CB Financial Services, Inc. Announces Second 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 second quarter and year-to-date 2024 financial results.

Three Months Ended

Six Months Ended

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

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

Net Income (GAAP)

2,650

4,196

12,966

2,672

2,757

6,847

6,915

Net Income Adjustments

(1,000

)

(9,905

)

(976

)

(49

)

Adjusted Net Income (Non-GAAP) (1)

2,674

3,196

3,061

2,701

2,835

5,871

6,866

Earnings per Common Share - Diluted (GAAP)

0.51

0.82

2.52

0.52

0.54

1.33

1.35

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

0.52

0.62

0.60

0.53

0.55

1.14

1.34

(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 Second Quarter Financial Highlights

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

Net income was $2.7 million, compared to $2.8 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.
- Adjusted net income (Non-GAAP) was $2.7 million compared to $2.8 million.
- Income before income tax expense was $3.2 million compared to $3.5 million.
- Adjusted pre-provision net revenue (PPNR) (Non-GAAP) was $3.2 million compared to $4.0 million.
Earnings per diluted common share (EPS) decreased to $0.51 from $0.54.
- Adjusted earning per common share - diluted (Non-GAAP) was $0.52, compared to $0.55.
Return on average assets (annualized) was 0.71%, compared to 0.79%.
- Adjusted return on average assets (annualized) (Non-GAAP) was 0.72%, compared to 0.81%.
Return on average equity (annualized) was 7.58%, compared to 9.38%.
- Adjusted return on average equity (annualized) (Non-GAAP) was 7.65%, compared to 9.64%.
Net interest margin (“NIM”) declined to 3.18% from 3.29%.
Net interest and dividend income was $11.5 million, compared to $11.1 million.
Noninterest income decreased to $688,000, compared to $2.3 million. The significant change in noninterest income was driven by a $1.5 million decrease in insurance commissions due to the sale of EU.
Noninterest expense decreased to $9.0 million, compared to $9.5 million, due to decreases in compensation and benefits, intangible amortization and FDIC assessment expenses, partially offset by increases in data processing, occupancy and Pennsylvania shares tax expenses.

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

Total assets increased $103.8 million, or 7.1%, to $1.6 billion from $1.5 billion.
Total loans decreased $31.7 million, or 2.9%, to $1.08 billion compared to $1.11 billion, and included decreases in consumer, commercial real estate and residential real estate loans of $21.3 million, $8.4 million and $5.1 million, respectively, partially offset by increases in commercial and industrial loans, other loans and construction loans of $1.1 million, $1.1 million and $922,000, 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 $21.6 million decrease in indirect automobile loans, total loans decreased $10.1 million, or 0.9%. In total, $62.3 million of loans have paid off since December 31, 2023.
Nonperforming loans to total loans was 0.17% at June 30, 2024, compared to 0.20% at December 31, 2023.
Total deposits were $1.35 billion, an increase of $82.6 million, compared to $1.27 billion.
Book value per share was $27.79, compared to $27.53 as of March 31, 2024 and $27.32 as of December 31, 2023.
Tangible book value per share (Non-GAAP) was $25.83, compared to $25.52 as of March 31, 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 $6.8 million, partially offset by a $1.6 million increase in accumulated other comprehensive loss and the payment of $2.6 million in dividends since December 31, 2023.

Management Commentary

President and CEO John H. Montgomery commented, “The first half of the year has reflected ongoing trends of net interest margin pressure due to heightened funding costs that have been driven by prevailing market rates, however, our previously announced balance sheet strategies and continued commercial loan production are contributing to stabilization and improvement in this area.

While the yield on our loan portfolio continues to improve, total loans decreased $17.6 million, or 1.6%, from March 31, 2024. Runoff in the formerly exited indirect lending portfolio of $10.2 million was partially offset by a $9.1 million increase in more profitable commercial and industrial loans. Commercial and residential real estate loans declined $11.7 million and $4.2 million, respectively, with the former largely related to the Bank’s decision to exit certain relationships along with expected asset sales and the later related to our repositioning of our residential mortgage program. Notably, asset quality remains robust, with nonperforming loans declining to $1.9 million (0.17% of total loans) from $2.2 million (0.20% of total loans) in the prior quarter.

Overall, deposit movements continued during the quarter, shifting from non-interest and lower-cost 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 a new enterprise-wide loan origination system and a redesigned residential mortgage program. The loan origination system utilizes market leading technology which was carefully customized and enhanced to streamline and optimize our credit delivery process, increase transparency and communication with our clients - ensuring that we provide a best-in-class credit delivery process. Our residential mortgage program redesign was developed to provide expanded product offerings to our market, mitigate risk and generate additional sources of non-interest income through scalability.

Additionally, we completed the construction and celebrated the opening of a state-of-the-art branch office serving as a regional service center in Rostraver, PA and added a news section to our upgraded website, www.cb.bank, to provide more timely communications to our market.

Last, in our continual focus on the client experience, we created a new retail support team staffed with experienced personnel to assist our bankers as they provide a higher level of personalized service to our clients.

We firmly believe that all stakeholders benefit from the continued investment in our franchise, our commitment to our long-term plan and our focus on delivering an exceptional client experience.”

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 August 30, 2024, to stockholders of record as of the close of business on August 15, 2024.

2024 Second Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income increased $350,000, or 3.1%, to $11.5 million for the three months ended June 30, 2024 compared to $11.1 million for the three months ended June 30, 2023.

NIM (GAAP) decreased to 3.18% for the three months ended June 30, 2024 compared to 3.29% for the three months ended June 30, 2023. Fully tax equivalent (FTE) NIM (Non-GAAP) decreased 11 basis points (“bps”) to 3.19% for the three months ended June 30, 2024 compared to 3.30% for the three months ended June 30, 2023.
- Interest and dividend income increased $3.7 million, or 24.6%, to $18.9 million for the three months ended June 30, 2024 compared to $15.2 million for the three months ended June 30, 2023.
- Interest income on loans increased $1.2 million, or 9.3%, to $14.7 million for the three months ended June 30, 2024 compared to $13.4 million for the three months ended June 30, 2023. The average yield on loans increased 50 bps to 5.50% compared to 5.00% resulting in a $1.3 million increase in interest income on loans. The average balance of loans decreased $2.9 million to $1.076 billion from $1.079 billion, causing a $77,000 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 $1.9 million, or 199.4%, to $2.8 million for the three months ended June 30, 2024 compared to $950,000 for the three months ended June 30, 2023 driven by a 246 bp increase in average yield coupled with a $56.7 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 $74.3 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 $592,000, to $1.3 million for the three months ended June 30, 2024 compared to $721,000 for the three months ended June 30, 2023 driven by a $47.7 million increase in average balances, partially offset by a 19 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 $3.4 million, or 82.9%, to $7.5 million for the three months ended June 30, 2024 compared to $4.1 million for the three months ended June 30, 2023.
- Interest expense on deposits increased $3.2 million, or 83.9%, to $7.1 million for the three months ended June 30, 2024 compared to $3.8 million for the three months ended June 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 109 bp, or 65.8%, increase in the average cost of interest-bearing deposits compared to the three months ended June 30, 2023. This accounted for a $2.8 million increase in interest expense. Additionally, interest-bearing deposit balances increased $103.6 million, or 11.1%, to $1.0 billion as of June 30, 2024 compared to $930.1 million as of June 30, 2023, accounting for a $462,000 increase in interest expense.
- Interest expense on borrowed funds increased $163,000, or 67.6%, to $404,000 for the three months ended June 30, 2024 compared to $241,000 for the three months ended June 30, 2023. The average balance of borrowed funds increased $13.2 million due to $20.0 million of FHLB long-term advances added during the second quarter of 2023. The increase in the average balance accounted for a $158,000 increase in interest expense.

Provision for Credit Losses

The provision for credit losses recorded for the three months ended June 30, 2024 was a net recovery of $36,000. The provision for credit losses - loans was $12,000 and was primarily due to an increase in the required reserve for individually analyzed loans, partially offset by the impact of a decrease in loan balances while the provision for credit losses - unfunded commitments was a recovery of $48,000 and was due to a decrease in loss rates. This compared to a $432,000 provision for credit losses recorded for the three months ended June 30, 2023 and was required primarily due to loan growth coupled with a modeled slowdown in loan prepayment speeds.

Noninterest Income

Noninterest income decreased $1.6 million, or 69.7%, to $688,000 for the three months ended June 30, 2024, compared to $2.3 million for the three months ended June 30, 2023. This decrease resulted primarily from a $1.5 million decrease in insurance commissions as no income was recognized for the three months ended June 30, 2024 due to the December 2023 sale of EU, compared to a full quarter of income recognized for the three months ended June 30, 2023.

Noninterest Expense

Noninterest expense decreased $517,000, or 5.4%, to $9.0 million for the three months ended June 30, 2024 compared to $9.5 million for the three months ended June 30, 2023. Salaries and benefits decreased $806,000, or 15.4%, to $4.4 million primarily due to no expense related to EU recognized for the three months ended June 30, 2024 due to the December 2023 sale, compared to $823,000 of expense recognized for the three months ended June 30, 2023, partially offset by merit increases and revenue producing staff additions. Intangible amortization decreased $182,000 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 June 30, 2023. FDIC assessment expense decreased $63,000 due to a decrease in the assessment rate. Data processing expense increased $293,000 costs associated with the implementation of a new loan origination system and financial dashboard platform. Occupancy expenses increased $151,000 due to $192,000 of environmental remediation costs related to a construction project on one of the Bank’s office location, partially offset by $42,000 of EU occupancy expenses realized during the three months ended June 30, 2023. Pennsylvania shares tax expense increased $102,000 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 $103.8 million, or 7.1%, to $1.56 billion at June 30, 2024, compared to $1.46 billion at December 31, 2023.

Cash and due from banks increased $74.4 million, or 109.0%, to $142.6 million at June 30, 2024, compared to $68.2 million at December 31, 2023.
Securities increased $61.7 million, or 29.8%, to $268.8 million at June 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 $6.8 million of principal repayments on amortizing securities.

Loans and Credit Quality

Total loans decreased $31.7 million, or 2.9%, to $1.08 billion at June 30, 2024 compared to $1.11 billion at December 31, 2023. This was driven by decreases in consumer, commercial real estate and residential real estate loans of $21.3 million, $8.4 million and $5.1 million, respectively, partially offset by increases in commercial and industrial loans, other loans and construction loans of $1.1 million, $1.1 million and $922,000, 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, $62.3 million of loans have paid off since December 31, 2023.
The allowance for credit losses (ACL) was $9.5 million at June 30, 2024 and $9.7 million at December 31, 2023. As a result, the ACL to total loans was 0.88% at June 30, 2024 and 0.87% at December 31, 2023. During the current year, the Company recorded a net recovery of credit losses of $73,000.
Net charge-offs for the three months ended June 30, 2024 were $67,000, or 0.02% of average loans on an annualized basis. Net charge-offs for the three months ended June 30, 2023 were $96,000, or 0.04% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2024 were $50,000. Net recoveries for the six months ended June 30, 2023 were $660,000 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 $1.9 million at June 30, 2024 and $2.2 million at December 31, 2023. Nonperforming loans to total loans ratio was 0.17% at June 30, 2024 and 0.20% at December 31, 2023.

Total liabilities increased $100.7 million, or 7.7%, to $1.4 billion at June 30, 2024 compared to $1.3 billion at December 31, 2023.

Deposits

Total deposits increased $82.6 million to $1.35 billion as of June 30, 2024 compared to $1.27 billion at December 31, 2023. Time deposits increased $115.4 million and money market deposits increased $28.9 million while interest-bearing demand, savings and non interest-bearing demand deposits decreased $38.3 million, $15.6 million and $7.8 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 $63.1 million of brokered certificates of deposit during the period. Brokered certificates of deposit totaled $92.1 million as of June 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 June 30, 2024, FDIC insured deposits totaled approximately 62.6% of total deposits while an additional 15.0% of deposits were collateralized with investment securities.

Accrued Interest Payable and Other Liabilities

Accrued interest payable and other liabilities increased $18.1 million, or 125.5%, to $32.5 million at June 30, 2024, compared to $14.4 million at December 31, 2023 primarily due to the purchase of $14.7 million of syndicated loans and $7.6 million of securities which were unsettled at the end of the period.

Stockholders’ Equity

Stockholders’ equity increased $3.0 million, or 2.1%, to $142.9 million at June 30, 2024, compared to $139.8 million at December 31, 2023. The key factor positively impacting stockholders’ equity was $6.8 million of net income for the current period, partially offset by a $1.6 million increase in accumulated other comprehensive loss and the payment of $2.6 million in dividends since December 31, 2023.

Book value per share

Book value per common share was $27.79 at June 30, 2024 compared to $27.32 at December 31, 2023, an increase of $0.47.

Tangible book value per common share (Non-GAAP) was $25.83 at June 30, 2024, compared to $25.23 at December 31, 2023, an increase of $0.60.

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

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

Assets

Cash and Due From Banks

142,600

73,691

68,223

52,597

78,093

Securities

268,769

232,276

207,095

172,904

181,427

Loans Held for Sale

632

200

—

Loans

Real Estate:

Residential

342,689

346,938

347,808

346,485

338,493

Commercial

458,724

470,430

467,154

466,910

458,614

Construction

44,038

44,323

43,116

41,874

44,523

Commercial and Industrial

112,395

103,313

111,278

100,873

102,266

Consumer

90,357

100,576

111,643

122,516

134,788

Other

30,491

30,763

29,397

23,856

22,470

Total Loans

1,078,694

1,096,343

1,110,396

1,102,514

1,101,154

Allowance for Credit Losses

(9,527

)

(9,582

)

(9,707

)

(10,848

)

(10,666

)

Loans, Net

1,069,167

1,086,761

1,100,689

1,091,666

1,090,488

Premises and Equipment, Net

20,326

19,548

19,704

18,524

18,582

Bank-Owned Life Insurance

23,910

23,763

25,378

25,227

25,082

Goodwill

9,732

Intangible Assets, Net

353

617

958

2,177

2,622

Accrued Interest Receivable and Other Assets

24,360

26,501

24,312

26,665

26,707

Total Assets

1,559,849

1,473,089

1,456,091

1,399,492

1,432,733

Liabilities

Deposits

Noninterest-Bearing Demand Accounts

269,964

275,182

277,747

305,145

316,098

Interest-Bearing Demand Accounts

324,688

323,134

362,994

357,381

374,654

Money Market Accounts

229,998

208,375

201,074

189,187

185,814

Savings Accounts

179,081

190,206

194,703

207,148

217,267

Time Deposits

346,037

265,597

230,641

177,428

169,482

Total Deposits

1,349,768

1,262,494

1,267,159

1,236,289

1,263,315

Other Borrowings

34,698

34,688

34,678

34,668

34,658

Accrued Interest Payable and Other Liabilities

32,501

34,317

14,420

13,689

18,171

Total Liabilities

1,416,967

1,331,499

1,316,257

1,284,646

1,316,144

Stockholders’ Equity

142,882

141,590

139,834

114,846

116,589

Total Liabilities and Stockholders’ Equity

1,559,849

1,473,089

1,456,091

1,399,492

1,432,733

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

Three Months Ended

Six Months Ended

Selected Operating Data

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

Interest and Dividend Income:

Loans, Including Fees

14,670

14,838

14,804

14,049

13,426

29,508

25,797

Securities:

Taxable

2,844

2,303

1,164

940

950

5,148

1,914

Tax-Exempt

—

Dividends

Other Interest and Dividend Income

1,398

818

872

819

760

2,216

1,605

Total Interest and Dividend Income

18,939

17,986

16,905

15,874

15,203

36,926

29,448

Interest Expense:

Deposits

7,065

5,991

5,336

4,750

3,842

13,056

6,346

Short-Term Borrowings

—

Other Borrowings

404

407

238

808

393

Total Interest Expense

7,469

6,395

5,769

5,157

4,083

13,864

6,744

Net Interest and Dividend Income

11,470

11,591

11,136

10,717

11,120

23,062

22,704

Provision (Recovery) for Credit Losses - Loans

(143

)

(1,147

)

291

492

(130

)

572

(Recovery) Provision for Credit Losses - Unfunded Commitments

(48

)

106

(273

)

115

(60

)

(60

)

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

11,506

11,628

12,556

10,311

10,688

23,135

22,192

Noninterest Income:

Service Fees

354

415

460

466

448

769

892

Insurance Commissions

969

1,436

1,511

3,434

Other Commissions

224

368

Net Gain (Loss) on Sales of Loans

—

)

Net Loss on Securities

(31

)

(166

)

(9,830

)

(37

)

(100

)

(197

)

(332

)

Net Gain on Purchased Tax Credits

Gain on Sale of Subsidiary

—

24,578

—

Net Gain on Disposal of Premises and Equipment

—

274

—

274

Income from Bank-Owned Life Insurance

147

148

151

145

139

295

280

Net Gain on Bank-Owned Life Insurance Claims

—

915

—

915

303

Other Income

174

232

121

301

406

113

Total Noninterest Income

688

1,916

16,518

2,412

2,269

2,604

5,080

Noninterest Expense:

Salaries and Employee Benefits

4,425

4,576

6,224

5,369

5,231

9,001

10,310

Occupancy

940

749

810

698

789

1,689

1,490

Equipment

298

264

298

265

283

562

501

Data Processing

1,011

692

726

714

718

1,703

1,575

Federal Deposit Insurance Corporation Assessment

161

129

189

224

290

376

Pennsylvania Shares Tax

297

217

195

595

455

Contracted Services

390

281

299

286

434

671

581

Legal and Professional Fees

208

212

434

320

246

420

428

Advertising

129

158

114

206

154

Other Real Estate Owned (Income)

(23

)

(36

)

(35

)

(72

)

Amortization of Intangible Assets

264

341

430

445

446

605

891

Other Expense

875

781

1,016

878

895

1,656

1,841

Total Noninterest Expense

8,984

8,428

10,765

9,487

9,501

17,412

18,530

Income Before Income Tax Expense

3,210

5,116

18,309

3,236

3,456

8,327

8,742

Income Tax Expense

560

920

5,343

564

699

1,480

1,827

Net Income

2,650

4,196

12,966

2,672

2,757

6,847

6,915

Three Months Ended

Six Months Ended

Per Common Share Data

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

Dividends Per Common Share

0.25

0.50

Earnings Per Common Share - Basic

0.52

0.82

2.53

0.52

0.54

1.33

1.35

Earnings Per Common Share - Diluted

0.51

0.82

2.52

0.52

0.54

1.33

1.35

Weighted Average Common Shares Outstanding - Basic

5,142,139

5,129,903

5,119,184

5,115,026

5,111,987

5,136,021

5,110,799

Weighted Average Common Shares Outstanding - Diluted

5,152,657

5,142,286

5,135,997

5,126,546

5,116,134

5,151,188

5,118,396

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

Common Shares Outstanding

5,141,911

5,142,901

5,118,713

5,120,678

5,111,678

Book Value Per Common Share

27.79

27.53

27.32

22.43

22.81

Tangible Book Value per Common Share (1)

25.83

25.52

25.23

20.10

20.39

Stockholders’ Equity to Assets

9.2

9.6

8.2

8.1

Tangible Common Equity to Tangible Assets (1)

8.6

9.0

8.9

7.4

7.3

Three Months Ended

Six Months Ended

Selected Financial Ratios (2)

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

Return on Average Assets

0.71

1.17

3.62

0.75

0.79

0.93

1.00

Return on Average Equity

7.58

12.03

44.99

9.03

9.38

9.80

11.98

Average Interest-Earning Assets to Average Interest-Bearing Liabilities

135.69

137.07

138.67

139.65

142.28

136.36

144.88

Average Equity to Average Assets

9.36

9.72

8.04

8.32

8.38

9.54

8.33

Net Interest Rate Spread

2.44

2.67

2.56

2.54

2.78

2.55

2.95

Net Interest Rate Spread (FTE) (1)

2.46

2.68

2.57

2.55

2.79

2.56

2.96

Net Interest Margin

3.18

3.36

3.19

3.13

3.29

3.27

3.40

Net Interest Margin (FTE) (1)

3.19

3.37

3.21

3.14

3.30

3.28

3.41

Net Charge-Offs (Recoveries) to Average Loans

0.02

(0.01

)

—

0.04

0.01

(0.12

)

Efficiency Ratio

73.89

62.40

38.93

72.26

70.96

67.84

66.69

Asset Quality Ratios

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

Allowance for Credit Losses to Total Loans

0.88

0.87

0.98

0.97

Allowance for Credit Losses to Nonperforming Loans (3)

513.03

437.73

433.35

330.13

260.46

Delinquent and Nonaccrual Loans to Total Loans (4)

0.53

0.63

0.62

0.73

0.68

Nonperforming Loans to Total Loans (3)

0.17

0.20

0.30

0.37

Nonperforming Assets to Total Assets (5)

0.13

0.15

0.16

0.23

0.30

Capital Ratios (6)

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

Common Equity Tier 1 Capital (to Risk Weighted Assets)

14.62

14.50

13.64

12.77

12.54

Tier 1 Capital (to Risk Weighted Assets)

14.62

14.50

13.64

12.77

12.54

Total Capital (to Risk Weighted Assets)

15.61

15.51

14.61

13.90

13.64

Tier 1 Leverage (to Adjusted Total Assets)

9.98

10.28

10.19

9.37

9.26

(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

June 30, 2024

March 31, 2024

December 31, 2023

September 30, 2023

June 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)

1,076,455

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

1,079,399

13,450

5.00

Debt Securities

Taxable

266,021

2,844

4.28

235,800

2,303

3.91

206,702

1,164

2.25

204,848

940

1.84

209,292

950

1.82

Tax-Exempt

—

4,833

3.48

6,013

3.46

6,180

3.43

Equity Securities

2,693

4.01

2,693

4.01

2,693

4.75

2,693

3.71

2,693

3.71

Interest-Earning Deposits at Banks

101,277

1,313

5.19

58,887

733

4.98

67,450

808

4.79

52,466

750

5.72

53,582

721

5.38

Other Interest-Earning Assets

3,154

10.84

3,235

10.57

3,387

7.50

3,292

8.32

2,783

5.62

Total Interest-Earning Assets

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

1,353,929

15,238

4.51

Noninterest-Earning Assets

53,564

54,910

38,464

52,885

52,812

Total Assets

1,503,164

1,443,414

1,421,813

1,410,888

1,406,741

Liabilities and Stockholders' Equity:

Interest-Bearing Liabilities:

Interest-Bearing Demand Accounts

325,069

1,858

2.30

334,880

1,794

2.15

362,018

1,965

2.15

363,997

2,003

2.18

354,497

1,582

1.79

Money Market Accounts

214,690

1,646

3.08

203,867

1,514

2.99

205,060

1,441

2.79

187,012

1,141

2.42

194,565

1,033

2.13

Savings Accounts

184,944

0.11

191,444

0.12

200,737

0.11

212,909

0.10

225,175

0.09

Time Deposits

308,956

3,509

4.57

248,118

2,624

4.25

193,188

1,873

3.85

173,832

1,552

3.54

155,867

1,174

3.02

Total Interest-Bearing Deposits

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

930,104

3,842

1.66

Short-Term Borrowings

—

1,902

5.42

—

480

2.51

Other Borrowings

34,692

404

4.68

34,682

404

4.69

34,673

407

4.66

34,662

407

4.66

21,026

238

4.54

Total Interest-Bearing Liabilities

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

951,610

4,083

1.72

Noninterest-Bearing Demand Deposits

272,280

278,691

305,789

312,016

326,262

Total Funding and Cost of Funds

1,340,633

2.24

1,291,682

1.99

1,303,367

1.76

1,284,428

1.59

1,277,872

1.28

Other Liabilities

21,867

11,441

4,119

9,025

10,920

Total Liabilities

1,362,500

1,303,123

1,307,486

1,293,453

1,288,792

Stockholders' Equity

140,664

140,291

114,327

117,435

117,949

Total Liabilities and Stockholders' Equity

1,503,164

1,443,414

1,421,813

1,410,888

1,406,741

Net Interest Income (FTE)

(Non-GAAP) (3)

11,511

11,630

11,181

10,760

11,155

Net Interest-Earning Assets (4)

381,247

375,513

385,771

385,591

402,319

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

2.46

2.68

2.57

2.55

2.79

Net Interest Margin (GAAP) (6)

3.18

3.36

3.19

3.13

3.29

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

3.19

3.37

3.21

3.14

3.30

(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

Six Months Ended

June 30, 2024

June 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)

1,082,172

29,586

5.50

1,060,092

25,840

4.92

Debt Securities

Taxable

250,912

5,148

4.10

211,213

1,914

1.81

Exempt From Federal Tax

—

6,225

105

3.37

Marketable Equity Securities

2,693

4.01

2,693

3.64

Interest-Earning Deposits at Banks

80,082

2,045

5.11

64,455

1,526

4.74

Other Interest-Earning Assets

3,195

171

10.76

2,709

5.88

Total Interest-Earning Assets

1,419,054

37,004

5.24

1,347,387

29,513

4.42

Noninterest-Earning Assets

54,141

50,159

Total Assets

1,473,195

1,397,546

Liabilities and Stockholders' Equity:

Interest-Bearing Liabilities:

Interest-Bearing Demand Accounts

329,974

3,653

2.23

344,965

2,773

1.62

Savings Accounts

188,194

111

0.12

233,689

0.08

Money Market Accounts

209,279

3,159

3.04

203,952

1,972

1.95

Time Deposits

278,538

6,133

4.43

128,659

1,511

2.37

Total Interest-Bearing Deposits

1,005,985

13,056

2.61

911,265

6,346

1.40

Short-Term Borrowings

—

910

1.11

Other Borrowings

34,687

808

4.68

17,850

393

4.44

Total Interest-Bearing Liabilities

1,040,673

13,864

2.68

930,025

6,744

1.46

Noninterest-Bearing Demand Deposits

275,485

344,203

Total Funding and Cost of Funds

1,316,158

2.12

1,274,228

1.07

Other Liabilities

16,559

6,959

Total Liabilities

1,332,717

1,281,187

Stockholders' Equity

140,478

116,359

Total Liabilities and Stockholders' Equity

1,473,195

1,397,546

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

23,140

22,769

Net Interest-Earning Assets (4)

378,381

417,362

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

2.56

2.96

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

3.28

3.41

(1)

Annualized based on six 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.

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

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

Total Assets (GAAP)

1,559,849

1,473,089

1,456,091

1,399,492

1,432,733

Goodwill and Intangible Assets, Net

(10,085

)

(10,349

)

(10,690

)

(11,909

)

(12,354

)

Tangible Assets (Non-GAAP) (Numerator)

1,549,764

1,462,740

1,445,401

1,387,583

1,420,379

Stockholders' Equity (GAAP)

142,882

141,590

139,834

114,846

116,589

Goodwill and Intangible Assets, Net

(10,085

)

(10,349

)

(10,690

)

(11,909

)

(12,354

)

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

132,797

131,241

129,144

102,937

104,235

Stockholders’ Equity to Assets (GAAP)

9.2

9.6

8.2

8.1

Tangible Common Equity to Tangible Assets (Non-GAAP)

8.6

9.0

8.9

7.4

7.3

Common Shares Outstanding (Denominator)

5,141,911

5,142,901

5,118,713

5,120,678

5,111,678

Book Value per Common Share (GAAP)

27.79

27.53

27.32

22.43

22.81

Tangible Book Value per Common Share (Non-GAAP)

25.83

25.52

25.23

20.10

20.39

Three Months Ended

Six Months Ended

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

(Dollars in thousands) (Unaudited)

Net Income (GAAP)

2,650

4,196

12,966

2,672

2,757

6,847

6,915

Amortization of Intangible Assets, Net

264

341

430

445

446

605

891

Adjusted Net Income (Non-GAAP) (Numerator)

2,914

4,537

13,396

3,117

3,203

7,452

7,806

Annualization Factor

4.02

3.97

4.01

2.01

2.02

Average Stockholders' Equity (GAAP)

140,664

140,291

114,327

117,435

117,949

140,478

116,359

Average Goodwill and Intangible Assets, Net

(10,242

)

(10,553

)

(11,829

)

(12,185

)

(12,626

)

(10,398

)

(12,852

)

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

130,422

129,738

102,498

105,250

105,323

130,080

103,507

Return on Average Equity (GAAP)

7.58

12.03

44.99

9.03

9.38

9.80

11.98

Return on Average Tangible Common Equity (Non-GAAP)

8.99

14.07

51.85

11.75

12.20

11.52

15.21

Three Months Ended

Six Months Ended

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

(Dollars in thousands) (Unaudited)

Interest Income (GAAP)

18,939

17,986

16,905

15,874

15,203

36,926

29,448

Adjustment to FTE Basis

Interest Income (FTE) (Non-GAAP)

18,980

18,025

16,950

15,917

15,238

37,004

29,513

Interest Expense (GAAP)

7,469

6,395

5,769

5,157

4,083

13,864

6,744

Net Interest Income (FTE) (Non-GAAP)

11,511

11,630

11,181

10,760

11,155

23,140

22,769

Net Interest Rate Spread (GAAP)

2.44

2.67

2.56

2.54

2.78

2.55

2.95

Adjustment to FTE Basis

0.02

0.01

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

2.46

2.68

2.57

2.55

2.79

2.56

2.96

Net Interest Margin (GAAP)

3.18

3.36

3.19

3.13

3.29

3.27

3.40

Adjustment to FTE Basis

0.01

0.02

0.01

Net Interest Margin (FTE) (Non-GAAP)

3.19

3.37

3.21

3.14

3.30

3.28

3.41

Three Months Ended

Six Months Ended

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

(Dollars in thousands) (Unaudited)

Income Before Income Tax Expense (GAAP)

3,210

5,116

18,309

3,236

3,456

8,327

8,742

Net (Recovery) Provision for Credit Losses

(36

)

(37

)

(1,420

)

406

432

(73

)

512

Adjustments

Net Loss on Securities

166

9,830

100

197

332

Gain on Sale of Subsidiary

—

(24,578

)

—

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)

3,205

4,056

2,141

3,679

3,987

7,262

9,272

Annualization Factor

4.02

3.97

4.01

2.01

2.02

Average Assets (Denominator)

1,503,164

1,443,414

1,421,813

1,410,888

1,406,741

1,473,195

1,397,546

Adjusted PPNR Return on Average Assets (Non-GAAP)

0.86

1.13

0.60

1.04

1.14

0.99

1.34

Three Months Ended

Six Months Ended

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

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

Net Income (GAAP)

2,650

4,196

12,966

2,672

2,757

6,847

6,915

Adjustments

Net Loss on Securities

166

9,830

100

197

332

Gain on Sale of Subsidiary

—

(24,578

)

—

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

)

(21

)

(67

)

Adjusted Net Income (Non-GAAP)

2,674

3,196

3,061

2,701

2,835

5,871

6,866

Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding

5,152,657

5,142,286

5,135,997

5,126,546

5,116,134

5,151,188

5,118,396

Earnings per Common Share - Diluted (GAAP)

0.51

0.82

2.52

0.52

0.54

1.33

1.35

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

0.52

0.62

0.60

0.53

0.55

1.14

1.34

Net Income (GAAP) (Numerator)

2,650

4,196

12,966

2,672

2,757

6,847

6,915

Annualization Factor

4.02

3.97

4.01

2.01

2.02

Average Assets (Denominator)

1,503,164

1,443,414

1,421,813

1,410,888

1,406,741

1,473,195

1,397,546

Return on Average Assets (GAAP)

0.71

1.17

3.62

0.75

0.79

0.93

1.00

Adjusted Net Income (Non-GAAP) (Numerator)

2,674

3,196

3,061

2,701

2,835

5,871

6,866

Annualization Factor

4.02

3.97

4.01

2.01

2.02

Average Assets (Denominator)

1,503,164

1,443,414

1,421,813

1,410,888

1,406,741

1,473,195

1,397,546

Adjusted Return on Average Assets (Non-GAAP)

0.72

0.89

0.85

0.76

0.81

0.80

0.99

Three Months Ended

Six Months Ended

6/30/24

3/31/24

12/31/23

9/30/23

6/30/23

6/30/24

6/30/23

(Dollars in thousands) (Unaudited)

Net Income (GAAP) (Numerator)

2,650

4,196

12,966

2,672

2,757

6,847

6,915

Annualization Factor

4.02

3.97

4.01

2.01

2.02

Average Equity (GAAP) (Denominator)

140,664

140,291

114,327

117,435

117,949

140,478

116,359

Return on Average Equity (GAAP)

7.58

12.03

44.99

9.03

9.38

9.80

11.98

Adjusted Net Income (Non-GAAP) (Numerator)

2,674

3,196

3,061

2,701

2,835

5,871

6,866

Annualization Factor

4.02

3.97

4.01

2.01

2.02

Average Equity (GAAP) (Denominator)

140,664

140,291

114,327

117,435

117,949

140,478

116,359

Adjusted Return on Average Equity (Non-GAAP)

7.65

9.16

10.62

9.12

9.64

8.40

11.90

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724356648/en/

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

CB Financial Services (NASDAQ:CBFV)
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