336
Provision for credit losses – loans	524	732	490	560
Provision for credit losses – unfunded commitments	8	56	(38)	(14)
Total provision for credit losses	532	788	452	546
Income before income taxes	3,544	4,049	3,985	3,679
Income taxes	568	578	624	646
Net income	2,976	3,471	3,361	3,033
Diluted EPS ($)	0.68	0.79	0.77	0.66

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Net interest margin (%)	3.30%	3.24%	2.88%	2.99%
ROA (%)	0.70%	0.75%	0.67%	0.59%
ROE (%)	9.82%	11.81%	10.21%	9.12%

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Total assets ($)	1,736,165	1,836,039	2,011,614	2,039,126
Loans, net ($)	1,130,547	1,240,933	1,261,062	1,301,302
Deposits ($)	1,513,135	1,537,978	1,559,312	1,586,458
Other borrowings ($)	70,000	130,000	280,000	280,000
Shareholders’ equity ($)	119,770	132,136	134,237	136,809

Metric	Q4 2023	Q1 2024	Q2 2024
CRE loans total ($)	703.8M	721.3M	743.6M
Apartments ($)	120.2M	127.7M	134.8M
Hotels & motels ($)	80.7M	87.1M	92.2M
Office ($)	87.1M	87.7M	90.3M

KPI	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Nonperforming loans / gross loans (%)	0.02%	0.01%	0.04%	0.07%
Nonperforming assets / total assets (%)	0.01%	0.01%	0.02%	0.04%
ACL / loans (%)	1.28%	1.28%	1.29%	1.29%
Book value/share ($)	27.53	30.23	30.55	31.01
Tangible book value/share ($)	25.46	28.17	28.50	28.96
Wealth Mgmt AUM ($)	977,461	1,094,747	1,107,611	1,128,087

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q3 2024	$0.32 (Q2 2024 declared)	$0.32 (Q3 2024 declared)	Maintained
Revenue/margins/OpEx/tax rate	2H 2024	None issued	None issued; qualitative: “poised to improve earnings”	No formal guidance

No Q2 2024 earnings call transcript was available; themes are derived from management’s press releases.

Topic	Previous Mentions (Q4 2023 and Q1 2024)	Current Period (Q2 2024)	Trend
Funding & liquidity	Increased borrowings to support growth; BTFP/FHLB usage noted	Borrowings $280M; $40M FHLB matures Q3 2024; BTFP due Q1 2025	Stable/elevated funding; near-term maturities
Margin dynamics	NIM 3.24% (Q4); Q1 compression from higher funding costs/excess cash (2.88%)	NIM improved to 2.99% sequentially	Improving sequentially, still below YoY
Deposit mix/costs	Shift toward time deposits; cost 1.70% (Q1)	Cost 1.78% (Q2); ~90% insured/collateralized	Higher costs; strong insurance coverage
Credit quality	Strong; ACL 1.28% (Q4) & 1.29% (Q1)	NPL/Gross 0.07%; ACL 1.29%	Strong; slight uptick in NPL%
Technology/process	Salesforce initiative highlighted (Q4)	No new tech update provided	Neutral
Growth/expansion	New community office in Dauphin County by year-end (Q1)	Emphasis on loan/deposit growth continuing	Ongoing growth posture

“I am pleased that in the first six months of the year we were able to show forward momentum as loans, deposits and non-interest fee income grew… we are poised to improve earnings as those borrowings are used to fund continued loan growth going into the third and fourth quarters of the year.” — Tim Henry, President & CEO .
“We took several steps to ensure our ability to grow… FHLB borrowing will have an initial negative effect on earnings but provide support… assets over the $2 billion threshold… grew both loans and deposits, maintained stellar loan quality, and saw growth in non-interest income.” — Tim Henry (Q1 2024) .
“Restructuring investments… controlling expenses… growing outstanding loan balances… mitigating deposit challenges… continuing the development of our use of Salesforce… position us for a positive future.” — Tim Henry (Q4 2023) .

No Q2 2024 earnings call transcript or Q&A was available to review [ListDocuments returned none].

S&P Global consensus estimates for Q2 2024 EPS and revenue were unavailable due to data access limits (Daily Request Limit exceeded). As a result, comparisons to Wall Street estimates could not be made for this quarter [GetEstimates error].

Sequential NIM improvement to 2.99% and rising NII suggest stabilization despite elevated funding costs; continued deployment of borrowings into higher-yielding assets is the near-term margin lever .
Operating expense inflation (salaries/benefits, data processing, FDIC) drove a q/q EPS decline; watch for OpEx discipline to support earnings trajectory in 2H24 .
Loan growth remains robust (+$61.3M YTD), particularly in CRE; monitor concentration in apartments, hotels/motels, and office given macro sensitivity (office exposure now $90.3M) .
Funding profile: $280M total borrowings with $40M FHLB maturing in Q3 2024 and BTFP due Q1 2025; rollover terms and rate environment are key to 2H24/2025 NIM outcomes .
Deposit mix shifting to higher-cost categories; cost of deposits 1.78% (Q2) and YTD 1.74% vs 1.04% prior year—margin recovery will depend on asset yields outpacing funding costs .
Credit quality strong with low NPLs/NPA and ACL stable at 1.29%; supports benign credit cost baseline even as loan book expands .
Dividend maintained at $0.32; no formal guidance—management’s qualitative tone is constructive on earnings improvement with loan growth as catalyst .