DEF 14A of Peoples Financial Services Corp., Apr 5, 2024

DEF 14A of Peoples Financial Services Corp.

Filed Apr 5, 2024 · FY20230001104659-24-043948

Open on EDGAR

  1. Proposal 1 – Election of Directors

    Proposal 1 – Election of Directors Our bylaws provide that the number of directors constituting the entire board will be not less than five nor more than twenty-five, with the exact number to be fixed from time to time by our board of directors. The number of directors constituting the entire board is currently fixed at eight. Our bylaws also provide that our board of directors will be classified into three classes, each class to be as nearly equal in number, in respect to the time for which they severally hold office. At each annual meeting of shareholders, one class of directors is to be elected and each class of directors so elected will serve for a term of approximately three years. Two nominees will be elected to the 2027 class of directors. It is intended that the proxies solicited by the board of directors will be voted FOR the two director nominees named below (unless the shareholder otherwise directs). If, for any reason, any nominee becomes unavailable for election or service on the board, the proxy solicited by the board of directors will be voted for such substituted nominee as is selected by the board of directors. The board has no reason to believe that any of the named nominees are not available or will not serve if elected. On September 27, 2023, the Company entered into an Agreement and Plan of Merger with FNCB pursuant to which, among other things, FNCB will merge with and into the Company, with the Company being the surviving entity in the merger. On March 22, 2024, our shareholders, as well as the shareholders of FNCB voted to approve the FNCB merger. Consummation of the merger, however, remains subject to the receipt of required regulatory approvals and the satisfaction of other customary closing conditions, and the FNCB merger will not be completed prior to the annual meeting. Upon completion of the FNCB merger, the number of directors comprising the entire board of directors of the Company will be increased to sixteen, and eight of the incumbent directors of FNCB will be appointed to the Company’s board of directors. Nominees for Director - Term Expiring In 2027 The board has nominated incumbent directors Richard S. Lochen, Jr. and James B. Nicholas for election to the board of directors at the 2024 Annual Meeting of shareholders, each to serve until the 2027 annual meeting of shareholders and until his successor has been elected and qualified. The names of the director nominees and certain information about them are set forth below: Richard S. Lochen, Jr., age 60, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company since 2003. He has been a Certified Public Accountant with the firm of Lochen & Chase PC since 1995. In January 2023, Lochen & Chase PC merged with McGrail Merkel and Quinn PC and into MMQ PC. In May 2006, Mr. Lochen was appointed as President of Peoples Financial Services Corp. and its banking subsidiary (then known as Peoples National Bank) and served as President and Chief Executive Officer from January 2007 until November 2009. The board has determined that Mr. Lochen is qualified to be on the board due to his knowledge of auditing publicly-traded financial institutions that he gained during his career as a CPA, which included assisting in preparation of annual and quarterly filings with the Securities and Exchange Commission. He also brings executive leadership experience and understanding of the operations of Peoples gained from his past service as an officer of Peoples Financial Services Corp. and its banking subsidiary. James B. Nicholas, age 72, was appointed as a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company in connection with the consummation of our merger with Penseco in November 2013. Prior to that, he served as a director of Penseco Financial Services Corporation and Penn Security Bank and Trust Company since 1981. The Company has concluded that Mr. Nicholas is qualified to serve as a director of the Company as a result of his substantial small company management experience, particularly within the region in which the Bank conducts its business, and his familiarity with the operations of the former Penn Security Bank and Trust Company. Mr. Nicholas has served as the President of D.G. Nicholas Co., a wholesale auto parts company located in Scranton, Pennsylvania, since 1990. Through his oversight of D.G. Nicholas Co., Mr. Nicholas is able to obtain insight regarding the local business and consumer environment that is valuable to our board of directors in its oversight of the Company’s and Bank’s operations. His service as a director of Penseco and Penn Security has enabled him to develop a knowledge of their former operations, which is beneficial to the Company’s Board. Continuing Directors The names of our directors whose current terms will continue after the 2024 Annual Meeting of shareholders and certain information about them follow. Term Expiring In 2025 William E. Aubrey II, age 61, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company since 2006 and Chairman of the Board since 2008. He was President and Chief Executive Officer of Gertrude Hawk Chocolates based in Dunmore, PA from 2003 to 2019. He was Chief Executive Officer and President of Alternative Investments at Gertrude Hawk Holdings from 2020 to 2023, and remains an advisor to Gertrude Hawk Holdings. The board has determined that Mr. Aubrey is qualified to be on the board due to his executive management experience gained by serving as a chief executive. He also brings knowledge gained by serving on the board of directors of United Gilsonite Laboratories in Scranton, PA, Schlotterbeck & Foss in Portland, ME and Rustic Crust in Pittsfield, NH. In addition, he has served on many community boards including past Chairman of Geisinger CMC Hospital, Keystone College, Holy Cross School System, Everhart Museum and the Waverly Community House. He holds an MBA and CPA. Craig W. Best, age 63, was appointed as a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company in connection with the consummation of our merger with Penseco in November 2013. Prior to that, he served as a director of Penseco Financial Services Corporation and Penn Security Bank and Trust Company since 2006. The Company has concluded that Mr. Best is qualified to serve as a director of the Company as a result of his leadership and prior experience in the banking industry. Mr. Best has served as Chief Executive Officer of the Company and the Bank since May 2020. Mr. Best served as President and Chief Executive Officer of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company from the time of the 2013 Penseco merger until May 2020, and from 2006 until the merger served as President and Chief Executive Officer of Penseco Financial Services Corporation and Penn Security Bank and Trust Company Penseco merger. Prior to joining Penseco, Mr. Best served as Chief Operating Officer of First Commonwealth Bank, a $6.2 billion financial services institution headquartered in Indiana, Pennsylvania, from July 2000 to December 2005. During his employment with First Commonwealth Bank, Mr. Best was responsible for overseeing the day to day operations of all lines of business and administrative functions for First Commonwealth Bank. Before serving as Chief Operating Officer of First Commonwealth Bank, Mr. Best was President of NBOC, a $1.0 billion division of First Commonwealth Bank. This collective experience, along with his knowledge of all aspects of the Company’s and the Bank’s business through his position as President and Chief Executive Officer, uniquely qualify Mr. Best for service on the Company’s board of directors.

  2. Proposal 1 – Election of Directors

    Joseph T. Wright, Jr., age 68, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company since 2009. He has been an attorney at law with Wright & Reihner PC since 1980. The board has determined that Mr. Wright is qualified to be on the board due to his experience and knowledge gained as a practicing attorney for nearly forty years with involvement in numerous financially complex matters related to disputes involving shareholders, employment matters, contracts, valuation issues, real estate matters, and general business issues related to risk assessment. Term Expiring In 2026 Sandra L. Bodnyk, age 72, was appointed as a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company on February 28, 2020. Ms. Bodnyk was Executive Vice President, Senior Loan Administrator for Branch Banking and Trust Company, the banking subsidiary of BB&T Corporation, from April 2016 through December 2018, and was Senior Executive Vice President, Chief Risk Officer for National Penn Bank, the banking subsidiary of National Penn Bancshares, Inc., from January 2013 until its merger with BB&T in April 2016. Before Ms. Bodnyk’s appointment to that position, she was Group Executive Vice President & Chief Risk Officer for National Penn Bank, and before that she held various positions with KNBT Bancorp, Inc. and Keystone Nazareth Bank & Trust Company. Our board of directors determined that Ms. Bodnyk is qualified to serve as a director of the Company as a result of her extensive background in commercial banking, including her experience with commercial lending and enterprise risk management, and oversight of regulatory compliance and technology and information security. Ronald G. Kukuchka, age 70, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company since 2007. He has been President of Ace Robbins, Inc. since 1982. The board has determined that Mr. Kukuchka is qualified to be on the board due to his leadership skills gained from owning a successful petroleum company in our market area for over 37 years. He also brings experience gained by serving as director for the Pennsylvania Marketers & Convenience Store Association, director of the Tunkhannock Fireman’s Relief Association, and from being trustee of the Roy Piper Charitable Trust. Elisa Zúñiga Ramirez, age 55, has been a director of Peoples Financial Services Corp. and Peoples Security Bank and Trust Company since 2022. She has over 30 years’ experience in the capital markets. Since October 2020, until the present, she has been the President of Exito Consulting LLC. From May 2018 until her retirement in July 2020, Ms. Ramirez was Senior Portfolio Manager and Principal at Segall Bryant & Hamill, an employee-owned money manager with $25 billion in assets under management. Prior to this, from 2009, she was Senior Portfolio Manager and Partner at Denver Investments LLC, an employee-owned money manager with $7.3 billion in assets under management that was acquired by Segall Bryant and Hamill in May 2018. Ms. Ramirez had served in various other position with Denver Investments since 1989. Ms. Ramirez managed midcap growth equity assets in the first half of her career and spent the second half managing value equity assets with a focus on small-cap dividend-paying stocks. At the peak, the Small-Cap Value Dividend Fund that she co-managed had $2.3 billion in assets under management. Since November 2020, she has served as an independent director for the Denver Employees Retirement Plan; since January 2021 she has served as an advisory board member for Bow River Capital; and since February 2022, she has been a trustee of Trust for Professional Managers (US Bank Global Fund Services Series Trust). Our board of directors determined that Ms. Ramirez is qualified to serve as a director of the Company as a result of her deep understanding of investment theory and practice, ESG investing, and diversity, equity & inclusion. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF ITS NOMINEES TO THE BOARD OF DIRECTORS OF THE COMPANY TO SERVE UNTIL THE 2027 ANNUAL MEETING OF SHAREHOLDERS AND UNTIL HIS SUCCESSOR HAS BEEN ELECTED AND QUALIFIED.

  3. Board of Directors and Committees

    | ● | review and approve the annual base salaries and annual incentive opportunities of our chief executive officer and other executive officers; |

  4. Board of Directors and Committees

    | ● | review and approve incentive awards and opportunities, including both cash-based and equity-based awards and opportunities, any employment agreements and severance arrangements, any change-in-control agreements and change-in-control provisions affecting any elements of compensation and benefits, and any special or supplemental compensation and benefits, in each case for our executive officers; |

  5. Board of Directors and Committees

    | ● | review and make recommendations to our board of directors with respect to director compensation; |

  6. Board of Directors and Committees

    | ● | administer our compensation programs, including equity incentive programs, for all employees; |

  7. Board of Directors and Committees

    | ● | oversee risks and exposures associated with leadership assessment, and compensation programs and arrangements, including incentive plans, and reviewing and evaluating our compensation policies and practices of compensating our employees, including non-executive officers, as they relate to risk management practices and risk-taking incentives. |

  8. 2023 Summary Compensation Table

    2023 Summary Compensation Table

  9. 2023 Summary Compensation Table

    | | | | | | | Change in | | | | | | | | | | Pension Value | | | | | | | | | | and | | | | | | | | | | Nonqualified | | | | | | | | | Non-Equity | Deferred | | | | | | | | Stock | Incentive Plan | Compensation | All Other | | | | | Salary | Bonus | Awards | Compensation | Earnings | Compensation | Total | | Name and Principal Position | Year | ($) | ($) | ($)(1) | ($) | ($) | ($) | ($) | | Craig W. Best | 2023 | 472,420 | – | 223,175 | 61,950 | 6,996(2) | 162,532(3) | 927,073 | | Chief Executive Officer | 2022 | 460,000 | – | 217,333 | 144,900 | – | 169,907 | 992,140 | | | 2021 | 460,000 | – | 217,311 | 161,000 | – | 170,778 | 1,009,089 | | Thomas P. Tulaney | 2023 | 335,000 | – | 113,051 | 46,900 | 117,495 | 32,943(4) | 645,389 | | President and Chief Operating Officer | 2022 | 325,000 | – | 109,648 | 93,844 | 117,494 | 34,856 | 680,842 | | | 2021 | 325,000 | – | 109,633 | 113,750 | 364,486 | 31,766 | 944,635 | | Neal D. Koplin | 2023 | 295,800 | – | 99,811 | 28,841 | 76,228 | 36,886(5) | 537,566 | | Senior Executive Vice President and Chief Banking Officer | 2022 | 290,000 | – | 97,825 | 78,300 | 73,978 | 30,628 | 570,731 | | | 2021 | 290,000 | – | 87,783 | 87,000 | 80,732 | 28,869 | 574,384 | | Timothy H. Kirtley | 2023 | 255,000 | – | 86,125 | 41,119 | 28,626 | 23,570(6) | 434,440 | | Executive Vice President, Chief Risk Officer and Corporate Secretary | 2022 | 250,000 | – | 84,425 | 67,500 | 20,914 | 20,312 | 443,151 | | | 2021 | 240,000 | – | 80,982 | 72,000 | – | 21,660 | 414,642 | | John R. Anderson III | 2023 | 260,000 | – | 87,749 | 32,175 | 45,505(2) | 26,426(7) | 451,855 | | Executive Vice President and Chief Financial Officer | 2022 | 250,000 | – | 84,425 | 67,500 | 29,191 | 24,992 | 456,108 | | | 2021 | 240,000 | – | 80,982 | 72,000 | – | 22,912 | 415,894 |

  10. 2023 Summary Compensation Table

    | (1) The entries in the stock awards column reflect the grant date fair value of awards of time-vested restricted stock and performance-vested restricted stock units, as calculated for financial statement reporting purposes in accordance with Accounting Standards Codification (ASC) No. 718, Compensation—Stock Compensation. See Notes 1 and 15 of the Notes to Consolidated Financial Statements for the fiscal year ended December 31, 2023 for a discussion of the relevant assumptions used to determine the valuation of our stock awards for accounting purposes. The value of the performance-vested restricted stock units at the grant date assumes that the maximum level of performance conditions will be achieved. |

  11. 2023 Summary Compensation Table

    | (2) Change in pension value in 2023 was $6,996 for Mr. Best and $5,549 for Mr. Anderson under the Penseco Employees’ Pension Plan, and was $117,495, $76,228, $28,626 and $39,956 for Messrs. Tulaney, Koplin, Kirtly and Anderson, respectively, under their supplemental executive retirement plans. |

  12. 2023 Summary Compensation Table

    | (3) For 2023, includes $17,239 contribution to the Excess Benefit Plan; $26,000 matching contribution to the Executive Deferred Compensation Plan No. 1; $80,000 contribution to Deferred Compensation Plan No. 2; country club memberships $8,723; automobile allowance $9,714; 401(k) safe harbor contribution of $9,900; 401(k) match $9,900 and life insurance $1,056. |

  13. 2023 Summary Compensation Table

    | (4) For 2023, includes country club membership $9,836; automobile allowance $3,307; 401(k) safe harbor $9,900 and 401(k) match $9,900. |

  14. 2023 Summary Compensation Table

    | (5) For 2023, includes country club membership $14,440; automobile allowance $2,686; 401(k) safe harbor $9,900 and 401(k) match $9,860. |

  15. 2023 Summary Compensation Table

    | (6) For 2023, includes country club membership $6,239; 401(k) safe harbor $9,678 and 401(k) match $7,653. |

  16. 2023 Summary Compensation Table

    | (7) For 2023, includes country club membership $6,800; 401(k) safe harbor $9,813 and 401(k) match $9,813. |

  17. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table provides information concerning grants of plan-based awards made to our named executive officers during the year ended December 31, 2023.

  18. Grants of Plan-Based Awards

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of | Grant Date Fair Value of Stock | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Stock (#) | Awards ($)(1) | | Craig W. Best | 6/29/2023 | – | 165,347 | 165,347 | | | | | | | | 6/29/2023 | | | | 1,324 | 2,648 | 3,972 | | 173,576 | | | 6/29/2023 | | | | | | | 1,135 | 49,599 | | Thomas P. Tulaney | 6/29/2023 | – | 117,250 | 117,250 | | | | | | | | 6/29/2023 | | | | 670 | 1,342 | 2,012 | | 87,924 | | | 6/29/2023 | | | | | | | 575 | 25,127 | | Neal D. Koplin | 6/29/2023 | – | 88,740 | 88,740 | | | | | | | | 6/29/2023 | | | | 584 | 1,084 | 1,776 | | 77,611 | | | 6/29/2023 | | | | | | | 508 | 22,200 | | Timothy H. Kirtley | 6/29/2023 | – | 76,500 | 76,500 | | | | | | | | 6/29/2023 | | | | 510 | 1,022 | 1,532 | | 66,984 | | | 6/29/2023 | | | | | | | 438 | 19,141 | | John R Anderson | 6/29/2023 | – | 78,000 | 78,000 | | | | | | | | 6/29/2023 | | | | 520 | 1,042 | 1,562 | | 68,259 | | | 6/29/2023 | | | | | | | 446 | 19,490 |

  19. Grants of Plan-Based Awards

    | (1) Grant date values based on the maximum payout of equity incentive plan awards based on the closing price of $43.70 per share of our common stock on the grant date of June 29, 2023. |

  20. Grants of Plan-Based Awards

    The table above includes the fiscal 2023 target and maximum payouts designated under our Cash Incentive Plan, the threshold, target and maximum payouts designated under performance-vested restricted stock units issued under the 2023 Equity Incentive Plan, and the number of time-vested restricted stock awards issued under the 2023 Equity Incentive Plan. Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table With respect to the Cash Incentive Plan, the target and maximum payout for Mr. Tulaney was set by the compensation committee at 35 percent of his base salary; for Mr. Koplin, at 30 percent of his base salary; for Mr. Kirtley at 30 percent of his base salary and for Mr. Anderson at 30 percent of his base salary. The target and maximum payout for Mr. Best was set by the compensation committee at 35 percent of his base salary. As described above in “Compensation Discussion and Analysis,” based on 2023 performance, only four of the eight Company performance goals were achieved, with 37.5 percent weighted achievement. With respect to the equity awards, the compensation committee approved a mix of long-term equity incentives with the majority consisting of performance-vested restricted stock units (RSUs) (70% of the targeted equity award) and the remainder consisting of time-vested restricted stock (30% of the targeted equity award). The performance-vested RSUs vest over a three-year cumulative performance period beginning January 1, 2023 and ending December 31, 2025. The potential number of shares that can vest ranges from 0% to 150% of the target levels depending on achievement of 3-year Cumulative Diluted Earnings Per Share (EPS) and Average Return on Average Tangible Common Equity (ROATCE) goals set by the compensation committee. Time-vested restricted stock vests ratably over three years subject to the executive officer’s continued employment by us. We are a party to employment agreements with certain of our named executive officers, which are described in the following sections. These employment agreements control many aspects of the compensation of our named executive officers. Craig W. Best Employment Agreement We are party to an amended and restated employment agreement with our Chief Executive Officer, Craig W. Best, dated January 3, 2011, as amended as of December 31, 2015 (the “Best Employment Agreement”). The Best Employment Agreement provides for an annual base salary, which is subject to annual review by the compensation committee. In 2023, Mr. Best’s annual base salary increased from $460,000 to $472,420. In the event of an across-the-board salary reduction affecting all of the Company’s management employees, we may decrease Mr. Best’s base salary. The Best Employment Agreement also provides that Mr. Best will be eligible to:

  21. Grants of Plan-Based Awards

    | ● | receive an annual cash incentive payment equal to a percentage of his base salary, which percentage will be determined by the compensation committee from time to time; | | ● | participate in certain deferred compensation plans maintained by the Company; and | | ● | participate in our long-term incentive equity-based compensation plans. |

  22. Grants of Plan-Based Awards

    Under the Best Employment Agreement, the Company agreed to purchase and maintain a bank owned life insurance (“BOLI”) policy on the life of Mr. Best. Any death benefit payable under the policy is payable to the Company, subject to a split-dollar arrangement that provides if Mr. Best dies in active service to the Company, the Company will pay his estate a portion of the death benefit. In addition, the Best Employment Agreement provides that Mr. Best will be eligible for Company-paid term-life insurance coverage with a death benefit of not less than two times Mr. Best’s base salary, as in effect from time to time, a portion of which may be satisfied by the Company’s group term life insurance. The Company also agreed to provide Mr. Best with the use of an automobile, along with reasonable insurance and maintenance costs, as well as reimbursement for country and dining club memberships and reasonable business expenses. The Best Employment Agreement contains customary confidentiality and restrictive covenant provisions. For a period of 12 months following termination of employment for any reason, Mr. Best has agreed that he will not: (1) solicit customers, potential customers or suppliers for or on behalf of a competing business (as defined under the Best Employment Agreement); (2) recruit employees of the Bank or Company for a competing business; or (3) serve as a director, officer, employee or investor in a competing business. Thomas P. Tulaney Employment Agreement We are party to an employment agreement with our President and Chief Operating Officer, Thomas P. Tulaney, dated May 30, 2012 (the “Tulaney Employment Agreement”) that automatically renews annually unless either party terminates the agreement earlier in accordance with the provisions of the Tulaney Employment Agreement. The Tulaney Employment Agreement provides for an annual base salary, which is subject to annual review by the compensation committee. In 2023, Mr. Tulaney’s annual base salary increased from $325,000 to $335,000. In the event of an across-the-board salary reduction affecting all of the Company’s management employees, we may decrease Mr. Tulaney’s base salary. The Tulaney Employment Agreement also provides that Mr. Tulaney will be eligible to:

  23. Grants of Plan-Based Awards

    | ● | receive an annual cash incentive payment targeted at 35 percent of his base salary with the actual payment based on achievement of corporate and individual performance goals, as determined by the compensation committee from time to time; | | ● | participate in his SERP arrangement; and | | ● | participate in our long-term incentive equity-based compensation plans. |

  24. Grants of Plan-Based Awards

    The Tulaney Employment Agreement contains customary confidentiality and restrictive covenant provisions. For a period of 12 months following termination of employment for any reason other than in connection with a change of control (in which case the applicable period is 24 months), Mr. Tulaney has agreed that he will not: (1) solicit customers, potential customers or suppliers for or on behalf of a competing business (as defined under the agreement); (2) recruit employees of the Bank or Company for a competing business; or (3) serve as a director, officer, employee or investor, or otherwise engage, in a competing business. Neal D. Koplin Employment Agreement We are party to an employment agreement dated August 27, 2014, with Neal D. Koplin, our Senior Executive Vice President and Chief Banking Officer (the “Koplin Employment Agreement”) that automatically renews annually unless either party terminates the agreement earlier in accordance with the provisions of the Koplin Employment Agreement. In 2023, Mr. Koplin’s annual base salary increased from $290,000 to $295,800. The Koplin Employment Agreement also provides that Mr. Koplin will be eligible to:

  25. Grants of Plan-Based Awards

    | ● | receive an annual cash incentive payment targeted at 30 percent of his base salary, with the actual payment based on achievement of corporate and individual performance goals, as determined by the compensation committee from time to time; | | ● | participate in his SERP arrangement; and | | ● | participate in our long-term incentive equity-based compensation plans. |

  26. Grants of Plan-Based Awards

    The Koplin Employment Agreement contains customary confidentiality and non-solicitation provisions. For a period of 12 months following termination of employment for any reason other than in connection with a change of control (in which case the applicable period is 36 months), Mr. Koplin has agreed that he will not solicit customers, potential customers or suppliers for or on behalf of a competing business (as defined under the agreement), and will not recruit employees of the Bank or Company for a competing business. The Company also agreed to provide Mr. Koplin with a monthly automobile allowance, currently satisfied by the Company’s providing Mr. Koplin use of a Company-owned automobile, as well as reimbursement for a country club membership and reasonable business expenses. Timothy H. Kirtley Employment Agreement We are party to an employment agreement dated September 30, 2016 with Timothy H. Kirtley, our Executive Vice President, Chief Risk Officer and Corporate Secretary, which was amended as of December 5, 2017 and May 8, 2020 (as amended, the “Kirtley Employment Agreement”). The Kirtley Employment Agreement is automatically renewed on annual basis date for an annual renewal term unless either party provides notice of non-renewal in accordance with the provisions of the Kirtley Employment Agreement. The Kirtley Employment Agreement provides for an annual base salary, which is subject to annual review by the compensation committee. In 2023, Mr. Kirtley’s annual base salary increased from $250,000 to $255,000. The Kirtley Employment Agreement also provides that Mr. Kirtley will be eligible to receive an annual cash incentive payment targeted at 30 percent of his base salary, with the actual payment based on achievement of corporate and individual performance goals, as determined by the compensation committee from time to time. The Kirtley Employment Agreement contains customary confidentiality and restrictive covenant provisions. For a period of 12 months following termination of employment for any reason other than in connection with a change of control (in which case the applicable period is 24 months), Mr. Kirtley has agreed that he will not: (1) solicit customers, potential customers or suppliers for or on behalf of a competing business (as defined under the agreement); (2) recruit employees of the Bank or Company for a competing business; or (3) serve as a director, officer, employee or investor, or otherwise engage, in a competing business. John R. Anderson III Severance Agreement On September 27, 2023, the compensation committee approved an amended and restated severance agreement with Mr. Anderson. Mr. Anderson’s severance agreement provides him with certain severance benefits in the event that he is terminated without cause or resigns for good reason (each as defined in the severance agreement). In the event of such a termination, Mr. Anderson will be entitled to receive, for a period of 12 months following such termination, monthly payments equal to the sum of 1/12th of Mr. Anderson’s base salary at the time of termination plus 1/12th of the average annual bonus paid to Mr. Anderson in the 3 fiscal years ending before his date of termination, monthly COBRA continuation premium payments for up to 12 months and up to $20,000 for executive outplacement assistance. If Mr. Anderson is terminated without cause or resigns for good reason within 24 months following a change of control or within 24 months of the closing date of the proposed FNCB merger, Mr. Anderson will be entitled to receive, in lieu of any other severance benefits, for a period of 24 months following such termination, monthly payments equal to the sum of 1/12th of Mr. Anderson’s base salary at the time of termination plus 1/12th of the average annual bonus paid to Mr. Anderson in the 3 fiscal years ending before his date of termination, COBRA continuation premium payments for up to 18 months and up to $20,000 for executive outplacement assistance. Payment of severance under the severance agreement is contingent upon Mr. Anderson’s execution and delivery of a release of claims against the Company.

  27. Outstanding Equity Awards at Fiscal Year

    Outstanding Equity Awards at Fiscal Year The following table sets forth information concerning equity awards outstanding as of December 31, 2023.

  28. Outstanding Equity Awards at Fiscal Year

    | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(7) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(6) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(7) | | Craig W. Best(1) | 2,187 | 106,507 | 5,002 | 243,597 | | Thomas P. Tulaney(2) | 1,105 | 53,814 | 2,530 | 123,211 | | Neal D. Koplin(3) | 964 | 46,947 | 2,244 | 109,283 | | Timothy H. Kirtley(4) | 840 | 40,908 | 1,936 | 94,283 | | John R. Anderson III(5) | 848 | 41,298 | 1,956 | 95,257 |

  29. Outstanding Equity Awards at Fiscal Year

    | (1) Mr. Best’s outstanding equity awards consist of 379 shares of restricted stock, subject to vesting in one annual installment on March 11, 2024; 673 shares of restricted stock, subject to vesting in two annual installments on March 11, 2024, and 2025; 1,135 shares of restricted stock, subject to vesting in three annual installments on March 11, 2024, 2025, and 2026; 2,354 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2024; and 2,648 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2025. |

  30. Outstanding Equity Awards at Fiscal Year

    | (2) Mr. Tulaney’s outstanding equity awards consist of 191 shares of restricted stock, subject to vesting in one annual installment on March 11, 2024; 339 shares of restricted stock, subject to vesting in two annual installments on March 11, 2024 and 2025; 575 shares of restricted stock, subject to vesting in three annual installments on March 11, 2024, 2025, and 2026; 1,188 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2024; and 1,342 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2025. |

  31. Outstanding Equity Awards at Fiscal Year

    | (3) Mr. Koplin’s outstanding equity awards consist of 153 shares of restricted stock, subject to vesting in one annual installment on March 11, 2024; 303 shares of restricted stock, subject to vesting in two annual installments on March 11, 2024 and 2025; 508 shares of restricted stock, subject to vesting in three annual installments on March 11, 2024, 2025, and 2026; 1,060 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2024; and 1,184 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2025. |

  32. Outstanding Equity Awards at Fiscal Year

    | (4) Mr. Kirtley’s outstanding equity awards consist of 141 shares of restricted stock, subject to vesting in one annual installment on March 11, 2024; 261 shares of restricted stock, subject to vesting in two annual installments on March 11, 2024 and 2025; 438 shares of restricted stock, subject to vesting in three annual installments on March 11, 2024, 2025, and 2026; 914 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2024; and 1,022 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2025. |

  33. Outstanding Equity Awards at Fiscal Year

    | (5) Mr. Anderson’s outstanding equity awards consist of 141 shares of restricted stock, subject to vesting in one annual installment on March 11, 2024; 261 shares of restricted stock, subject to vesting in two annual installments on March 11, 2024, and 2025; 446 shares of restricted stock, subject to vesting in three annual installments on March 11, 2024, 2025, and 2026; 914 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2024; and 1,042 unearned performance-vested restricted stock units that would be earned for achieving target performance goals over a three-year period ending December 31, 2025. |

  34. Outstanding Equity Awards at Fiscal Year

    | (6) These amounts reflect a portion of the unvested RSUs that may become vested based on the actual performance over the applicable performance periods. For purposes of calculating the amounts set forth in the table and based on performance through December 31, 2023, it is assumed that the RSUs will be earned at target; however, the number of shares actually earned will depend upon actual performance over the applicable performance periods. |

  35. Outstanding Equity Awards at Fiscal Year

    | (7) Market value is based on a closing price of $48.70 per share of our common stock on December 29, 2023. |

  36. Stock Vested

    Stock Vested The following table sets forth information concerning restricted stock that vested during the fiscal year ended December 31, 2023.

  37. Stock Vested

    | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Craig W. Best | 1,054 | 49,749(1) | | Thomas P. Tulaney | 521 | 24,591(2) | | Neal D. Koplin | 442 | 20,862(3) | | Timothy H. Kirtley | 396 | 18,691(4) | | John R. Anderson III | 391 | 18,455(5) |

  38. Stock Vested

    | (1) Mr. Best’s restricted stock awards consist of 1,054 shares; 340 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023; 378 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023; and 336 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023. |

  39. Stock Vested

    | (2) Mr. Tulaney’s restricted stock awards consist of 521 shares; 160 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023; 191 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023; and 170 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023. |

  40. Stock Vested

    | (3) Mr. Koplin’s restricted stock awards consist of 442 shares; 138 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023; 153 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023; and 151 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023. |

  41. Stock Vested

    | (4) Mr. Kirtley’s restricted stock awards consist of 396 shares; 124 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023, 141 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023, and 131 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023. |

  42. Stock Vested

    | (5) Mr. Anderson’s restricted stock awards consist of 391 shares; 119 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023, 141 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023 and 131 shares of restricted stock based on the closing price of $47.20 per share of our common stock on the vesting date, March 11, 2023. |

  43. Stock Vested

    The following table sets forth information concerning performance-vested restricted stock units that vested during the fiscal year ended December 31, 2023.

  44. Stock Vested

    | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Craig W. Best | 3,496 | 184,861 | | Thomas P. Tulaney | 1,764 | 85,907 | | Neal D. Koplin | 1,412 | 68,764 | | Timothy H. Kirtley | 1,303 | 63,456 | | John R. Anderson III | 1,303 | 63,456 |

  45. Stock Vested

    | (1) Based on the closing price of $48.70 per share of our common stock on the vesting date, December 31, 2023. |

  46. Pension Benefits

    Pension Benefits The following table sets forth information concerning our plans that provide for payments or other benefits at, following, or in connection with, retirement for each of the named executive officers.

  47. Pension Benefits

    | Name | Plan Name | Number of Years of Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payment During Last Fiscal Year ($) | | Craig W. Best | Penseco Employees’ Pension Plan | 3 | 98,078 | – | | John R. Anderson III | Penseco Employees’ Pension Plan | 18 | 68,822 | – | | Thomas P. Tulaney | Supplemental Executive Retirement Plan | 12 | 1,608,779 | – | | Neal D. Koplin | Supplemental Executive Retirement Plan | 7 | 448,281 | – | | Timothy H. Kirtley | Supplemental Executive Retirement Plan | 2 | 49,540 | – | | John R. Anderson III | Supplemental Executive Retirement Plan | 2 | 69,147 | – |

  48. Pension Benefits

    | (1) Represents the number of benefit years of service credited to the executive officer under the plan, computed as of the same pension plan measurement date used for financial statement reporting purposes with respect to the registrant’s audited financial statements for the last completed fiscal year. The Penseco Employees’ Pension Plan was frozen as of June 2008, and no additional years of services are being credited under such plan. |

  49. Pension Benefits

    | (2) Reflects the actuarial present value of the named executive officer’s accumulated benefit under the plan(s), computed as of the same measurement date used for financial statement reporting purposes with respect to the registrant’s audited financial statements for the last completed fiscal year. |

  50. Pension Benefits

    The information in the foregoing table for Messrs. Best and Anderson includes information related to the Penseco Employees’ Pension Plan, a qualified defined benefit retirement plan. As of June 2008, no further benefits are being accrued in this plan. The plan provides for fixed benefits payable for life upon retirement at the age of 65, based on length of service and compensation levels as defined in the plan. The information in the table has been determined using interest rate and mortality rate assumptions consistent with those used in the preparation of the Company’s financial statements. Messrs. Best and Anderson participate in the Employees’ Pension Plan on the same basis as all other former Penseco employees who were participants as of June 2008, and receive only those benefits that are available to all such other employees. Under his SERP arrangement, Mr. Tulaney is eligible to earn a benefit of $114,600 per year commencing upon his retirement at age 65 and continuing for twenty years. Mr. Tulaney may receive lesser or equal benefits upon a qualifying termination of employment that occurs prior to Mr. Tulaney reaching age 65. Under his SERP arrangement, Mr. Koplin is eligible to earn a benefit of $62,000 per year commencing upon his retirement at age 67 and continuing for fifteen years. Mr. Koplin may receive lesser or equal benefits upon a qualifying termination of employment that occurs prior to Mr. Koplin reaching age 67. Under his SERP arrangement, Mr. Kirtley is eligible to earn a benefit of $50,000 per year commencing upon his retirement at age 65 and continuing for ten years. Mr. Kirtley may receive lesser or equal benefits upon a qualifying termination of employment that occurs prior to Mr. Kirtley reaching age 65. Under his SERP arrangement, Mr. Anderson is eligible to earn a benefit of $50,000 per year commencing upon his retirement at age 65 and continuing for ten years. Mr. Anderson may receive lesser or equal benefits upon a qualifying termination of employment that occurs prior to Mr. Anderson reaching age 65.

  51. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation The following table sets forth nonqualified deferred compensation contributions during the year ended December 31, 2023.

  52. Nonqualified Deferred Compensation

    | Name | Executive Contributions in 2023($) | Company Contributions in 2023($) | Aggregate Earnings in 2023($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at December 31, 2023($) | | Craig W. Best | – | 17,239(1) | – | – | 197,522 | | Craig W. Best | 52,000 | 26,000(2) | 135,444(3) | – | 896,812 | | Craig W. Best | – | 80,000(4) | 62,084(5) | – | 1,312,868 |

  53. Nonqualified Deferred Compensation

    | (1) Represents Company accrued contributions for the 2023 plan year under the Excess Benefit Plan, which contributions are included in “All Other Compensation” in the Summary Compensation Table set forth above. | | (2) Represents Company matching contributions under the Executive Deferred Compensation Plan, which contributions are included in “All Other Compensation” in the Summary Compensation Table set forth above. | | (3) Represents earnings on balances in the Executive Deferred Compensation Plan No 1. | | (4) Represents Company contributions under the Deferred Compensation Plan No. 2, which contributions are included in “All Other Compensation” in the Summary Compensation Table set forth above. | | (5) Represents earnings on balances in the Deferred Compensation Plan No. 2. |

  54. Nonqualified Deferred Compensation

    Excess Benefit Plan. The company contribution set forth in the table above represents our contribution pursuant to the Excess Benefit Plan maintained for Mr. Best. The plan provides Mr. Best with benefits in an amount which is equivalent to the excess, if any, of the matching and ESOP contributions he would have been entitled to receive under the 401(k) Plan and ESOP if those plans were administered without regard to the limitations required by Section 401(a)(17) of the Internal Revenue Code and any regulations thereunder, over the amount he is entitled to receive under those plans for the applicable plan year. The Excess Benefit Plan is intended to be an unfunded excess benefit plan. The benefit described above is to be computed as of the date of Mr. Best’s separation from service. The accrued benefit will become payable if Mr. Best separates from service for any reason. If a change in control (as defined in the Excess Benefit Plan) occurs, the accrued benefit at the date of the change in control shall be valued and payable according to the provisions set forth below as if the change in control constituted a separation from service. Mr. Best, or his beneficiaries, will be entitled to receive, by virtue of his separation from service, a distribution in an aggregate amount equal to his accrued benefit. The actuarial equivalent of his accrued benefit will be distributed in a single lump sum payment within five days following the date that is six months after the date Mr. Best separates from service. If Mr. Best dies before terminating his employment with the Bank and before the commencement of payments under the Excess Benefit Plan, the actuarial equivalent of the entire value of his accrued benefit will be paid, in a single lump sum, within sixty days following the date of his death, to his designated beneficiaries. If Mr. Best’s employment had terminated on December 31, 2023 his accrued benefit under the Excess Benefit Plan would have been $197,522. Executive Deferred Compensation Plan. The Executive Deferred Compensation Plan is an account-based deferred compensation arrangement that provides Mr. Best an opportunity to defer base salary and annual bonus compensation and requires the Company to make matching contributions to Mr. Best’s account in an amount equal to 50 percent of Mr. Best’s deferrals, up to a maximum of six percent of Mr. Best’s salary and annual bonus for a given year. The Company may also contribute a discretionary contribution to Mr. Best’s account under the plan. Notional interest or earnings and losses, based on the investment returns under our 401(k) profit sharing plan, will also be credited. Distributions from the Executive Deferred Compensation Plan will be made upon Mr. Best’s retirement or other separation from service, or upon his death or a change in control if earlier. Deferred Compensation Plan No. 2. The Deferred Compensation Plan No. 2 is an account-based deferred compensation arrangement contemplated by the amendment and restatement of Mr. Best’s employment agreement on January 3, 2011. Pursuant to the agreement, the Deferred Compensation Plan No. 2 provides Mr. Best an opportunity to defer base salary and bonus compensation and required the Company to make contributions to Mr. Best’s account in the amount of $61,375 on or around the time his employment agreement was amended and restated, followed by credits of $60,000 each August 1 beginning in 2011 and ending in 2014. The plan was amended August 31, 2014 and, as amended, requires an annual contribution of $80,000 per year from 2015 through 2019 subject to Mr. Best’s continued employment. On January 30, 2020, a Second Amendment to the Amended and Restated Deferred Compensation Plan No. 2 was approved. The second amendment provides for a contribution of $80,000 each August 1 from 2020 through 2024, each conditioned on Mr. Best’s continued employment through the applicable date. Notional interest will be credited to such deferred amounts and Mr. Best’s account will be distributed upon his retirement or other separation from service, or upon his death or a change in control if earlier. The second amendment provides that with respect to the benefit attributable to contributions accrued on August 1, 2020 and thereafter, subject to the other terms and conditions of the plan, such benefit will be paid in a lump sum within forty-five (45) days following Mr. Best’s separation from service. With respect to the benefit attributable to contributions accrued through August 1, 2019, such benefit will be paid in one hundred twenty (120) consecutive monthly installments. Potential Post-Termination Benefits Payments Made Upon Termination of Employment. The following chart summarizes the total benefits payable to the named executive officers upon a termination of employment, assuming that the termination occurred on December 31, 2023 and based on a closing price of $48.70 per share of our common stock on December 31, 2023:

  55. Nonqualified Deferred Compensation

    | | Termination | Termination for | Termination After a | | Name | Without “Cause” | “Good Reason” | Change in Control | | Craig W. Best | 3,670,367 | 3,670,367 | 4,570,433 | | Thomas P. Tulaney | 2,588,150 | 2,588,150 | 3,280,919 | | Neal D. Koplin | 848,160 | – | 1,756,153 | | Timothy H. Kirtley | 409,024 | 352,064 | 1,136,140 | | John R. Anderson III | 441,127 | 361,797 | 1,196,508 |

  56. Nonqualified Deferred Compensation

    Payments Made Upon Termination for Cause. Under the employment agreements with Messrs. Best, Tulaney, Koplin and Kirtley, we may terminate their employment for cause (as defined in the agreement) at any time. Mr. Anderson is an at-will employee without an employment agreement. If any of the named executive officers is terminated for cause, he will receive only accrued compensation and vested benefits through his termination date. Payments Made Upon Termination Without Cause or For Good Reason. Craig W. Best – Upon termination by the Company without cause (as defined in his employment agreement) or voluntary termination by Mr. Best with good reason (as defined in his employment agreement), he will receive his accrued compensation and other benefits through his termination date, along with a severance payment equal to 24 months of payments based upon base salary and average annual incentive and bonus payments and $30,000 in outplacement assistance to be paid by us to a firm selected by Mr. Best. In addition, the Company will pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and any dependents for a period of 24 months following termination. If the Company terminated Mr. Best’s employment without cause or he resigned with good reason on December 31, 2023, the cash severance payment due under his employment agreement (based solely on Mr. Best’s then current cash compensation and average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $1,190,073. In addition, Mr. Best would have received the outplacement assistance noted above, payment of health insurance premiums valued at $43,092, and payment of accrued benefits of $197,522 under the Excess Benefit Plan, $896,812 under the Executive Deferred Compensation Plan and $1,312,868 under Deferred Compensation Plan No. 2. The Best Employment Agreement provides that payment of severance is contingent upon Mr. Best’s execution and delivery of a release agreement to the Company and the Bank. Thomas P. Tulaney – Pursuant to the terms of his employment agreement, upon termination by the Company without cause (as defined in his employment agreement) or voluntary termination by Mr. Tulaney with good reason (as defined in his employment agreement), he will receive his accrued compensation and other benefits through his termination date, along with a severance payment equal to 12 months of payments based upon base salary and average annual incentive and bonus payments. In addition, the Company will pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and dependents for a period of 18 months following termination. If the Company terminated Mr. Tulaney’s employment without cause or he resigned with good reason on December 31, 2023, the cash severance payment due under his employment agreement (based solely on Mr. Tulaney’s then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $419,831. In addition, Mr. Tulaney would have received payment of health insurance premiums valued at $32,319 and, upon termination by the Company without cause or any voluntary termination by Mr. Tulaney (including for good reason), $106,800 per year, payable in monthly installments for twenty years, under his SERP. The Tulaney Employment Agreement provides that payment of severance is contingent upon Mr. Tulaney’s execution and delivery of a release agreement to the Company and the Bank. Neal D. Koplin – Pursuant to the terms of his employment agreement, upon termination by the Company without cause (as defined in his employment agreement), we are obligated to, among other things, make monthly payments to Mr. Koplin for one (1) year following the termination equal to 1/12th of Mr. Koplin’s base salary at the time of termination. If the company terminated Mr. Koplin’s employment without cause on December 31, 2023, the cash severance payment due under his employment agreement (based solely on Mr. Koplin’s then current base salary, without regard to future base salary adjustments) would have been $295,800. Payment of severance under the Koplin Employment Agreement is contingent upon Mr. Koplin’s execution and delivery of a release agreement to the Company and the Bank. In addition, upon termination by the Company without cause, Mr. Koplin would have received $36,824 per year, payable in monthly installments for fifteen years, under his SERP. Timothy H. Kirtley – Pursuant to the terms of his employment agreement, upon termination by the Company without cause (as defined in his employment agreement) or voluntary termination by Mr. Kirtley with good reason (as defined in his employment agreement), he will receive his accrued compensation and other benefits through his termination date, along with a severance payment equal to 12 months of payments based upon base salary and average annual incentive and bonus payments. In addition, the Company will pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and dependents for a period of 18 months following termination. If the Company terminated Mr. Kirtley’s employment without cause or he resigned with good reason on December 31, 2023, the cash severance payment due under his employment agreement (based solely on Mr. Kirtley’s then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $315,206. In addition, Mr. Kirtley would have received payment of health insurance premiums valued at $36,858. Payment of severance under the Kirtley Employment Agreement is contingent upon Mr. Kirtley’s execution and delivery of a release agreement to the Company and the Bank. In addition, upon termination by the Company without cause, Mr. Kirtley would have received $5,696 per year, payable in monthly installments for ten years, under his SERP.

  57. Nonqualified Deferred Compensation

    John R. Anderson III – Pursuant to the terms of his severance agreement, upon termination by the Company without cause (as defined in his severance agreement) or voluntary termination by Mr. Anderson with good reason (as defined in his severance agreement), Mr. Anderson will be entitled to receive, for a period of 12 months following such termination, monthly payments equal to the sum of 1/12th of Mr. Anderson’s base salary at the time of termination plus 1/12th of the average annual bonus paid to Mr. Anderson in the 3 fiscal years ending before his date of termination, monthly COBRA continuation premium payments for up to 12 months and up to $20,000 for executive outplacement assistance. If the Company terminated Mr. Anderson’s employment without cause or he resigned with good reason on December 31, 2023, the cash severance payment due under his severance agreement (based solely on Mr. Anderson’s then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $317,225, the COBRA premiums valued at $24,572 and outplacement benefits of up to $20,000. In lieu of the foregoing benefits, if Mr. Anderson is terminated without cause or resigns for good reason within 24 months of the closing date of the proposed FNCB merger, Mr. Anderson will be entitled to receive, for a period of 24 months following such termination, monthly payments equal to the sum of 1/12th of Mr. Anderson’s base salary at the time of termination plus 1/12th of the average annual bonus paid to Mr. Anderson in the 3 fiscal years ending before his date of termination, COBRA continuation premium payments for up to 18 months and up to $20,000 for executive outplacement assistance. In addition, upon termination by the Company without cause, Mr. Anderson would have received $7,933 per year, payable in monthly installments for ten years, under his SERP. Payments Made Upon Disability or Death. The employment agreements with Messrs. Best, Tulaney, Koplin and Kirtley provide that, upon termination due to the executive’s death or disability, he will receive only accrued compensation and vested benefits through his termination date. Likewise, upon a termination due to Mr. Anderson’s death or disability, he will receive only accrued compensation and vested benefits through his termination date. If Mr. Best’s employment terminated December 31, 2023 due to his death or disability, he would be entitled to receive payment of accrued benefits of $197,522 under the Excess Benefit Plan, $896,812 under the Executive Deferred Compensation Plan and $1,312,868 under Deferred Compensation Plan No. 2. In addition, he would have received accelerated vesting of $39,885 or $106,507 in restricted stock, if terminated due to death or disability, respectively, and accelerated vesting of $119,364 in RSUs if terminated due to death. If terminated due to death at December 31, 2023, Mr. Best’s estate would have been entitled to $593,000 in life insurance benefits, in addition to any benefit under the group life insurance plan maintained for employees generally. If Mr. Tulaney’s employment terminated December 31, 2023 due to his death or disability, under his SERP he would be entitled to receive, respectively, $114,600 per year or $106,800 per year, in either case payable in monthly installments for twenty years. In addition, he would have received accelerated vesting of $20,113 or $53,814 in restricted stock, if terminated due to death or disability, respectively, and accelerated vesting of $60,339 in RSUs if terminated due to death. If Mr. Koplin’s employment terminated December 31, 2023 due to his death or disability, under his SERP he would be entitled to receive, respectively, $62,000 per year or $36,824 per year, in either case payable in monthly installments for fifteen years. In addition, he would have received accelerated vesting of $17,240 or $46,947 in restricted stock, if terminated due to death or disability, respectively, and accelerated vesting of $53,570 in RSUs if terminated due to death. If Mr. Kirtley’s employment terminated December 31, 2023 due to his death or disability, under his SERP he would be entitled to receive, respectively, $50,000 per year or $5,696 per year, in either case payable in monthly installments for ten years. If Mr. Kirtley’s employment terminated December 31, 2023 he would have received accelerated vesting of $15,146 or $40,908 in restricted stock, if terminated due to death or disability, respectively, and accelerated vesting of $46,216 in RSUs if terminated due to death. If Mr. Anderson’s employment terminated December 31, 2023 due to his death or disability, under his SERP he would be entitled to receive, respectively, $50,000 per year or $7,933 per year, in either case payable in monthly installments for ten years. If Mr. Anderson’s employment terminated December 31, 2023 he would have received accelerated vesting of $15,243 or $41,298 in restricted stock, if terminated due to death or disability, respectively, and accelerated vesting of $46,557 in RSUs if terminated due to death. Payments Made Upon a Change in Control. In accordance with the terms of their employment agreements, our named executive officers are entitled to the following payments upon termination in connection with a change of control: Craig W. Best – If we terminate Mr. Best without cause or Mr. Best terminates for good reason within 36 months of a change in control, he will receive, in addition to previously accrued compensation and benefits, monthly severance payments for 36 months following termination, equal to the sum of 1/12th of the executive’s base salary at the time of termination and 1/12th of the average bonus and incentive payment that Mr. Best received over the prior three years. In addition, the Company will pay the applicable premium otherwise payable for COBRA continuation coverage for the executive and his spouse for a period of 36 months following termination. If Mr. Best was terminated without cause or resigned for good reason on December 31, 2023 following a change in control, the cash severance payment due under his employment agreement (based solely on Mr. Best’s then current base salary and average bonus and incentive payments, without regard to future adjustments, bonuses or incentives) would have been $1,785,110. In addition, Mr. Best would have received payment of health insurance premiums valued at $64,638, and payment of accrued benefits of $197,522 under the Excess Benefit Plan, $896,812 under the Executive Deferred Compensation Plan and $1,312,868 under Deferred Compensation Plan No. 2. In the event that Mr. Best had been terminated without cause or had resigned for good reason on December 31, 2023, within 12 months following a change of control, he would have received accelerated vesting of $39,885 in restricted stock and accelerated vesting of $243,597 in RSUs. For purposes of calculating accelerated vesting of RSUs upon a change of control, based on performance through December 31, 2023, it is assumed that RSUs would be earned at target.

  58. Nonqualified Deferred Compensation

    Thomas P. Tulaney – Pursuant to the terms of his employment agreement, if we terminate Mr. Tulaney without cause or Mr. Tulaney terminates for good reason within 24 months of a change in control, he will receive, in addition to previously accrued compensation and benefits, monthly severance payments for 24 months following termination, equal to the sum of 1/12th of the executive’s base salary at the time of termination and 1/12th of average annual incentive and bonus payments. In addition, the Company will pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and any dependents for a period of 24 months following termination. If Mr. Tulaney was terminated without cause or resigned for good reason on December 31, 2023 following a change in control, the cash severance payment due under his employment agreement (based solely on Mr. Tulaney’s then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $839,663. In addition, Mr. Tulaney would have received payment of health insurance premiums valued at $43,092, accelerated vesting of $20,113 in restricted stock and accelerated vesting of $123,211 in RSUs, and $112,742 per year, payable in monthly installments for twenty years, under his SERP. For purposes of calculating accelerated vesting of RSUs upon a change of control, based on performance through December 31, 2023, it is assumed that RSUs would be earned at target. Neal D. Koplin – In the event that Mr. Koplin is terminated within 24 months following a change of control (as defined in his employment agreement) or resigns for good reason (as defined in his employment agreement), he will be entitled to the salary payments described above for a period of three (3) years following termination (in lieu of one (1) year). Payment of severance under the Koplin Employment Agreement is in each case contingent upon Mr. Koplin’s execution and delivery of a release agreement to the Company and the Bank. If Mr. Koplin was terminated without cause or resigned for good reason on December 31, 2023 following a change in control, the cash severance due to Mr. Koplin under his employment agreement would have been $887,400. In addition, Mr. Koplin would have received accelerated vesting of $17,240 in restricted stock and accelerated vesting of $109,283 in RSUs, and $53,520 per year, payable in monthly installments for fifteen years, under his SERP. For purposes of calculating accelerated vesting of RSUs upon a change of control, based on performance through December 31, 2023, it is assumed that RSUs would be earned at target. Timothy H. Kirtley – Pursuant to the terms of his employment agreement, if we terminate Mr. Kirtley without cause or Mr. Kirtley terminates for good reason within 24 months of a change in control, he will receive, in addition to previously accrued compensation and benefits, monthly severance payments for 24 months following termination, equal to the sum of 1/12th of the executive’s base salary at the time of termination and 1/12th of average annual incentive and bonus payments. In addition, the Company will pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and any dependents for a period of 18 months following termination. If Mr. Kirtley was terminated without cause or resigned for good reason on December 31, 2023 following a change in control, the cash severance payment due under his employment agreement (based solely on Mr. Kirtley’s then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $630,413. In addition, Mr. Kirtley would have received payment of health insurance premiums valued at $36,858, accelerated vesting of $15,146 in restricted stock and accelerated vesting of $94,283 in RSUs, and $35,944 per year, payable in monthly installments for ten years, under his SERP. For purposes of calculating accelerated vesting of RSUs upon a change of control, based on performance through December 31, 2023, it is assumed that RSUs would be earned at target. John R. Anderson III – Pursuant to the terms of his severance agreement, if we terminate Mr. Anderson without cause or Mr. Anderson terminates for good reason within 24 months of a change in control, he will receive, in addition to previously accrued compensation and benefits, monthly severance payments for 24 months following termination, equal to the sum of 1/12th of the executive’s base salary at the time of termination and 1/12th of average annual bonus payments paid in the 3 fiscal years ending before his date of termination. In addition, the Company will pay the applicable premium otherwise payable for COBRA continuation coverage for the executive, his spouse and any dependents for a period of 18 months following termination and pay and up to $20,000 for executive outplacement assistance. If Mr. Anderson was terminated without cause or resigned for good reason on December 31, 2023 following a change in control, the cash severance payment due under his severance agreement (based solely on Mr. Anderson’s then current base salary and average annual incentive and bonus payments, without regard to future adjustments, incentives or bonuses) would have been $634,450. In addition, Mr. Anderson would have received payment of health insurance premiums valued at $36,858, accelerated vesting of $15,243 in restricted stock and accelerated vesting of $95,257 in RSUs, and $39,470 per year, payable in monthly installments for ten years, under his SERP, and up to $20,000 in outplacement assistance. For purposes of calculating accelerated vesting of RSUs upon a change of control, based on performance through December 31, 2023, it is assumed that RSUs would be earned at target. Pay Ratio Disclosure We identified our median employee as of December 31, 2023, using our entire employee population, other than our principal executive officer, and the total base salary or wages, plus bonus, earned by those employees during the 2023 calendar year. We calculated the total compensation of our median employee in the same manner that the total compensation of our principal executive officer is calculated in the summary compensation table, although the median employee’s total compensation consisted solely of salary, bonus and contributions to our ESOP and 401(k) profit sharing plan. Based on this methodology, the 2023 total compensation of our median employee was $50,710. The 2023 total compensation of our principal executive officer was $927,073 and the ratio of the median employee’s total compensation to our principal executive officer’s total compensation for 2023 was 1:18.3. Pay Versus Performance Disclosure The table below shows the following information for the past three fiscal years: (i) “total” compensation for our named executive officers (“NEOs”) for purposes of the “Summary compensation table”; (ii) the “Compensation actually paid” to named executive officers (calculated using rules required by the SEC); (iii) our total shareholder return (“TSR”); (iv) the TSR of the S&P U.S. BMI Banks Index; (v) our net income; and (vi) our return on average tangible common equity. “Compensation actually paid” does not represent the value of cash and shares of the Company’s common stock received by named executive officers during the year, but rather is an amount calculated under SEC rules and includes, among other things, year-over-year changes in the value of unvested equity-based awards. As a result of the calculation methodology required by the SEC, “Compensation actually paid” amounts below differ from compensation actually received by the individuals.

  59. Nonqualified Deferred Compensation

    | Year | “Summary compensation table” total for CEO(1) | Compensation actually paid to CEO(2) | Average “Summary compensation table” total for other NEOs(1) | Average compensation actually paid to other NEOs(2) | Company TSR(3) | Peer group TSR(3) | Net income (in thousands) | Return on average tangible common equity(4) | | 2023 | $927,073 | $894,021 | $517,313 | $490,183 | 146.59 | 123.02 | $27,380 | 10.30% | | 2022 | $992,140 | $1,002,424 | $537,708 | $529,093 | 150.38 | 112.77 | $38,090 | 14.80% | | 2021 | $1,009,089 | $1,201,076 | $587,389 | $622,866 | 148.19 | 135.96 | $43,519 | 12.94% |

  60. Nonqualified Deferred Compensation

    | (1) The CEO for each year reported was Craig W. Best. The other named executive officers, or NEOs, for each year reported were: Thomas P. Tulaney, Neal D. Koplin, Timothy H. Kirtley and John R. Anderson III. |

  61. Nonqualified Deferred Compensation

    | (2) SEC rules require certain adjustments be made to the “Summary compensation table” totals to determine “compensation actually paid” as reported in the “Pay versus performance table” above. The following table details the applicable adjustments that were made to determine “compensation actually paid” (all amounts are averages for the named executive officers other than the CEO): |

  62. Nonqualified Deferred Compensation

    | Year | Executive(s) | “Summary compensation table” total | Deduct change in pension value | Add pension services costs | Deduct stock awards | Add year- end value of unvested equity awards granted in year | Change in value of unvested equity awards granted in prior years | Change in value of equity awards granted in prior years which vested in year | Deduct value of equity awards granted in prior years that failed to vest | Add dividends | | 2023 | CEO | $927,073 | $(6,996) | – | $(223,175) | $248,711 | $(14,394) | $(15,868) | $(24,883) | $3,553 | | | Other NEOs | $517,313 | $(66,964) | $50,329 | $(96,684) | $107,737 | $(6,206) | $(6,569) | $(10,290) | $1,518 | | 2022 | CEO | $992,140 | – | – | $(217,333) | $235,405 | $(4,312) | $(6,823) | – | $3,347 | | | Other NEOs | $537,708 | $(60,394) | $47,076 | $(94,081) | $101,904 | $(1,778) | $(2,734) | – | $1,393 | | 2021 | CEO | $1,009,089 | – | – | $(217,311) | $269,351 | $73,039 | $63,721 | – | $3,187 | | | Other NEOs | $587,389 | $(111,305) | $70,743 | $(89,845) | $111,360 | $29,005 | $24,260 | – | $1,258 |

  63. Nonqualified Deferred Compensation

    | (3) TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2020. The peer group TSR represents TSR of the S&P U.S. BMI Banks Index. |

  64. Nonqualified Deferred Compensation

    | (4) Return on average tangible common equity (ROATCE), a non-GAAP measure, is equal to net income divided by the difference of average stockholders’ equity minus average intangible assets. Consistent with its usage by our compensation committee, the 2021 return on average tangible common equity shown in the table above excludes an extraordinary gain on the sale of Visa Class B shares. |

  65. Nonqualified Deferred Compensation

    The charts below describe the relationships between “compensation actually paid” to our named executive officers (NEOs), our total shareholder return (TSR), our net income and our return on average tangible common equity (ROATCE) for the last three completed fiscal years. Company’s Most Important Financial Performance Measures The following were the most important financial performance measures, as determined by the Company, that link compensation actually paid to our CEO and other NEOs to the Company’s performance for the most recently completed fiscal year.

  66. Nonqualified Deferred Compensation

    | Earnings per share (EPS) growth Revenue growth Expense to asset ratio Loan growth Deposit growth | Asset growth Ratio of non-performing assets to average loans plus other real estate owned Ratio of net charge-offs to average loans |

  67. Nonqualified Deferred Compensation

    Each of these financial performance measures are used in our incentive programs to determine the level of payout. For more information on each of these performance measures, see “Components of the Compensation Program” beginning on page 25. 2023 Director Compensation The following table sets forth information concerning the compensation received by individuals who served as directors (other than Craig W. Best) during the year ended December 31, 2023.

  68. Nonqualified Deferred Compensation

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | William E. Aubrey II | 85,008 | 15,028 | 140 | 100,176 | | Sandra L. Bodnyk | 64,012 | 15,028 | 373 | 79,413 | | Ronald G. Kukuchka | 58,012 | 15,028 | 360 | 73,400 | | Richard S. Lochen, Jr. | 78,016 | 15,028 | 131 | 93,175 | | James B. Nicholas | 60,512 | 15,028 | – | 75,540 | | Elisa Zúñiga Ramirez | 52,012 | 15,028 | – | 67,040 | | Joseph T. Wright, Jr. | 75,008 | 15,028 | 319 | 90,355 |

  69. Nonqualified Deferred Compensation

    | (1) The entries in the stock awards column reflect the aggregate grant date fair value of awards of restricted stock and time-vested restricted stock, computed in accordance with FASB ASC Topic 718, Compensation—Stock Compensation. See Notes 1 and 15 of the Notes to Consolidated Financial Statements for the fiscal year ended December 31, 2023 for a discussion of the relevant assumptions used to determine the valuation of our stock awards for accounting purposes. Each non-employee director serving as of December 31, 2023 received an award of 322 shares of restricted stock on January 11, 2024, which was fully vested upon grant. Amount is based on the December 2023 average share price of $46.67. | | (2) All other amounts reflect 2023 imputed income on supplemental life insurance split-dollar arrangements. |

  70. Nonqualified Deferred Compensation

    Each non-employee director receives $2,000 for attendance at each meeting of the board of the Company or the Bank, $500 for each committee meeting, and $300 each for certain advisory meetings. All non-employee directors receive a cash retainer of $20,000 per year. In addition, all non-employee directors receive an annual stock award having a target value of $15,000, based on the average closing price of our common stock during the month of December. The Chairman of the Board receives a retainer of $40,000 per year, and the Audit Committee Chairman receives an additional $417 per month; the Compensation Committee Chairman receives an additional $292 per month; the Nominating and Corporate Governance Committee Chairman receives an additional $250 per month; the Chair of the Bank’s Trust Committee receives an additional $209 per month; the Chair of the Bank’s Asset Liability Management Committee receives an additional $209 per month; the Chair of the Bank’s Asset Quality/Credit Committee receives an additional $209 per month; the Chair of the Information Technology Committee receives an additional $209 per month and the Chair of the ESG Committee receives an additional $209 per month. We maintain a director supplemental life insurance plan. All directors are eligible for the life insurance benefit, subject to medical underwriting acceptance. The plan currently insures five directors. The director life insurance benefit of up to $100,000 per participating director is provided through a single premium bank-owned life insurance, or “BOLI,” program because BOLI is a more cost-effective way of providing the benefits. The eligible participating directors are not required to pay any premiums on the life insurance policy, but have the imputed value of the insurance coverage included in their taxable income.