DEF 14A of Western New England Bancorp, Inc., Apr 4, 2025

DEF 14A of Western New England Bancorp, Inc.

Filed Apr 4, 2025 · FY20240001999371-25-003796

Open on EDGAR

  1. TABLE OF CONTENTS

    | EXECUTIVE COMPENSATION | 47 | | Summary Compensation Table | 47 | | Compensation Actually Paid | 47 | | CEO Pay Ratio Disclosure | 50 | | Outstanding Equity Awards at Fiscal Year End | 50 | | Option Exercises and Stock Vesting | 51 | | Pension Benefits | 51 | | DIRECTOR COMPENSATION | 52 | | Cash Compensation | 52 | | Equity Retainer Grant | 52 | | Deferred Compensation Plan | 52 | | Stock Ownership Guidelines | 53 | | Non-Employee Director Stock Election Program | 53 | | TRANSACTIONS WITH RELATED PERSONS | 54 | | Related-Person Transactions Policy and Procedures | 54 | | Transactions with Certain Related Persons | 54 | | DELINQUENT SECTION 16(A) REPORTS | 55 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 56 | | Principal Shareholders | 56 | | Security Ownership of Management | 57 | | PROPOSAL 2 – NON-BINDING ADVISORY RESOLUTION ON THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS | 58 | | Vote Required | 58 | | Our Recommendation | 58 | | General | 58 | | PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 59 | | Vote Required | 59 | | Our Recommendation | 59 | | Independent Registered Public Accounting Firm Fees and Services | 59 | | PROPOSAL 4 –APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2021 OMNIBUS INCENTIVE PLAN | 60 | | Vote Required | 60 | | Our Recommendation | 60 | | Securities Authorized for Issuance under Equity Compensation Plans | 61 | | Notable Features of the Amended and Restated Plan | 61 | | Purpose of the Amended and Restated Plan | 61 | | Key Metrics | 61 | | Description of the Amended and Restated Plan | 62 | | Registration with the SEC | 69 | | HOUSEHOLDING OF PROXY MATERIALS | 70 | | OTHER MATTERS | 70 | | APPENDIX A – AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2021 OMNIBUS INCENTIVE PLAN | |

  2. Proposal 1: Election of Directors

    Proposal 1: Election of Directors Directors will be elected by a plurality of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. Plurality means that the individuals who receive the largest number of “FOR” votes cast are elected as directors up to the maximum number of directors to be chosen at the Annual Meeting. Abstentions and broker non-votes will not affect the outcome of the election of directors. You may not vote your shares cumulatively for the election of directors.

  3. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS The Board, upon recommendation of its Nominating and Corporate Governance Committee, has nominated the following two (2) individuals named in the table below for election as directors. All nominees have consented to being named in this Proxy Statement and to serve if elected. If you elect all the nominees listed below, they will hold office until the Annual Meeting of Shareholders held in 2028 or until their successors have been elected and qualified. If any nominee is unable or does not qualify to serve, you or your proxy may vote for another nominee proposed by the Board. If for any reason these nominees prove unable or unwilling to stand for election or cease to qualify to serve as directors, the Board will nominate alternates or reduce the size of the Board to eliminate the vacancies. The Board has no reason to believe that any of the nominees would prove unable to serve if elected. There are no arrangements or understandings between us and any director, or nominee for directorship, pursuant to which such person was selected as a director or nominee.

  4. ELECTION OF DIRECTORS

    | Name of Nominee | Age(1) | Term to Expire | Position Held | Director Since | | Gary G. Fitzgerald | 58 | 2028 | Director | 2016 | | Paul C. Picknelly | 64 | 2028 | Director | 2016 |

  5. ELECTION OF DIRECTORS

    (1)Age at May 14, 2025

  6. INFORMATION ABOUT OUR BOARD OF DIRECTORS

    INFORMATION ABOUT OUR BOARD OF DIRECTORS

  7. Director Nominees

    Director Nominees The biographies of the nominees below contain information regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experience, qualifications, attributes or skills that caused the Nominating and Governance Committee and the Board to determine that the person should serve as a director. Gary G. Fitzgerald has been serving as a director of our Board since October 2016. Previously, Mr. Fitzgerald served on the boards of legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. since 2009, up until their merger with and into the Company. Mr. Fitzgerald is a Certified Public Accountant and is a Managing Principal of Downey, Pieciak, Fitzgerald & Co., P.C., a CPA firm located in South Hadley, Massachusetts. Mr. Fitzgerald currently serves on the board of directors of the Chicopee Savings Bank Charitable Foundation, an affiliate with Westfield Bank, a position he has held since 2021. Mr. Fitzgerald received a Bachelor of Science degree from Western New England University, a Master of Science in Taxation degree from Bentley University and has been licensed as a Certified Public Accountant since 1996. His extensive background in accounting and taxation provides him with the qualifications and skills to serve as a director and as the Company’s financial expert. Paul C. Picknelly has been serving as a director of our Board since October 2016. Previously, Mr. Picknelly served on the boards of legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. since 2000 and 2006, respectively, up until their merger with and into the Company. Mr. Picknelly is a premium hotel owner and operator, as well as a commercial real estate developer. Mr. Picknelly has served as President of Monarch Enterprises, LLC (Monarch Place Office Tower, Sheraton Springfield, and the Hilton Garden Inn Hotels in Springfield and Worcester, Massachusetts) since 1993 and further manages various commercial real estate properties in the local area. Since 2020, Mr. Picknelly has been serving on the board of directors of Baystate Health. Mr. Picknelly brings to the Board his unique and extensive knowledge of the customers, communities and political climate within our marketplace from a premier hotel management and real estate developer perspective.

  8. Continuing Directors

    Continuing Directors Laura Benoit has been serving as a director of our Board since 2014. Ms. Benoit retired in August 2022 as Treasurer and Co-Owner of Bay State Fuel Oil, Inc., a fuel distribution company located in West Springfield, Massachusetts, where she served since 1985. Bay State Fuel Oil, Inc. was the recipient of an Excellence in Risk Management Award for ten consecutive years. Ms. Benoit served on the board of directors for EMaxx Insurance from 2017 through 2022, where she served as chairperson of their Investment and Audit Committees. Ms. Benoit currently serves as President of Buddy Realty, LLC and oversees the management of several properties, a position she has held since 2005. Ms. Benoit gained substantial knowledge of cybersecurity and information technology of the Payment Card Industry Data Security Standards and compliance requirements through her businesses. During the past five years, Ms. Benoit has attended multiple cybersecurity educational conferences provided by CMD Technology. Further, during the past twenty years, Ms. Benoit has annually received training through EMaxx conferences. Ms. Benoit is a former member of the board of directors of the Western Mass Fuel Dealers Association, where she served from 1995 through 2010 in the capacity of treasurer and president. Ms. Benoit’s finance, accounting and small business management experience provides her with the qualifications and skills to serve as a director. Donna J. Damon has been serving as a director of our Board since 2011. Ms. Damon has been the President and owner of New England Concrete Cutting, Inc., a construction company specializing in concrete cutting and drilling located in Agawam, Massachusetts, since 1992. Since 1998, Ms. Damon also has been serving as a director and an executive officer for two additional owned companies: Witch Equipment of New England, Inc. and Witch Enterprises, Inc. Ms. Damon’s experience in human resources, employee benefit administration, office management and business administration provides her with the qualifications and skills to serve as a director. James C. Hagan has been serving as a director of our Board since 2009, as our Chief Executive Officer since December 31, 2008, and as our President since June 2005. Mr. Hagan served as Chief Operating Officer from June 2005 until he assumed the position of Chief Executive Officer in 2008. Prior to June 2005, he served as Senior Vice President and Commercial Loan Department Manager from 1998 and was a Vice President from 1994. Prior to 1994, Mr. Hagan worked as a commercial lender and manager at other New England-based banking institutions. Mr. Hagan currently serves on the following boards, none of which are publicly traded: since 2017, Sullivan Paper Company and the Western MA Baseball Hall of Fame; since 2016, the Chicopee Savings Bank Charitable Foundation (an affiliate with the Bank); and since 2005, Stanley Park of Westfield, Inc. Since 2008, Mr. Hagan has also been serving as a class agent for Suffield Academy. Mr. Hagan received a Bachelor of Science from Westfield State University and received a Master of Business Administration from American International College. Mr. Hagan’s expertise in the financial industry, inclusive of credit administration and commercial lending, financial reporting, workforce development, c-suite leadership and corporate governance, coupled with the extensive experience he acquired within other New England-based financial institutions provides him with the qualifications and skills to serve as a director. William D. Masse has been serving as a director of our Board since October 2016. Previously, Mr. Masse served on the boards of legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. since 1998 and 2006, respectively, up until their merger with and into the Company. In January 2021, Mr. Masse retired as the President of Granfield, Bugbee & Masse Insurance Agency and had been serving in the insurance industry for 40 years. Mr. Masse holds a Bachelor of the Arts degree from Williams College where he majored in economics. Previous to the past five years, Mr. Masse served as chairman and/or president of the board of directors of various local non-profit organizations. His extensive insurance background and business-owner expertise, as well as his business and community contacts, provide him with the qualifications and skills to serve as a director. Lisa G. McMahon has been serving as a director of our Board since 2014 and has served as our Chairperson since 2020. Ms. McMahon has been serving as the Vice President of Institutional Advancement at Westfield State University since 2021. Ms. McMahon recently retired as the Executive Director of the Westfield State University Foundation, a position she held from 2021 through 2024. She also currently serves as the Director and President of the Westfield Academy Foundation, a position she has held since 2018. Ms. McMahon began her career at Westfield State University in 2013 after leaving Merrill Lynch where she obtained her general securities license and license to become a registered investment advisor representative. Prior to her employment with Merrill Lynch, Ms. McMahon served as the Executive Director of the Westfield Business Improvement District from 2007 through 2012. Previously, Ms. McMahon served on numerous boards and committees in a leadership capacity during her professional career, inclusive of her service as the board chair of the Genesis Spiritual and Conference Center, a division of the Sisters of Providence Health Systems. Ms. McMahon received a Bachelor of Science degree from Our Lady of the Elms College and an honorary doctorate degree in Public Service from Westfield State University. Ms. McMahon’s extensive business leadership experience and work with micro businesses, nonprofit management and community relations provides her with the qualifications and skills to serve as a director.

  9. Continuing Directors

    Steven G. Richter has been serving as a director of our Board since 2011. Dr. Richter is the founder, former owner, operator and President of Micro Test Laboratories, Inc., a contract testing and manufacturing organization for the medical device, pharmaceutical and biotechnology industries. During his 30 years at the helm of Micro Test, Dr. Richter was involved with financial responsibilities and strategic initiatives. Micro Test was acquired and then merged with Cambrex, Inc. in 2014. Dr. Richer developed a knowledge of computer technology through various sources, including formal training and classroom activities. His human resources experience, developed over 30 years at Micro Test, is an asset to the Company’s Compensation Committee. Dr. Richter’s regulatory compliance experience began at the Food and Drug Administration (“FDA”) with Federal and State regulatory authorities. His experience with filing FDA-related documents and compliance to FDA laws gives the Board additional compliance perspectives. Dr. Richter is a founding managing partner of RichCo Laboratories, LLC, a life science consulting and testing operation established in 2017. His experience with risk management programs is an asset to the Company’s Finance and Risk Management Committee. His ability to review a business plan and financial statements is essential for participation on the Company’s Executive Committee – a Bank committee responsible for reviewing and approving customer loans exceeding Management’s authority. Dr. Richter continues to give back to his alma maters, both Holyoke Community College and the University of Massachusetts. At Holyoke Community College, Dr. Richter is involved with the life science community and was instrumental in obtaining a $4 million grant for their lab build out. At the University of Massachusetts, Dr. Richter served on the board of the IALS institute from its inception. Currently, RichCo Laboratories, LLC supports student undergraduate research work that helps identify PFOS/PFAS toxicology issues in zebrafish models. Dr. Richter is a graduate of the University of Massachusetts with a Bachelor’s of Science in Microbiology and went on to receive his Master of Sciences degree in Biological Sciences from the University of Massachusetts-Lowell and his Ph.D. in Sterilization Sciences from Columbia Pacific University. Dr. Richter’s extensive experience in regulatory compliance, risk management, small business administration and management provides him with the qualifications and skills to serve as a director. Philip R. Smith has been serving as a director of our Board since 2009. Prior to Mr. Smith’s directorship, he served as Secretary to the Company for several years. Mr. Smith has been a partner at Bacon & Wilson, P.C. since 2001, one of the largest and prestigious regional law firms in western Massachusetts, specializing in Real Estate, Business Law and Estate Planning. Previous to the past five years, Mr. Smith served as a board member of the Westfield Chamber of Commerce in Westfield, Massachusetts, the Westfield State College Foundation and the Westfield Community Development Corporation. He is a graduate of the University of New Hampshire and received his Juris Doctor from the New England School of Law and his LLM in Taxation from Boston University. Mr. Smith’s extensive experience in commercial and residential lending and business law, as a practicing attorney, coupled with his extensive experience in corporate governance provides him with the qualifications and skills to serve as a director.

  10. INFORMATION ABOUT OUR EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

    INFORMATION ABOUT OUR EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS The executive officers of the Company, as of April 4, 2025, are as follows. Ages reflected are as of the Annual Meeting date of May 14, 2025. Allen J. Miles, III, age 62, was appointed to Executive Vice President in December 2008 and serves as the Bank’s Chief Lending Officer. Previously, Mr. Miles served as Senior Vice President and Senior Lender of the Company and the Bank since August 2005. From 1998 to 2005, Mr. Miles served as Vice President and Commercial Loan Officer. Mr. Miles’ extensive commercial lending and loan workout experience spans nearly 40 years in the banking industry. Kevin C. O’Connor, age 65, was appointed to Executive Vice President and Chief Operating Officer in February 2017. Previously, Mr. O’Connor held the position of Senior Vice President of Retail Banking since February 2015 and served as Vice President since 2010. Mr. O’Connor holds over 30 years’ experience in retail and branch banking and had previously worked at both national and regional banking institutions as a vice president and regional manager of retail banking and sales, including small business sales. Guida R. Sajdak, age 52, was appointed to Chief Financial Officer and Treasurer in April 2017 and to Executive Vice President in October 2016. Mrs. Sajdak previously served as the Chief Risk Officer from October 2016 to April 2017. Previous to October 2016, Mrs. Sajdak served as a Senior Vice President and the Chief Financial Officer and Treasurer of legacy Chicopee Bancorp, Inc. and legacy Chicopee Savings Bank, where she held those positions since 2010. Mrs. Sajdak served Chicopee Savings Bank in various capacities since 1989, including that of Internal Auditor and Commercial Lender. Mrs. Sajdak has been serving on the board of the Chicopee Savings Bank Charitable Foundation (an affiliate with the Bank) since 2016 and as its Chairperson and President since 2022. Previous to her appointment as a director in 2016, Mrs. Sajdak served as the Foundation’s Treasurer since 2010. John E. Bonini, age 57, was appointed to Senior Vice President and General Counsel upon the retirement of his predecessor in January 2021 and previously served as Senior Vice President and Associate General Counsel upon joining the Company in August 2020. Prior to joining the Company, Mr. Bonini was employed at Barings LLC, an international investment management firm owned by MassMutual, where he was a managing director and senior counsel for Barings Real Estate since 2005. Mr. Bonini has extensive experience in real estate transactions, corporate and investment law and corporate governance. He is a graduate of Wesleyan University and received his Juris Doctor from Suffolk University Law School. Filipe B. Goncalves, age 61, was appointed to Senior Vice President and Chief Credit Officer in April 2023. Prior to his appointment as Chief Credit Officer, Mr. Goncalves served as the Associate Chief Credit Officer and as a Commercial Lending Team Leader. Prior to Mr. Goncalves joining the Company in 2019, he held the position of Chief Lending Officer at a mutual savings bank serving central and western Massachusetts. Mr. Goncalves received a Master of Business Administration Degree with a focus in finance and economics from Western New England University. Darlene Libiszewski, age 59, was appointed to Senior Vice President and Chief Information Officer in October 2016. Ms. Libiszewski previously served as the Senior Vice President of Information Technology for legacy Chicopee Savings Bank and legacy Chicopee Bancorp, Inc. where she held the position since December 2007. Ms. Libiszewski has over 35 years of experience in various information technology and cybersecurity roles, including management, spanning many disciplines, including network and infrastructure design, maintenance and management; risk management; vendor management; strategic planning; business resiliency; disaster recovery planning and testing; project management and delivery; and protection of digital assets. Ms. Libiszewski holds a Bachelor and Master degree in Business and Technology Management and maintains cybersecurity certifications and participation in various industry, cyber and technology committees and forums to maintain continuous awareness of evolving risks, threats and mitigation strategies associated with emerging technology. Daniel Marini, age 54, was appointed to an Executive Officer position in January 2023 and serves as Senior Vice President of Retail Banking and Marketing, a position he has held since January 2022. Previously, Mr. Marini served in various capacities since 2011 within the Bank’s Retail Banking and Marketing divisions. Mr. Marini has extensive experience in retail banking sales and service, retirement services, cash management services, marketing and sales administration. Mr. Marini received his Bachelor’s Degree in Economics from the University of Massachusetts. Christine Phillips, age 52, was appointed to Senior Vice President in November 2020 upon joining the Company and serves as the Bank’s Chief Human Resources Officer. Previously, Ms. Phillips served as the First Vice President of Human Resources for PeoplesBank, headquartered in Massachusetts, since 2014. There she was responsible for overseeing the operations of the Human Resources Department and employee engagement. Ms. Phillips brings with her extensive leadership and human resources management including strategic planning, compensation, benefits, talent management and employee training programs. Ms. Phillips received a Master’s Degree in Business Administration at the Isenberg School of Management at the University of Massachusetts. Leo R. Sagan, Jr., age 62, was appointed to Senior Vice President and Chief Risk Officer in 2017. Previously, Mr. Sagan served as the Chief Financial Officer since December 2008, as Vice President and Controller from 2003 to 2008, as Controller from 2002 to 2003 and as Assistant Treasurer from 1999 to 2002. Mr. Sagan is a Certified Risk Professional, obtaining this certification from the Bank Administration Institute (BAI). He also obtained his certification as an Nstitute Certified Vendor Management Professional (NCVMP) and served as an integral member of Nstitute’s Client Advisory Committee for the development of their NCVMP certification program. Mr. Sagan is currently a member of the Risk Management Association (RMA), the Financial Managers Society and the Massachusetts Bank Internal Auditors Association.

  11. Compensation Committee

    | ● | review director compensation for service on the Board and the Board committees at least every three years through the review of a comprehensive director compensation market survey provided by the Compensation Committee’s independent consultant, and to recommend any changes to the Board; and |

  12. Best Practices in Executive Compensation

    | WHAT WE DO | WHAT WE DON’T DO | | Use an independent compensation consultant to advise on executive compensation matters | Do not have compensation programs that encourage unnecessary and excessive risk taking | | Design compensation programs to drive long-term performance | No income tax or excise tax gross-ups in our Change-in-Control programs | | Incorporate an overriding performance condition in our performance metrics | No repricing stock options without shareholder approval and no backdating stock options | | Consider peer group data when making executive compensation decisions | Do not permit short-selling of the Company’s stock by executive officers | | Set multi-year vesting periods for equity awards | No reload or “evergreen” share replenishment features | | Stock ownership guidelines | Do not provide guaranteed bonuses to our NEOs | | Have recoupment and incentive recovery policies | Do not provide excessive severance arrangements | | Maintain an independent Compensation Committee | | | Provide NEOs compensation opportunities in the form of incentive awards, aligning compensation with the Company’s performance | | | Conduct an annual Say-on-Pay advisory vote and evaluate voting results | |

  13. Role of the Compensation Committee

    Role of the Compensation Committee The Compensation Committee is responsible for discharging the Board’s duties in executive compensation matters and for administering the Company’s incentive and equity-based plans. The Committee oversees the development and implementation of the total compensation program for our NEOs. The Committee has the responsibility for establishing, implementing and continually monitoring adherence with our executive compensation philosophy. The Committee ensures that the total compensation paid to executives is fair, reasonable and performance-based while aligning with shareholder interests. Details on the Committee’s functions are more fully described in its charter, which has been approved by the Board and is available on our website. To fulfill its charter and responsibilities, the Committee met three times during 2024, and also took action by written consent. The Chair of the Committee regularly reports on Committee actions at meetings of the Board, for which actions are then reviewed and approved by the Board. The Committee reviews all compensation components for the Company’s Chief Executive Officer, including base salary, annual incentive awards, equity awards, benefits and other perquisites. The Committee may request compensation data from independent consultants as a matter of best practice and to provide external reference and perspective. The Committee is ultimately responsible for approving the compensation of the Company’s NEOs, Executive Vice Presidents and Senior Vice Presidents. The Committee reviews its decisions with the full Board and obtains the Board’s approval on all actions. In addition to reviewing competitive market values, the Committee examines the total compensation mix, pay-for-performance relationship and how all elements, in aggregate, comprise our executives’ total compensation package. The Committee also reviews the employment contracts entered into with the Chief Executive Officer, the Chief Financial Officer and the Chief Lending Officer, as well as the Change in Control Agreements or any severance or employment agreements with other senior officers. The Committee and management closely review any accounting and tax (individual and corporate) consequences of the compensation plans prior to making changes to the plans. The Committee also reviews and approves the adoption of, or revision to, any compensation clawback policy, ensuring its compliance with the requirements of the SEC and NASDAQ Listing Rules. The Committee also reviews and approves all written recommendations regarding clawbacks of incentive compensation whilst determining the extent, if any, to which incentive-based compensation of the relevant executive/s should be reduced or extinguished. The Committee has the sole authority and resources to obtain advice and assistance from internal or external legal, human resource, accounting or other advisors or consultants as it deems desirable or appropriate. The Committee has direct access to outside advisors and consultants throughout the year as they relate to executive compensation. The Committee has direct access to, and meets periodically with, the compensation consultant independently of management, and ultimately the Board is responsible for all compensation decisions, upon the recommendation of the Compensation Committee. (For additional information on the role of our Compensation Committee, please see “Committees of the Board of Directors,” subsection “Compensation Committee,” on page 19.)

  14. Role of the Compensation Consultant

    Role of the Compensation Consultant The Committee last engaged the consulting services of Pearl Meyer & Partners, LLC (“Pearl Meyer”) in 2022 to provide independent advice and counsel related to executive and director compensation, inclusive of comprehensive non-employee director and executive compensation analyses. The Committee has also used the services of several law firms to ensure compensation plans and programs are properly administered, documented and meet legal and regulatory requirements. The Committee engages with Pearl Meyer on a tri-annual and rotating basis for independent advice and counsel related to executive and director compensation. The Compensation Committee considers the independence of Pearl Meyer and its outside legal advisors in light of SEC and NASDAQ Listing Rules for compensation committees and compensation consultants, legal counsel and other advisers.

  15. Compensation Components

    Compensation Components In support of our executive compensation philosophy and objectives, our executive compensation program consists of the following three key components: (i) base salary; (ii) short-term annual incentive awards (cash component); and (iii) long-term incentives (equity component, employment and change-in-control agreements, deferred compensation, retirement and fringe benefits). The Committee reviews the various elements of executive compensation provided by the Company with a view toward aligning executive interests with those of the Company’s shareholders and the long-term interests of the Company. The Committee determines the allocation of compensation by reviewing data from the Company’s Proxy Peer Group (Please see “Benchmarking Data and Use of Compensation Consultants” on page 45), as well as using salary surveys and review of industry trends. The elements of the Company’s NEO compensation program include the following:

  16. Compensation Components

    | Compensation Element | Description or Purpose | Fixed/ Performance-Based | Short-Term or Long- Term | | Base Salary | Attract and retain executives | Fixed | Short-term | | Short-Term Incentive Plan (Cash component) | Drives performance achievement and creates shareholder value | Performance-based | Short-term | | Long-Term Incentive Plan (Equity component) | Aligns interests with shareholders and serves as a retention tool through multi-year vesting requirements | Performance-based | Long-term |

  17. 2024 Short-Term Incentive Plan

    2024 Short-Term Incentive Plan The Company’s Short-Term Incentive Plan (the “STI Plan”) is an annual short-term cash incentive compensation plan intended to reward performance of key employees, including the NEOs. The STI Plan is designed to motivate employees to attain desired short-term objectives and to encourage teamwork and collaboration while aligning compensation with overall Company performance. The STI Plan is a key element of the total compensation provided to the NEOs and allows the Company to remain competitive with the market by providing an opportunity for the NEOs to receive cash incentives. The design of the STI Plan is intended to ensure that benefits paid to NEOs and other officers are in alignment with both the Company’s performance objectives and goals and the achievement of individual performance goals. The award opportunities are linked to specific target and range of performance results for multiple performance measures and are calculated as a percentage of base salary earned during the relevant performance period, which runs from January 1st to December 31st (the “Plan Year”). The Company typically makes payments in the first quarter immediately following the end of the annual performance period. The Compensation Committee sets and approves award targets as a percentage of base salary earned during the Plan Year. The incentive pool funding ranges from 0% to 150% of target based on actual performance. The maximum award for any participant, in consideration of corporate and individual performance, is capped at 150% of target. Each year, in the first quarter, the Compensation Committee sets specific incentive metrics and goals that align with the Company’s performance objectives and goals. The Compensation Committee sets threshold, target and stretch goals for each incentive metric. Target performance goals are expected to have some stretch and not be “guaranteed.” Threshold performance goals are intended to reward solid performance but at reduced payout levels. Stretch performance goals are expected to represent strong performance that is unlikely, but possible, if the Company exceeds its goals. The Compensation Committee approves the NEOs’ goals and awards. The Compensation Committee can modify the goals at its discretion and approves the final goals at the beginning of each year. Once the performance goals and pool funding are known, individual performance is assessed to determine and allocate the actual awards from the amount that has been funded to the pool. The Compensation Committee determines awards in consideration of individual performance, but with the discretion to consider other factors such as: (i) Company performance shortfalls, (ii) regulatory and safety and soundness concerns and/or (iii) risk management considerations. For 2024, the individual targets were defined as a percentage of base salary earned for the Plan Year. Mr. Hagan’s target was 45% of base salary and Mr. Miles’ and Mrs. Sajdak’s targets were each 30% of base salary. The STI Plan target percentages were unchanged from the prior year. Similarly, all NEOs had the same four Company performance goals and weightings described in the table below. The Committee, working with management, established and approved the Company’s 2024 performance metrics within the STI Plan.

  18. Company Performance Component (75% of annual incentive award)

    Company Performance Component (75% of annual incentive award) On February 13, 2024, the Compensation Committee established and approved performance goals and awards to determine the pool available for payout of incentive compensation. The Compensation Committee also established a minimum trigger or gate level of performance, which is defined as: (i) 80% of budgeted net income and (ii) the Bank receiving satisfactory regulatory ratings from its regulatory examiner. The Committee worked with Pearl Meyer to redesign the Company’s STI Plan framework in 2022 and its framework remains substantially unchanged. The Compensation Committee determined that the four corporate performance goals listed below reflect a broad measurement of corporate performance, including bottom-line profitability, top line revenue objectives and safety and soundness. The assessment of corporate goals was based on the reported financial results of the Company. Financial results are subject to adjustment at the discretion of the Compensation Committee and may exclude the impact of one-time extraordinary gains or losses, which may have the effect of either increasing or decreasing calculated payouts under the STI Plan. Once the minimum trigger is achieved, the incentive pool funding is determined based on Company performance compared against four performance goals. After reviewing the performance metrics under the STI Plan, the Compensation Committee did not make any changes to the 2024 performance metrics. The table below outlines the 2024 performance objectives and corporate performance results under the STI Plan:

  19. Company Performance Component (75% of annual incentive award)

    | Goals and Weighting | | Performance Goals | | | Actual | | | Company Goals (75%) | Goal Weight | Threshold | Target | Stretch | Actual Performance | % of Target | | Net Interest Margin, on a Tax-Equivalent Basis | 20% | 2.72% | 3.02% | 3.62% | 2.47% | 0% | | Expense Ratio | 20% | 2.35% | 2.25% | 2.00% | 2.25% | 100% | | Pre-Tax, Pre-Provision Income ($000s) | 20% | $16,400 | $20,500 | $24,600 | $14,292 | 0% | | Nonperforming Loans to Total Loans | 15% | 1.00% | 0.75% | 0.50% | 0.26% | 150% |

  20. Company Performance Component (75% of annual incentive award)

    The considerations in setting the 2024 corporate targets and evaluating performance are shown below.

  21. Net Interest Margin (NIM) on a Tax-Equivalent Basis

    Net Interest Margin (NIM) on a Tax-Equivalent Basis NIM, on a tax-equivalent basis, represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. The target NIM, on a tax-equivalent basis, for 2024 was established at 3.02%, which was a decrease of 18 basis points from the 2023 actual results of 2.84%. Since 2022, the Federal Reserve increased interest rates 425 basis points as an attempt to control the highest inflation in 40+ years and began reversing course in September 2024 by decreasing interest rates. Management developed strategies to manage the balance sheet to offset the impact of the rapidly changing interest rate environment and protect the NIM. For the year ended December 31, 2024, the NIM, on a tax-equivalent basis, was 2.47%, which did not meet the threshold performance goal, and management did not earn a payout factor for the NIM performance metric.

  22. Individual Performance Component (25% of annual incentive awards)

    Individual Performance Component (25% of annual incentive awards) In addition to the corporate performance component, each 2024 STI award was determined based on individual performance. The individual component for each NEO, with the exception of Mr. Hagan, was assessed by Mr. Hagan based on each NEO’s annual performance evaluation and was reviewed and approved by the Compensation Committee. The review of Mr. Hagan’s individual component was based on the Compensation Committee’s and the full Board’s performance evaluation of Mr. Hagan. Multiple factors were considered in this assessment, including but not limited to:

  23. Individual Performance Component (25% of annual incentive awards)

    | ● | Overall corporate performance; |

  24. Individual Performance Component (25% of annual incentive awards)

    | ● | Progress on key strategic initiatives; |

  25. Individual Performance Component (25% of annual incentive awards)

    | ● | Regulatory relationships and evaluations; |

  26. Individual Performance Component (25% of annual incentive awards)

    | ● | The performance of each individual’s business line or department; and |

  27. Individual Performance Component (25% of annual incentive awards)

    | ● | Extraordinary unplanned accomplishments outside of the planned annual goals but which significantly contributed to organizational success and increased shareholder value. |

  28. Individual Performance Component (25% of annual incentive awards)

    The table below details the STI Plan opportunities and awards earned for each NEO for 2024:

  29. Individual Performance Component (25% of annual incentive awards)

    | | Annual Incentive Award Opportunity (Percent of Base Salary) | | | Annual Incentive Award Opportunity (Dollar Value) | | | 2024 Earned | | | NEO | Threshold | Target | Stretch | Threshold ($) | Target ($) | Stretch ($) | ($) | % of Target | | James C. Hagan | 22.5% | 45.0% | 67.5% | 168,383 | 336,767 | 505,150 | 268,240 | 79.7% | | Allen J. Miles, III | 15.0% | 30.0% | 45.0% | 57,681 | 115,362 | 173,043 | 91,951 | 79.7% | | Guida R. Sajdak | 15.0% | 30.0% | 45.0% | 51,530 | 103,059 | 154,589 | 82,145 | 79.7% |

  30. Individual Performance Component (25% of annual incentive awards)

    The Compensation Committee has the discretion to adjust any payouts to reflect the business environment and market conditions. After reviewing the Company’s performance, combined with its evaluation of the individual achievement of the NEOs, the Compensation Committee did not make any adjustments and authorized individual incentive payments for 2024 at 79.7% of target on January 22, 2025.

  31. Long-Term Incentive Plan

    Long-Term Incentive Plan The Company’s Long-Term Incentive Plan (the “LTI Plan”) is designed to provide key employees, including NEOs, with a reward opportunity that aligns the interests of the participants with those of the Company’s shareholders by focusing on the Company’s performance over a longer period of time and encouraging balance between growth and prudent risk-taking. The restricted stock awards, granted under the LTI Plan, have a retentive effect because they vest over a period of time, typically within three years. Vesting of the restricted stock may be accelerated under certain circumstances, such as the executive’s death or disability, or if an executive’s employment is terminated in connection with a change-in-control of the Company. The Compensation Committee sets and approves award targets as a percentage of base salary earned. The LTI Plan incentive pool funding ranges from 0% to 150% of target based on actual performance. The maximum award for any participant, in consideration of corporate and individual performance, is capped at 150% of target. Each year, in the first quarter, the Compensation Committee determines, at its discretion, the terms of the LTI Plan, the timing of the awards, the recipients who may be granted awards and the form and the amount of awards. The Compensation Committee works with its compensation consultant, Pearl Meyer, to continue to improve upon the LTI Plan framework with the following objectives:

  32. Long-Term Incentive Plan

    | ● | Align executives with our shareholders by matching incentives with increases in shareholder value; |

  33. Long-Term Incentive Plan

    | ● | Attract and retain talented executives to drive the Company’s success; |

  34. Long-Term Incentive Plan

    | ● | Ensure sound risk management by providing a balanced view of performance and aligning rewards with the time horizon of risk; |

  35. Long-Term Incentive Plan

    | ● | Position the Company’s total compensation to be competitive with the market for meeting performance goals; and |

  36. Long-Term Incentive Plan

    | ● | Motivate and reward long-term sustained performance and avoid excessive risk taking. |

  37. Long-Term Incentive Plan Awards for the 2021-2023 Performance Period (“2021 LTI Plan”)

    Long-Term Incentive Plan Awards for the 2021-2023 Performance Period (“2021 LTI Plan”) In 2021, the Compensation Committee selected Return on Average Equity (“ROAE”) and Earnings per Share (“EPS”) as its long-term performance goals. The Committee believes that these measures are appropriate to evaluate performance over a three-year period. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. The overall long-term incentive compensation for all NEOs remained unchanged from prior years. Mr. Hagan’s target was 30% of his base salary and Mr. Miles’ and Mrs. Sajdak’s targets remained at 20% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance. For each performance-based goal, achieving threshold performance pays at 50% of target value and achieving stretch performance pays at 150% of target value. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Compensation Committee within seventy-five (75) days following the end of the performance period. The framework for establishing specific goals for the 2021 long-term incentive grant was similar to previous years. The goals were based on the Company’s performance objectives and goals at the end of 2020. The goals motivated improved performance to align results to shareholders’ expectations. The performance goals and weighting for the period are set forth below:

  38. Long-Term Incentive Plan Awards for the 2021-2023 Performance Period (“2021 LTI Plan”)

    | Goal | Weight | Threshold | Target | Stretch | Actual | | Return on Equity | 50% | | | | | | 2021 | | 5.63% | 6.25% | 7.50% | 10.64% | | 2022 | | 5.85% | 6.50% | 7.80% | 11.85% | | 2023 | | 6.08% | 6.75% | 8.10% | 6.47% | | Three-Year Cumulative EPS | 50% | $1.58 | $1.97 | $2.36 | $2.90 |

  39. Long-Term Incentive Plan Awards for the 2021-2023 Performance Period (“2021 LTI Plan”)

    As of December 31, 2023, the three-year performance period for the 2021 LTI Plan ended. The 2021 LTI Plan included a “catch-up” provision allowing unearned performance-based shares from the 2021 and 2022 performance periods to be earned at the end of the three-year period based on the final year performance. Of the 50,205 performance-based shares granted in 2021 based on achieving target, 69,376 performance-based shares vested on March 5, 2024, and were eligible to be issued to recipients based on achieving stretch. Of the total 69,376 performance-based shares that vested, Mr. Hagan earned 14,715 shares, Mr. Miles earned 5,252 shares and Mrs. Sajdak earned 4,691 shares. 2021 Performance Measure. The actual ROAE result for 2021 was 10.64%, and management exceeded stretch of 7.50%. In 2021, the provision for loan losses decreased $8.7 million, from $7.8 million in 2020 to a credit for loan losses of $925,000. During the twelve months ended December 31, 2021, net interest income increased $8.7 million, or 13.6%, to $73.2 million compared to the same period in 2020. For the twelve months ended December 31, 2021, non-interest income of $12.6 million increased $3.3 million, or 35.8%, compared to $9.3 million for the twelve months ended December 31, 2020. These increases were partially offset by an increase in non-interest expense of $3.2 million, or 6.2%, from the prior year. 2022 Performance Measure. The actual ROAE result for 2022 was 11.85%, and management exceeded stretch of 7.80%. During the twelve months ended December 31, 2022, average interest-earning assets increased $67.1 million, or 2.9%, and net interest income increased $6.0 million, or 8.3%, from the prior year. 2023 Performance Measure. The actual ROAE result for 2023 was 6.47%, and management exceeded threshold of 6.08%, but did not meet the target of 6.75%. During the twelve months ended December 31, 2023, net interest income decreased $11.3 million, or 14.3%, to $67.9 million, compared to $79.2 million for the twelve months ended December 31, 2022. The decrease in net interest income was due to an increase in interest expense of $26.5 million, partially offset by an increase in interest and dividend income of $15.2 million, or 17.7%. During the twelve months ended December 31, 2023, average interest-earning assets increased $10.3 million, or 0.4%, to $2.4 billion compared to the twelve months ended December 31, 2022, primarily due to an increase in average loans of $52.6 million, or 2.7%, and an increase in average other investments of $2.1 million, or 20.8%, partially offset by a decrease in average securities of $39.2 million, or 9.6%, and a decrease in average short-term investments, consisting of cash and cash equivalents, of $5.3 million, or 20.4%. In 2022, the Compensation Committee selected ROAE and EPS as its long-term performance goals. The Committee believes that these measures are appropriate to evaluate performance over a three-year period. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. Mr. Hagan’s target was increased to 35% of his base salary, and Mr. Miles’ and Mrs. Sajdak’s targets remained at 20% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance. For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2022 LTI Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Compensation Committee within seventy-five (75) days following the end of the performance period. The framework for establishing specific goals for the 2022 long-term incentive grant was similar to previous years. The goals were based on the Company’s performance objectives and goals at the end of 2021. The goals motivated improved performance to align results to shareholders’ expectations. The performance goals and weighting for the period are set forth below:

  40. Long-Term Incentive Plan Awards for the 2021-2023 Performance Period (“2021 LTI Plan”)

    | Goal | Weight | Threshold | Target | Stretch | Actual | | Return on Equity | 50% | | | | | | 2022 | | 7.79% | 8.20% | 8.61% | 11.85% | | 2023 | | 7.93% | 8.35% | 8.77% | 6.47% | | 2024 | | 8.03% | 8.45% | 8.87% | 4.93% | | Three-Year Cumulative EPS | 50% | $2.35 | $2.61 | $2.85 | $2.44 |

  41. Long-Term Incentive Plan Awards for the 2021-2023 Performance Period (“2021 LTI Plan”)

    As of December 31, 2024, the three-year performance period for the 2022 LTI Plan ended. Of the 59,688 performance-based shares granted in 2022, based on achieving 58.7% of target, 31,460 performance-based shares vested on March 7, 2025, and were eligible to be issued to recipients. Of the total 31,460 performance-based shares that vested, Mr. Hagan earned 7,265 shares, Mr. Miles earned 2,163 shares and Mrs. Sajdak earned 1,933 shares. 2022 Performance Measure. The actual ROAE result for 2022 was 11.85%, and management exceeded stretch of 8.61%. During the twelve months ended December 31, 2022, net interest income increased $6.1 million, or 8.3%, to $79.2 million, compared to the same period in 2021. For the twelve months ended December 31, 2022, non-interest income of $12.6 million increased $768,000, or 6.1%, compared to $12.6 million for the twelve months ended December 31, 2021. These increases were partially offset by an increase in non-interest expense of $2.3 million, or 4.2%, from the prior year and an increase in the provision for credit losses of $1.6 million. The provision for credit losses was $700,000 for the twelve months ended December 31, 2022, compared to a reversal of credit losses of $925,000 for the twelve months ended December 31, 2021. 2023 Performance Measure. The actual ROAE result for 2023 was 6.47%. Since management did not meet the threshold of 7.93%, management did not receive an award for the 2023 results. 2024 Performance Measure. The actual ROAE result for 2024 was 4.93%. Since management did not meet the threshold of 8.03%, management did not receive an award for the 2024 results.

  42. Long-Term Incentive Plan Awards for the 2023-2025 Performance Period (“2023 LTI Plan”)

    Long-Term Incentive Plan Awards for the 2023-2025 Performance Period (“2023 LTI Plan”) In 2023, the Compensation Committee selected ROAE and EPS as its long-term performance goals. The Committee believes that these measures are appropriate to evaluate performance over a three-year period. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. Mr. Hagan’s target was 35% of his base salary and Mr. Miles’ and Mrs. Sajdak’s targets were increased to 25% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance. The 2023 LTI Plan grants with respect to the 2023-2025 performance period have not yet been earned. For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The 2023 LTI Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Compensation Committee within seventy-five (75) days following the end of the performance period. The framework for establishing specific goals for the 2023 long-term incentive grant was similar to previous years. The goals were based on the Company’s performance objectives and goals at the end of 2022. The goals motivated improved performance to align results to shareholders’ expectations.

  43. Long-Term Incentive Plan Awards for the 2023-2025 Performance Period (“2023 LTI Plan”)

    | Goal | Weight | Threshold | Target | Stretch | | Return on Equity | 50% | | | | | 2023 | | 8.00% | 8.45% | 8.85% | | 2024 | | 8.75% | 9.25% | 9.75% | | 2025 | | 9.00% | 9.50% | 10.00% | | Three-Year Cumulative EPS | 50% | $2.39 | $2.65 | $2.89 |

  44. Long-Term Incentive Plan Awards for the 2023-2025 Performance Period (“2023 LTI Plan”)

    In 2024, the Compensation Committee selected ROAE and EPS as its long-term performance goals. The Committee believes that these measures are appropriate to evaluate performance over a three-year period. Each of these two measures were independently assigned a 50% weight for determining future performance against goals. The actual number of performance shares that vest will be determined at the end of the three-year period, depending upon the Company’s performance against the three-year goals and alignment to shareholder value. The grants were made and awarded as 50% performance-based shares and 50% time-based shares. Mr. Hagan’s target was 35% of his base salary and Mr. Miles’ and Mrs. Sajdak’s targets were 25% of their respective base salaries. Grants for the performance period provided for the possibility of awards at a threshold, target and stretch level based on the Company’s performance. The 2024 LTI Plan grants with respect to the 2024-2026 performance period have not yet been earned. For each performance-based goal, achieving threshold performance pays at 50% of target value, and achieving stretch performance pays at 150% of target value. The LTI 2024 Plan includes a “catch-up” provision which allows unearned performance-based restricted shares from the first and second performance periods to be earned at the end of the three-year period based on final year performance. To the extent earned at the end of the performance period, performance shares will be paid in the form of vested shares of common stock at a date determined by the Compensation Committee within seventy-five (75) days following the end of the performance period. The framework for establishing specific goals for the 2024 long-term incentive grant was similar to previous years. The goals were based on the Company’s performance objectives and goals at the end of 2023. The goals motivated improved performance to align results to shareholders’ expectations. The performance goals and weighting for the period are set forth below:

  45. Long-Term Incentive Plan Awards for the 2023-2025 Performance Period (“2023 LTI Plan”)

    | Goal | Weight | Threshold | Target | Stretch | | Return on Equity | 50% | | | | | 2024 | | 5.05% | 5.61% | 6.17% | | 2025 | | 6.18% | 6.86% | 7.55% | | 2026 | | 7.30% | 8.11% | 8.92% | | Three-Year cumulative EPS | 50% | $2.25 | $2.50 | $2.75 |

  46. Long-Term Incentive Plan Awards for the 2023-2025 Performance Period (“2023 LTI Plan”)

    The table below outlines the awards value and the number of shares granted to each Named Executive Officer in 2024:

  47. Long-Term Incentive Plan Awards for the 2023-2025 Performance Period (“2023 LTI Plan”)

    | | 2024 Equity Award (Performance-Based Shares) # | 2024 Equity Award (Time-Based Shares) # | 2024 Grant Date Fair Value $ | | James C. Hagan | 15,610 | 15,610 | 261,936 | | Allen J. Miles, III | 5,729 | 5,729 | 96,133 | | Guida R. Sajdak | 5,118 | 5,118 | 85,880 |

  48. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation

  49. Employment Agreements and Change of Control Agreements

    Employment Agreements and Change of Control Agreements The Committee believes that our continued success depends, to a significant degree, on the skills and competence of certain senior officers. The employment agreements are intended to ensure that we continue to maintain and retain experienced senior management. We currently have employment agreements with our President and Chief Executive Officer, Mr. Hagan; our Executive Vice President and Chief Lending Officer, Mr. Miles and our Executive Vice President and Chief Financial Officer, Mrs. Sajdak, in order to retain such executives. The employment agreements of Messrs. Hagan and Miles and Mrs. Sajdak provide for an initial three-year term subject to separate one-year extensions as approved by the Board at the end of each applicable fiscal year. The employment agreements provide for a base salary to be established annually by the Board and for annual increases, as well the right to participate in and receive benefits under any and all qualified or non-qualified retirement, profit-sharing or stock bonus plans; all group life, health, accident and long-term disability insurance plans; and any other benefit and compensation plans as may from time to time be maintained by the Company and the Bank. Each employment agreement contains a covenant not to compete against the Company and the Bank, their parent, affiliates or subsidiaries during the term of employment and thereafter for a period of twelve months. In addition, each employment agreement contains a standard non-solicitation covenant for a period of one year following termination of employment, as well as a covenant to protect the Company’s and the Bank’s confidential information. The employment agreements also provide for severance payments in the event an NEO is terminated without “cause” (as such term is defined in the employment agreements) regardless of whether such termination is in connection with a change in control, or voluntarily terminates employment under certain specific “good reason” circumstances following a change in control. Such “good reason” circumstances include a material reduction in authorities, duties or responsibilities or assignment of duties inconsistent with current responsibilities, a material reduction in salary or other benefits, and reassignment to a location greater than 25 miles from the current location. Following such a termination of employment, each NEO will be entitled to receive a lump sum cash payment equal to the sum of: (i) three times his/her highest annual rate of salary for the prior three years, plus (ii) three times the estimated annual incentive bonus payments, plus (iii) the excess of aggregate benefits the NEO would be entitled to for tax-qualified and non-tax-qualified defined benefit plans for three years, plus (iv) the amount of employer contributions that would be credited to all tax-qualified and non-tax-qualified defined contribution plans for three years. The NEOs are also eligible to receive continued group medical, dental, and vision coverage on the same terms and conditions for thirty-six months. Additionally, accelerated vesting of outstanding time-based unvested restricted stock awards will occur and restrictions will lapse. Outstanding performance-based awards will vest and restrictions will lapse, with the performance goals measured at target performance.

  50. Benchmarking Data and Use of Compensation Consultants

    Benchmarking Data and Use of Compensation Consultants The Compensation Committee believes that utilization of appropriate benchmarks for compensation analyses is an effective method for evaluating executive and director compensation. Accordingly, approximately every three years, the Compensation Committee engages with an independent compensation consultant to conduct market competitive reviews, which generally include an assessment of compensation compared to market (e.g., industry-specific surveys and proxy peer group, where applicable), recommendations for total compensation opportunity guidelines (e.g., base salary, annual and long-term incentive targets) and a high-level assessment of performance relative to peers. The Compensation Committee uses this information to determine appropriate salary and incentive levels for executive officers and directors. The competitive review was conducted in 2021 for reference with 2022 to 2025 pay decisions. This peer group was selected in December 2021 and included financial institutions of generally similar asset size and regional location. At that time, the Company was positioned approximately at the median of the peer group in terms of total assets, with asset size ranging from $1.8 billion to $5.3 billion. All banks were publicly-traded financial institutions located within the Northeast. The peer group used in the report presented for consideration of 2024 compensation decisions consisted of the following institutions:

  51. Benchmarking Data and Use of Compensation Consultants

    | Compensation Peer Group | | | | ACNB Corporation | CNB Financial Corporation | Hingham Institution for Savings | | Arrow Financial Corporation | Codorus Valley Bancorp, Inc. | Mid Penn Bancorp, Inc. | | Bankwell Financial Group, Inc. | Enterprise Bancorp, Inc. | Norwood Financial Corp | | Bar Harbor Bankshares | ESSA Bancorp, Inc. | Orrstown Financial Services, Inc. | | Cambridge Bancorp | Evans Bancorp, Inc. | Penns Woods Bancorp, Inc. | | Chemung Financial Corporation | Financial Institutions, Inc. | Peoples Financial Services Corp | | Citizens & Northern Corporation | The First Bancorp, Inc. | |

  52. Benchmarking Data and Use of Compensation Consultants

    Pearl Meyer will continue to support the Compensation Committee in its executive compensation actions. The Committee has engaged with Pearl Meyer to provide an updated comprehensive executive compensation and peer group analysis for pay decisions occurring after December 31, 2025.

  53. Summary Compensation Table

    Summary Compensation Table The following table sets forth information regarding compensation awarded to or earned by our NEOs for service during each of the last three completed fiscal years, as applicable:

  54. Summary Compensation Table

    | Name and Principal Position | Year | Salary (1) ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | James C. Hagan President and Chief Executive Officer | 2024 | 745,112 | 261,936 | 268,240 | 218,877 | 1,494,165 | | | 2023 | 701,299 | 247,112 | 243,000 | 224,608 | 1,416,019 | | | 2022 | 640,705 | 225,673 | 382,408 | 75,591 | 1,324,377 | | Allen J. Miles, III EVP and Chief Lending Officer | 2024 | 383,131 | 96,133 | 91,951 | 55,056 | 626,271 | | | 2023 | 363,902 | 91,562 | 84,061 | 58,338 | 597,863 | | | 2022 | 334,526 | 67,195 | 133,109 | 26,092 | 560,922 | | Guida R. Sajdak EVP, Chief Financial Officer and Treasurer | 2024 | 342,272 | 85,880 | 82,145 | 53,915 | 564,212 | | | 2023 | 325,094 | 81,790 | 75,097 | 53,360 | 535,341 | | | 2022 | 298,850 | 60,035 | 118,914 | 25,321 | 503,120 |

  55. Summary Compensation Table

    | (1) The figures shown for salary represent amounts earned for the fiscal year, whether or not actually paid during such year. |

  56. Summary Compensation Table

    | (2) Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 with respect to restricted stock awards granted to our NEOs. For more information concerning the assumptions used for these calculations, please refer to the notes to the financial statements contained in the Company’s 2024 Annual Report on Form 10-K. The stock award column does not include the value of dividends paid on unvested restricted stock, which are included in the Summary Compensation Table under the caption “All Other Compensation.” |

  57. Summary Compensation Table

    | (3) Amounts shown in this column reflect cash awards earned under the STI Plan, whether or not paid during such calendar year. Amounts payable under the STI Plan were paid in February 2025. |

  58. Summary Compensation Table

    | (4) Amounts in this column for the year 2024 are set forth in the table below and include life insurance premiums, 401(k) Plan matching contributions, ESOP contributions, dividends on unvested restricted stock, contributions under the Benefit Restoration Plan, and contributions under the NQDC Plan. The NEOs participate in certain group life, health, disability insurance and medical reimbursement plans, not disclosed in the Summary Compensation Table, that are generally available to salaried employees and do not discriminate in scope, terms and operation. In addition, we provide certain non-cash perquisites and personal benefits to each NEO that do not exceed $10,000 in the aggregate for any individual and are not included in the reported figures. |

  59. Summary Compensation Table

    | | Life Insurance Premiums ($) | 401(k) Matching Contributions ($) | ESOP Contributions ($) | Dividends on Unvested Restricted Stock ($) | Contributions under the Benefit Restoration Plan ($) | Contributions under the NQDC Plan ($) | Total ($) | | James C. Hagan | 18,070 | 13,044 | 11,584 | 16,954 | 66,225 | 93,000 | 218,877 | | Allen J. Miles, III | — | 13,800 | 11,462 | 6,046 | — | 23,748 | 55,056 | | Guida R. Sajdak | — | 13,691 | 14,187 | 5,401 | — | 20,636 | 53,915 |

  60. Compensation Actually Paid

    Compensation Actually Paid As required by Item 402(v) of Regulation S-K, the information below reflects the relationship between executive compensation actually paid by us (“CAP”) to our CEO, as principal executive officer, and other non-CEO NEOs (“Other NEOs”) and our financial performance for the years ended December 31, 2024, 2023 and 2022. The disclosure included in this section is required by SEC rules and does not necessarily align with how the Company or the Compensation Committee views the link between the Company’s performance and the compensation of its NEOs. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years presented. For a discussion of how the Company views its executive compensation structure, including alignment with Company performance, see “Compensation Discussion and Analysis” beginning on page 31 of this Proxy Statement. The following table summarizes the total compensation paid to our CEO and Other NEOs versus the performance of the Company for the fiscal years ended December 31, 2024, 2023 and 2022.

  61. Compensation Actually Paid

    | Year (a)(1) | Summary Compensation Total for CEO ($) (b) (2)(3) | Compensation Actually Paid to CEO ($) (c) (2)(4) | Average Summary Compensation Total for Other NEOs ($) (d) (2)(5) | Average Compensation Actually paid to Other NEOs ($) (e)(2)(4) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($) (f)(6) | Net Income ($)(g)(7) | | 2024 | 1,494,165 | 1,379,053 | 595,242 | 555,111 | 116.41 | 11,666,000 | | 2023 | 1,416,019 | 1,272,230 | 566,602 | 516,706 | 109.79 | 15,068,000 | | 2022 | 1,324,377 | 1,358,362 | 532,021 | 573,050 | 110.98 | 25,887,000 |

  62. Compensation Actually Paid

    | (1) As a smaller reporting company, the Company is required to provide information for the prior three completed fiscal years. |

  63. Compensation Actually Paid

    | (2) For all years presented our CEO was James C. Hagan and our Other NEOs consisted of Allen J. Miles, III and Guida R. Sajdak. |

  64. Compensation Actually Paid

    | (3) Column (b) shows the amount for the CEO included in the Summary Compensation Table. |

  65. Compensation Actually Paid

    | (4) Columns (c) and (e) show the total compensation paid to the Company’s CEO and average compensation paid to the Other NEOs, respectively, for the applicable years adjusted by changes in equity award values and change in pension value, if any, prior to its termination in 2023. The following table sets forth the adjustments made to the amounts disclosed in columns (c) and (e) to arrive at compensation “actually paid” to our CEO and Other NEOs during each of the years disclosed: |

  66. Compensation Actually Paid

    | | 2024 | | 2023 | | 2022 | | | | CEO ($) | Other NEOs ($) | CEO ($) | Other NEOs ($) | CEO ($) | Other NEOs ($) | | Summary Compensation Table Total | 1,494,165 | 595,242 | 1,416,019 | 566,602 | 1,324,377 | 532,021 | | Adjustments to determine compensation “actually paid” for CEO and Other NEOs | | | | | | | | Deduction for amounts reported under the “Stock Awards” column in the Summary Compensation Table | (261,936) | (91,006) | (247,112) | (86,676) | (225,673) | (63,615) | | Increase for fair value of awards granted during the year that remain unvested as of year-end (8) | 95,744 | 33,263 | 75,330 | 26,420 | 195,680 | 55,161 | | Increase for fair value of awards granted during the year that vested during year | 47,868 | 16,634 | 37,107 | 13,019 | 38,663 | 10,898 | | Increase (decrease) for change in fair value from prior year-end to current year-end of awards granted prior to year that were outstanding and unvested as of year-end | 2,302 | 707 | (11,526) | (3,628) | 16,308 | 5,562 | | Increase for change in fair value from prior year-end to vesting date of awards granted prior to year that vested during the year | 910 | 271 | 2,412 | 969 | 9,007 | 3,140 | | Service cost for CEO and Other NEOs with accumulated benefit under all defined benefit pension plans | — | — | — | — | — | 29,883 | | Total Adjustments to Summary Compensation | (115,112) | (40,131) | (143,789) | (49,896) | 33,985 | 41,029 | | Total Compensation Actually Paid | 1,379,053 | 555,111 | 1,272,230 | 516,706 | 1,358,362 | 573,050 |

  67. Compensation Actually Paid

    | (5) Column (d) shows the average amount of the total compensation shown in the Summary Compensation Table for the Other NEOs for the applicable years. |

  68. Compensation Actually Paid

    | (6) The calculation for each year is based on a fixed investment of $100 from the market close on the last trading day before the earliest year in the pay versus performance table through the end of each applicable year in the table, assuming reinvestment of dividends. The calculation begins on December 31, 2021, and, in the third year, extends through December 31, 2024. |

  69. Compensation Actually Paid

    | (7) Column (g) provides the Company’s net income for each year. |

  70. Compensation Actually Paid

    | (8) The decrease in fair value of awards granted during the year and unvested as of year-end for 2024 reflects the estimated value of performance-based shares to be earned under the Company’s 2024 LTI over the three-year performance period based on performance over the first year ending December 31, 2024. |

  71. Compensation Actually Paid

    As described in more detail in the “Compensation Components” section of this Proxy Statement beginning on page 34, the Company’s executive compensation program includes variable components in the form of annual short-term incentive cash compensation based upon the Company’s financial performance. Compensation decisions at the Company are made independently of SEC disclosure requirements. While the Company utilizes several performance measures to align executive compensation with the Company’s performance, all of those measures are not presented in the “Pay Versus Performance Table.” Moreover, the Company generally seeks to incentivize long-term performance and, therefore, does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of SEC Regulation S-K) for a particular year. The following chart demonstrates the relationship between compensation actually paid to our CEO and average compensation actually paid to other Non NEOs, compared to total shareholder return (“TSR”) performance of our common stock, for the fiscal years ended December 31, 2024, 2023 and 2022. The TSR amounts in the chart below assumes that $100 was invested beginning on December 31, 2021, and that all distributions or dividends were reinvested on a quarterly basis. The following chart compares the compensation actually paid to our CEO and the average of the compensation actually paid to our other Non-NEOs with net income.

  72. CEO Pay Ratio Disclosure

    CEO Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing this disclosure regarding the relationship of the annual total compensation of the individual identified as the median paid employee of our Company and the annual total compensation of James C. Hagan, our President and Chief Executive Officer. In accordance with SEC regulations, we have utilized the same median employee identified in 2023 for our 2024 CEO pay ratio calculation. We have determined that there have been no significant changes to our employee population or compensation arrangements during this period that would materially impact our pay ratio disclosure. The individual identified as the median-compensated employee was determined using a census of all employees as of December 31, 2023, which totaled 348 employees, excluding the CEO. In order to identify the median compensated employee, we included compensation reported in Box 5 of Form W-2 for the full year of 2023, annualizing pay for those full-time and part-time employees who were hired during 2023. The annual total compensation for the median employee was calculated using the same methodology shown for the CEO in the “Summary Compensation Table” on page 47. Based on this methodology, the annual total compensation of the CEO for 2024 was $1,494,165 and the annual total compensation of the employee identified at median for 2024 was $53,127.17. The ratio of these amounts was 28 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

  73. Outstanding Equity Awards at Fiscal Year End

    Outstanding Equity Awards at Fiscal Year End The following table provides information about outstanding equity awards under the Company’s equity compensation plans at December 31, 2024, whether granted in 2024 or earlier. The NEOs did not have any outstanding stock option awards.

  74. Outstanding Equity Awards at Fiscal Year End

    | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | James C. Hagan | 03/02/2022 | — | — | 7,265 | 66,838 | | | 03/08/2023 | 4,247 | 39,072 | 4,123 | 37,932 | | | 03/07/2024 | 10,407 | 95,744 | 7,805 | 71,806 | | Allen J. Miles, III | 03/02/2022 | — | — | 2,163 | 19,900 | | | 03/08/2023 | 1,573 | 14,472 | 1,528 | 14,058 | | | 03/07/2024 | 3,819 | 35,135 | 2,865 | 26,353 | | Guida R. Sajdak | 03/02/2022 | — | — | 1,933 | 17,784 | | | 03/08/2023 | 1,405 | 12,926 | 1,365 | 12,558 | | | 03/07/2024 | 3,412 | 31,390 | 2,559 | 23,543 |

  75. Outstanding Equity Awards at Fiscal Year End

    | (1) The market values of these shares are based on the closing market price of the Company’s common stock on the NASDAQ Stock Market of $9.20 on December 31, 2024. |

  76. Outstanding Equity Awards at Fiscal Year End

    | (2) Shares granted on March 2, 2022, were under the Company’s LTI Plan, are time-based and vest ratably over a three-year period beginning December 31, 2022. Shares granted on March 8, 2023, were under the Company’s LTI Plan, are time-based and vest ratably over a three-year period beginning December 31, 2023. Shares granted on March 7, 2024, were under the Company’s LTI Plan, are time-based and vest ratably over a three-year period beginning December 31, 2024. |

  77. Outstanding Equity Awards at Fiscal Year End

    | (3) Shares granted on March 2, 2022, were under the Company’s LTI Plan, are performance-based and are subject to the achievement of annual 2022 LTI performance metrics before vesting is realized after a three-year period ending December 31, 2024. Shares that have not yet vested under the 2022 LTI reflect the amount of shares earned as of the end of the measurement period ending December 31, 2024, based on achieving 58.7% of target. Shares granted on March 8, 2023, were under the Company’s LTI Plan, are performance-based and are subject to the achievement of annual 2023 LTI performance metrics before vesting is realized after a three-year period ending December 31, 2025. Shares that have not yet vested under the 2023 LTI Plan are shown based on achieving threshold for the performance periods ending December 31, 2024 and 2023, respectively. Shares granted on March 7, 2024, were under the Company’s LTI Plan, are performance-based and are subject to the achievement of annual 2024 LTI performance metrics before vesting is realized after a three-year period ending December 31, 2026. Shares that have not yet vested under the 2024 LTI Plan are shown based on achieving threshold. |

  78. Option Exercises and Stock Vesting

    Option Exercises and Stock Vesting The following table sets forth the stock awards that vested for the NEOs during the last fiscal year. The NEOs did not have any outstanding stock option awards.

  79. Option Exercises and Stock Vesting

    | | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(1) ($) | | James C. Hagan | 28,253 | 246,537 | | Allen J. Miles, III | 9,944 | 86,705 | | Guida R. Sajdak | 8,883 | 77,455 |

  80. Option Exercises and Stock Vesting

    | (1) The figure shown for stock awards includes the amount realized during the fiscal year upon the vesting of restricted stock, based on the closing sales price for a share of our common stock on the vesting date. Unvested restricted stock may not be transferred for value. |

  81. Pension Benefits

    Pension Benefits On July 26, 2022, the Board of Directors approved the termination of the Westfield Bank Pension Plan (the “DB Plan”), which became effective as of October 31, 2022. As a result of the decision to terminate the DB Plan during 2022, all participants became fully vested in their accrued benefit, including Messrs. Hagan and Miles. On April 11, 2023, the DB Plan Administrator made an additional cash contribution of $1.3 million in order to fully fund the DB Plan on a plan termination basis, and on April 14, 2023, the DB Plan Administrator funded $6.3 million to purchase a group annuity contract to transfer its remaining liabilities under the DB Plan for those participants who did not opt for a one-time lump sum payment. As of June 2, 2023, all DB Plan assets were fully liquidated.

  82. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION

  83. Deferred Compensation Plan

    | Name | Fees Earned or Paid in Cash(1) ($) | Equity Retainer Stock Grant(2) ($) | All Other Compensation(3) ($) | Total Annual Compensation ($) | | Laura Benoit | 32,200 | 20,000 | 501 | 52,701 | | Donna J. Damon | 31,500 | 20,000 | 501 | 52,001 | | Gary G. Fitzgerald | 37,200 | 20,000 | 501 | 57,701 | | William D. Masse | 36,200 | 20,000 | 501 | 56,701 | | Lisa G. McMahon | 74,000 | 20,000 | 501 | 94,501 | | Gregg F. Orlen(4) | 15,000 | 20,000 | 167 | 35,167 | | Paul C. Picknelly | 32,200 | 20,000 | 501 | 52,701 | | Steven G. Richter | 49,800 | 20,000 | 501 | 70,301 | | Philip R. Smith | 49,300 | 20,000 | 501 | 69,801 |