CB Financial Services, Inc. Announces Third Quarter and Year-to-Date 2024 Financial Results and Declares Quarterly Cash Dividend

CB Financial Services, Inc. (“CB” or the “Company”) (NASDAQGM: CBFV), the holding company of Community Bank (the “Bank”), today announced its third quarter and year-to-date 2024 financial results.

Three Months Ended

Nine Months Ended

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

(Dollars in thousands, except per share data) (Unaudited)

Net Income (GAAP)

3,219

2,650

4,196

12,966

2,672

10,065

9,586

Net Income Adjustments

(293

)

(1,000

)

(9,905

)

(1,269

)

(20

)

Adjusted Net Income (Non-GAAP) (1)

2,926

2,674

3,196

3,061

2,701

8,796

9,566

Earnings per Common Share - Diluted (GAAP)

0.60

0.51

0.82

2.52

0.52

1.89

1.87

Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1)

0.55

0.52

0.62

0.60

0.53

1.65

1.87

(1)

Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of adjusted net income and adjusted earnings per common share - diluted as presented later in this Press Release.

2024 Third Quarter Financial Highlights

(Comparisons to three months ended September 30, 2023 unless otherwise noted)

Net income was $3.2 million, compared to $2.7 million. Results were impacted by the December 2023 sale of the Bank’s subsidiary insurance agency, Exchange Underwriters (“EU”), which drove decreases in noninterest income and noninterest expense.
Earnings per diluted common share (EPS) increased to $0.60 from $0.52.
Return on average assets (annualized) was 0.84%, compared to 0.75%.
Return on average equity (annualized) was 8.80%, compared to 9.03%.
Net interest and dividend income was $11.5 million, compared to $10.7 million.
Noninterest income decreased to $1.2 million, compared to $2.4 million. The significant decrease in noninterest income was driven by a $1.4 million decrease in insurance commissions due to the sale of EU.
Noninterest expense decreased to $8.8 million, compared to $9.5 million, due to decreases in compensation and benefits and intangible amortization expenses also driven by the sale of EU, partially offset by increases in contracted services, data processing, occupancy and Pennsylvania shares tax expenses.

(Amounts at September 30, 2024; comparisons to December 31, 2023, unless otherwise noted)

Total assets increased $105.7 million, or 7.3%, to $1.6 billion from $1.5 billion.
Total loans decreased $44.6 million, or 4.0%, to $1.07 billion compared to $1.11 billion, and included decreases in consumer, residential real estate, commercial real estate and commercial and industrial loans of $31.6 million, $8.9 million, $2.8 million and $2.7 million, respectively. The consumer loan portfolio is primarily comprised of indirect automobile loans and decreased as a result of the discontinuation of that product as of June 30, 2023. Excluding the $31.8 million decrease in indirect automobile loans, total loans decreased $12.8 million, or 1.2%. In total, $95.5 million of loans have paid off since December 31, 2023.
Nonperforming loans to total loans was 0.19% at September 30, 2024, compared to 0.20% at December 31, 2023.
Total deposits were $1.35 billion, an increase of $86.7 million, compared to $1.27 billion.
Book value per share was $29.07, compared to $27.79 as of June 30, 2024 and $27.32 as of December 31, 2023.
Tangible book value per share (Non-GAAP) was $27.16, compared to $25.83 as of June 30, 2024 and $25.23 as of December 31, 2023. The year-to-date change was due to an increase in stockholders’ equity primarily related to current period net income of $10.1 million and a $2.8 million decrease in accumulated other comprehensive loss, partially offset by the payment of $3.9 million in dividends since December 31, 2023.

Management Commentary

President and CEO John H. Montgomery commented, “Funding costs continued to increase from the prior period, maintaining pressure on our net interest margin. However, relief from this ongoing trend appears to be on the horizon with prevailing market deposit costs beginning to soften. Our balance sheet strategies and continued focus on quality, relationship-driven loan production continue to strengthen the fundamentals of our bank.

During the quarter, our loan portfolio decreased $12.9 million, or 1.2%, with the previously exited Indirect Lending Portfolio declining $10.4 million. Commercial real estate loans increased $5.6 million, while residential real estate loans declined $3.8 million, results that are consistent with the purposeful repositioning of our loan portfolio. Notably, our asset quality remains robust, with nonperforming loans remaining stable at $2.0 million (0.19% of total loans) from $2.2 million (0.20% of total loans) at year end 2023.

Overall, deposit movements continued during the quarter, shifting from non-interest and low interest-bearing accounts to higher-cost time deposits. Total deposits remained relatively stable, with a slight increase, largely due to growth in our interest-bearing demand deposits and time deposits.

During the quarter, we continued progress on our strategic initiatives by implementing our Specialty Treasury Payments & Services strategy. This strategy includes development of a platform that will provide Treasury Management payments, products and an exceptional client experience to our traditional Commercial Treasury Clients and Multiple Deposit Niche markets. This targeted Specialized Treasury Management program will allow us to enter into new markets with a proven and differentiated approach, focusing on specific industries that are deposit rich, need high levels of service, and require access to highly efficient money movement systems.

Additionally, we completed the construction and celebrated the opening of a state-of-the-art branch office in Uniontown, PA, continuing the service we have provided to Fayette County for many decades.

We are confident that sustained investment in our franchise, unwavering commitment to our long-term strategy, and dedication to providing an exceptional client experience will benefit all stakeholders.”

Dividend Declaration

The Company’s Board of Directors declared a $0.25 quarterly cash dividend per outstanding share of common stock, payable on or about November 29, 2024, to stockholders of record as of the close of business on November 15, 2024.

2024 Third Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income increased $757,000, or 7.1%, to $11.5 million for the three months ended September 30, 2024 compared to $10.7 million for the three months ended September 30, 2023.

Net Interest Margin (NIM) (GAAP) decreased to 3.11% for the three months ended September 30, 2024 compared to 3.13% for the three months ended September 30, 2023. Fully tax equivalent (FTE) NIM (Non-GAAP) decreased 2 basis points (“bps”) to 3.12% for the three months ended September 30, 2024 compared to 3.14% for the three months ended September 30, 2023.
Interest and dividend income increased $3.9 million, or 24.6%, to $19.8 million for the three months ended September 30, 2024 compared to $15.9 million for the three months ended September 30, 2023.
- Interest income on loans increased $896,000, or 6.4%, to $14.9 million for the three months ended September 30, 2024 compared to $14.0 million for the three months ended September 30, 2023. The average yield on loans increased 47 bps to 5.60% compared to 5.13% resulting in a $1.3 million increase in interest income on loans. The average balance of loans decreased $24.7 million to $1.06 billion from $1.09 billion, causing a $357,000 decrease in interest income on loans. The increase in loan yield has been driven by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products.
- Interest income on taxable investment securities increased $2.3 million, or 249.9%, to $3.3 million for the three months ended September 30, 2024 compared to $940,000 for the three months ended September 30, 2023 driven by a 272 bp increase in average yield coupled with a $83.4 million increase in average balances. The increase in the average yield was the result of the Bank implementing a balance sheet repositioning strategy of its portfolio of available-for-sale securities during the fourth quarter of 2023. The Bank sold $69.3 million in market value of its lower yielding U.S. government agency, mortgage-backed and municipal securities with an average yield of 1.89% and purchased $69.3 million of higher yielding mortgage-backed and collateralized mortgage obligation securities with an average yield of 5.49%. The increase in volume was driven by a $99.9 million increase in the average balance of collateralized loan obligation (“CLO”) securities as the Bank executed a leverage strategy to purchase these assets funded with brokered certificates of deposits.
- Interest income on interest-earning deposits at other banks increased $698,000 to $1.4 million for the three months ended September 30, 2024 compared to $750,000 for the three months ended September 30, 2023 driven by a $58.7 million increase in average balances, partially offset by a 51 bp decrease in the average yield. The volume increase was due in part to $30.5 million in cash received from the December 2023 sale of EU.
Interest expense increased $3.1 million, or 60.9%, to $8.3 million for the three months ended September 30, 2024 compared to $5.2 million for the three months ended September 30, 2023.
- Interest expense on deposits increased $3.1 million, or 66.1%, to $7.9 million for the three months ended September 30, 2024 compared to $4.8 million for the three months ended September 30, 2023. Rising market interest rates led to the repricing of interest-bearing demand and money market deposits and a shift in deposits from noninterest-bearing and interest-bearing demand deposits into money market and time deposits which resulted in a 93 bp, or 46.3%, increase in the average cost of interest-bearing deposits compared to the three months ended September 30, 2023. This accounted for a $2.4 million increase in interest expense. Additionally, interest-bearing deposit balances increased $130.0 million, or 13.9%, to $1.1 billion as of September 30, 2024 compared to $937.8 million as of September 30, 2023, accounting for a $716,000 increase in interest expense.

Provision for Credit Losses

The provision for credit losses recorded for the three months ended September 30, 2024 was a net recovery of $41,000. The provision for credit losses - loans was $25,000 and was primarily due to changes in qualitative factors partially offset by changes in loan portfolio concentrations and an improvement in loss rates. The provision for credit losses - unfunded commitments was a recovery of $66,000 and was due to a decrease in the unfunded commitments and in the loss rate on construction loans. This compared to a $406,000 provision for credit losses recorded for the three months ended September 30, 2023 and was required primarily due to loan growth coupled with a modeled slowdown in loan prepayment speeds.

Noninterest Income

Noninterest income decreased $1.2 million, or 48.9%, to $1.2 million for the three months ended September 30, 2024, compared to $2.4 million for the three months ended September 30, 2023. This decrease resulted primarily from a $1.4 million decrease in insurance commissions as no income was recognized for the three months ended September 30, 2024 due to the December 2023 sale of EU, compared to a full quarter of income recognized for the three months ended September 30, 2023.

Noninterest Expense

Noninterest expense decreased $705,000, or 7.4%, to $8.8 million for the three months ended September 30, 2024 compared to $9.5 million for the three months ended September 30, 2023. Salaries and benefits decreased $808,000, or 15.0%, to $4.6 million primarily due to no expense related to EU recognized for the three months ended September 30, 2024 due to the December 2023 sale, compared to $878,000 of expense recognized for the three months ended September 30, 2023, partially offset by merit increases and revenue producing staff additions. Intangible amortization decreased $181,000 as a portion of the Bank’s core deposit intangible was fully amortized in February 2024 and EU intangible amortization of $47,000 was realized during the three months ended September 30, 2023. Data processing expense increased $58,000 due to costs associated with the implementation of a new loan origination system and financial dashboard platform. Occupancy expense increased $57,000 due to $130,000 of environmental remediation costs related to a construction project on one of the Bank’s office locations, partially offset by $44,000 of EU occupancy expense realized during the three months ended September 30, 2023. Pennsylvania shares tax expense increased $48,000 due to a higher taxable base due to the increase in equity resulting from the sale of EU.

Statement of Financial Condition Review

Assets

Total assets increased $105.7 million, or 7.3%, to $1.6 billion at September 30, 2024, compared to $1.5 billion at December 31, 2023.

Cash and due from banks increased $79.1 million, or 115.9%, to $147.3 million at September 30, 2024, compared to $68.2 million at December 31, 2023.
Securities increased $63.8 million, or 30.8%, to $270.9 million at September 30, 2024, compared to $207.1 million at December 31, 2023. The securities balance was primarily impacted by the purchase of $69.8 million of CLO securities, partially offset by $10.7 million of principal repayments on amortizing securities.

Loans and Credit Quality

Total loans decreased $44.6 million, or 4.0%, to $1.07 billion at September 30, 2024 compared to $1.11 billion at December 31, 2023. This was driven by decreases in consumer, residential real estate, commercial real estate and commercial and industrial loans of $31.6 million, $8.9 million, $2.8 million and $2.7 million, respectively, partially offset by increases in other loans and construction loans of $1.0 million and $399,000, respectively. The decrease in consumer loans resulted from a reduction in indirect automobile loan production due to rising market interest rates and the discontinuation of this product offering as of June 30, 2023. This portfolio is expected to continue to decline as resources are allocated and production efforts are focused on more profitable commercial products. In total, $95.5 million of loans have paid off since December 31, 2023.
The allowance for credit losses (ACL) was $9.5 million at September 30, 2024 and $9.7 million at December 31, 2023. As a result, the ACL to total loans was 0.89% at September 30, 2024 and 0.87% at December 31, 2023. During the current year, the Company recorded a net recovery of credit losses of $114,000.
Net charge-offs for the three months ended September 30, 2024 were $73,000, or 0.03% of average loans on an annualized basis. Net charge-offs for the three months ended September 30, 2023 were $109,000, or 0.04% of average loans on an annualized basis. Net charge-offs for the nine months ended September 30, 2024 were $123,000. Net recoveries for the nine months ended September 30, 2023 were $551,000 primarily due to recoveries totaling $750,000 related to a prior year $2.7 million charged-off commercial and industrial loan.
Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $2.0 million at September 30, 2024 and $2.2 million at December 31, 2023. Nonperforming loans to total loans ratio was 0.19% at September 30, 2024 and 0.20% at December 31, 2023.

Other

Accrued interest and other assets increased $7.8 million or 32.1%, to $32.1 million at September 30, 2024, compared to $24.3 million at December 31, 2023 due primarily to a $6.0 million investment in a low-income housing tax credit project.

Total liabilities increased $96.3 million, or 7.3%, to $1.4 billion at September 30, 2024 compared to $1.3 billion at December 31, 2023.

Deposits

Total deposits increased $86.7 million to $1.35 billion as of September 30, 2024 compared to $1.27 billion at December 31, 2023. Time deposits increased $136.5 million and money market deposits increased $19.7 million while interest-bearing demand, savings and non interest-bearing demand deposits decreased $36.5 million, $22.3 million and $10.7 million, respectively. Deposit changes were primarily the result of the current interest rate environment causing a shift in deposit products to higher priced money market and time deposits. Additionally, the Bank added $70.6 million of brokered certificates of deposit during the period. Brokered certificates of deposit totaled $99.6 million as of September 30, 2024 compared to $29.0 million at December 31, 2023, all mature within three months and were utilized to fund the purchase of floating rate CLO securities. At September 30, 2024, FDIC insured deposits totaled approximately 62.4% of total deposits while an additional 15.9% of total deposits were collateralized with investment securities.

Accrued Interest Payable and Other Liabilities

Accrued interest payable and other liabilities increased $9.7 million, or 67.3%, to $24.1 million at September 30, 2024, compared to $14.4 million at December 31, 2023 primarily due to the purchase of $6.0 million of syndicated loans which were unfunded at the end of the period and a $5.4 million unfunded commitment related to a low-income housing tax credit project.

Stockholders’ Equity

Stockholders’ equity increased $9.3 million, or 6.7%, to $149.1 million at September 30, 2024, compared to $139.8 million at December 31, 2023. The key factor positively impacting stockholders’ equity was $10.1 million of net income for the current period and a $2.8 million decrease in accumulated other comprehensive loss, partially offset by the payment of $3.9 million in dividends since December 31, 2023.

Book value per share

Book value per common share was $29.07 at September 30, 2024 compared to $27.32 at December 31, 2023, an increase of $1.75.

Tangible book value per common share (Non-GAAP) was $27.16 at September 30, 2024, compared to $25.23 at December 31, 2023, an increase of $1.93.

Refer to “Explanation of Use of Non-GAAP Financial Measures” at the end of this Press Release.

About CB Financial Services, Inc.

CB Financial Services, Inc. is the bank holding company for Community Bank, a Pennsylvania-chartered commercial bank. Community Bank operates its branch network in southwestern Pennsylvania and West Virginia. Community Bank offers a broad array of retail and commercial lending and deposit services.

For more information about CB Financial Services, Inc. and Community Bank, visit our website at www.communitybank.tv.

Statement About Forward-Looking Statements

Statements contained in this press release that are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and such forward-looking statements are subject to significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Act. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, general and local economic conditions, changes in market interest rates, deposit flows, demand for loans, real estate values and competition, competitive products and pricing, the ability of our customers to make scheduled loan payments, loan delinquency rates and trends, our ability to manage the risks involved in our business, our ability to control costs and expenses, inflation, market and monetary fluctuations, changes in federal and state legislation and regulation applicable to our business, actions by our competitors, and other factors that may be disclosed in the Company’s periodic reports as filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

CB FINANCIAL SERVICES, INC.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Dollars in thousands, except share and per share data) (Unaudited)

Selected Financial Condition Data

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

Assets

Cash and Due From Banks

147,325

142,600

73,691

68,223

52,597

Securities

270,881

268,769

232,276

207,095

172,904

Loans Held for Sale

428

632

200

—

Loans

Real Estate:

Residential

338,926

342,689

346,938

347,808

346,485

Commercial

464,354

458,724

470,430

467,154

466,910

Construction

43,515

44,038

44,323

43,116

41,874

Commercial and Industrial

108,554

112,395

103,313

111,278

100,873

Consumer

80,004

90,357

100,576

111,643

122,516

Other

30,402

30,491

30,763

29,397

23,856

Total Loans

1,065,755

1,078,694

1,096,343

1,110,396

1,102,514

Allowance for Credit Losses

(9,479

)

(9,527

)

(9,582

)

(9,707

)

(10,848

)

Loans, Net

1,056,276

1,069,167

1,086,761

1,100,689

1,091,666

Premises and Equipment, Net

20,838

20,326

19,548

19,704

18,524

Bank-Owned Life Insurance

24,057

23,910

23,763

25,378

25,227

Goodwill

9,732

Intangible Assets, Net

353

617

958

2,177

Accrued Interest Receivable and Other Assets

32,116

24,770

26,501

24,312

26,665

Total Assets

1,561,741

1,560,259

1,473,089

1,456,091

1,399,492

Liabilities

Deposits

Noninterest-Bearing Demand Accounts

267,022

269,964

275,182

277,747

305,145

Interest-Bearing Demand Accounts

326,505

324,688

323,134

362,994

357,381

Money Market Accounts

220,789

229,998

208,375

201,074

189,187

Savings Accounts

172,354

179,081

190,206

194,703

207,148

Time Deposits

367,150

346,037

265,597

230,641

177,428

Total Deposits

1,353,820

1,349,768

1,262,494

1,267,159

1,236,289

Other Borrowings

34,708

34,698

34,688

34,678

34,668

Accrued Interest Payable and Other Liabilities

24,073

32,911

34,317

14,420

13,689

Total Liabilities

1,412,601

1,417,377

1,331,499

1,316,257

1,284,646

Stockholders’ Equity

149,140

142,882

141,590

139,834

114,846

Total Liabilities and Stockholders’ Equity

1,561,741

1,560,259

1,473,089

1,456,091

1,399,492

(Dollars in thousands, except share and per share data) (Unaudited)

Three Months Ended

Nine Months Ended

Selected Operating Data

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

Interest and Dividend Income:

Loans, Including Fees

14,945

14,670

14,838

14,804

14,049

44,453

39,846

Securities:

Taxable

3,289

2,844

2,303

1,164

940

8,437

2,853

Tax-Exempt

—

124

Dividends

Other Interest and Dividend Income

1,511

1,398

818

872

819

3,727

2,424

Total Interest and Dividend Income

19,773

18,939

17,986

16,905

15,874

56,699

45,321

Interest Expense:

Deposits

7,892

7,065

5,991

5,336

4,750

20,948

11,097

Short-Term Borrowings

—

Other Borrowings

407

404

407

1,215

800

Total Interest Expense

8,299

7,469

6,395

5,769

5,157

22,163

11,902

Net Interest and Dividend Income

11,474

11,470

11,591

11,136

10,717

34,536

33,419

Provision (Recovery) for Credit Losses - Loans

(143

)

(1,147

)

291

(105

)

863

(Recovery) Provision for Credit Losses - Unfunded Commitments

(66

)

(48

)

106

(273

)

115

)

Net Interest and Dividend Income After Net (Recovery) Provision for Credit Losses

11,515

11,506

11,628

12,556

10,311

34,650

32,502

Noninterest Income:

Service Fees

451

354

415

460

466

1,220

1,359

Insurance Commissions

969

1,436

4,870

Other Commissions

104

188

462

Net Gain (Loss) on Sales of Loans

—

)

Net Gain (Loss) on Securities

245

(31

)

(166

)

(9,830

)

(37

)

(369

)

Net Gain on Purchased Tax Credits

Gain on Sale of Subsidiary

138

—

24,578

—

138

—

Net Gain on Disposal of Premises and Equipment

—

274

—

274

Income from Bank-Owned Life Insurance

147

148

151

145

442

425

Net Gain on Bank-Owned Life Insurance Claims

—

915

—

915

303

Other Income

117

174

232

121

301

523

413

Total Noninterest Income

1,233

688

1,916

16,518

2,412

3,839

7,493

Noninterest Expense:

Salaries and Employee Benefits

4,561

4,425

4,576

6,224

5,369

13,563

15,679

Occupancy

755

940

749

810

698

2,444

2,188

Equipment

280

298

264

298

265

842

766

Data Processing

772

1,011

692

726

714

2,476

2,289

Federal Deposit Insurance Corporation Assessment

177

161

129

189

467

565

Pennsylvania Shares Tax

265

297

217

860

672

Contracted Services

431

390

281

299

286

1,102

868

Legal and Professional Fees

297

208

212

434

320

717

748

Advertising

141

129

158

114

348

268

Other Real Estate Owned (Income)

(23

)

(36

)

(80

)

Amortization of Intangible Assets

264

341

430

445

870

1,336

Other Expense

837

875

781

1,016

878

2,492

2,718

Total Noninterest Expense

8,782

8,984

8,428

10,765

9,487

26,197

28,017

Income Before Income Tax Expense

3,966

3,210

5,116

18,309

3,236

12,292

11,978

Income Tax Expense

747

560

920

5,343

564

2,227

2,392

Net Income

3,219

2,650

4,196

12,966

2,672

10,065

9,586

Three Months Ended

Nine Months Ended

Per Common Share Data

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

Dividends Per Common Share

0.25

0.75

Earnings Per Common Share - Basic

0.63

0.52

0.82

2.53

0.52

1.96

1.88

Earnings Per Common Share - Diluted

0.60

0.51

0.82

2.52

0.52

1.89

1.87

Weighted Average Common Shares Outstanding - Basic

5,137,586

5,142,139

5,129,903

5,119,184

5,115,026

5,136,546

5,112,223

Weighted Average Common Shares Outstanding - Diluted

5,346,750

5,152,657

5,142,286

5,135,997

5,126,546

5,328,610

5,118,279

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

Common Shares Outstanding

5,129,921

5,141,911

5,142,901

5,118,713

5,120,678

Book Value Per Common Share

29.07

27.79

27.53

27.32

22.43

Tangible Book Value per Common Share (1)

27.16

25.83

25.52

25.23

20.10

Stockholders’ Equity to Assets

9.5

9.2

9.6

8.2

Tangible Common Equity to Tangible Assets (1)

9.0

8.6

9.0

8.9

7.4

Three Months Ended

Nine Months Ended

Selected Financial Ratios (2)

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

Return on Average Assets

0.84

0.71

1.17

3.62

0.75

0.90

0.91

Return on Average Equity

8.80

7.58

12.03

44.99

9.03

9.45

10.98

Average Interest-Earning Assets to Average Interest-Bearing Liabilities

133.26

135.69

137.07

138.67

139.65

135.28

143.07

Average Equity to Average Assets

9.54

9.36

9.72

8.04

8.32

9.54

8.33

Net Interest Rate Spread

2.36

2.44

2.67

2.56

2.54

2.48

2.80

Net Interest Rate Spread (FTE) (1)

2.38

2.46

2.68

2.57

2.55

2.50

2.81

Net Interest Margin

3.11

3.18

3.36

3.19

3.13

3.21

3.31

Net Interest Margin (FTE) (1)

3.12

3.19

3.37

3.21

3.14

3.22

3.32

Net Charge-Offs (Recoveries) to Average Loans

0.03

0.02

(0.01

)

—

0.04

0.02

(0.07

)

Efficiency Ratio

69.11

73.89

62.40

38.93

72.26

68.27

68.48

Asset Quality Ratios

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

Allowance for Credit Losses to Total Loans

0.89

0.88

0.87

0.98

Allowance for Credit Losses to Nonperforming Loans (3)

463.07

513.03

437.73

433.35

330.13

Delinquent and Nonaccrual Loans to Total Loans (4)

0.98

0.53

0.63

0.62

0.73

Nonperforming Loans to Total Loans (3)

0.19

0.17

0.20

0.30

Nonperforming Assets to Total Assets (5)

0.14

0.13

0.15

0.16

0.23

Capital Ratios (6)

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

Common Equity Tier 1 Capital (to Risk Weighted Assets)

14.79

14.62

14.50

13.64

12.77

Tier 1 Capital (to Risk Weighted Assets)

14.79

14.62

14.50

13.64

12.77

Total Capital (to Risk Weighted Assets)

15.76

15.61

15.51

14.61

13.90

Tier 1 Leverage (to Adjusted Total Assets)

9.96

9.98

10.28

10.19

9.37

(1)

Refer to Explanation of Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(2)

Interim period ratios are calculated on an annualized basis.

(3)

Nonperforming loans consist of all nonaccrual loans and accruing loans that are 90 days or more past due.

(4)

Delinquent loans consist of accruing loans that are 30 days or more past due.

(5)

Nonperforming assets consist of nonperforming loans and other real estate owned.

(6)

Capital ratios are for Community Bank only.

Certain items previously reported may have been reclassified to conform with the current reporting period’s format.

AVERAGE BALANCES AND YIELDS

Three Months Ended

September 30, 2024

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

Average Balance

Interest and Dividends

Yield / Cost (1)

Average Balance

Interest and Dividends

Yield / Cost (1)

Average Balance

Interest and Dividends

Yield / Cost (1)

Average Balance

Interest and Dividends

Yield / Cost (1)

Average Balance

Interest and Dividends

Yield / Cost (1)

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net (2)

1,063,946

14,987

5.60

1,076,455

14,711

5.50

1,087,889

14,877

5.50

1,098,284

14,840

5.36

1,088,691

14,081

5.13

Debt Securities

Taxable

288,208

3,289

4.56

266,021

2,844

4.28

235,800

2,303

3.91

206,702

1,164

2.25

204,848

940

1.84

Tax-Exempt

—

4,833

3.48

6,013

3.46

Equity Securities

2,693

4.16

2,693

4.01

2,693

4.01

2,693

4.75

2,693

3.71

Interest-Earning Deposits at Banks

111,131

1,448

5.21

101,277

1,313

5.19

58,887

733

4.98

67,450

808

4.79

52,466

750

5.72

Other Interest-Earning Assets

3,108

8.06

3,154

10.84

3,235

10.57

3,387

7.50

3,292

8.32

Total Interest-Earning Assets

1,469,086

19,815

5.37

1,449,600

18,980

5.27

1,388,504

18,025

5.22

1,383,349

16,950

4.86

1,358,003

15,917

4.65

Noninterest-Earning Assets

57,602

53,564

54,910

38,464

52,885

Total Assets

1,526,688

1,503,164

1,443,414

1,421,813

1,410,888

Liabilities and Stockholders' Equity:

Interest-Bearing Liabilities:

Interest-Bearing Demand Accounts

316,301

1,923

2.42

325,069

1,858

2.30

334,880

1,794

2.15

362,018

1,965

2.15

363,997

2,003

2.18

Money Market Accounts

217,148

1,726

3.16

214,690

1,646

3.08

203,867

1,514

2.99

205,060

1,441

2.79

187,012

1,141

2.42

Savings Accounts

175,753

0.10

184,944

0.11

191,444

0.12

200,737

0.11

212,909

0.10

Time Deposits

358,498

4,197

4.66

308,956

3,509

4.57

248,118

2,624

4.25

193,188

1,873

3.85

173,832

1,552

3.54

Total Interest-Bearing Deposits

1,067,700

7,892

2.94

1,033,659

7,065

2.75

978,309

5,991

2.46

961,003

5,336

2.20

937,750

4,750

2.01

Short-Term Borrowings

—

1,902

5.42

—

Other Borrowings

34,702

407

4.67

34,692

404

4.68

34,682

404

4.69

34,673

407

4.66

34,662

407

4.66

Total Interest-Bearing Liabilities

1,102,402

8,299

2.99

1,068,353

7,469

2.81

1,012,991

6,395

2.54

997,578

5,769

2.29

972,412

5,157

2.10

Noninterest-Bearing Demand Deposits

263,650

272,280

278,691

305,789

312,016

Total Funding and Cost of Funds

1,366,052

2.42

1,340,633

2.24

1,291,682

1.99

1,303,367

1.76

1,284,428

1.59

Other Liabilities

15,043

21,867

11,441

4,119

9,025

Total Liabilities

1,381,095

1,362,500

1,303,123

1,307,486

1,293,453

Stockholders' Equity

145,593

140,664

140,291

114,327

117,435

Total Liabilities and Stockholders' Equity

1,526,688

1,503,164

1,443,414

1,421,813

1,410,888

Net Interest Income (FTE)

(Non-GAAP) (3)

11,516

11,511

11,630

11,181

10,760

Net Interest-Earning Assets (4)

366,684

381,247

375,513

385,771

385,591

Net Interest Rate Spread (FTE)

(Non-GAAP) (3) (5)

2.38

2.46

2.68

2.57

2.55

Net Interest Margin (GAAP) (6)

3.11

3.18

3.36

3.19

3.13

Net Interest Margin (FTE)

(Non-GAAP) (3)(6)

3.12

3.19

3.37

3.21

3.14

(1)

Annualized based on three months ended results.

(2)

Net of the allowance for credit losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.

(3)

Refer to Explanation and Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(4)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)

Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(6)

Net interest margin represents annualized net interest income divided by average total interest-earning assets.

AVERAGE BALANCES AND YIELDS

Nine Months Ended

September 30, 2024

September 30, 2023

Average Balance

Interest and Dividends

Yield /Cost (1)

Average Balance

Interest and Dividends

Yield / Cost (1)

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net (2)

1,076,052

44,571

5.53

1,069,729

39,924

4.99

Debt Securities

Taxable

263,433

8,437

4.27

209,069

2,853

1.82

Exempt From Federal Tax

—

6,154

157

3.40

Marketable Equity Securities

2,693

4.06

2,693

3.66

Interest-Earning Deposits at Banks

90,507

3,493

5.15

60,474

2,276

5.02

Other Interest-Earning Assets

3,166

234

9.87

2,905

148

6.81

Total Interest-Earning Assets

1,435,851

56,817

5.29

1,351,024

45,432

4.50

Noninterest-Earning Assets

55,366

51,018

Total Assets

1,491,217

1,402,042

Liabilities and Stockholders' Equity:

Interest-Bearing Liabilities:

Interest-Bearing Demand Accounts

325,383

5,576

2.29

351,379

4,776

1.82

Savings Accounts

184,017

157

0.11

226,686

145

0.09

Money Market Accounts

211,921

4,885

3.08

198,243

3,113

2.10

Time Deposits

305,386

10,330

4.52

143,881

3,063

2.85

Total Interest-Bearing Deposits

1,026,707

20,948

2.73

920,189

11,097

1.61

Short-Term Borrowings

—

604

1.11

Other Borrowings

34,692

1,215

4.68

23,516

800

4.55

Total Interest-Bearing Liabilities

1,061,400

22,163

2.79

944,309

11,902

1.69

Noninterest-Bearing Demand Deposits

271,511

333,356

Total Funding and Cost of Funds

1,332,911

2.22

1,277,665

1.25

Other Liabilities

16,045

7,655

Total Liabilities

1,348,956

1,285,320

Stockholders' Equity

142,261

116,722

Total Liabilities and Stockholders' Equity

1,491,217

1,402,042

Net Interest Income (FTE) (Non-GAAP) (3)

34,654

33,530

Net Interest-Earning Assets (4)

374,451

406,715

Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)

2.50

2.81

Net Interest Margin (FTE) (Non-GAAP) (3)(6)

3.22

3.32

(1)

Annualized based on nine months ended results.

(2)

Net of the allowance for credit losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.

(3)

Refer to Explanation and Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(4)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)

Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(6)

Net interest margin represents annualized net interest income divided by average total interest-earning assets.

Explanation of Use of Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), we use, and this Press Release contains or references, certain Non-GAAP financial measures. We believe these Non-GAAP financial measures provide useful information in understanding our underlying results of operations or financial position and our business and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Non-GAAP adjusted items impacting the Company's financial performance are identified to assist investors in providing a complete understanding of factors and trends affecting the Company’s business and in analyzing the Company’s operating results on the same basis as that applied by management. Although we believe that these Non-GAAP financial measures enhance the understanding of our business and performance, they should not be considered an alternative to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with similar Non-GAAP measures which may be presented by other companies. Where Non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

(Dollars in thousands, except share and per share data) (Unaudited)

Total Assets (GAAP)

1,561,741

1,560,259

1,473,089

1,456,091

1,399,492

Goodwill and Intangible Assets, Net

(9,820

)

(10,085

)

(10,349

)

(10,690

)

(11,909

)

Tangible Assets (Non-GAAP) (Numerator)

1,551,921

1,550,174

1,462,740

1,445,401

1,387,583

Stockholders' Equity (GAAP)

149,140

142,882

141,590

139,834

114,846

Goodwill and Intangible Assets, Net

(9,820

)

(10,085

)

(10,349

)

(10,690

)

(11,909

)

Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator)

139,320

132,797

131,241

129,144

102,937

Stockholders’ Equity to Assets (GAAP)

9.5

9.2

9.6

8.2

Tangible Common Equity to Tangible Assets (Non-GAAP)

9.0

8.6

9.0

8.9

7.4

Common Shares Outstanding (Denominator)

5,129,921

5,141,911

5,142,901

5,118,713

5,120,678

Book Value per Common Share (GAAP)

29.07

27.79

27.53

27.32

22.43

Tangible Book Value per Common Share (Non-GAAP)

27.16

25.83

25.52

25.23

20.10

Three Months Ended

Nine Months Ended

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

(Dollars in thousands) (Unaudited)

Net Income (GAAP)

3,219

2,650

4,196

12,966

2,672

10,065

9,586

Amortization of Intangible Assets, Net

264

341

430

445

870

1,336

Adjusted Net Income (Non-GAAP) (Numerator)

3,483

2,914

4,537

13,396

3,117

10,935

10,922

Annualization Factor

3.98

4.02

3.97

1.34

Average Stockholders' Equity (GAAP)

145,593

140,664

140,291

114,327

117,435

142,261

116,722

Average Goodwill and Intangible Assets, Net

(9,987

)

(10,242

)

(10,553

)

(11,829

)

(12,185

)

(10,260

)

(12,627

)

Average Tangible Common Equity (Non-GAAP) (Denominator)

135,606

130,422

129,738

102,498

105,250

132,001

104,095

Return on Average Equity (GAAP)

8.80

7.58

12.03

44.99

9.03

9.45

10.98

Return on Average Tangible Common Equity (Non-GAAP)

10.22

8.99

14.07

51.85

11.75

11.07

14.03

Three Months Ended

Nine Months Ended

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

(Dollars in thousands) (Unaudited)

Interest Income (GAAP)

19,773

18,939

17,986

16,905

15,874

56,699

45,321

Adjustment to FTE Basis

118

111

Interest Income (FTE) (Non-GAAP)

19,815

18,980

18,025

16,950

15,917

56,817

45,432

Interest Expense (GAAP)

8,299

7,469

6,395

5,769

5,157

22,163

11,902

Net Interest Income (FTE) (Non-GAAP)

11,516

11,511

11,630

11,181

10,760

34,654

33,530

Net Interest Rate Spread (GAAP)

2.36

2.44

2.67

2.56

2.54

2.48

2.80

Adjustment to FTE Basis

0.02

0.01

0.02

0.01

Net Interest Rate Spread (FTE) (Non-GAAP)

2.38

2.46

2.68

2.57

2.55

2.50

2.81

Net Interest Margin (GAAP)

3.11

3.18

3.36

3.19

3.13

3.21

3.31

Adjustment to FTE Basis

0.01

0.02

0.01

Net Interest Margin (FTE) (Non-GAAP)

3.12

3.19

3.37

3.21

3.14

3.22

3.32

Three Months Ended

Nine Months Ended

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

(Dollars in thousands) (Unaudited)

Income Before Income Tax Expense (GAAP)

3,966

3,210

5,116

18,309

3,236

12,292

11,978

Net (Recovery) Provision for Credit Losses

(41

)

(36

)

(37

)

(1,420

)

406

(114

)

917

Adjustments

Net (Gain) Loss on Securities

(245

)

166

9,830

(49

)

369

Gain on Sale of Subsidiary

(138

)

—

(24,578

)

—

(138

)

—

Net Gain on Disposal of Premises and Equipment

—

(274

)

—

(274

)

(11

)

Net Gain on Bank-Owned Life Insurance Claims

—

(915

)

—

(915

)

(303

)

Adjusted PPNR (Non-GAAP) (Numerator)

3,542

3,205

4,056

2,141

3,679

10,802

12,950

Annualization Factor

3.98

4.02

3.97

1.34

Average Assets (Denominator)

1,526,688

1,503,164

1,443,414

1,421,813

1,410,888

1,491,217

1,402,042

Adjusted PPNR Return on Average Assets (Non-GAAP)

0.92

0.86

1.13

0.60

1.04

0.97

1.24

Three Months Ended

Nine Months Ended

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

(Dollars in thousands, except share and per share data) (Unaudited)

Net Income (GAAP)

3,219

2,650

4,196

12,966

2,672

10,065

9,586

Adjustments

Net (Gain) Loss on Securities

(245

)

166

9,830

(49

)

369

Gain on Sale of Subsidiary

(138

)

—

(24,578

)

—

(138

)

—

Net Gain on Disposal of Premises and Equipment

—

(274

)

—

(274

)

(11

)

Net Gain on Bank-Owned Life Insurance Claims

—

(915

)

—

(915

)

(303

)

Tax effect

)

4,843

)

107

(75

)

Adjusted Net Income (Non-GAAP)

2,926

2,674

3,196

3,061

2,701

8,796

9,566

Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding

5,346,750

5,152,657

5,142,286

5,135,997

5,126,546

5,328,610

5,118,279

Earnings per Common Share - Diluted (GAAP)

0.60

0.51

0.82

2.52

0.52

1.89

1.87

Adjusted Earnings per Common Share - Diluted (Non-GAAP)

0.55

0.52

0.62

0.60

0.53

1.65

1.87

Net Income (GAAP) (Numerator)

3,219

2,650

4,196

12,966

2,672

10,065

9,586

Annualization Factor

3.98

4.02

3.97

1.34

Average Assets (Denominator)

1,526,688

1,503,164

1,443,414

1,421,813

1,410,888

1,491,217

1,402,042

Return on Average Assets (GAAP)

0.84

0.71

1.17

3.62

0.75

0.90

0.91

Adjusted Net Income (Non-GAAP) (Numerator)

2,926

2,674

3,196

3,061

2,701

8,796

9,566

Annualization Factor

3.98

4.02

3.97

1.34

Average Assets (Denominator)

1,526,688

1,503,164

1,443,414

1,421,813

1,410,888

1,491,217

1,402,042

Adjusted Return on Average Assets (Non-GAAP)

0.76

0.72

0.89

0.85

0.76

0.79

0.91

Three Months Ended

Nine Months Ended

9/30/24

6/30/24

3/31/24

12/31/23

9/30/23

9/30/24

9/30/23

(Dollars in thousands) (Unaudited)

Net Income (GAAP) (Numerator)

3,219

2,650

4,196

12,966

2,672

10,065

9,586

Annualization Factor

3.98

4.02

3.97

1.34

Average Equity (GAAP) (Denominator)

145,593

140,664

140,291

114,327

117,435

142,261

116,722

Return on Average Equity (GAAP)

8.80

7.58

12.03

44.99

9.03

9.45

10.98

Adjusted Net Income (Non-GAAP) (Numerator)

2,926

2,674

3,196

3,061

2,701

8,796

9,566

Annualization Factor

3.98

4.02

3.97

1.34

Average Equity (GAAP) (Denominator)

145,593

140,664

140,291

114,327

117,435

142,261

116,722

Adjusted Return on Average Equity (Non-GAAP)

8.00

7.65

9.16

10.62

9.12

8.26

10.96

View source version on businesswire.com: https://www.businesswire.com/news/home/20241025393060/en/

John H. Montgomery President and Chief Executive Officer Phone: (724) 223-8317

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