EX-99.1 2 currentex9911stqtrearnings.htm EX-99.1 EARNINGS RELEASE Document

EXHIBIT 99.1
cbfinancialservices.jpg

CB Financial Services, Inc.
Announces First Quarter 2023 Financial Results and
Declares Quarterly Cash Dividend

WASHINGTON, PA., April 28, 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 first quarter 2023 financial results.
Three Months Ended
3/31/2312/31/229/30/226/30/223/31/22
(Dollars in thousands, except per share data) (Unaudited)
Net Income (GAAP)$4,156 $4,152 $3,929 $118 $3,047 
Net Income Adjustments
(127)(66)(310)157 12 
Adjusted Net Income (Non-GAAP) (1)
$4,029 $4,086 $3,619 $275 $3,059 
Earnings per Common Share - Diluted (GAAP)$0.79 $0.81 $0.77 $0.02 $0.58 
Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1)
$0.77 $0.80 $0.71 $0.05 $0.59 
(1)    Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of adjusted net income and adjusted earnings per common share - diluted in this Press Release.
2023 First Quarter Financial Highlights
(Comparisons to three months ended March 31, 2022 unless otherwise noted)
•Net income was $4.2 million, compared to $3.0 million. Current period results were driven primarily by net interest margin (NIM) expansion coupled with a modest increase in noninterest income.
◦Adjusted net income (Non-GAAP) was $4.0 million, compared to $3.1 million.
•Earnings per diluted common share (EPS) increased to $0.79 from $0.58.
◦Adjusted earnings per common share - diluted (Non-GAAP) was $0.77, compared to $0.59.
•Return on average assets (annualized) of 1.21%, compared to 0.87%.
◦Adjusted return on average assets (annualized) (Non-GAAP) of 1.18%, compared to 0.87%.
•Return on average equity (annualized) of 14.69%, compared to 9.50%.
◦Adjusted return on average equity (annualized) (Non-GAAP) of 14.24%, compared to 9.54%.
•NIM improved to 3.51% from 3.08%.
•Net interest and dividend income was $11.6 million, compared to $9.9 million.
•Noninterest income increased to $2.8 million, compared to $2.6 million. The most significant changes in noninterest income included increases in net gains on bank-owned life insurance of $302,000 resulting from two death claims and insurance commissions of $124,000, partially offset by an increase in net losses on securities of $225,000.

(Amounts at March 31, 2023; comparisons to December 31, 2022, unless otherwise noted)
•Total assets increased to $1.43 billion from $1.41 billion.
•Total loans increased $22.0 million, or 8.4% annualized, to $1.07 billion compared to $1.05 billion, and included increases of $16.0 million, or 3.7%, in commercial real estate, $9.5 million, or 13.5%, in commercial and industrial loans and $2.1 million, or 0.6%, in residential mortgages, partially offset by decreases of $5.4 million, or 12.0%, in construction real estate, and $846,000, or 0.8%, in consumer loans.
•Nonperforming loans to total loans was 0.67%, an increase of 12 basis points (“bps”), compared to 0.55%.
•Total deposits were $1.28 billion, an increase of $13.0 million, compared to $1.27 billion.
•Book value per share was $22.90, compared to $21.60 as of December 31, 2022 and $23.69 as of March 31, 2022.
•Tangible book value per share (Non-GAAP) was $20.40, compared to $19.00 as of December 31, 2022 and $20.86 as of March 31, 2022, increase was related to current period items of net income of $4.2 million, $2.1 million due to the Company’s January 1, 2023 adoption of CECL, and $2.0 million positive impact to Accumulated Other Comprehensive
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EXHIBIT 99.1

Loss from a decrease in unrealized losses on securities portfolios. This was partially offset by the current period dividend paid to stockholders of $1.3 million and $130,000 of common stock repurchased since December 31, 2022.

Management Commentary
President and CEO John H. Montgomery stated, “I am pleased to note that we posted solid first quarter results which are a testament to the quality of our business, particularly in light of recent negative news regarding issues at large regional banks. As a community bank, our model is markedly different from that of large money center, regional, and other notable ‘specialty’ banks that concentrate on specific industries such as venture capital-backed startups. That community bank model, focused on a well-diversified business on both the asset and liability sides of the balance sheet, is at the heart of what we do and continues to buoy us in uncertain times. We provide financial products to a wide range of local borrowers, from homebuyers to local businesses, all of which are underwritten and managed by an experienced leadership team that has proven success managing credit through prior periods of economic turbulence. We also have a diversified, high-quality capital base. Our depositors are primarily local residents and businesses we know well and who appreciate our focus on serving their needs.”

Mr. Montgomery continued, “Turning back to our first quarter results, continued interest rate increases by the Federal Reserve helped drive an expansion in our net interest margin as variable rate loans repriced to higher rates. That coupled with an expansion in our total loan book drove a $1.7 million, or 17.1%, increase in net interest and dividend income for the quarter, compared to the first quarter a year ago. While it is certainly nice to experience this expansion, we are also seeing increasing upward pressure on deposit rates. As expected, the rates we are paying on deposits have also gone up and we anticipate that to continue. It is also important to highlight that our deposit base is well-diversified, with 75.6% below the $250,000 level.”

Mr. Montgomery concluded, “Our bank remains well-capitalized and I would like to emphasize that we have had no need to borrow from the Federal Reserve during the recent banking industry issues, just as we did not require any TARP injections during the Great Recession. I would also like to stress that we have no securities classified as ‘held to maturity’ - all of our holdings are classified as ‘available-for-sale’. Our strong capital position has us well-positioned to continue pursuing our internal growth programs while enabling us to maintain our commitment to share our positive returns with CB shareholders. Toward the end of 2022, we increased our regular quarterly dividend to $0.25 per share and have maintained it at that level with our first quarter declaration. In addition, we repurchased 5,686 shares during the first quarter under the current $10.0 million share repurchase program announced in early 2022. Our capital position gives use the ability to support growth along with these shareholder-friendly actions.”

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 May 31, 2023, to stockholders of record as of the close of business on May 15, 2023.

Stock Repurchase Program
On April 21, 2022, CB announced a program to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. Based on the Company’s closing stock price at April 26, 2023, the repurchase program, if fully completed, would encompass 426,461 shares, or approximately 8.3% of the shares currently outstanding.

2023 First Quarter Financial Review

Net Interest and Dividend Income
Net interest and dividend income increased $1.7 million, or 17.1%, to $11.6 million for the three months ended March 31, 2023 compared to $9.9 million for the three months ended March 31, 2022.
•Net interest margin (GAAP) increased to 3.51% for the three months ended March 31, 2023 compared to 3.08% for the three months ended March 31, 2022. Fully tax equivalent (“FTE”) net interest margin (Non-GAAP) increased 42 bps to 3.52% for the three months ended March 31, 2023 compared to 3.10% for the three months ended March 31, 2022.
•Interest and dividend income increased $3.6 million, or 34.2%, to $14.2 million for the three months ended March 31, 2023 compared to $10.6 million for the three months ended March 31, 2022.
◦Interest income on loans increased $2.8 million, or 29.5%, to $12.4 million for the three months ended March 31, 2023 compared to $9.6 million for the three months ended March 31, 2022. The average balance of loans increased $31.4 million to $1.04 billion from $1.01 billion, generating $311,000 of additional interest income on loans. The average yield increased 98 bps to 4.83% compared to 3.85% causing a $2.5 million increase in interest income on loans. Interest and fee income on PPP loans was $445,000 for the three months ended March 31, 2022, which contributed 13 bps to loan yield while the current year quarter was not materially impacted by PPP loan-related interest and fee income.
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◦Interest income on taxable investment securities increased $59,000, or 6.5%, to $964,000 for the three months ended March 31, 2023 compared to $905,000 for the three months ended March 31, 2022 driven by a 13 bps increase in average yield.
◦Interest income on interest bearing deposits at other banks increased $772,000, to $805,000 for the three months ended March 31, 2023 compared to $33,000 for the three months ended March 31, 2022 as average balances increased $15.3 million and the average yield increased 410 bps. Higher cash balances were maintained as a result of increased deposits while the increase in the average yield was the result of the Federal Reserve Bank’s interest rate increases.
•Interest expense increased $1.9 million, or 268.0%, to $2.7 million for the three months ended March 31, 2023 compared to $723,000 for the three months ended March 31, 2022.
◦Interest expense on deposits increased $2.0 million, or 372.5%, to $2.5 million for the three months ended March 31, 2023 compared to $530,000 for the three months ended March 31, 2022. Average interest-earning deposit balances increased $47.4 million, or 5.6%, to $892.2 million as of March 31, 2023 compared to $844.8 million as of March 31, 2022, and rising interest rates led to the repricing of higher-cost demand and money market deposits and resulted in an 89 bps, or 349.8%, increase in average cost compared to the three months ended March 31, 2022. Partially offsetting this increase, the average balance of time deposits and the related average cost decreased $30.9 million and 5 bps, respectively.
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 in the first quarter of 2023 was calculated using CECL and resulted in an $80,000 provision for credit losses recorded for the three months ended March 31, 2023 compared to no provision for credit losses recorded for the three months ended March 31, 2022.

Noninterest income
Noninterest income increased $197,000, or 7.5%, to $2.8 million for the three months ended March 31, 2023, compared to $2.6 million for the three months ended March 31, 2022. This increase was primarily related to a $302,000 increase in net gains on bank-owned life insurance claims resulting from two death claims and an increase of $124,000 in insurance commissions primarily driven by contingency income which resulted from the timing of lock-in amounts received and core business including commercial and personal insurance lines. These increases were partially offset by an increase in net losses on securities of $225,000.

Noninterest Expense
Noninterest expense increased $372,000, or 4.3%, to $9.0 million for the three months ended March 31, 2023 compared to $8.7 million for the three months ended March 31, 2022. Salaries and benefits increased $514,000, or 11.3%, to $5.1 million primarily due to merit increases and staffing additions, while data processing expense increased $372,000, or 76.7%, to $857,000, due to increased ongoing costs related to the fourth quarter 2022 core conversion. Conversely, contracted services decreased $440,000 to $147,000 for the three months ended March 31, 2023 compared to $587,000 for the three months ended March 31, 2022.

Statement of Financial Condition Review

Assets
Total assets increased $21.8 million, or 1.5%, to $1.43 billion at March 31, 2023, compared to $1.41 billion at December 31, 2022.
•Cash and due from banks decreased to $103.5 million at March 31, 2023, compared to $103.7 million at December 31, 2022.
•Securities decreased $1.0 million, or 0.5%, to $189.0 million at March 31, 2023, compared to $190.1 million at December 31, 2022. The securities balance was primarily impacted by $3.4 million of repayments on mortgage-backed and collateralized mortgage obligation securities and a $232,000 decrease in the market value in the equity securities portfolio, which is primarily comprised of bank stocks. These decreases were partially offset by a $2.6 million increase in the market value of the debt securities portfolio.

Loans and Credit Quality
•Total loans increased $22.0 million, or 2.1%, to $1.07 billion at March 31, 2023 compared to $1.05 billion at December 31, 2022. Loan growth was driven by increases in commercial real estate, commercial and industrial loans
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and residential mortgages of $16.0 million, $9.5 million, and $2.1 million, respectively, partially offset by decreases in construction real estate and consumer loans of $5.4 million and $846,000, respectively. Growth in commercial and industrial loans included the purchase of $8.9 million of syndicated loans.
•The allowance for credit losses (ACL) was $10.3 million at March 31, 2023 and $12.8 million at December 31, 2022. As a result, the ACL to total loans was 0.96% at March 31, 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. 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 current expected credit loss (CECL) activity using a forecast approach. At adoption, the Company decreased its ACL by $3.4 million.
•Net recoveries for the three months ended March 31, 2023 were $756,000, or 0.29% of average loans on an annualized basis. This is due to recoveries totaling $750,000 related to the prior year commercial and industrial charged-off loan for $2.7 million. Net recoveries for the three months ended March 31, 2022 were $13,000, or 0.01% of average loans on an annualized basis.
•Nonperforming loans, which includes nonaccrual loans and accruing loans past due 90 days or more, were $7.2 million at March 31, 2023 compared to $5.8 million at December 31, 2022. The increase of $1.4 million was due to a commercial real estate loan relationship that moved to non-accrual in the current period. Current nonperforming loans to total loans ratio was 0.67% compared to 0.55% at December 31, 2022.
Other
•Intangible assets decreased $445,000, or 11.4%, to $3.1 million at March 31, 2023 compared to $3.5 million at December 31, 2022 due to amortization expense recognized during the period.

Total liabilities increased $14.7 million, or 1.1%, to $1.31 billion at March 31, 2023 compared to $1.30 billion at December 31, 2022.
Deposits
•Total deposits increased $13.0 million to $1.28 billion as of March 31, 2023 compared to $1.27 billion at December 31, 2022, an annualized increase of 4.1%. Interest-bearing demand deposits increased $47.2 million and time deposits increased $21.3 million, while non interest-bearing demand deposits decreased $39.5 million and savings deposits decreased $13.1 million. The increase in interest-bearing demand deposits is primarily the result of higher interest rates attracting more customers and/or additional deposits from existing customers. FDIC insured deposits totaled approximately 62.9% of total deposits.
Borrowed Funds
•Short-term borrowings decreased $7.9 million, or 98.5%, to $121,000 at March 31, 2023, compared to $8.1 million at December 31, 2022. At March 31, 2023 and December 31, 2022, short-term borrowings were comprised entirely of securities sold under agreements to repurchase. This decrease is due to accounts that 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 $9.6 million, or 127.2%, to $17.2 million at March 31, 2023, compared to $7.6 million at December 31, 2022 primarily due to the purchase of $8.9 million of syndicated loans which were unfunded at the end of the period.

Stockholders’ Equity
Stockholders’ equity increased $7.0 million, or 6.4%, to $117.2 million at March 31, 2023, compared to $110.2 million at December 31, 2022. Key factors impacting stockholders’ equity included the positive impact of $4.2 million of net income coupled with the change in accumulated other comprehensive loss, which decreased $2.0 million primarily due to the effect of changes in market interest rates on the Company’s investment securities. In addition, stockholders’ equity was positively impacted by $2.1 million, 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 $1.3 million in dividends since December 31, 2022 and activity under share repurchase programs. On April 21, 2022, a $10 million repurchase program was authorized, with the Company repurchasing 67,864 shares at an average price of $22.45 per share since the inception of the plan. In total, the Company repurchased $130,000 of common stock since December 31, 2022.
Book value per share
Book value per common share was $22.90 at March 31, 2023 compared to $21.60 at December 31, 2022, an increase of $1.30.

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Tangible book value per common share (Non-GAAP) was $20.40 at March 31, 2023, compared to $19.00 at December 31, 2022, an increase of $1.40.

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, the scope and duration of economic contraction as a result of the COVID-19 pandemic and its effects on the Company’s business and that of the Company’s customers, 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.

Company Contact:
John H. Montgomery
President and Chief Executive Officer
Phone: (724) 225-2400

Investor Relations:
Jeremy Hellman, Vice President
The Equity Group Inc.
Phone: (212) 836-9626
Email: jhellman@equityny.com
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CB FINANCIAL SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands, except share and per share data) (Unaudited)
Selected Financial Condition Data3/31/2312/31/229/30/226/30/223/31/22
Assets
Cash and Due From Banks$103,545 $103,700 $122,801 $81,121 $123,588 
Securities189,025 190,058 193,846 213,505 231,097 
Loans 
Real Estate: 
Residential332,840 330,725 328,248 325,138 317,254 
Commercial452,770 436,805 432,516 426,105 427,227 
Construction39,522 44,923 49,502 41,277 54,227 
Commercial and Industrial:
Commercial and Industrial79,436 69,918 61,428 62,054 59,601 
PPP65 126 768 3,853 8,242 
Consumer146,081 146,927 150,615 148,921 143,422 
Other21,151 20,449 19,865 20,621 10,669 
Total Loans1,071,865 1,049,873 1,042,942 1,027,969 1,020,642 
Allowance for Credit Losses(10,270)(12,819)(12,854)(12,833)(11,595)
Loans, Net1,061,595 1,037,054 1,030,088 1,015,136 1,009,047 
Premises and Equipment, Net17,732 17,844 18,064 18,196 18,349 
Bank-Owned Life Insurance24,943 25,893 25,750 25,610 25,468 
Goodwill9,732 9,732 9,732 9,732 9,732 
Intangible Assets, Net3,068 3,513 3,959 4,404 4,850 
Accrued Interest Receivable and Other Assets21,068 21,144 21,680 18,757 16,539 
Total Assets$1,430,708 $1,408,938 $1,425,920 $1,386,461 $1,438,670 
Liabilities
Deposits
Non-Interest Bearing Demand Accounts$350,911 $390,405 $407,107 $389,127 $400,105 
Interest Bearing Demand Accounts359,051 311,825 298,755 265,347 280,455 
Money Market Accounts206,174 209,125 198,715 185,308 192,929 
Savings Accounts234,935 248,022 250,378 250,226 247,589 
Time Deposits130,449 109,126 120,879 125,182 129,235 
Total Deposits1,281,520 1,268,503 1,275,834 1,215,190 1,250,313 
Short-Term Borrowings121 8,060 18,108 32,178 39,219 
Other Borrowings14,648 14,638 17,627 17,618 17,607 
Accrued Interest Payable and Other Liabilities17,224 7,582 7,645 7,703 9,375 
Total Liabilities1,313,513 1,298,783 1,319,214 1,272,689 1,316,514 
Stockholders’ Equity117,195 110,155 106,706 113,772 122,156 
Total Liabilities and Stockholders’ Equity$1,430,708 $1,408,938 $1,425,920 $1,386,461 $1,438,670 
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(Dollars in thousands, except share and per share data) (Unaudited)
 Three Months Ended
Selected Operating Data3/31/2312/31/229/30/226/30/223/31/22
Interest and Dividend Income
Loans, Including Fees$12,371 $11,835 $10,815 $9,733 $9,551 
Securities:
Taxable964 974 985 988 905 
Tax-Exempt41 40 49 57 66 
Dividends24 28 21 20 22 
Other Interest and Dividend Income844 978 417 160 72 
Total Interest and Dividend Income14,244 13,855 12,287 10,958 10,616 
Interest Expense
Deposits2,504 1,811 1,079 604 530 
Short-Term Borrowings2 7 19 18 19 
Other Borrowings155 171 174 173 174 
Total Interest Expense2,661 1,989 1,272 795 723 
Net Interest and Dividend Income11,583 11,866 11,015 10,163 9,893 
Provision for Credit Losses80 — — 3,784 — 
Net Interest and Dividend Income After Provision for Credit Losses11,503 11,866 11,015 6,379 9,893 
Noninterest Income:
Service Fees445 530 544 559 526 
Insurance Commissions1,922 1,399 1,368 1,369 1,798 
Other Commissions144 157 244 179 89 
Net Gain on Sales of Loans2 — — — — 
Net (Loss) Gain on Securities(232)83 (46)(199)(7)
Net Gain on Purchased Tax Credits7 14 14 14 14 
    Net Gain (Loss) on Disposal of Fixed Assets11 — 439 — (8)
Income from Bank-Owned Life Insurance140 143 140 142 136 
Net Gain on Bank-Owned Life Insurance Claims302 — — — — 
Other Income69 34 36 41 65 
Total Noninterest Income2,810 2,360 2,739 2,105 2,613 
Noninterest Expense:
Salaries and Employee Benefits5,079 4,625 4,739 4,539 4,565 
Occupancy701 817 768 776 686 
Equipment218 178 170 182 210 
Data Processing857 681 540 446 485 
FDIC Assessment152 154 147 128 209 
PA Shares Tax260 258 240 240 240 
Contracted Services147 405 288 348 587 
Legal and Professional Fees182 362 334 389 152 
Advertising79 165 131 115 116 
Other Real Estate Owned (Income)(37)(38)(38)(37)(38)
Amortization of Intangible Assets445 446 445 446 445 
Other945 945 1,063 838 999 
Total Noninterest Expense9,028 8,998 8,827 8,410 8,656 
Income Before Income Tax Expense (Benefit)5,285 5,228 4,927 74 3,850 
Income Tax Expense (Benefit)1,129 1,076 998 (44)803 
Net Income $4,156 $4,152 $3,929 $118 $3,047 
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Three Months Ended
Per Common Share Data3/31/2312/31/229/30/226/30/223/31/22
Dividends Per Common Share$0.25 $0.24 $0.24 $0.24 $0.24 
Earnings Per Common Share - Basic0.81 0.81 0.77 0.02 0.59 
Earnings Per Common Share - Diluted0.79 0.81 0.77 0.02 0.58 
Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1)
0.77 0.80 0.71 0.05 0.59 
Weighted Average Common Shares Outstanding - Basic5,109,597 5,095,237 5,106,861 5,147,846 5,198,194 
Weighted Average Common Shares Outstanding - Diluted5,262,982 5,104,254 5,118,627 5,156,975 5,220,887 
3/31/2312/31/229/30/226/30/223/31/22
Common Shares Outstanding5,116,830 5,100,189 5,096,672 5,128,333 5,156,897 
Book Value Per Common Share$22.90 $21.60 $20.94 $22.18 $23.69 
Tangible Book Value per Common Share (1)
20.40 19.00 18.25 19.43 20.86 
Stockholders’ Equity to Assets8.2 %7.8 %7.5 %8.2 %8.5 %
Tangible Common Equity to Tangible Assets (1)
7.4 6.9 6.6 7.3 7.6 
Three Months Ended
Selected Financial Ratios (2)
3/31/2312/31/229/30/226/30/223/31/22
Return on Average Assets1.21 %1.16 %1.12 %0.03 %0.87 %
Adjusted Return on Average Assets (1)
1.18 1.15 1.03 0.08 0.87 
Return on Average Equity14.69 15.26 13.60 0.40 9.50 
Adjusted Return on Average Equity (1)
14.24 15.01 12.53 0.93 9.54 
Average Interest-Earning Assets to Average Interest-Bearing Liabilities147.53 149.04 149.41 149.03 144.48 
Average Equity to Average Assets8.27 7.63 8.20 8.49 9.14 
Net Interest Rate Spread3.12 3.17 3.10 3.00 2.98 
Net Interest Rate Spread (FTE) (1)
3.13 3.18 3.11 3.01 2.99 
Net Interest Margin3.51 3.45 3.29 3.12 3.08 
Net Interest Margin (FTE) (1)
3.52 3.46 3.30 3.13 3.10 
Net (Recoveries) and Charge-offs to Average Loans
(0.29)0.01 (0.01)1.01 (0.01)
Efficiency Ratio62.72 63.25 64.18 68.55 69.21 
Adjusted Efficiency Ratio (1)
60.23 60.74 63.02 64.18 65.88 
Asset Quality Ratios3/31/2312/31/229/30/226/30/223/31/22
Allowance for Credit Losses to Total Loans0.96 %1.22 %1.23 %1.25 %1.14 %
Allowance for Credit Losses to Nonperforming Loans (3)
143.44 221.06 218.61 219.89 158.88 
Allowance for Credit Losses to Noncurrent Loans (4)
189.73 320.64 318.96 329.47 218.28 
Delinquent and Nonaccrual Loans to Total Loans (4) (5)
1.02 0.81 0.46 0.45 0.79 
Nonperforming Loans to Total Loans (3)
0.67 0.55 0.56 0.57 0.72 
Noncurrent Loans to Total Loans (4)
0.51 0.38 0.39 0.38 0.52 
Nonperforming Assets to Total Assets (6)
0.52 0.41 0.41 0.42 0.51 
Capital Ratios (7)
3/31/2312/31/229/30/226/30/223/31/22
Common Equity Tier 1 Capital (to Risk Weighted Assets)12.60 %12.33 %12.02 %11.83 %11.99 %
Tier 1 Capital (to Risk Weighted Assets)12.60 12.33 12.02 11.83 11.99 
Total Capital (to Risk Weighted Assets)13.69 13.58 13.27 13.08 13.20 
Tier 1 Leverage (to Adjusted Total Assets)9.24 8.66 8.51 8.33 8.19 
(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. 
8

AVERAGE BALANCES AND YIELDS
 Three Months Ended
 March 31, 2023December 31, 2022September 30, 2022June 30, 2022March 31, 2022
Average BalanceInterest and Dividends
Yield / Cost (1)
Average BalanceInterest and Dividends
Yield / Cost (1)
Average BalanceInterest and Dividends
Yield / Cost (1)
Average BalanceInterest and Dividends
Yield / Cost (1)
Average BalanceInterest and Dividends
Yield / Cost (1)
(Dollars in thousands) (Unaudited)
Assets:
Interest-Earning Assets:
Loans, Net (2)
$1,040,570 $12,391 4.83 %$1,034,714 $11,853 4.54 %$1,024,363 $10,833 4.20 %$1,007,874 $9,751 3.88 %$1,009,210 $9,573 3.85 %
Debt Securities
Taxable213,158 964 1.81 216,915 974 1.80 222,110 985 1.77 228,315 988 1.73 215,906 905 1.68 
Exempt From Federal Tax6,270 52 3.32 6,277 51 3.25 7,998 62 3.10 9,109 73 3.21 10,195 84 3.30 
Equity Securities2,693 24 3.56 2,693 28 4.16 2,693 21 3.12 2,693 20 2.97 2,693 22 3.27 
Interest-Bearing Deposits at Banks74,555 805 4.32 99,108 939 3.79 67,870 378 2.23 56,379 122 0.87 59,296 33 0.22 
Other Interest-Earning Assets2,633 39 6.01 2,875 39 5.38 2,784 39 5.56 3,235 38 4.71 3,483 39 4.54 
Total Interest-Earning Assets1,339,879 14,275 4.32 1,362,582 13,884 4.04 1,327,818 12,318 3.68 1,307,605 10,992 3.37 1,300,783 10,656 3.32 
Noninterest-Earning Assets48,369 51,718 68,796 84,323 122,288 
Total Assets$1,388,248 $1,414,300 $1,396,614 $1,391,928 $1,423,071 
Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits $335,327 $1,191 1.44 %$315,352 $810 1.02 %$278,412 $393 0.56 $260,655 $111 0.17 $276,603 $48 0.07 %
Savings242,298 37 0.06 249,948 29 0.05 251,148 20 0.03 248,356 20 0.03 243,786 19 0.03 
Money Market 213,443 939 1.78 206,192 604 1.16 189,371 269 0.56 188,804 61 0.13 192,425 41 0.09 
Time Deposits 101,147 337 1.35 116,172 368 1.26 123,438 397 1.28 127,832 412 1.29 132,015 422 1.30 
Total Interest-Bearing Deposits892,215 2,504 1.14 887,664 1,811 0.81 842,369 1,079 0.51 825,647 604 0.29 844,829 530 0.25 
Short-Term Borrowings
Securities Sold Under Agreements to Repurchase1,344 2 0.60 8,985 7 0.31 28,738 19 0.26 34,135 18 0.21 37,884 19 0.20 
Other Borrowings14,641 155 4.29 17,598 171 3.86 17,621 174 3.92 17,611 173 3.94 17,604 174 4.01 
Total Interest-Bearing Liabilities908,200 2,661 1.19 914,247 1,989 0.86 888,728 1,272 0.57 877,393 795 0.36 900,317 723 0.33 
Noninterest-Bearing Demand Deposits362,343 391,300 390,658 391,975 384,188 
Other Liabilities2,953 788 2,636 4,415 8,554 
Total Liabilities1,273,496 1,306,335 1,282,022 1,273,783 1,293,059 
Stockholders' Equity114,752 107,965 114,592 118,145 130,012 
Total Liabilities and Stockholders' Equity$1,388,248 $1,414,300 $1,396,614 $1,391,928 $1,423,071 
Net Interest Income (FTE)
(Non-GAAP) (3)
$11,614 $11,895 $11,046 $10,197 $9,933 
Net Interest-Earning Assets (4)
431,679 448,335 439,090 430,212 400,466 
Net Interest Rate Spread (FTE)
(Non-GAAP) (3) (5)
3.13 %3.18 %3.11 %3.01 %2.99 %
Net Interest Margin (FTE)
(Non-GAAP) (3)(6)
3.52 3.46 3.30 3.13 3.10 
PPP Loans100 3 12.17 216 22 40.41 2,424 123 20.13 5,546 144 10.41 14,673 445 12.30 
(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.
()    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.
9

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 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.
Three Months Ended
3/31/2312/31/229/30/226/30/223/31/22
(Dollars in thousands, except share and per share data) (Unaudited)
Net Income (GAAP)$4,156 $4,152 $3,929 $118 $3,047 
Adjustments
Loss (Gain) on Securities232 (83)46 199 7 
(Gain) Loss on Disposal of Fixed Assets(11)— (439)— 8 
Gain on Bank-Owned Life Insurance Claims(302)— — — — 
Tax effect(46)17 83 (42)(3)
Adjusted Net Income (Non-GAAP)$4,029 $4,086 $3,619 $275 $3,059 
Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding5,262,982 5,104,254 5,118,627 5,156,975 5,220,887 
Earnings per Common Share - Diluted (GAAP)$0.79 $0.81 $0.77 $0.02 $0.58 
Adjusted Earnings per Common Share - Diluted (Non-GAAP)$0.77 $0.80 $0.71 $0.05 $0.59 
Net Income (GAAP) (Numerator)$4,156 $4,152 $3,929 $118 $3,047 
Annualization Factor4.06 3.97 3.97 4.01 4.06 
Average Assets (Denominator)1,388,248 1,414,300 1,396,614 1,391,928 1,423,071 
Return on Average Assets (GAAP)1.21 %1.16 %1.12 %0.03 %0.87 %
Adjusted Net Income (Non-GAAP) (Numerator)$4,029 $4,086 $3,619 $275 $3,059 
Annualization Factor4.06 3.97 3.97 4.01 4.06 
Average Assets (Denominator)1,388,248 1,414,300 1,396,614 1,391,928 1,423,071 
Adjusted Return on Average Assets (Non-GAAP)1.18 %1.15 %1.03 %0.08 %0.87 %
10

Three Months Ended
3/31/2312/31/229/30/226/30/223/31/22
(Dollars in thousands) (Unaudited)
Net Income (GAAP) (Numerator)$4,156 $4,152 $3,929 $118 $3,047 
Annualization Factor4.06 3.97 3.97 4.01 4.06 
Average Equity (GAAP) (Denominator)114,752 107,965 114,592 118,145 130,012 
Return on Average Equity (GAAP)14.69 %15.26 %13.60 %0.40 %9.50 %
Adjusted Net Income (Non-GAAP) (Numerator)$4,029 $4,086 $3,619 $275 $3,059 
Annualization Factor4.06 3.97 3.97 4.01 4.06 
Average Equity (GAAP) (Denominator)114,752 107,965 114,592 118,145 130,012 
Adjusted Return on Average Equity (Non-GAAP)14.24 %15.01 %12.53 %0.93 %9.54 %
Tangible book value per common share is a Non-GAAP measure and is calculated based on tangible common equity divided by period-end common shares outstanding. Tangible common equity to tangible assets is a Non-GAAP measure and is calculated based on tangible common equity divided by tangible assets. We believe these Non-GAAP measures serve as useful tools to help evaluate the strength and discipline of the Company's capital management strategies and as an additional, conservative measure of the Company’s total value.
3/31/2312/31/229/30/226/30/223/31/22
(Dollars in thousands, except share and per share data) (Unaudited)
Assets (GAAP)$1,430,708 $1,408,938 $1,425,920 $1,386,461 $1,438,670 
Goodwill and Intangible Assets, Net(12,800)(13,245)(13,691)(14,136)(14,582)
Tangible Assets (Non-GAAP) (Numerator)$1,417,908 $1,395,693 $1,412,229 $1,372,325 $1,424,088 
Stockholders' Equity (GAAP)$117,195 $110,155 $106,706 $113,772 $122,156 
Goodwill and Intangible Assets, Net(12,800)(13,245)(13,691)(14,136)(14,582)
Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator)$104,395 $96,910 $93,015 $99,636 $107,574 
Stockholders’ Equity to Assets (GAAP)8.2 %7.8 %7.5 %8.2 %8.5 %
Tangible Common Equity to Tangible Assets (Non-GAAP)7.4 %6.9 %6.6 %7.3 %7.6 %
Common Shares Outstanding (Denominator)5,116,830 5,100,189 5,096,672 5,128,333 5,156,897 
Book Value per Common Share (GAAP)$22.90 $21.60 $20.94 $22.18 $23.69 
Tangible Book Value per Common Share (Non-GAAP)$20.40 $19.00 $18.25 $19.43 $20.86 

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Interest income on interest-earning assets, net interest rate spread and net interest margin are presented on a fully tax-equivalent (“FTE”) basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and securities using the federal statutory income tax rate of 21 percent. We believe the presentation of net interest income on a FTE basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. The following table reconciles net interest income, net interest spread and net interest margin on a FTE basis for the periods indicated:
 Three Months Ended
3/31/2312/31/229/30/226/30/223/31/22
(Dollars in thousands) (Unaudited)   
Interest Income (GAAP)$14,244 $13,855 $12,287 $10,958 $10,616 
Adjustment to FTE Basis31 29 31 34 40 
Interest Income (FTE) (Non-GAAP)14,275 13,884 12,318 10,992 10,656 
Interest Expense (GAAP)2,661 1,989 1,272 795 723 
Net Interest Income (FTE) (Non-GAAP)$11,614 $11,895 $11,046 $10,197 $9,933 
Net Interest Rate Spread (GAAP)3.12 %3.17 %3.10 %3.00 %2.98 %
Adjustment to FTE Basis0.01 0.01 0.01 0.01 0.01 
Net Interest Rate Spread (FTE) (Non-GAAP)3.13 3.18 3.11 3.01 2.99 
Net Interest Margin (GAAP)3.51 %3.45 %3.29 %3.12 %3.08 %
Adjustment to FTE Basis0.01 0.01 0.01 0.01 0.02 
Net Interest Margin (FTE) (Non-GAAP)3.52 3.46 3.30 3.13 3.10 

Adjusted efficiency ratio excludes the effect of certain non-recurring or non-cash items and represents adjusted noninterest expense divided by adjusted operating revenue. The Company evaluates its operational efficiency based on its adjusted efficiency ratio and believes it provides additional perspective on its ongoing performance as well as peer comparability.
Three Months Ended
3/31/2312/31/229/30/226/30/223/31/22
(Dollars in thousands) (Unaudited)
Noninterest Expense (GAAP) (Numerator)$9,028 $8,998 $8,827 $8,410 $8,656 
Net Interest and Dividend Income (GAAP)$11,583 $11,866 $11,015 $10,163 $9,893 
Noninterest Income (GAAP)2,810 2,360 2,739 2,105 2,613 
Operating Revenue (GAAP) (Denominator)$14,393 $14,226 $13,754 $12,268 $12,506 
Efficiency Ratio (GAAP)62.72 %63.25 %64.18 %68.55 %69.21 %
Noninterest Expense (GAAP)$9,028 $8,998 $8,827 $8,410 $8,656 
Less:
Other Real Estate Owned (Income)(37)(38)(38)(37)(38)
Amortization of Intangible Assets445 446 445 446 445 
Adjusted Noninterest Expense (Non-GAAP) (Numerator)$8,620 $8,590 $8,420 $8,001 $8,249 
Net Interest and Dividend Income (GAAP)$11,583 $11,866 $11,015 $10,163 $9,893 
Noninterest Income (GAAP)2,810 2,360 2,739 2,105 2,613 
Less:
Net (Loss) Gain on Securities(232)83 (46)(199)(7)
Net Gain (Loss) on Disposal of Fixed Assets11 — 439 — (8)
Net Gain on Bank-Owned Life Insurance Claims302 — — — — 
Adjusted Noninterest Income (Non-GAAP)$2,729 $2,277 $2,346 $2,304 $2,628 
Adjusted Operating Revenue (Non-GAAP) (Denominator)$14,312 $14,143 $13,361 $12,467 $12,521 
Adjusted Efficiency Ratio (Non-GAAP)60.23 %60.74 %63.02 %64.18 %65.88 %

12