CB Financial Services, Inc. Announces Third Quarter and Year-to-Date 2023 Financial Results and Declares Quarterly Cash Dividend

Provided By Business Wire

Last update: Oct 27, 2023

CB Financial Services, Inc. (“CB” or the “Company”) (NASDAQGM: CBFV), the holding company of Community Bank (the “Bank”) and Exchange Underwriters, Inc. (“EU”), a wholly-owned insurance subsidiary of the Bank, today announced its third quarter and year-to-date 2023 financial results.

2023 Third Quarter Financial Highlights

(Comparisons to three months ended September 30, 2022 unless otherwise noted)

Net income was $2.7 million, compared to $3.9 million. Current period results were negatively impacted by net interest margin (NIM) compression coupled with increases in the provision for credit losses and noninterest expense and a decrease in noninterest income, partially offset by a decrease in income tax expense.
- Income before income tax expense was $3.2 million compared to $4.9 million.
- Pre-provision net revenue (PPNR) (non-GAAP) was $3.5 million compared to $4.9 million.
Earnings per diluted common share (EPS) decreased to $0.52 from $0.77.
Return on average assets (annualized) was 0.75%, compared to 1.12%.
Return on average equity (annualized) was 9.03%, compared to 13.60%.
NIM declined to 3.13% from 3.29%.
Net interest and dividend income was $10.7 million, compared to $11.0 million.
Noninterest income decreased to $2.4 million, compared to $2.7 million. Prior period noninterest income included a $439,000 gain recognized as a result of the sale of assets of two closed branch locations.
Noninterest expense increased to $9.5 million, compared to $8.8 million, primarily due to increases in compensation and benefits, equipment and data processing costs.

(Amounts at September 30, 2023; comparisons to December 31, 2022, unless otherwise noted)

Total assets decreased to $1.40 billion from $1.41 billion.
Total loans increased $52.6 million, or 5.0%, to $1.10 billion compared to $1.05 billion, and included increases of $30.8 million, or 44.0%, in commercial and industrial loans, $30.1 million, or 6.9%, in commercial real estate loans, and $15.8 million, or 4.8%, in residential mortgage loans, partially offset by a decrease of $24.4 million, or 16.6%, in consumer loans, which is primarily comprised of indirect automobile loans.
Nonperforming loans to total loans was 0.30%, a decrease of 25 basis points (“bps”), compared to 0.55%.
Total deposits were $1.24 billion, a decrease of $32.2 million, compared to $1.27 billion.
Book value per share was $22.43, compared to $22.81 as of June 30, 2023 and $21.60 as of December 31, 2022.
Tangible book value per share (Non-GAAP) was $20.10, compared to $20.39 as of June 30, 2023 and $19.00 as of December 31, 2022. The year-to-date change was due to an increase in stockholders’ equity primarily related to current period net income of $9.6 million and a $2.1 million positive adjustment due to the Company’s January 1, 2023 adoption of CECL, partially offset by current period dividends paid to stockholders of $3.8 million.

Management Commentary

President and CEO John H. Montgomery stated, “Our third quarter results, while impacted by pressures on funding costs, continue to support our model of investing in our franchise and focusing on delivering an exceptional client experience.

As we have noted for several quarters, the net interest margin compression continues as our customers respond to the overall increase in market interest rates, while being partially offset by the gradual and increasing shift in our asset base from consumer loans into higher yielding commercial and industrial loans and commercial real estate loans. We continued to make investments in our team, resulting in substantial loan growth and onboarding of new relationships. We firmly believe that the challenges of the economic environment provide an opportunity for quality relationship growth, increasing our long term franchise value and benefiting all of our stakeholders. In addition to our loan growth, our asset quality remains strong with nonperforming assets to total assets decreasing from the previous quarter.

During the quarter, significant progress was made on a number of strategic initiatives, including investing in technology and refreshing our branch network, creating the physical environment for technology and our team members to work cohesively in serving our customers. Additionally, we also declared and paid a $0.25 cash dividend during the quarter, continuing our commitment to our shareholders.”

Mr. Montgomery concluded, “As I have noted previously, we remain focused on maintaining solid capital and liquidity positions as we continue to navigate the challenging economic environment and position ourselves for the future.”

Dividend Information

The Company’s Board of Directors declared a $0.25 quarterly cash dividend per outstanding share of common stock, payable on or about November 30, 2023, to stockholders of record as of the close of business on November 15, 2023.

2023 Third Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income decreased $298,000, or 2.7%, to $10.7 million for the three months ended September 30, 2023 compared to $11.0 million for the three months ended September 30, 2022.

Net interest margin (GAAP) decreased to 3.13% for the three months ended September 30, 2023 compared to 3.29% for the three months ended September 30, 2022. Fully tax equivalent (FTE) net interest margin (Non-GAAP) decreased 16 bps to 3.14% for the three months ended September 30, 2023 compared to 3.30% for the three months ended September 30, 2022.
Interest and dividend income increased $3.6 million, or 29.2%, to $15.9 million for the three months ended September 30, 2023 compared to $12.3 million for the three months ended September 30, 2022.
- Interest income on loans increased $3.2 million, or 29.9%, to $14.0 million for the three months ended September 30, 2023 compared to $10.8 million for the three months ended September 30, 2022. The average balance of loans increased $64.3 million to $1.09 billion from $1.02 billion, generating $729,000 of additional interest income on loans. The average yield increased 93 bps to 5.13% compared to 4.20% resulting in a $2.5 million increase in interest income on loans.
- Interest income on interest-earning deposits at other banks increased $372,000, to $750,000 for the three months ended September 30, 2023 compared to $378,000 for the three months ended September 30, 2022 as the average yield increased 347 bps, partially offset by a $15.2 million decrease in average balances. The increase in the average yield was the result of the Federal Reserve Board’s interest rate increases.
Interest expense increased $3.9 million, or 305.4%, to $5.2 million for the three months ended September 30, 2023 compared to $1.3 million for the three months ended September 30, 2022.
- Interest expense on deposits increased $3.7 million, or 340.2%, to $4.8 million for the three months ended September 30, 2023 compared to $1.1 million for the three months ended September 30, 2022. Rising market interest rates led to the repricing of interest-bearing demand and money market deposits and a shift in deposits from noninterest-bearing to interest-bearing demand and time deposits resulted in a 150 bps, or 295.2%, increase in the average cost of interest-bearing deposits compared to the three months ended September 30, 2022. This accounted for a $3.5 million increase in interest expense. Additionally, interest-bearing deposit balances increased $95.4 million, or 11.3%, to $937.8 million as of September 30, 2023 compared to $842.4 million as of September 30, 2022, accounting for a $138,000 increase in interest expense.

Provision for Credit Losses

Effective January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The provision for credit losses recorded for the three months ended September 30, 2023 was $406,000 and was required primarily due to changes in qualitative factors coupled with a modeled slowdown in loan prepayment speeds. This compared to no provision for credit losses recorded for the three months ended September 30, 2022.

Noninterest Income

Noninterest income decreased $327,000, or 11.9%, to $2.4 million for the three months ended September 30, 2023, compared to $2.7 million for the three months ended September 30, 2022. This decrease was primarily related to a $439,000 decrease in net gain on disposal of fixed assets as the prior period included a $439,000 gain resulting from the sale of assets of two closed branch locations.

Noninterest Expense

Noninterest expense increased $660,000, or 7.5%, to $9.5 million for the three months ended September 30, 2023 compared to $8.8 million for the three months ended September 30, 2022. Salaries and benefits increased $630,000, or 13.3%, to $5.4 million primarily due to merit increases and revenue producing staff additions. Data processing expense increased $174,000, or 32.2%, to $714,000, due to increased ongoing costs related to the fourth quarter 2022 core conversion and equipment expense increased $95,000 or 55.9%, to $265,000, due to costs associated with the implementation and operation of new interactive teller machines.

Statement of Financial Condition Review

Assets

Total assets decreased $9.4 million, or 0.7%, to $1.40 billion at September 30, 2023, compared to $1.41 billion at December 31, 2022.

Cash and due from banks decreased $51.1 million, or 49.3%, to $52.6 million at September 30, 2023, compared to $103.7 million at December 31, 2022, due to significant loan growth.
Securities decreased $17.2 million, or 9.0%, to $172.9 million at September 30, 2023, compared to $190.1 million at December 31, 2022. The securities balance was primarily impacted by $12.4 million of repayments on mortgage-backed and collateralized mortgage obligation securities and a $369,000 decrease in the market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Loans and Credit Quality

Total loans increased $52.6 million, or 5.0%, to $1.10 billion at September 30, 2023 compared to $1.05 billion at December 31, 2022. Loan growth was driven by increases in commercial and industrial loans, commercial real estate loans and residential mortgage loans of $30.8 million, $30.1 million, and $15.8 million, respectively, partially offset by a decrease in consumer loans of $24.4 million. 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.
The allowance for credit losses (ACL) was $10.8 million at September 30, 2023 and $12.8 million at December 31, 2022. As a result, the ACL to total loans was 0.98% at September 30, 2023 compared to 1.22% at December 31, 2022. The change in the ACL was primarily due to the Company's aforementioned adoption of CECL. At adoption, the Company decreased its ACL by $3.4 million. Contributing to the change in ACL was a prior year charge-off of $2.7 million and qualitative factors that significantly impacted the incurred loss model driven by historical activity compared to the adopted CECL methodology that is centered around CECL activity using a forecast approach.
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 recoveries for the three months ended September 30, 2022 were $21,000, or 0.01% of average loans on an annualized basis. Net recoveries for the nine months ended September 30, 2023 were $551,000 primarily due to recoveries totaling $750,000 related to the prior year $2.7 million charged-off commercial and industrial loan. Net charge-offs for the nine months ended September 30, 2022 were $2.5 million.
Nonperforming loans, which includes nonaccrual loans and accruing loans past due 90 days or more, were $3.3 million at September 30, 2023 compared to $5.8 million at December 31, 2022. The decrease of $2.5 million was due to ten loans totaling $1.7 million transferred from nonaccrual to accrual status during the current period and the repayment of a $1.6 million commercial real estate loan that was previously on nonaccrual status. Partially offsetting these favorable movements, a $757,000 commercial real estate loan moved to nonaccrual status during the period. Nonperforming loans to total loans ratio was 0.30% at September 30, 2023 compared to 0.55% at December 31, 2022.

Other

Intangible assets decreased $1.3 million, or 37.0%, to $2.2 million at September 30, 2023 compared to $3.5 million at December 31, 2022 due to amortization expense recognized during the period.
Accrued interest and other assets increased $5.5 million or 26.0%, to $26.7 million at September 30, 2023, compared to $21.1 million at December 31, 2022 due to the sale of a $2.0 million syndicated loan which was sold but not yet settled at September 30, 2023, and increases in prepaid expenses and accrued interest receivable of $1.2 million and $600,000.

Total liabilities decreased $14.1 million, or 1.1%, to $1.28 billion at September 30, 2023 compared to $1.30 billion at December 31, 2022.

Deposits

Total deposits decreased $32.2 million to $1.24 billion as of September 30, 2023 compared to $1.27 billion at December 31, 2022. Interest-bearing demand deposits increased $45.6 million and time deposits increased $68.3 million, while non interest-bearing demand deposits decreased $85.3 million, savings deposits decreased $40.9 million, and money market deposits decreased $19.9 million. The increase in interest-bearing demand deposits was primarily the result of higher interest rates attracting more customers and additional deposits from existing customers while higher time deposits resulted from the offering of a higher-rate certificate of deposit product. FDIC insured deposits totaled approximately 60.5% of total deposits while an additional 16.9% of deposits were collateralized with investment securities.

Borrowed Funds

Long-term borrowings increased $20.0 million, or 136.6%, to $34.7 million at September 30, 2023, compared to $14.6 million at December 31, 2022. During the second quarter, the Bank entered into $20.0 million of FHLB advances for a term of 24 months at 4.92%, the proceeds of which were utilized to match fund originations within the Bank’s commercial and industrial loan portfolio.
Short-term borrowings decreased $8.1 million, or 100.0%, as there were no short-term borrowings at September 30, 2023, compared to $8.1 million at December 31, 2022. At December 31, 2022, short-term borrowings were comprised entirely of securities sold under agreements to repurchase. These accounts were transitioned into other deposit products and account for a portion of the interest-bearing demand deposit increase.

Accrued Interest Payable and Other Liabilities

Accrued interest payable and other liabilities increased $6.1 million, or 80.5%, to $13.7 million at September 30, 2023, compared to $7.6 million at December 31, 2022 primarily due to the purchase of $3.9 million of syndicated loans which were unfunded at the end of the period and a $1.1 million increase in accrued interest payable on certificate accounts.

Stockholders’ Equity

Stockholders’ equity increased $4.7 million, or 4.3%, to $114.8 million at September 30, 2023, compared to $110.2 million at December 31, 2022. Key factors positively impacting stockholders’ equity included $9.6 million of net income for the current period and a $2.1 million positive adjustment, net of tax, due to the Company’s January 1, 2023 adoption of CECL as described above. These factors were partially offset by the payment of $3.8 million in dividends since December 31, 2022 and activity under share repurchase programs. On April 21, 2022, a $10.0 million repurchase program was authorized, with the Company repurchasing 74,656 shares at an average price of $22.38 per share since the inception of the program. In total, the Company repurchased $274,000 of common stock since December 31, 2022. The program expired on May 1, 2023.

Book value per share

Book value per common share was $22.43 at September 30, 2023 compared to $21.60 at December 31, 2022, an increase of $0.83.

Tangible book value per common share (Non-GAAP) was $20.10 at September 30, 2023, compared to $19.00 at December 31, 2022, an increase of $1.10.

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 and provides commercial and personal insurance brokerage services through Exchange Underwriters, Inc., its wholly owned subsidiary.

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	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22
Assets
Cash and Due From Banks	$	52,597		$	78,093		$	103,545		$	103,700		$	122,801
Securities		172,904			181,427			189,025			190,058			193,846
Loans
Real Estate:
Residential		346,485			338,493			332,840			330,725			328,248
Commercial		466,910			458,614			452,770			436,805			432,516
Construction		41,874			44,523			39,522			44,923			49,502
Commercial and Industrial:
Commercial and Industrial		100,852			102,232			79,436			69,918			61,428
PPP		21			34			65			126			768
Consumer		122,516			134,788			146,081			146,927			150,615
Other		23,856			22,470			21,151			20,449			19,865
Total Loans		1,102,514			1,101,154			1,071,865			1,049,873			1,042,942
Allowance for Credit Losses		(10,848	)		(10,666	)		(10,270	)		(12,819	)		(12,854	)
Loans, Net		1,091,666			1,090,488			1,061,595			1,037,054			1,030,088
Premises and Equipment, Net		18,524			18,582			17,732			17,844			18,064
Bank-Owned Life Insurance		25,227			25,082			24,943			25,893			25,750
Goodwill		9,732			9,732			9,732			9,732			9,732
Intangible Assets, Net		2,177			2,622			3,068			3,513			3,959
Accrued Interest Receivable and Other Assets		26,665			26,707			21,068			21,144			21,680
Total Assets	$	1,399,492		$	1,432,733		$	1,430,708		$	1,408,938		$	1,425,920


Liabilities
Deposits
Noninterest-Bearing Demand Accounts	$	305,145		$	316,098		$	350,911		$	390,405		$	407,107
Interest-Bearing Demand Accounts		357,381			374,654			359,051			311,825			298,755
Money Market Accounts		189,187			185,814			206,174			209,125			198,715
Savings Accounts		207,148			217,267			234,935			248,022			250,378
Time Deposits		177,428			169,482			130,449			109,126			120,879
Total Deposits		1,236,289			1,263,315			1,281,520			1,268,503			1,275,834

Short-Term Borrowings		—			—			121			8,060			18,108
Other Borrowings		34,668			34,658			14,648			14,638			17,627
Accrued Interest Payable and Other Liabilities		13,689			18,171			17,224			7,582			7,645
Total Liabilities		1,284,646			1,316,144			1,313,513			1,298,783			1,319,214

Stockholders’ Equity		114,846			116,589			117,195			110,155			106,706
Total Liabilities and Stockholders’ Equity	$	1,399,492		$	1,432,733		$	1,430,708		$	1,408,938		$	1,425,920


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

	Three Months Ended															Nine Months Ended
Selected Operating Data	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22			9/30/23			9/30/22
Interest and Dividend Income:
Loans, Including Fees	$	14,049		$	13,426		$	12,371		$	11,835		$	10,815		$	39,846		$	30,098
Securities:
Taxable		940			950			964			974			985			2,853			2,878
Tax-Exempt		41			42			41			40			49			124			172
Dividends		25			25			24			28			21			74			64
Other Interest and Dividend Income		819			760			844			978			417			2,424			649
Total Interest and Dividend Income		15,874			15,203			14,244			13,855			12,287			45,321			33,861
Interest Expense:
Deposits		4,750			3,842			2,504			1,811			1,079			11,097			2,214
Short-Term Borrowings		—			3			2			7			19			5			56
Other Borrowings		407			238			155			171			174			800			522
Total Interest Expense		5,157			4,083			2,661			1,989			1,272			11,902			2,792
Net Interest and Dividend Income		10,717			11,120			11,583			11,866			11,015			33,419			31,069
Provision for Credit Losses - Loans		291			492			80			—			—			863			3,784
Provision (Recovery) for Credit Losses - Unfunded Commitments		115			(60	)		—			—			—			54			—
Net Interest and Dividend Income After Provision for Credit Losses		10,311			10,688			11,503			11,866			11,015			32,502			27,285
Noninterest Income:
Service Fees		466			448			445			530			544			1,359			1,629
Insurance Commissions		1,436			1,511			1,922			1,399			1,368			4,870			4,535
Other Commissions		94			224			144			157			244			462			512
Net (Loss) Gain on Sales of Loans		—			(5	)		2			—			—			(3	)		—
Net (Loss) Gain on Securities		(37	)		(100	)		(232	)		83			(46	)		(369	)		(252	)
Net Gain on Purchased Tax Credits		7			7			7			14			14			22			43
Net Gain on Disposal of Fixed Assets		—			—			11			—			439			11			431
Income from Bank-Owned Life Insurance		145			139			140			143			140			425			418
Net Gain on Bank-Owned Life Insurance Claims		—			1			302			—			—			303			—
Other Income		301			44			69			34			36			413			143
Total Noninterest Income		2,412			2,269			2,810			2,360			2,739			7,493			7,459
Noninterest Expense:
Salaries and Employee Benefits		5,369			5,231			5,079			4,625			4,739			15,679			13,843
Occupancy		698			789			701			817			768			2,188			2,230
Equipment		265			283			218			178			170			766			561
Data Processing		714			718			857			681			540			2,289			1,471
FDIC Assessment		189			224			152			154			147			565			484
PA Shares Tax		217			195			260			258			240			672			721
Contracted Services		286			434			147			405			288			868			1,223
Legal and Professional Fees		320			246			182			362			334			748			876
Advertising		114			75			79			165			131			268			362
Other Real Estate Owned (Income)		(8	)		(35	)		(37	)		(38	)		(38	)		(80	)		(113	)
Amortization of Intangible Assets		445			446			445			446			445			1,336			1,336
Other		878			895			945			945			1,063			2,718			2,899
Total Noninterest Expense		9,487			9,501			9,028			8,998			8,827			28,017			25,893
Income Before Income Tax Expense		3,236			3,456			5,285			5,228			4,927			11,978			8,851
Income Tax Expense		564			699			1,129			1,076			998			2,392			1,757
Net Income	$	2,672		$	2,757		$	4,156		$	4,152		$	3,929		$	9,586		$	7,094

	Three Months Ended										Nine Months Ended
Per Common Share Data	9/30/23		6/30/23		3/31/23		12/31/22		9/30/22		9/30/23		9/30/22
Dividends Per Common Share	$	0.25	$	0.25	$	0.25	$	0.24	$	0.24	$	0.75	$	0.72
Earnings Per Common Share - Basic		0.52		0.54		0.81		0.81		0.77		1.88		1.38
Earnings Per Common Share - Diluted		0.52		0.54		0.81		0.81		0.77		1.87		1.37

Weighted Average Common Shares Outstanding - Basic		5,115,026		5,111,987		5,109,597		5,095,237		5,106,861		5,112,223		5,150,632
Weighted Average Common Shares Outstanding - Diluted		5,126,546		5,116,134		5,115,705		5,104,254		5,118,627		5,118,279		5,165,376

	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22
Common Shares Outstanding		5,120,678			5,111,678			5,116,830			5,100,189			5,096,672
Book Value Per Common Share	$	22.43		$	22.81		$	22.90		$	21.60		$	20.94
Tangible Book Value per Common Share ⁽¹⁾		20.10			20.39			20.40			19.00			18.25
Stockholders’ Equity to Assets		8.2	%		8.1	%		8.2	%		7.8	%		7.5	%
Tangible Common Equity to Tangible Assets ⁽¹⁾		7.4			7.3			7.4			6.9			6.6

	Three Months Ended										Nine Months Ended
Selected Financial Ratios ⁽²⁾	9/30/23		6/30/23		3/31/23		12/31/22		9/30/22		9/30/23		9/30/22
Return on Average Assets	0.75	%	0.79	%	1.21	%	1.16	%	1.12	%	0.91	%	0.68	%
Return on Average Equity	9.03		9.38		14.69		15.26		13.60		10.98		7.85
Average Interest-Earning Assets to Average Interest-Bearing Liabilities	139.67		142.37		147.53		149.04		149.41		143.07		147.64
Average Equity to Average Assets	8.32		8.38		8.27		7.63		8.20		8.33		8.61
Net Interest Rate Spread	2.54		2.78		3.12		3.17		3.10		2.80		3.03
Net Interest Rate Spread (FTE) ⁽¹⁾	2.55		2.79		3.13		3.18		3.11		2.81		3.04
Net Interest Margin	3.13		3.29		3.51		3.45		3.29		3.31		3.17
Net Interest Margin (FTE) ⁽¹⁾	3.14		3.30		3.52		3.46		3.30		3.32		3.18
Net Charge-Offs (Recoveries) to Average Loans	0.04		0.04		(0.29	)	0.01		(0.01	)	(0.07	)	0.33
Efficiency Ratio	72.26		70.96		62.72		63.25		64.18		68.48		67.21

Asset Quality Ratios	9/30/23		6/30/23		3/31/23		12/31/22		9/30/22
Allowance for Credit Losses to Total Loans	0.98	%	0.97	%	0.96	%	1.22	%	1.23	%
Allowance for Credit Losses to Nonperforming Loans ⁽³⁾	330.13		260.46		189.73		221.06		218.61
Allowance for Credit Losses to Noncurrent Loans ⁽⁴⁾	330.13		260.46		189.73		320.64		318.96
Delinquent and Nonaccrual Loans to Total Loans ^{(4) (5)}	0.73		0.68		1.02		0.81		0.46
Nonperforming Loans to Total Loans ⁽³⁾	0.30		0.37		0.51		0.55		0.56
Noncurrent Loans to Total Loans ⁽⁴⁾	0.30		0.37		0.51		0.38		0.39
Nonperforming Assets to Total Assets ⁽⁶⁾	0.23		0.30		0.40		0.41		0.41

Capital Ratios ⁽⁷⁾	9/30/23		6/30/23		3/31/23		12/31/22		9/30/22
Common Equity Tier 1 Capital (to Risk Weighted Assets)	12.77	%	12.54	%	12.60	%	12.33	%	12.02	%
Tier 1 Capital (to Risk Weighted Assets)	12.77		12.54		12.60		12.33		12.02
Total Capital (to Risk Weighted Assets)	13.90		13.64		13.69		13.58		13.27
Tier 1 Leverage (to Adjusted Total Assets)	9.37		9.26		9.24		8.66		8.51

(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)	Noncurrent loans consist of nonaccrual loans and accruing loans that are 90 days or more past due.
(5)	Delinquent loans consist of accruing loans that are 30 days or more past due.
(6)	Nonperforming assets consist of nonperforming loans and other real estate owned.
(7)	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, 2023						June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022
	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⁾	$	1,088,691	$	14,081	5.13	%	$	1,079,399	$	13,450	5.00	%	$	1,040,570	$	12,391	4.83	%	$	1,034,714	$	11,853	4.54	%	$	1,024,363	$	10,833	4.20	%
Debt Securities
Taxable		204,848		940	1.84			209,292		950	1.82			213,158		964	1.81			216,915		974	1.80			222,110		985	1.77
Exempt From Federal Tax		6,013		52	3.46			6,180		53	3.43			6,270		52	3.32			6,277		51	3.25			7,998		62	3.10
Equity Securities		2,693		25	3.71			2,693		25	3.71			2,693		24	3.56			2,693		28	4.16			2,693		21	3.12
Interest-Earning Deposits at Banks		52,642		750	5.70			54,466		721	5.30			74,555		805	4.32			99,108		939	3.79			67,870		378	2.23
Other Interest-Earning Assets		3,292		69	8.32			2,783		39	5.62			2,633		39	6.01			2,875		39	5.38			2,784		39	5.56
Total Interest-Earning Assets		1,358,179		15,917	4.65			1,354,813		15,238	4.51			1,339,879		14,275	4.32			1,362,582		13,884	4.04			1,327,818		12,318	3.68
Noninterest-Earning Assets		52,709						51,928						48,369						51,718						68,796
Total Assets	$	1,410,888					$	1,406,741					$	1,388,248					$	1,414,300					$	1,396,614
Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Accounts	$	363,997	$	2,003	2.18	%	$	354,497	$	1,582	1.79	%	$	335,327	$	1,191	1.44	%	$	315,352	$	810	1.02	%	$	278,412	$	393	0.56	%
Savings Accounts		212,909		54	0.10			225,175		53	0.09			242,298		37	0.06			249,948		29	0.05			251,148		20	0.03
Money Market Accounts		187,012		1,141	2.42			194,565		1,033	2.13			213,443		939	1.78			206,192		604	1.16			189,371		269	0.56
Time Deposits		173,832		1,552	3.54			155,867		1,174	3.02			101,147		337	1.35			116,172		368	1.26			123,438		397	1.28
Total Interest-Bearing Deposits		937,750		4,750	2.01			930,104		3,842	1.66			892,215		2,504	1.14			887,664		1,811	0.81			842,369		1,079	0.51
Short-Term Borrowings		—		—	—			480		3	2.51			1,344		2	0.60			8,985		7	0.31			28,738		19	0.26
Other Borrowings		34,662		407	4.66			21,026		238	4.54			14,641		155	4.29			17,598		171	3.86			17,621		174	3.92
Total Interest-Bearing Liabilities		972,412		5,157	2.10			951,610		4,083	1.72			908,200		2,661	1.19			914,247		1,989	0.86			888,728		1,272	0.57
Noninterest-Bearing Demand Deposits		312,016						326,262						362,343						391,300						390,658
Other Liabilities		9,025						10,920						2,953						788						2,636
Total Liabilities		1,293,453						1,288,792						1,273,496						1,306,335						1,282,022
Stockholders' Equity		117,435						117,949						114,752						107,965						114,592
Total Liabilities and Stockholders' Equity	$	1,410,888					$	1,406,741					$	1,388,248					$	1,414,300					$	1,396,614
Net Interest Income (FTE) (Non-GAAP) ⁽³⁾			$	10,760					$	11,155					$	11,614					$	11,895					$	11,046
Net Interest-Earning Assets ⁽⁴⁾		385,767						403,203						431,679						448,335						439,090
Net Interest Rate Spread (FTE) (Non-GAAP) ^{(3) (5)}					2.55	%					2.79	%					3.13	%					3.18	%					3.11	%
Net Interest Margin (FTE) (Non-GAAP)⁽³⁾⁽⁶⁾					3.14						3.30						3.52						3.46						3.30
PPP Loans		24		1	16.53			38		1	10.56			100		3	12.17			216		22	40.41			2,424		123	20.13

(1)	Annualized based on three months ended results.
(2)	Net of the allowance for credit losses and includes nonaccrual loans with a zero yield.
(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, 2023						September 30, 2022
	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⁾	$	1,069,729	$	39,924	4.99	%	$	1,013,871	$	30,157	3.98	%
Debt Securities
Taxable		209,069		2,853	1.82			222,132		2,878	1.73
Exempt From Federal Tax		6,154		157	3.40			9,093		218	3.20
Marketable Equity Securities		2,693		74	3.66			2,693		64	3.17
Interest-Earning Deposits at Banks		60,474		2,276	5.02			61,213		534	1.16
Other Interest-Earning Assets		2,905		148	6.81			3,165		115	4.86
Total Interest-Earning Assets		1,351,024		45,432	4.50			1,312,167		33,966	3.46
Noninterest-Earning Assets		51,018						91,607
Total Assets	$	1,402,042					$	1,403,774

Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Accounts	$	351,379	$	4,776	1.82	%	$	271,897	$	554	0.27	%
Savings Accounts		226,686		145	0.09			247,790		58	0.03
Money Market Accounts		198,243		3,113	2.10			190,189		371	0.26
Time Deposits		143,881		3,063	2.85			127,732		1,231	1.29
Total Interest-Bearing Deposits		920,189		11,097	1.61			837,608		2,214	0.35
Short-Term Borrowings		604		5	1.11			33,553		56	0.22
Other Borrowings		23,516		800	4.55			17,612		522	3.96
Total Interest-Bearing Liabilities		944,309		11,902	1.69			888,773		2,792	0.42
Noninterest-Bearing Demand Deposits		333,356						388,964
Other Liabilities		7,655						5,177
Total Liabilities		1,285,320						1,282,914
Stockholders' Equity		116,722						120,860
Total Liabilities and Stockholders' Equity	$	1,402,042					$	1,403,774
Net Interest Income (FTE) (Non-GAAP) ⁽³⁾				33,530						31,174
Net Interest-Earning Assets ⁽⁴⁾		406,715						423,394
Net Interest Rate Spread (FTE) (Non-GAAP) ⁽³⁾⁽⁵⁾					2.81	%					3.04	%
Net Interest Margin (FTE) (Non-GAAP)⁽³⁾⁽⁶⁾					3.32						3.18
PPP Loans		54		5	12.38			7,503		712	12.69

(1)	Annualized based on nine months ended results.
(2)	Net of the allowance for credit losses and includes nonaccrual loans with a zero yield.
(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.

	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22
(Dollars in thousands, except share and per share data) (Unaudited)

Assets (GAAP)	$	1,399,492		$	1,432,733		$	1,430,708		$	1,408,938		$	1,425,920
Goodwill and Intangible Assets, Net		(11,909	)		(12,354	)		(12,800	)		(13,245	)		(13,691	)
Tangible Assets (Non-GAAP) (Numerator)	$	1,387,583		$	1,420,379		$	1,417,908		$	1,395,693		$	1,412,229

Stockholders' Equity (GAAP)	$	114,846		$	116,589		$	117,195		$	110,155		$	106,706
Goodwill and Intangible Assets, Net		(11,909	)		(12,354	)		(12,800	)		(13,245	)		(13,691	)
Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator)	$	102,937		$	104,235		$	104,395		$	96,910		$	93,015

Stockholders’ Equity to Assets (GAAP)		8.2	%		8.1	%		8.2	%		7.8	%		7.5	%
Tangible Common Equity to Tangible Assets (Non-GAAP)		7.4	%		7.3	%		7.4	%		6.9	%		6.6	%

Common Shares Outstanding (Denominator)		5,120,678			5,111,678			5,116,830			5,100,189			5,096,672

Book Value per Common Share (GAAP)	$	22.43		$	22.81		$	22.90		$	21.60		$	20.94
Tangible Book Value per Common Share (Non-GAAP)	$	20.10		$	20.39		$	20.40		$	19.00		$	18.25

	Three Months Ended															Nine Months Ended
	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22			9/30/23			9/30/22
(Dollars in thousands) (Unaudited)

Net Income (GAAP)	$	2,672		$	2,757		$	4,156		$	4,152		$	3,929		$	9,586		$	7,094
Amortization of Intangible Assets, Net		445			446			445			446			445			1,336			1,336
Adjusted Net Income (Non-GAAP) (Numerator)	$	3,117		$	3,203		$	4,601		$	4,598		$	4,374		$	10,922		$	8,430

Annualization Factor		3.97			4.01			4.06			3.97			3.97			1.34			1.34

Average Stockholders' Equity (GAAP)	$	117,435		$	117,949		$	114,752		$	107,965		$	114,592		$	116,722		$	120,860
Average Goodwill and Intangible Assets, Net		(12,185	)		(12,626	)		(13,080	)		(13,534	)		(13,968	)		(12,627	)		(14,414	)
Average Tangible Common Equity (Non-GAAP) (Denominator)	$	105,250		$	105,323		$	101,672		$	94,431		$	100,624		$	104,095		$	106,446

Return on Average Equity (GAAP)		9.03	%		9.38	%		14.69	%		15.26	%		13.60	%		10.98	%		7.85	%
Return on Average Tangible Common Equity (Non-GAAP)		11.75	%		12.20	%		18.35	%		19.32	%		17.25	%		14.03	%		10.59	%

	Three Months Ended															Nine Months Ended
	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22			9/30/23			9/30/22
(Dollars in thousands) (Unaudited)

Interest Income (GAAP)	$	15,874		$	15,203		$	14,244		$	13,855		$	12,287		$	45,321		$	33,861
Adjustment to FTE Basis		43			35			31			29			31			111			105
Interest Income (FTE) (Non-GAAP)		15,917			15,238			14,275			13,884			12,318			45,432			33,966
Interest Expense (GAAP)		5,157			4,083			2,661			1,989			1,272			11,902			2,792
Net Interest Income (FTE) (Non-GAAP)	$	10,760		$	11,155		$	11,614		$	11,895		$	11,046		$	33,530		$	31,174

Net Interest Rate Spread (GAAP)		2.54	%		2.78	%		3.12	%		3.17	%		3.10	%		2.80	%		3.03	%
Adjustment to FTE Basis		0.01			0.01			0.01			0.01			0.01			0.01			0.01
Net Interest Rate Spread (FTE) (Non-GAAP)		2.55	%		2.79	%		3.13	%		3.18	%		3.11	%		2.81	%		3.04	%

Net Interest Margin (GAAP)		3.13	%		3.29	%		3.51	%		3.45	%		3.29	%		3.31	%		3.17	%
Adjustment to FTE Basis		0.01			0.01			0.01			0.01			0.01			0.01			0.01
Net Interest Margin (FTE) (Non-GAAP)		3.14	%		3.30	%		3.52	%		3.46	%		3.30	%		3.32	%		3.18	%

	Three Months Ended															Nine Months Ended
	9/30/23			6/30/23			3/31/23			12/31/22			9/30/22			9/30/23			9/30/22
(Dollars in thousands) (Unaudited)

Net Income Before Income Tax Expense (GAAP)	$	3,236		$	3,456		$	5,285		$	5,228		$	4,927		$	11,978		$	8,851
Provision for Credit Losses		291			492			80			—			—			863			3,784
PPNR (Non-GAAP) (Numerator)	$	3,527		$	3,948		$	5,365		$	5,228		$	4,927		$	12,841		$	12,635

Annualization Factor		3.97			4.01			4.06			3.97			3.97			1.34			1.34

Average Assets (Denominator)	$	1,410,888		$	1,406,741		$	1,388,248		$	1,414,300		$	1,396,614		$	1,402,042		$	1,403,774

PPNR Return on Average Assets (Non-GAAP)		0.99	%		1.13	%		1.57	%		1.47	%		1.40	%		1.22	%		1.20	%

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