Kish Bancorp : Annual Report - 2022

2022 ANNUAL REPORT

PERFORMANCE

with Clear Purpose

A 3-D rendering

of Kish Bank's

Altoona branch,

2022: The Confluence of Performance and Client Fulfillment

This2022 Annual Report to Shareholders provides

coming summer

2023.

Contents

Chairman's Letter to the Shareholders	3
Financial Highlights	10
Independent Auditor's Report	11
Financial Statements	13
Notes to Consolidated Financial Statements	18
Board of Directors and Officers	62

Front Cover, Top: Community members Brandon Zlupko and Joy Vincent-Killianwith Caleb Shertzer, Kish Bank AVP and ​ Commercial Relationship Manager

Front Cover, Bottom: Chase and Allison Peachey, owners of Peach View Farm, and children

financial details of one of the most extraordinary years in Kish's 122-yearhistory. While the numbers on one hand tell the story of outstanding financial performance asmeasured by revenue growth and expanding profitability, they also reflect the magnitude of the Corporation's impact on the lives of the people and communities we serve. For that reason, this Shareholders' Letter has client testimonials woven throughout its pages. These powerful perspectives provide a strong sense

of partnership with Kish that underscores and validates our deeply held belief that it is Kish's singular focus on fulfilling client needs that leads to our success and consistently produces such exceptional financial results.

In reality, the story of 2022 is, like most of Kish's success stories, a multi-year tale. Quite simply, sustained growth in the loan portfolio in recent years drove loans outstanding from approximately $600 million in 2018 to $879 million at the beginning of 2022. So, Kish began the year hitting on all cylinders just as the bank experienced a swell of new business requests resulting from customers who valued our response to the PPP loan program. Thus, the strong base was further fueled by continued upward momentum as loans grew by $145 million, or 16.5%, to $1.02 billion by year end 2022. This was especially noteworthy

William P. Hayes

Chairman of the Board

and Chief Executive Officer

2 Table of Contents	Chairman's Letter to the Shareholders 3

What started in 1940 as one truck hauling coal and lumber is now a fleet of nearly 100 trucks that can be seen on roadways in the Northeast and Mid-Atlantic regions. Like Kish, Zimmerman Truck Lines invests in people and technology and prioritizes customer service to ensure longevity.

"Kish helps us with employee benefits. They are very helpful with assisting our employees in choosing the right products to prepare for their future. Kish worked

given the national decline in loan demand caused by the headwinds of dramatically higher interest rates as the Fed tightened monetary policy to combat inflation.

Kish's expanding loan portfolio, rising interest rates, and well-controlled funding costs combined to elevate net interest income by $4.9 million in 2022, up 14.5% from the prior year end. Despite a $1.36 million decline in gains from mortgage loan sales caused by sharply lower residential mortgage demand, higher customer numbers drove up bank service fees and strength in several of Kish's non-bank units. Gains from the sale of real estate further augmented the strong bottom line. The combination of all of the above delivered net income of $12.86 million, up 30.2% from the prior year's earnings of $9.88 million.

The sustained growth experienced in

2022 was driven largely by Kish's ever- sharpening focus on serving small and medium-sized business customers and our growing reputation for responsive service to that segment. Commercial borrowers in both our expanding central Pennsylvania

	Peach View Farm in Belleville is a multi-generational dairy	by Chase and
	attribute their success to hard work, consistency, and the	to the ever
	new technology. They	think about growing	to benefit the next

	by a belief that		"
	our clients,		and	in
		and		and dairy	. They
	powerful
			what we need to
		about	to
		prioritize	the future growth
		clients and	.
			of the farm "
We	you	visit	.com to
			proposition	&	Peachey

closely with us to learn our business and offered flexibility that helped us restructure our debt, improve cash flow, and implement processes to pay dividends in the future."

Mark Zimmerman

CEO, Zimmerman Truck Lines

Pictured right with David Wetzler, COO

market and our northeastern Ohio market

were	responsible for much of the
growth	the	. As you read
the perspectives of some

throughout these pages, you will be

by the sense of trust and shared values that they express, as well as a belief that Kish has their best interests heart.

Elevating lives at the core of all that we do at Kish. The entire Kish team

and the strong we build.

These movingtestimonialsreflect Kish's

powerful capacity to build partnerships not

just with customers,but with community

organizationsand charitiesWhileKish supports dozens of local organizations financially each year, our team's personal investment our communities through our Kish Community Action Teams ("CATs") is a source of equal value and pride To ensure active community engagement,

View Farm

Kish empowers every team member with 24 hours of paid time off for volunteer activities each year, and our team members readily answer the call to action. Through volunteerism, fundraising, and actions support of our communities by Kish's CATs, we are truly making lives better for those around us.

4 Chairman's Letter to the Shareholders	Chairman's Letter to the Shareholders 5

Statistics show that for every 10 restaurants that open today, only one will still be operating a year later. Hoss's

Steak & Sea House's key to successfor

the last 40 years has been to consistently

give guests great food and excellent service at a price that is affordable.

"Kish was willing to enter into a lending agreement with Hoss's when other lenders turned away from the hospitality industry. Having a loan with Kish allowed us to keep a presence in the communities that we have served all these years."

Carl Raup

CFO, Hoss's Steak & Sea House

Of special note in 2022 was the team's incredibly successful Kish for the Cure campaign, which raised a total of over $74,000 to support the fight against cancer. These dollars were directed locally to the Bob Perks Cancer Assistance Fund, Relay For Life of Mifflin/Juniata, and through Pennsylvania Pink Zone to all area hospitals. We are also proud of the growing success of Kish's Teach Children to Save program, through which Kish volunteers recently presentedto over8,500 school children in classrooms across the region onthe importance of learning to save.These

efforts represent just the tipof the iceberg

of the impact of our team on the lives of

those in our communities, often those

who arethe most inneed. Once again, the

testimonials on WhyKish.com speak even more fully to the value of our effortsto make lives better.

None of what has been discussed so far in this report would have been possible without the incredible efforts of the Kish team. While client testimonials speak to the performance of the team and our relationship managers, equally impressive is the value of their support for each other. The quality of our products; the responsiveness of our branches, support teams, and call center; the focus on exceptional performance-all are elements of the teamwork that flows from the outstanding commitment the team demonstrates for each other every day. We have a vision of providing legendary service with the best team in banking.

It is a vision to which we are all deeply committed. Recruiting, developing, and retaining the very best is the means by which we will ensure our future success and continued prosperity.

In addition to supporting our clients, communities, and team members, everyone at Kish also understands that to ensure our sustainability as a leader in community banking, we must maintain a visibility andpresence throughoutour market. Our branches arethe conduits through which Kish maintains serviceto ourcommunities ata consistently highlevel. 2022 saw the

successful opening ofour new Mifflintown

and Pine Grove Mills bankingbranches, and we will be excited to open our first branch

inAltoona insummer2023.

"We have a vision of providing

legendary service

with the best team in banking. It is

a vision to which we are all deeply committed."

Since 1876, Juniata College has been an

institution centered on its students and their successin the world. The Collegeis committedto delivering a uniquely personalizedapproach to education to

each of its students. Juniata is one of 40 colleges in the book "Colleges That Change Lives" and it remains a top 100 national liberal arts college.

"Kish and Juniata are both mission-centric organizations who believe in our communities and the people we serve. It's amazing the parallels we have relative to the 'how' of what we each do. We are in different industries, but our approach is remarkably similar."

Jim Troha

President, Juniata College

Pictured with Karla Wiser, Controller & CFO

6 Chairman's Letter to the Shareholders	Chairman's Letter to the Shareholders 7

Finally, a word about another critical	our communities. When Accumulated	The following pages provide full details
constituency. As a shareholder-owned	Other Comprehensive Income ("AOCI") is	of the enormous success Kish Bancorp
company, producing consistent results	excluded, retained earnings elevated book	achieved in 2022, and we encourage your
for shareholders is what builds the loyalty	value per share to $33.38, compared to	in-depth review of all aspects of that
and long-term ownership that enables	$29.90 at year end 2021.	success. Please don't hesitate to reach
Kish to pursue long-term objectives. In		out with any questions regarding our
2022, that meant fully diluted earnings		2022 results. And while the numbers are
per share growth of 30.32%, and return on	"Several years ago, our then-	remarkable, we hope you'll be even more
shareholders' equity of 14.95%. 2022 also	bank had gone through several	impressed by the compelling words you
represented the seventh consecutive year	buyouts, and we decided to	have read from our clients throughout
as well as the ninth of the last 10 years	these pages-from Mark Zimmerman of
switch to Kish.Kish was a local
in which the board increased the annual	Zimmerman Truck Lines, fromChase and
bank who we felt understood our
dividend, which was raised by almost	Allison Peachey of Peach View Farm, from
needs and could help us grow. It	Second-generation farmer Mike Sevick
10% over 2021 dividends. Capital in the	Carl Raup of Hoss's Steak & Sea House,
form of retained earnings rose by 12.3% in	was the best decisionfor us."	from Jim Troha and Karla Wiser of Juniata	started working on his now54-year-old
family farm in 1988. Through a series
2022, well ahead of peers and continuing		College, from Andy Friberg of Spectra
Andy Friberg	of carefully-thought-out decisions over
to support growth and investment in	Owner & President, Spectra Wood	Wood, and from Mike and Darla Sevick of	the years, the family has expanded the

farming ope

rations from g

r

owing hay

and

S

e

vick Farm.

They sp

eak to

the values that

raising beef

cattle to also g

rowing co

r

n,

lie

at the cor

e

of Kish's missi

o

n and vision:

responsiveness,

knowledge,

stability, client-

wheat, soybeans, and green beans.

centered relationships, professionalism, and

"Kish helps us with insurance,

promises kept. It is these values on which

banking, and wealth

we will build Kish's successful future, one

management. Our business's

client at a time.

long-term success is due

Sincerely,

to careful decision making,

and we rely on qualified

professionals with good

attitudes and excellent

William P. Hayes

skills. We were looking for,

Chairman of the Board

and found Kish to be, a true

and Chief Executive Officer

community bank that cares

about our unique financial

situation and delivers

Spectra Wood, a second-generation family furniture manufacturer celebrating 54 years in business this year,

personalized service."

began in the basement of the family's State College home and now operates two manufacturing facilities in

Centre and Mifflin Counties. They distribute to several top 100 furniture retailers in the U.S. and their furniture	Mike & Darla Sevick
Owners, Sevick Farm
quality remains at the highest level, despite the challenges that can accompany rapid expansion.

8 Chairman's Letter to the Shareholders	Chairman's Letter to the Shareholders 9