Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CB Financial Services, Inc. Announces Fourth Quarter and Full Year 2021 Financial Results and Declares Quarterly Cash Dividend By: CB Financial Services, Inc. via Business Wire January 28, 2022 at 16:30 PM EST 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 fourth quarter and year-to-date 2021 financial results. Three Months Ended Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands, except per share data) (Unaudited) Net Income (Loss) (GAAP) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Excluding Non-Recurring Items (Non-GAAP) (1) (4,122 ) (17 ) 3,440 (353 ) 40 (1,053 ) 19,343 Adjusted Net Income (Non-GAAP) (1) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Earnings (Loss) per Common Share - Diluted (GAAP) $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 ) Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1) $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 (1) Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of net income (loss) and adjusted earnings per common share - diluted in this Press Release. 2021 Fourth Quarter Financial Highlights (Comparisons to three months ended December 31, 2020 unless otherwise noted) Net income was $7.0 million, compared to $3.1 million, largely due to the $5.2 million gain recognized from the sale of branches. Adjusted net income (non-GAAP) was $2.8 million, compared to $3.1 million. Earnings per diluted common share (EPS) increased to $1.31 from $0.57. Adjusted earnings per common share - diluted (non-GAAP) was $0.53, compared to $0.58. Return on average assets (annualized) of 1.87%, compared to 0.87%. Adjusted return on average assets (annualized) (non-GAAP) of 0.76%, compared to 0.88%. Return on average equity (annualized) of 20.95%, compared to 9.13%. Adjusted return on average equity (annualized) (non-GAAP) of 8.55%, compared to 9.25%. Net interest margin (NIM) improved quarter over quarter to 2.95% from 2.88% for the three months ended September 30, 2021. NIM was 3.21% for the prior year period. Net interest and dividend income was $10.2 million, compared to $10.6 million. Non-interest income increased to $8.7 million, compared to $2.8 million, primarily due to the $5.2 million gain on sale of branches. (Amounts at December 31, 2021; comparisons to December 31, 2020, unless otherwise noted) Total loans, including Payroll Protection Program (“PPP”) loans, were $1.02 billion, a decrease of $24.0 million. Total loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, to $996.3 million compared to $968.9 million at September 30, 2021 and included 35.9% and 13.2% annualized growth in consumer and commercial real estate loans, respectively. Total loans, excluding PPP loans, were $989.7 million at December 31, 2020. Nonperforming loans to total loans was 0.71%, a decrease of 68 bps, compared to 1.39%. Total deposits were $1.23 billion, an increase of $2.0 million, inclusive of selling $102.8 million of deposits of two branches in December 2021. Total assets increased to $1.43 billion, compared to $1.42 billion. Book value per share was $25.31, compared to $24.76 and $24.57 at September 30, 2021. Tangible book value per share (Non-GAAP) increased to $22.45, compared to $21.42 and $21.67 at September 30, 2021. Branch Optimization and Operational Efficiency Update As previously announced in February 2021, CB has implemented strategic initiatives to improve Community Bank’s financial performance and to position the Bank for continued profitable growth. Since that announcement, the Company has substantially completed this project, highlighted by: The consolidation of six branches that was completed on June 30, 2021 and the sale of two branches that was completed in December 2021 that resulted in a gain on sale of $5.2 million. $6.1 million of loans and $102.8 million of deposits were sold as part of the sale of the branches. The Company anticipates $3.0 million of ongoing pre-tax cost savings as a result of the branch optimization initiatives. The identification and enhancement of over 185 individualized processes within its branch network and operating environment designed to improve the Bank’s infrastructure, client experience, efficiency and profitability. The project was expensed in 2021. The majority of process improvements have been implemented with the remaining items to be implemented in 2022. CB anticipates cost savings from the operational efficiency initiative ranging from approximately $2.5 million to $3.5 million in 2022, as well as expected enhanced revenue and fee generating capacity in future years. Management Commentary President and CEO John H. Montgomery stated, “The fourth quarter was highlighted by the sale of two branches, which resulted in a $5.2 million gain for the bank while completing the optimization initiative announced early in 2021. We undertook that initiative with the primary goals of reducing our expenses while also positioning the bank for growth and I am proud of our team for succeeding on both fronts. With the optimization effort now substantially complete, we intend to focus all our energy on continuing the growth we saw take hold during the second half of 2021. Despite the reduction of our deposit balances resulting from the sale of two branches, we were still able to grow our loan book 11.3% in the current quarter, which is a result we’re proud of. Our loan book experienced solid demand across nearly all our end markets, fueled by the continuing economic recovery in our geographic region.” Mr. Montgomery continued, “As we enter 2022, we are well-positioned for a rising rate environment. We are squarely focused on capturing growth opportunities and are investing in our business in support of that. A key component of our optimization initiative was the reduction of low return uses of capital so that capital could be repurposed for higher growth investment. With that in mind, we expect to bring on a Chief Commercial Banking Officer and a Director of Client Experience and Retail Banking during the first quarter. Set against the backdrop of reduced annual expense levels and rising interest rates, our expectation is for continued growth and expansion of profitability. In addition, we remain committed to CB’s shareholders through the payment of dividends and an active share buy-back program.” Dividend Information The Company’s Board of Directors has declared a $0.24 quarterly cash dividend per outstanding share of common stock, payable on or about February 28, 2022, to stockholders of record as of the close of business on February 18, 2022. Stock Repurchase Program On June 10, 2021, CB authorized a program to repurchase up to $7.5 million of the Company’s outstanding common stock. The program was effective as of June 14, 2021 and is authorized through June 13, 2022. As of January 21, 2022, the Company had repurchased 191,314 shares at an average price of $23.34 per share for a total of $4.5 million. 2021 Fourth Quarter Financial Review Net Interest and Dividend Income Net interest and dividend income decreased $403,000, or 3.8%, to $10.2 million for the three months ended December 31, 2021 compared to $10.6 million for the three months ended December 31, 2020. Net interest margin (FTE) (Non-GAAP) decreased 26 basis points (“bps”) to 2.96% for the three months ended December 31, 2021 compared to 3.22% for the three months ended December 31, 2020. Net interest margin (GAAP) decreased to 2.95% for the three months ended December 31, 2021 compared to 3.21% for the three months ended December 31, 2020. While CB has further controlled its deposit cost structure as deposit balances increased and benefited from non-renewal or repricing of higher-cost time deposits, the net interest margin decreased year-over-year due to the low interest rate environment decreasing yields on loans and securities. The fourth quarter of 2021 was aided by the full payoff of a $3.1 million nonperforming commercial real estate loan in the hotel portfolio, which resulted in the recognition of $201,000 of interest income. Net interest margin (GAAP) for the three months ended September 30, 2021 was 2.88%. Interest and dividend income decreased $792,000, or 6.7%, to $11.0 million for the three months ended December 31, 2021 compared to $11.8 million for the three months ended December 31, 2020. Interest income on loans decreased $929,000, or 8.6%, to $9.9 million for the three months ended December 31, 2021 compared to $10.8 million for the three months ended December 31, 2020. The average balance of loans decreased $28.1 million and the average yield decreased 26 bps to 3.92% compared to the three months ended December 31, 2020. Interest and fee income on PPP loans was $391,000 for the three months ended December 31, 2021 and contributed 4 bps to loan yield, compared to $768,000 for the three months ended December 31, 2020, which contributed 3 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $83,000 for the three months ended December 31, 2021 compared to $141,000 for the three months ended December 31, 2020, or 3 bps in the current period compared to 5 bps in the prior period. Interest income on taxable investment securities increased $141,000, or 19.4%, to $866,000 for the three months ended December 31, 2021 compared to $725,000 for the three months ended December 31, 2020 driven by a $72.3 million increase in average balance partially offset by a 49 bps decrease in average yield. The Federal Reserve’s pandemic-driven decision to drop the benchmark interest rate in 2020 resulted in significant calls of U.S. government agency securities and pay-downs on mortgage-backed securities in the declining interest rate environment, which, in combination with excess liquidity, were replaced with purchases of lower-yielding securities. Interest expense decreased $389,000, or 34.7%, to $732,000 for the three months ended December 31, 2021 compared to $1.1 million for the three months ended December 31, 2020. Interest expense on deposits decreased $400,000, or 38.6%, to $636,000 for the three months ended December 31, 2021 compared to $1.0 million for the three months ended December 31, 2020. While average interest-earning deposit balances increased $17.5 million compared to the three months ended December 31, 2020, controlling the deposit cost structure as deposit balances increased combined with non-renewal or repricing of higher-cost time deposit resulted in a 19 bp, or 40.4%, decrease in average cost compared to the three months ended December 31, 2020. The average balance of time deposits and the related average cost decreased $38.9 million and 32 bps, respectively. Provision for Loan Losses There was a $75,000 provision for loan losses for the three months ended December 31, 2021 compared to no provision for loan losses for the three months ended December 31, 2020. The provision was primarily due to loan growth in the current period, exclusive of PPP loan forgiveness, offset by adjustments in the qualitative factors driven by improving economic and industry conditions. Noninterest income Noninterest income increased $5.9 million, or 212.8%, to $8.7 million for the three months ended December 31, 2021, compared to $2.8 million for the three months ended December 31, 2020. The increase was largely due to a gain of $5.2 million from the sale of two branches during the quarter. In addition, net gain on sale of loans increased $589,000 to $977,000 for the three months ended December 31, 2021 compared to $388,000 for the three months ended December 31, 2020 primarily due to the sale of a nonperforming commercial real estate loan in the hotel portfolio that resulted in the recognition of an $897,000 gain. The loan previously incurred a $931,000 charge-off in the fourth quarter of 2020. Noninterest Expense Noninterest expense increased $247,000, or 2.5%, to $10.0 million for the three months ended December 31, 2021 compared to $9.7 million for the three months ended December 31, 2020. Contracted services increased $556,000 to $1.1 million for the three months ended December 31, 2021 compared to $577,000 for the three months ended December 31, 2020 primarily due to $859,000 in expenses associated with the engagement of a third-party workflow optimization expert to assist in implementing robotic process automations and more effective sales management designed to improve operational efficiencies in the near and long-term and engagement of other third party specialists to assist in core platform improvements and efficiencies. Statement of Financial Condition Review Assets Total assets increased $8.8 million, or 0.6%, to $1.43 billion at December 31, 2021, compared to $1.42 billion at December 31, 2020. Cash and due from banks decreased $41.2 million, or 25.6%, to $119.7 million at December 31, 2021, compared to $160.9 million at December 31, 2020. The change is primarily related to securities purchases and sale of branches, partially offset by net repayments on loans. Securities increased $79.6 million, or 54.7%, to $225.0 million at December 31, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $135.0 million of purchases, $38.4 million of paydowns, and $12.0 million of sales, primarily of mortgage-backed securities, which resulted in the recognition of a $231,000 gain. The sales recognized gains on higher-interest securities with faster prepayment speeds. The purchases were made to earn a higher yield on excess cash. In addition, there was a $5.5 million decrease in the market value of the debt securities portfolio and a $295,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks. Payroll Protection Program (“PPP”) Update PPP loans decreased $30.6 million to $24.5 million at December 31, 2021 compared to $55.1 million at December 31, 2020, which includes $34.6 million in originations in the current period offset by loan forgiveness. $678,000 of net PPP loan origination fees were unearned at December 31, 2021 compared to $1.1 million at December 31, 2020. $321,000 of net PPP loan origination fees were earned for the three month ended December 31, 2021 compared to $604,000 for the three months ended December 31, 2020 and $380,000 for the three months ended September 30, 2021. Loans and Credit Quality Total loans held for investment decreased $24.0 million, or 2.3%, to $1.02 billion at December 31, 2021 compared to $1.04 billion at December 31, 2020. Excluding the net decline of $30.6 million in PPP loans in the current period, loans increased $6.6 million. Compared to September 30, 2021, loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, primarily from increases of $12.5 million in commercial real estate loans, $10.1 million in consumer loans driven by efficiencies in the indirect auto loan process that did not sacrifice credit quality, and $7.0 million in net construction loan disbursements. The allowance for loan losses was $11.6 million at December 31, 2021 compared to $12.8 million at December 31, 2020. There was a net recovery of $1.1 million of provision for loan losses in the current year primarily due to a decrease in specific reserves on impaired loans and improving economic and industry conditions resulting in a decrease in qualitative factors. As a result, the allowance for loan losses to total loans was 1.13% at December 31, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.16% at December 31, 2021 compared to 1.29% at December 31, 2020. Net charge-offs for the three months ended December 31, 2021 were $74,000, or 0.03% of average loans on an annualized basis. Net charge-offs for the three months ended December 31, 2020 were $1.0 million, or 0.39% of average loans on an annualized basis. In the prior period, there was a $931,000 charge-off on a commercial real estate loan related to a hotel. This loan was subsequently sold and resulted in the recognition of an $897,000 gain on sale in the current period. Net charge-offs for the year ended December 31, 2021 were $64,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the year ended December 31, 2020 were $1.1 million, or 0.11% of average loans on an annualized basis. Nonperforming loans, which includes nonaccrual loans, accruing loans past due 90 days or more, and accruing loans that are considered troubled debt restructurings, were $7.3 million at December 31, 2021 compared to $14.5 million at December 31, 2020. The decrease is primarily attributable to the full payoff and sale in the current year of two of the Bank’s larger nonperforming commercial real estate loans that were secured by hotels. Nonperforming loans to total loans ratio was 0.71% at December 31, 2021 compared to 1.39% at December 31, 2020. Liabilities Total liabilities increased $10.2 million, or 0.8%, to $1.29 billion at December 31, 2021 compared to $1.28 billion at December 31, 2020. Deposits Despite the impact of the sale of $102.8 million of deposits from the sale of two branches completed in December 2021, total deposits increased $2.0 million to $1.23 billion as of December 31, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $45.2 million, $12.6 million and $4.4 million, respectively, partially offset by a decrease of $53.3 million in time deposits. Borrowed Funds Short-term borrowings decreased $1.8 million, or 4.4%, to $39.3 million at December 31, 2021, compared to $41.1 million at December 31, 2020. At December 31, 2021 and December 31, 2020, short-term borrowings were comprised entirely of securities sold under agreements to repurchase, which are related to business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase. Other borrowed funds increased $9.6 million to $17.6 million at December 31, 2021 due to the issuance of subordinated debt in December 2021 with net proceeds of $14.6 million partially offset by $5.0 million of Federal Home Loan Bank borrowings that matured in the current period. The Company intends to utilize the subordinated debt proceeds to continue to proactively repurchase shares or for other general corporate matters. Stockholders’ Equity Stockholders’ equity decreased $1.4 million, or 1.0%, to $133.1 million at December 31, 2021, compared to $134.5 million at December 31, 2020. The Company paid $5.2 million in dividends and repurchased $4.1 million of its common stock as part of its stock repurchase program. In addition, accumulated other comprehensive income decreased $4.3 million primarily due to the effect of market interest rate conditions on the Bank’s debt securities. This was partially offset by $11.6 million of net income. Book value per share Book value per common share was $25.31 at December 31, 2021 compared to $24.76 at December 31, 2020, an increase of $0.55. Book value per share increased $0.74 compared to $24.57 at September 30, 2021. Tangible book value per common share (Non-GAAP) was $22.45 at December 31, 2021, compared to $21.42 at December 31, 2020, an increase of $1.03. Tangible book value per share increased $0.78 compared to $21.67 at September 30, 2021. 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. CB FINANCIAL SERVICES, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands, except share and per share data) (Unaudited) Selected Financial Condition Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 ASSETS Cash and Due From Banks $ 119,674 $ 173,523 $ 172,010 $ 230,000 $ 160,911 Securities 224,974 221,351 208,472 142,156 145,400 Loans Held for Sale — 17,407 11,409 — — Loans Real Estate: Residential 320,798 317,373 322,480 339,596 344,142 Commercial 392,124 379,621 360,518 370,118 373,555 Construction 85,028 78,075 85,187 77,714 72,600 Commercial and Industrial Commercial and Industrial 64,487 69,657 70,666 68,551 71,717 PPP 24,523 32,703 49,525 60,380 55,096 Consumer 122,152 112,087 106,404 111,650 113,854 Other 11,684 12,083 12,666 13,688 13,789 Total Loans 1,020,796 1,001,599 1,007,446 1,041,697 1,044,753 Allowance for Loan Losses (11,582 ) (11,581 ) (11,544 ) (12,725 ) (12,771 ) Loans, Net 1,009,214 990,018 995,902 1,028,972 1,031,982 Premises and Equipment Held for Sale — 795 795 — — Premises and Equipment, Net 18,399 18,502 18,682 20,240 20,302 Bank-Owned Life Insurance 25,332 25,190 25,052 24,916 24,779 Goodwill 9,732 9,732 9,732 9,732 9,732 Intangible Assets, Net 5,295 5,740 6,186 7,867 8,399 Accrued Interest and Other Assets 12,859 12,560 13,373 12,938 15,215 Total Assets $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 LIABILITIES Deposits Held for Sale $ — $ 102,647 $ 102,557 $ — $ — Deposits Non-Interest Bearing Demand Deposits 385,775 373,320 368,452 377,137 340,569 Interest Bearing Demand Accounts 272,518 244,004 246,920 280,929 259,870 Money Market Accounts 192,125 190,426 176,824 198,975 199,029 Savings Accounts 239,482 232,679 226,639 246,725 235,088 Time Deposits 136,713 144,727 154,718 180,697 190,013 Total Deposits 1,226,613 1,185,156 1,173,553 1,284,463 1,224,569 Short-Term Borrowings 39,266 42,623 39,054 45,352 41,055 Other Borrowings 17,601 6,000 6,000 6,000 8,000 Accrued Interest and Other Liabilities 8,875 7,405 7,913 7,230 8,566 Total Liabilities 1,292,355 1,343,831 1,329,077 1,343,045 1,282,190 STOCKHOLDERS’ EQUITY $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 Three Months Ended Year Ended Selected Operating Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Interest and Dividend Income Loans, Including Fees $ 9,904 $ 9,718 $ 9,936 $ 10,146 $ 10,833 $ 39,704 $ 42,883 Securities: Taxable 866 843 635 646 725 2,990 3,619 Tax-Exempt 66 71 74 78 78 289 369 Dividends 21 19 24 20 20 84 79 Other Interest and Dividend Income 106 135 151 98 99 490 517 Total Interest and Dividend Income 10,963 10,786 10,820 10,988 11,755 43,557 47,467 Interest Expense Deposits 636 715 827 947 1,036 3,125 5,172 Short-Term Borrowings 26 25 24 23 25 98 137 Other Borrowings 70 36 35 41 60 182 254 Total Interest Expense 732 776 886 1,011 1,121 3,405 5,563 Net Interest and Dividend Income 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Provision (Recovery) for Loan Losses 75 — (1,200 ) — — (1,125 ) 4,000 Net Interest and Dividend Income After Provision (Recovery) for Loan Losses 10,156 10,010 11,134 9,977 10,634 41,277 37,904 Noninterest Income: Service Fees 569 602 614 546 560 2,331 2,206 Insurance Commissions 1,618 1,194 1,209 1,595 1,403 5,616 4,878 Other Commissions 90 93 173 165 105 521 479 Net Gain on Sales of Loans 977 49 31 86 388 1,143 1,391 Net Gain on Securities 44 24 11 447 213 526 233 Net Gain on Purchased Tax Credits 17 18 17 18 16 70 62 Gain on Sale of Branches 5,203 — — — — 5,203 — Net Loss on Disposal of Fixed Assets — — (3 ) — (13 ) (3 ) (61 ) Income from Bank-Owned Life Insurance 142 138 136 137 140 553 557 Other Income (Loss) 29 80 31 180 (34 ) 320 (274 ) Total Noninterest Income 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Noninterest Expense: Salaries and Employee Benefits 5,181 4,787 5,076 4,894 5,126 19,938 19,809 Occupancy 619 615 1,024 710 606 2,968 2,797 Equipment 252 205 311 266 234 1,034 935 Data Processing 488 541 607 518 476 2,154 1,843 FDIC Assessment 222 293 249 250 344 1,014 837 PA Shares Tax 173 224 225 265 350 887 1,313 Contracted Services 1,133 1,441 750 687 577 4,011 2,048 Legal and Professional Fees 206 180 419 189 185 994 752 Advertising 191 225 193 140 178 749 664 Other Real Estate Owned (Income) (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 ) Amortization of Intangible Assets 445 446 503 532 532 1,926 2,128 Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown of Fixed Assets 23 2 2,268 — 240 2,293 1,124 Other 1,069 903 945 982 916 3,899 3,893 Total Noninterest Expense 9,972 9,773 13,722 9,395 9,725 42,862 56,767 Income (Loss) Before Income Tax Expense (Benefit) 8,873 2,435 (369 ) 3,756 3,687 14,695 (9,392 ) Income Tax Expense (Benefit) 1,908 452 (146 ) 911 608 3,125 1,248 Net Income (Loss) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Three Months Ended Year Ended Per Common Share Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Dividends Per Common Share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.96 $ 0.96 Earnings (Loss) Per Common Share - Basic 1.32 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 ) Earnings (Loss) Per Common Share - Diluted 1.31 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 ) Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1) 0.53 0.36 0.59 0.46 0.58 1.95 1.61 Weighted Average Common Shares Outstanding - Basic 5,291,795 5,373,032 5,432,234 5,434,374 5,404,874 5,382,441 5,406,290 Weighted Average Common Shares Outstanding - Diluted 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Common Shares Outstanding 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 Book Value Per Common Share $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Tangible Book Value per Common Share (1) 22.45 21.67 21.56 21.38 21.42 Stockholders’ Equity to Assets 9.3 % 8.9 % 9.1 % 9.1 % 9.5 % Tangible Common Equity to Tangible Assets (1) 8.4 7.9 8.1 8.0 8.3 Three Months Ended Year Ended Selected Financial Ratios (2) 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Return on Average Assets 1.87 % 0.54 % (0.06 ) % 0.81 % 0.87 % 0.79 % (0.77 ) % Adjusted Return on Average Assets (1) 0.76 0.53 0.87 0.71 0.88 0.72 0.63 Return on Average Equity 20.95 5.93 (0.66 ) 8.54 9.13 8.66 (7.18 ) Adjusted Return on Average Equity (1) 8.55 5.88 9.57 7.48 9.25 7.87 5.88 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 145.09 146.78 146.82 142.98 141.58 145.44 139.89 Average Equity to Average Assets 8.93 9.03 9.08 9.48 9.49 9.12 10.75 Net Interest Rate Spread 2.85 2.77 2.72 2.91 3.07 2.81 3.13 Net Interest Rate Spread (FTE) (1) 2.86 2.78 2.74 2.92 3.08 2.82 3.15 Net Interest Margin 2.95 2.88 2.84 3.04 3.21 2.92 3.30 Net Interest Margin (FTE) (1) 2.96 2.89 2.85 3.05 3.22 2.94 3.32 Net Charge-offs (Recoveries) to Average Loans 0.03 (0.01 ) (0.01 ) 0.02 0.39 0.01 0.11 Efficiency Ratio 52.71 80.05 112.91 71.44 72.51 75.95 110.50 Adjusted Efficiency Ratio (1) 69.73 77.27 80.68 70.06 68.06 74.25 68.14 Asset Quality Ratios 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Allowance for Loan Losses to Total Loans 1.13 % 1.16 % 1.15 % 1.22 % 1.22 % Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1) 1.16 1.20 1.21 1.30 1.29 Allowance for Loan Losses to Nonperforming Loans (3) 159.40 106.18 74.92 89.29 88.15 Allowance for Loan Losses to Noncurrent Loans (4) 233.37 135.37 90.83 118.08 117.20 Delinquent and Nonaccrual Loans to Total Loans (4) (5) 0.78 0.97 1.37 1.18 1.50 Nonperforming Loans to Total Loans (3) 0.71 1.09 1.53 1.37 1.39 Noncurrent Loans to Total Loans (4) 0.49 0.85 1.26 1.03 1.04 Nonperforming Assets to Total Assets (6) 0.51 0.74 1.07 0.98 1.04 Capital Ratios (7) 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Common Equity Tier 1 Capital (to Risk Weighted Assets) 11.95 % 11.53 % 11.67 % 11.85 % 11.79 % Tier 1 Capital (to Risk Weighted Assets) 11.95 11.53 11.67 11.85 11.79 Total Capital (to Risk Weighted Assets) 13.18 12.77 12.92 13.10 13.04 Tier 1 Leverage (to Adjusted Total Assets) 7.76 7.38 7.23 7.87 7.81 (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 nonaccrual loans, accruing loans that are 90 days or more past due, and troubled debt restructured loans. (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 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 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) $ 1,004,827 $ 9,927 3.92 % $ 1,004,474 $ 9,740 3.85 % $ 1,016,868 $ 9,959 3.93 % $ 1,031,853 $ 10,168 4.00 % $ 1,032,942 $ 10,860 4.18 % Debt Securities Taxable 205,328 866 1.69 197,763 843 1.71 124,685 635 2.04 122,883 646 2.10 133,026 725 2.18 Exempt From Federal Tax 10,477 84 3.21 11,647 90 3.09 12,276 94 3.06 12,943 96 2.97 13,006 96 2.95 Equity Securities 2,693 21 3.12 2,655 19 2.86 2,649 24 3.62 2,632 20 3.04 2,612 20 3.06 Other Interest-Earning Assets 153,577 106 0.27 164,447 135 0.33 246,392 151 0.25 161,871 98 0.25 137,000 99 0.29 Total Interest-Earning Assets 1,376,902 11,004 3.17 1,380,986 10,827 3.11 1,402,870 10,863 3.11 1,332,182 11,028 3.36 1,318,586 11,800 3.56 Noninterest-Earning Assets 100,607 88,291 82,794 92,550 94,262 Total Assets $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 278,546 51 0.07 % $ 275,411 48 0.07 % $ 275,752 55 0.08 $ 259,065 77 0.12 $ 252,521 83 0.13 % Savings (3) 252,387 20 0.03 251,801 21 0.03 247,238 25 0.04 239,850 32 0.05 232,647 32 0.05 Money Market (3) 209,572 57 0.11 198,167 55 0.11 199,652 71 0.14 197,395 98 0.20 198,983 131 0.26 Time Deposits (3) 154,342 508 1.31 168,654 591 1.39 177,506 676 1.53 187,114 740 1.60 193,194 790 1.63 Total Interest-Bearing Deposits (3) 894,847 636 0.28 894,033 715 0.32 900,148 827 0.37 883,424 947 0.43 877,345 1,036 0.47 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 44,709 26 0.23 40,818 25 0.24 49,325 24 0.20 41,094 23 0.23 43,468 25 0.23 Other Borrowings 9,474 70 2.93 6,000 36 2.38 6,000 35 2.34 7,200 41 2.31 10,543 60 2.26 Total Interest-Bearing Liabilities 949,030 732 0.31 940,851 776 0.33 955,473 886 0.37 931,718 1,011 0.44 931,356 1,121 0.48 Noninterest-Bearing Demand Deposits 388,787 387,746 387,317 349,108 338,223 Other Liabilities 7,800 8,019 7,999 8,869 9,176 Total Liabilities 1,345,617 1,336,616 1,350,789 1,289,695 1,278,755 Stockholders' Equity 131,892 132,661 134,875 135,037 134,093 Total Liabilities and Stockholders' Equity $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 Net Interest Income (FTE) (Non-GAAP) (4) 10,272 10,051 9,977 10,017 10,679 Net Interest-Earning Assets (5) 427,872 440,135 447,397 400,464 387,230 Net Interest Rate Spread (FTE) (Non-GAAP) (4) (6) 2.86 % 2.78 % 2.74 2.92 3.08 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 2.96 2.89 2.85 3.05 3.22 PPP Loans 29,067 391 5.34 40,313 484 4.76 57,661 636 4.42 56,945 676 4.81 64,914 768 4.71 (1) Annualized based on three months ended results. (2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale. (3) Includes Deposits Held for Sale that were sold in December 2021. (4) 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. (5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (6) 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. (7) Net interest margin represents annualized net interest income divided by average total interest-earning assets. AVERAGE BALANCES AND YIELDS Year Ended December 31, 2021 December 31, 2020 Average Balance Interest and Dividends Yield / Cost Average Balance Interest and Dividends Yield / Cost (Dollars in thousands) (Unaudited) Assets: Interest-Earning Assets: Loans, Net (1) $ 1,014,405 $ 39,799 3.92 % $ 1,008,401 $ 43,013 4.27 % Debt Securities Taxable 162,987 2,990 1.83 138,015 3,619 2.62 Exempt From Federal Tax 11,829 366 3.09 14,244 450 3.16 Marketable Equity Securities 2,657 84 3.16 2,585 79 3.06 Other Interest-Earning Assets 181,502 490 0.27 105,588 517 0.49 Total Interest-Earning Assets 1,373,380 43,729 3.18 1,268,833 47,678 3.76 Noninterest-Earning Assets 91,075 109,241 Total Assets $ 1,464,455 $ 1,378,074 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (2) $ 272,256 232 0.09 % $ 240,372 590 0.25 % Savings (2) 247,864 98 0.04 227,277 188 0.08 Money Market (2) 201,222 281 0.14 187,095 708 0.38 Time Deposits (2) 171,805 2,514 1.46 203,128 3,686 1.81 Total Interest-Bearing Deposits (2) 893,147 3,125 0.35 857,872 5,172 0.60 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 43,988 98 0.22 37,819 137 0.36 Other Borrowings 7,172 182 2.54 11,328 254 2.24 Total Interest-Bearing Liabilities 944,307 3,405 0.36 907,019 5,563 0.61 Noninterest-Bearing Demand Deposits 378,374 313,858 Other Liabilities 8,168 9,065 Total Liabilities 1,330,849 1,229,942 Stockholders' Equity 133,605 148,132 Total Liabilities and Stockholders' Equity $ 1,464,454 $ 1,378,074 Net Interest Income (FTE) (Non-GAAP) (3) 40,324 42,115 Net Interest-Earning Assets (3)(4) 429,073 361,814 Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5) 2.82 % 3.15 % Net Interest Margin (FTE) (Non-GAAP) (3)(6) 2.94 3.32 PPP Loans 45,905 2,189 4.77 45,694 1,537 3.36 (1) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale. (2) Includes Deposits Held for Sale that were sold in December 2021. (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 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 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands, except share and per share data) (Unaudited) Net Income (Loss) (GAAP) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Adjustments Gain on Securities (44 ) (24 ) (11 ) (447 ) (213 ) (526 ) (233 ) Gain on Sale of Branches (5,203 ) — — — — (5,203 ) — Loss on Disposal of Fixed Assets — — 3 — 13 3 61 Tax effect 1,102 5 2 94 42 1,202 36 Non-Cash Charges: Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown on Fixed Assets 23 2 2,268 — 240 2,293 1,124 Tax Effect — — — — (42 ) — (338 ) Adjusted Net Income (Non-GAAP) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 Earnings (Loss) per Common Share - Diluted (GAAP) $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 ) Adjusted Earnings per Common Share - Diluted (Non-GAAP) $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 Net Income (Loss) (GAAP) (Numerator) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Assets (Denominator) 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 Return on Average Assets (GAAP) 1.87 % 0.54 % (0.06 ) % 0.81 % 0.87 % 0.79 % (0.77 ) % Adjusted Net Income (Non-GAAP) (Numerator) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Assets (Denominator) 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 Adjusted Return on Average Assets (Non-GAAP) 0.76 % 0.53 % 0.87 % 0.71 % 0.88 % 0.72 % 0.63 % Three Months Ended Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Net Income (Loss) (GAAP) (Numerator) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Equity (Denominator) (GAAP) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 Return on Average Equity (GAAP) 20.95 % 5.93 % (0.66 ) % 8.54 % 9.13 % 8.66 % (7.18 ) % Adjusted Net Income (Non-GAAP) (Numerator) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Equity (Denominator) (GAAP) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 Adjusted Return on Average Equity (Non-GAAP) 8.55 % 5.88 % 9.57 % 7.48 % 9.25 % 7.87 % 5.88 % 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. 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 (Dollars in thousands, except share and per share data) (Unaudited) Assets (GAAP) $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 Goodwill and Intangible Assets, Net (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 ) Tangible Assets (Non-GAAP) (Numerator) $ 1,410,452 $ 1,459,346 $ 1,445,695 $ 1,459,222 $ 1,398,589 Stockholders' Equity (GAAP) $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 Goodwill and Intangible Assets, Net (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 ) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator) $ 118,097 $ 115,515 $ 116,618 $ 116,177 $ 116,399 Stockholders’ Equity to Assets (GAAP) 9.3 % 8.9 % 9.1 % 9.1 % 9.5 % Tangible Common Equity to Tangible Assets (Non-GAAP) 8.4 % 7.9 % 8.1 % 8.0 % 8.3 % Common Shares Outstanding (Denominator) 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 Book Value per Common Share (GAAP) $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Tangible Book Value per Common Share (Non-GAAP) $ 22.45 $ 21.67 $ 21.56 $ 21.38 $ 21.42 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Interest Income (GAAP) $ 10,963 $ 10,786 $ 10,820 $ 10,988 $ 11,755 $ 43,557 $ 47,467 Adjustment to FTE Basis 41 41 43 40 45 172 211 Interest Income (FTE) (Non-GAAP) 11,004 10,827 10,863 11,028 11,800 43,729 47,678 Interest Expense (GAAP) 732 776 886 1,011 1,121 3,405 5,563 Net Interest Income (FTE) (Non-GAAP) $ 10,272 $ 10,051 $ 9,977 $ 10,017 $ 10,679 $ 40,324 $ 42,115 Net Interest Rate Spread (GAAP) 2.85 % 2.77 % 2.72 % 2.91 % 3.07 % 2.81 % 3.13 % Adjustment to FTE Basis 0.01 0.01 0.02 0.01 0.01 0.01 0.02 Net Interest Rate Spread (FTE) (Non-GAAP) 2.86 2.78 2.74 2.92 3.08 2.82 3.15 Net Interest Margin (GAAP) 2.95 % 2.88 % 2.84 % 3.04 % 3.21 % 2.92 % 3.30 % Adjustment to FTE Basis 0.01 0.01 0.01 0.01 0.01 0.02 0.02 Net Interest Margin (FTE) (Non-GAAP) 2.96 2.89 2.85 3.05 3.22 2.94 3.32 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Noninterest Expense (GAAP) $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 Net Interest and Dividend Income (GAAP) 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Noninterest Income (GAAP) 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Operating Revenue (GAAP) 18,920 12,208 12,153 13,151 13,412 56,432 51,375 Efficiency Ratio (GAAP) 52.71 % 80.05 % 112.91 % 71.44 % 72.51 % 75.95 % 110.50 % Noninterest Expense (GAAP) $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 Less: Other Real Estate Owned (Income) (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 ) Amortization of Intangible Assets 445 446 503 532 532 1,926 2,128 Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown on Fixed Assets 23 2 2,268 — 240 2,293 1,124 Adjusted Noninterest Expense (Non-GAAP) $ 9,534 $ 9,414 $ 9,799 $ 8,901 $ 8,992 $ 37,648 $ 34,891 Net Interest and Dividend Income (GAAP) 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Noninterest Income (GAAP) 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Less: Net Gain on Securities 44 24 11 447 213 526 233 Gain on Sale of Branches 5,203 — — — — 5,203 — Net Loss on Disposal of Fixed Assets — — (3 ) — (13 ) (3 ) (61 ) Adjusted Noninterest Income (Non-GAAP) 3,442 2,174 2,211 2,727 2,578 10,554 9,299 Adjusted Operating Revenue (Non-GAAP) 13,673 12,184 12,145 12,704 13,212 50,706 51,203 Adjusted Efficiency Ratio (Non-GAAP) 69.73 % 77.27 % 80.68 % 70.06 % 68.06 % 74.25 % 68.14 % Allowance for loan losses to total loans, excluding PPP loans, is a non-GAAP measure that serves as a useful measurement to evaluate the allowance for loan losses without the impact of SBA guaranteed loans. 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 (Dollars in thousands) (Unaudited) Allowance for Loan Losses $ 11,582 $ 11,581 $ 11,544 $ 12,725 $ 12,771 Total Loans 1,020,796 $ 1,001,599 1,007,446 $ 1,041,697 $ 1,044,753 PPP Loans (24,523 ) (32,703 ) (49,525 ) (60,380 ) (55,096 ) Total Loans, Excluding PPP Loans (Non-GAAP) $ 996,273 $ 968,896 $ 957,921 $ 981,317 $ 989,657 Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) 1.16 % 1.20 % 1.21 % 1.30 % 1.29 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220128005480/en/Contacts 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 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
CB Financial Services, Inc. Announces Fourth Quarter and Full Year 2021 Financial Results and Declares Quarterly Cash Dividend By: CB Financial Services, Inc. via Business Wire January 28, 2022 at 16:30 PM EST 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 fourth quarter and year-to-date 2021 financial results. Three Months Ended Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands, except per share data) (Unaudited) Net Income (Loss) (GAAP) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Excluding Non-Recurring Items (Non-GAAP) (1) (4,122 ) (17 ) 3,440 (353 ) 40 (1,053 ) 19,343 Adjusted Net Income (Non-GAAP) (1) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Earnings (Loss) per Common Share - Diluted (GAAP) $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 ) Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1) $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 (1) Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of net income (loss) and adjusted earnings per common share - diluted in this Press Release. 2021 Fourth Quarter Financial Highlights (Comparisons to three months ended December 31, 2020 unless otherwise noted) Net income was $7.0 million, compared to $3.1 million, largely due to the $5.2 million gain recognized from the sale of branches. Adjusted net income (non-GAAP) was $2.8 million, compared to $3.1 million. Earnings per diluted common share (EPS) increased to $1.31 from $0.57. Adjusted earnings per common share - diluted (non-GAAP) was $0.53, compared to $0.58. Return on average assets (annualized) of 1.87%, compared to 0.87%. Adjusted return on average assets (annualized) (non-GAAP) of 0.76%, compared to 0.88%. Return on average equity (annualized) of 20.95%, compared to 9.13%. Adjusted return on average equity (annualized) (non-GAAP) of 8.55%, compared to 9.25%. Net interest margin (NIM) improved quarter over quarter to 2.95% from 2.88% for the three months ended September 30, 2021. NIM was 3.21% for the prior year period. Net interest and dividend income was $10.2 million, compared to $10.6 million. Non-interest income increased to $8.7 million, compared to $2.8 million, primarily due to the $5.2 million gain on sale of branches. (Amounts at December 31, 2021; comparisons to December 31, 2020, unless otherwise noted) Total loans, including Payroll Protection Program (“PPP”) loans, were $1.02 billion, a decrease of $24.0 million. Total loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, to $996.3 million compared to $968.9 million at September 30, 2021 and included 35.9% and 13.2% annualized growth in consumer and commercial real estate loans, respectively. Total loans, excluding PPP loans, were $989.7 million at December 31, 2020. Nonperforming loans to total loans was 0.71%, a decrease of 68 bps, compared to 1.39%. Total deposits were $1.23 billion, an increase of $2.0 million, inclusive of selling $102.8 million of deposits of two branches in December 2021. Total assets increased to $1.43 billion, compared to $1.42 billion. Book value per share was $25.31, compared to $24.76 and $24.57 at September 30, 2021. Tangible book value per share (Non-GAAP) increased to $22.45, compared to $21.42 and $21.67 at September 30, 2021. Branch Optimization and Operational Efficiency Update As previously announced in February 2021, CB has implemented strategic initiatives to improve Community Bank’s financial performance and to position the Bank for continued profitable growth. Since that announcement, the Company has substantially completed this project, highlighted by: The consolidation of six branches that was completed on June 30, 2021 and the sale of two branches that was completed in December 2021 that resulted in a gain on sale of $5.2 million. $6.1 million of loans and $102.8 million of deposits were sold as part of the sale of the branches. The Company anticipates $3.0 million of ongoing pre-tax cost savings as a result of the branch optimization initiatives. The identification and enhancement of over 185 individualized processes within its branch network and operating environment designed to improve the Bank’s infrastructure, client experience, efficiency and profitability. The project was expensed in 2021. The majority of process improvements have been implemented with the remaining items to be implemented in 2022. CB anticipates cost savings from the operational efficiency initiative ranging from approximately $2.5 million to $3.5 million in 2022, as well as expected enhanced revenue and fee generating capacity in future years. Management Commentary President and CEO John H. Montgomery stated, “The fourth quarter was highlighted by the sale of two branches, which resulted in a $5.2 million gain for the bank while completing the optimization initiative announced early in 2021. We undertook that initiative with the primary goals of reducing our expenses while also positioning the bank for growth and I am proud of our team for succeeding on both fronts. With the optimization effort now substantially complete, we intend to focus all our energy on continuing the growth we saw take hold during the second half of 2021. Despite the reduction of our deposit balances resulting from the sale of two branches, we were still able to grow our loan book 11.3% in the current quarter, which is a result we’re proud of. Our loan book experienced solid demand across nearly all our end markets, fueled by the continuing economic recovery in our geographic region.” Mr. Montgomery continued, “As we enter 2022, we are well-positioned for a rising rate environment. We are squarely focused on capturing growth opportunities and are investing in our business in support of that. A key component of our optimization initiative was the reduction of low return uses of capital so that capital could be repurposed for higher growth investment. With that in mind, we expect to bring on a Chief Commercial Banking Officer and a Director of Client Experience and Retail Banking during the first quarter. Set against the backdrop of reduced annual expense levels and rising interest rates, our expectation is for continued growth and expansion of profitability. In addition, we remain committed to CB’s shareholders through the payment of dividends and an active share buy-back program.” Dividend Information The Company’s Board of Directors has declared a $0.24 quarterly cash dividend per outstanding share of common stock, payable on or about February 28, 2022, to stockholders of record as of the close of business on February 18, 2022. Stock Repurchase Program On June 10, 2021, CB authorized a program to repurchase up to $7.5 million of the Company’s outstanding common stock. The program was effective as of June 14, 2021 and is authorized through June 13, 2022. As of January 21, 2022, the Company had repurchased 191,314 shares at an average price of $23.34 per share for a total of $4.5 million. 2021 Fourth Quarter Financial Review Net Interest and Dividend Income Net interest and dividend income decreased $403,000, or 3.8%, to $10.2 million for the three months ended December 31, 2021 compared to $10.6 million for the three months ended December 31, 2020. Net interest margin (FTE) (Non-GAAP) decreased 26 basis points (“bps”) to 2.96% for the three months ended December 31, 2021 compared to 3.22% for the three months ended December 31, 2020. Net interest margin (GAAP) decreased to 2.95% for the three months ended December 31, 2021 compared to 3.21% for the three months ended December 31, 2020. While CB has further controlled its deposit cost structure as deposit balances increased and benefited from non-renewal or repricing of higher-cost time deposits, the net interest margin decreased year-over-year due to the low interest rate environment decreasing yields on loans and securities. The fourth quarter of 2021 was aided by the full payoff of a $3.1 million nonperforming commercial real estate loan in the hotel portfolio, which resulted in the recognition of $201,000 of interest income. Net interest margin (GAAP) for the three months ended September 30, 2021 was 2.88%. Interest and dividend income decreased $792,000, or 6.7%, to $11.0 million for the three months ended December 31, 2021 compared to $11.8 million for the three months ended December 31, 2020. Interest income on loans decreased $929,000, or 8.6%, to $9.9 million for the three months ended December 31, 2021 compared to $10.8 million for the three months ended December 31, 2020. The average balance of loans decreased $28.1 million and the average yield decreased 26 bps to 3.92% compared to the three months ended December 31, 2020. Interest and fee income on PPP loans was $391,000 for the three months ended December 31, 2021 and contributed 4 bps to loan yield, compared to $768,000 for the three months ended December 31, 2020, which contributed 3 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $83,000 for the three months ended December 31, 2021 compared to $141,000 for the three months ended December 31, 2020, or 3 bps in the current period compared to 5 bps in the prior period. Interest income on taxable investment securities increased $141,000, or 19.4%, to $866,000 for the three months ended December 31, 2021 compared to $725,000 for the three months ended December 31, 2020 driven by a $72.3 million increase in average balance partially offset by a 49 bps decrease in average yield. The Federal Reserve’s pandemic-driven decision to drop the benchmark interest rate in 2020 resulted in significant calls of U.S. government agency securities and pay-downs on mortgage-backed securities in the declining interest rate environment, which, in combination with excess liquidity, were replaced with purchases of lower-yielding securities. Interest expense decreased $389,000, or 34.7%, to $732,000 for the three months ended December 31, 2021 compared to $1.1 million for the three months ended December 31, 2020. Interest expense on deposits decreased $400,000, or 38.6%, to $636,000 for the three months ended December 31, 2021 compared to $1.0 million for the three months ended December 31, 2020. While average interest-earning deposit balances increased $17.5 million compared to the three months ended December 31, 2020, controlling the deposit cost structure as deposit balances increased combined with non-renewal or repricing of higher-cost time deposit resulted in a 19 bp, or 40.4%, decrease in average cost compared to the three months ended December 31, 2020. The average balance of time deposits and the related average cost decreased $38.9 million and 32 bps, respectively. Provision for Loan Losses There was a $75,000 provision for loan losses for the three months ended December 31, 2021 compared to no provision for loan losses for the three months ended December 31, 2020. The provision was primarily due to loan growth in the current period, exclusive of PPP loan forgiveness, offset by adjustments in the qualitative factors driven by improving economic and industry conditions. Noninterest income Noninterest income increased $5.9 million, or 212.8%, to $8.7 million for the three months ended December 31, 2021, compared to $2.8 million for the three months ended December 31, 2020. The increase was largely due to a gain of $5.2 million from the sale of two branches during the quarter. In addition, net gain on sale of loans increased $589,000 to $977,000 for the three months ended December 31, 2021 compared to $388,000 for the three months ended December 31, 2020 primarily due to the sale of a nonperforming commercial real estate loan in the hotel portfolio that resulted in the recognition of an $897,000 gain. The loan previously incurred a $931,000 charge-off in the fourth quarter of 2020. Noninterest Expense Noninterest expense increased $247,000, or 2.5%, to $10.0 million for the three months ended December 31, 2021 compared to $9.7 million for the three months ended December 31, 2020. Contracted services increased $556,000 to $1.1 million for the three months ended December 31, 2021 compared to $577,000 for the three months ended December 31, 2020 primarily due to $859,000 in expenses associated with the engagement of a third-party workflow optimization expert to assist in implementing robotic process automations and more effective sales management designed to improve operational efficiencies in the near and long-term and engagement of other third party specialists to assist in core platform improvements and efficiencies. Statement of Financial Condition Review Assets Total assets increased $8.8 million, or 0.6%, to $1.43 billion at December 31, 2021, compared to $1.42 billion at December 31, 2020. Cash and due from banks decreased $41.2 million, or 25.6%, to $119.7 million at December 31, 2021, compared to $160.9 million at December 31, 2020. The change is primarily related to securities purchases and sale of branches, partially offset by net repayments on loans. Securities increased $79.6 million, or 54.7%, to $225.0 million at December 31, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $135.0 million of purchases, $38.4 million of paydowns, and $12.0 million of sales, primarily of mortgage-backed securities, which resulted in the recognition of a $231,000 gain. The sales recognized gains on higher-interest securities with faster prepayment speeds. The purchases were made to earn a higher yield on excess cash. In addition, there was a $5.5 million decrease in the market value of the debt securities portfolio and a $295,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks. Payroll Protection Program (“PPP”) Update PPP loans decreased $30.6 million to $24.5 million at December 31, 2021 compared to $55.1 million at December 31, 2020, which includes $34.6 million in originations in the current period offset by loan forgiveness. $678,000 of net PPP loan origination fees were unearned at December 31, 2021 compared to $1.1 million at December 31, 2020. $321,000 of net PPP loan origination fees were earned for the three month ended December 31, 2021 compared to $604,000 for the three months ended December 31, 2020 and $380,000 for the three months ended September 30, 2021. Loans and Credit Quality Total loans held for investment decreased $24.0 million, or 2.3%, to $1.02 billion at December 31, 2021 compared to $1.04 billion at December 31, 2020. Excluding the net decline of $30.6 million in PPP loans in the current period, loans increased $6.6 million. Compared to September 30, 2021, loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, primarily from increases of $12.5 million in commercial real estate loans, $10.1 million in consumer loans driven by efficiencies in the indirect auto loan process that did not sacrifice credit quality, and $7.0 million in net construction loan disbursements. The allowance for loan losses was $11.6 million at December 31, 2021 compared to $12.8 million at December 31, 2020. There was a net recovery of $1.1 million of provision for loan losses in the current year primarily due to a decrease in specific reserves on impaired loans and improving economic and industry conditions resulting in a decrease in qualitative factors. As a result, the allowance for loan losses to total loans was 1.13% at December 31, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.16% at December 31, 2021 compared to 1.29% at December 31, 2020. Net charge-offs for the three months ended December 31, 2021 were $74,000, or 0.03% of average loans on an annualized basis. Net charge-offs for the three months ended December 31, 2020 were $1.0 million, or 0.39% of average loans on an annualized basis. In the prior period, there was a $931,000 charge-off on a commercial real estate loan related to a hotel. This loan was subsequently sold and resulted in the recognition of an $897,000 gain on sale in the current period. Net charge-offs for the year ended December 31, 2021 were $64,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the year ended December 31, 2020 were $1.1 million, or 0.11% of average loans on an annualized basis. Nonperforming loans, which includes nonaccrual loans, accruing loans past due 90 days or more, and accruing loans that are considered troubled debt restructurings, were $7.3 million at December 31, 2021 compared to $14.5 million at December 31, 2020. The decrease is primarily attributable to the full payoff and sale in the current year of two of the Bank’s larger nonperforming commercial real estate loans that were secured by hotels. Nonperforming loans to total loans ratio was 0.71% at December 31, 2021 compared to 1.39% at December 31, 2020. Liabilities Total liabilities increased $10.2 million, or 0.8%, to $1.29 billion at December 31, 2021 compared to $1.28 billion at December 31, 2020. Deposits Despite the impact of the sale of $102.8 million of deposits from the sale of two branches completed in December 2021, total deposits increased $2.0 million to $1.23 billion as of December 31, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $45.2 million, $12.6 million and $4.4 million, respectively, partially offset by a decrease of $53.3 million in time deposits. Borrowed Funds Short-term borrowings decreased $1.8 million, or 4.4%, to $39.3 million at December 31, 2021, compared to $41.1 million at December 31, 2020. At December 31, 2021 and December 31, 2020, short-term borrowings were comprised entirely of securities sold under agreements to repurchase, which are related to business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase. Other borrowed funds increased $9.6 million to $17.6 million at December 31, 2021 due to the issuance of subordinated debt in December 2021 with net proceeds of $14.6 million partially offset by $5.0 million of Federal Home Loan Bank borrowings that matured in the current period. The Company intends to utilize the subordinated debt proceeds to continue to proactively repurchase shares or for other general corporate matters. Stockholders’ Equity Stockholders’ equity decreased $1.4 million, or 1.0%, to $133.1 million at December 31, 2021, compared to $134.5 million at December 31, 2020. The Company paid $5.2 million in dividends and repurchased $4.1 million of its common stock as part of its stock repurchase program. In addition, accumulated other comprehensive income decreased $4.3 million primarily due to the effect of market interest rate conditions on the Bank’s debt securities. This was partially offset by $11.6 million of net income. Book value per share Book value per common share was $25.31 at December 31, 2021 compared to $24.76 at December 31, 2020, an increase of $0.55. Book value per share increased $0.74 compared to $24.57 at September 30, 2021. Tangible book value per common share (Non-GAAP) was $22.45 at December 31, 2021, compared to $21.42 at December 31, 2020, an increase of $1.03. Tangible book value per share increased $0.78 compared to $21.67 at September 30, 2021. 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. CB FINANCIAL SERVICES, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands, except share and per share data) (Unaudited) Selected Financial Condition Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 ASSETS Cash and Due From Banks $ 119,674 $ 173,523 $ 172,010 $ 230,000 $ 160,911 Securities 224,974 221,351 208,472 142,156 145,400 Loans Held for Sale — 17,407 11,409 — — Loans Real Estate: Residential 320,798 317,373 322,480 339,596 344,142 Commercial 392,124 379,621 360,518 370,118 373,555 Construction 85,028 78,075 85,187 77,714 72,600 Commercial and Industrial Commercial and Industrial 64,487 69,657 70,666 68,551 71,717 PPP 24,523 32,703 49,525 60,380 55,096 Consumer 122,152 112,087 106,404 111,650 113,854 Other 11,684 12,083 12,666 13,688 13,789 Total Loans 1,020,796 1,001,599 1,007,446 1,041,697 1,044,753 Allowance for Loan Losses (11,582 ) (11,581 ) (11,544 ) (12,725 ) (12,771 ) Loans, Net 1,009,214 990,018 995,902 1,028,972 1,031,982 Premises and Equipment Held for Sale — 795 795 — — Premises and Equipment, Net 18,399 18,502 18,682 20,240 20,302 Bank-Owned Life Insurance 25,332 25,190 25,052 24,916 24,779 Goodwill 9,732 9,732 9,732 9,732 9,732 Intangible Assets, Net 5,295 5,740 6,186 7,867 8,399 Accrued Interest and Other Assets 12,859 12,560 13,373 12,938 15,215 Total Assets $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 LIABILITIES Deposits Held for Sale $ — $ 102,647 $ 102,557 $ — $ — Deposits Non-Interest Bearing Demand Deposits 385,775 373,320 368,452 377,137 340,569 Interest Bearing Demand Accounts 272,518 244,004 246,920 280,929 259,870 Money Market Accounts 192,125 190,426 176,824 198,975 199,029 Savings Accounts 239,482 232,679 226,639 246,725 235,088 Time Deposits 136,713 144,727 154,718 180,697 190,013 Total Deposits 1,226,613 1,185,156 1,173,553 1,284,463 1,224,569 Short-Term Borrowings 39,266 42,623 39,054 45,352 41,055 Other Borrowings 17,601 6,000 6,000 6,000 8,000 Accrued Interest and Other Liabilities 8,875 7,405 7,913 7,230 8,566 Total Liabilities 1,292,355 1,343,831 1,329,077 1,343,045 1,282,190 STOCKHOLDERS’ EQUITY $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 Three Months Ended Year Ended Selected Operating Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Interest and Dividend Income Loans, Including Fees $ 9,904 $ 9,718 $ 9,936 $ 10,146 $ 10,833 $ 39,704 $ 42,883 Securities: Taxable 866 843 635 646 725 2,990 3,619 Tax-Exempt 66 71 74 78 78 289 369 Dividends 21 19 24 20 20 84 79 Other Interest and Dividend Income 106 135 151 98 99 490 517 Total Interest and Dividend Income 10,963 10,786 10,820 10,988 11,755 43,557 47,467 Interest Expense Deposits 636 715 827 947 1,036 3,125 5,172 Short-Term Borrowings 26 25 24 23 25 98 137 Other Borrowings 70 36 35 41 60 182 254 Total Interest Expense 732 776 886 1,011 1,121 3,405 5,563 Net Interest and Dividend Income 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Provision (Recovery) for Loan Losses 75 — (1,200 ) — — (1,125 ) 4,000 Net Interest and Dividend Income After Provision (Recovery) for Loan Losses 10,156 10,010 11,134 9,977 10,634 41,277 37,904 Noninterest Income: Service Fees 569 602 614 546 560 2,331 2,206 Insurance Commissions 1,618 1,194 1,209 1,595 1,403 5,616 4,878 Other Commissions 90 93 173 165 105 521 479 Net Gain on Sales of Loans 977 49 31 86 388 1,143 1,391 Net Gain on Securities 44 24 11 447 213 526 233 Net Gain on Purchased Tax Credits 17 18 17 18 16 70 62 Gain on Sale of Branches 5,203 — — — — 5,203 — Net Loss on Disposal of Fixed Assets — — (3 ) — (13 ) (3 ) (61 ) Income from Bank-Owned Life Insurance 142 138 136 137 140 553 557 Other Income (Loss) 29 80 31 180 (34 ) 320 (274 ) Total Noninterest Income 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Noninterest Expense: Salaries and Employee Benefits 5,181 4,787 5,076 4,894 5,126 19,938 19,809 Occupancy 619 615 1,024 710 606 2,968 2,797 Equipment 252 205 311 266 234 1,034 935 Data Processing 488 541 607 518 476 2,154 1,843 FDIC Assessment 222 293 249 250 344 1,014 837 PA Shares Tax 173 224 225 265 350 887 1,313 Contracted Services 1,133 1,441 750 687 577 4,011 2,048 Legal and Professional Fees 206 180 419 189 185 994 752 Advertising 191 225 193 140 178 749 664 Other Real Estate Owned (Income) (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 ) Amortization of Intangible Assets 445 446 503 532 532 1,926 2,128 Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown of Fixed Assets 23 2 2,268 — 240 2,293 1,124 Other 1,069 903 945 982 916 3,899 3,893 Total Noninterest Expense 9,972 9,773 13,722 9,395 9,725 42,862 56,767 Income (Loss) Before Income Tax Expense (Benefit) 8,873 2,435 (369 ) 3,756 3,687 14,695 (9,392 ) Income Tax Expense (Benefit) 1,908 452 (146 ) 911 608 3,125 1,248 Net Income (Loss) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Three Months Ended Year Ended Per Common Share Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Dividends Per Common Share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.96 $ 0.96 Earnings (Loss) Per Common Share - Basic 1.32 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 ) Earnings (Loss) Per Common Share - Diluted 1.31 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 ) Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1) 0.53 0.36 0.59 0.46 0.58 1.95 1.61 Weighted Average Common Shares Outstanding - Basic 5,291,795 5,373,032 5,432,234 5,434,374 5,404,874 5,382,441 5,406,290 Weighted Average Common Shares Outstanding - Diluted 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Common Shares Outstanding 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 Book Value Per Common Share $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Tangible Book Value per Common Share (1) 22.45 21.67 21.56 21.38 21.42 Stockholders’ Equity to Assets 9.3 % 8.9 % 9.1 % 9.1 % 9.5 % Tangible Common Equity to Tangible Assets (1) 8.4 7.9 8.1 8.0 8.3 Three Months Ended Year Ended Selected Financial Ratios (2) 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Return on Average Assets 1.87 % 0.54 % (0.06 ) % 0.81 % 0.87 % 0.79 % (0.77 ) % Adjusted Return on Average Assets (1) 0.76 0.53 0.87 0.71 0.88 0.72 0.63 Return on Average Equity 20.95 5.93 (0.66 ) 8.54 9.13 8.66 (7.18 ) Adjusted Return on Average Equity (1) 8.55 5.88 9.57 7.48 9.25 7.87 5.88 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 145.09 146.78 146.82 142.98 141.58 145.44 139.89 Average Equity to Average Assets 8.93 9.03 9.08 9.48 9.49 9.12 10.75 Net Interest Rate Spread 2.85 2.77 2.72 2.91 3.07 2.81 3.13 Net Interest Rate Spread (FTE) (1) 2.86 2.78 2.74 2.92 3.08 2.82 3.15 Net Interest Margin 2.95 2.88 2.84 3.04 3.21 2.92 3.30 Net Interest Margin (FTE) (1) 2.96 2.89 2.85 3.05 3.22 2.94 3.32 Net Charge-offs (Recoveries) to Average Loans 0.03 (0.01 ) (0.01 ) 0.02 0.39 0.01 0.11 Efficiency Ratio 52.71 80.05 112.91 71.44 72.51 75.95 110.50 Adjusted Efficiency Ratio (1) 69.73 77.27 80.68 70.06 68.06 74.25 68.14 Asset Quality Ratios 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Allowance for Loan Losses to Total Loans 1.13 % 1.16 % 1.15 % 1.22 % 1.22 % Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1) 1.16 1.20 1.21 1.30 1.29 Allowance for Loan Losses to Nonperforming Loans (3) 159.40 106.18 74.92 89.29 88.15 Allowance for Loan Losses to Noncurrent Loans (4) 233.37 135.37 90.83 118.08 117.20 Delinquent and Nonaccrual Loans to Total Loans (4) (5) 0.78 0.97 1.37 1.18 1.50 Nonperforming Loans to Total Loans (3) 0.71 1.09 1.53 1.37 1.39 Noncurrent Loans to Total Loans (4) 0.49 0.85 1.26 1.03 1.04 Nonperforming Assets to Total Assets (6) 0.51 0.74 1.07 0.98 1.04 Capital Ratios (7) 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Common Equity Tier 1 Capital (to Risk Weighted Assets) 11.95 % 11.53 % 11.67 % 11.85 % 11.79 % Tier 1 Capital (to Risk Weighted Assets) 11.95 11.53 11.67 11.85 11.79 Total Capital (to Risk Weighted Assets) 13.18 12.77 12.92 13.10 13.04 Tier 1 Leverage (to Adjusted Total Assets) 7.76 7.38 7.23 7.87 7.81 (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 nonaccrual loans, accruing loans that are 90 days or more past due, and troubled debt restructured loans. (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 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 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) $ 1,004,827 $ 9,927 3.92 % $ 1,004,474 $ 9,740 3.85 % $ 1,016,868 $ 9,959 3.93 % $ 1,031,853 $ 10,168 4.00 % $ 1,032,942 $ 10,860 4.18 % Debt Securities Taxable 205,328 866 1.69 197,763 843 1.71 124,685 635 2.04 122,883 646 2.10 133,026 725 2.18 Exempt From Federal Tax 10,477 84 3.21 11,647 90 3.09 12,276 94 3.06 12,943 96 2.97 13,006 96 2.95 Equity Securities 2,693 21 3.12 2,655 19 2.86 2,649 24 3.62 2,632 20 3.04 2,612 20 3.06 Other Interest-Earning Assets 153,577 106 0.27 164,447 135 0.33 246,392 151 0.25 161,871 98 0.25 137,000 99 0.29 Total Interest-Earning Assets 1,376,902 11,004 3.17 1,380,986 10,827 3.11 1,402,870 10,863 3.11 1,332,182 11,028 3.36 1,318,586 11,800 3.56 Noninterest-Earning Assets 100,607 88,291 82,794 92,550 94,262 Total Assets $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 278,546 51 0.07 % $ 275,411 48 0.07 % $ 275,752 55 0.08 $ 259,065 77 0.12 $ 252,521 83 0.13 % Savings (3) 252,387 20 0.03 251,801 21 0.03 247,238 25 0.04 239,850 32 0.05 232,647 32 0.05 Money Market (3) 209,572 57 0.11 198,167 55 0.11 199,652 71 0.14 197,395 98 0.20 198,983 131 0.26 Time Deposits (3) 154,342 508 1.31 168,654 591 1.39 177,506 676 1.53 187,114 740 1.60 193,194 790 1.63 Total Interest-Bearing Deposits (3) 894,847 636 0.28 894,033 715 0.32 900,148 827 0.37 883,424 947 0.43 877,345 1,036 0.47 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 44,709 26 0.23 40,818 25 0.24 49,325 24 0.20 41,094 23 0.23 43,468 25 0.23 Other Borrowings 9,474 70 2.93 6,000 36 2.38 6,000 35 2.34 7,200 41 2.31 10,543 60 2.26 Total Interest-Bearing Liabilities 949,030 732 0.31 940,851 776 0.33 955,473 886 0.37 931,718 1,011 0.44 931,356 1,121 0.48 Noninterest-Bearing Demand Deposits 388,787 387,746 387,317 349,108 338,223 Other Liabilities 7,800 8,019 7,999 8,869 9,176 Total Liabilities 1,345,617 1,336,616 1,350,789 1,289,695 1,278,755 Stockholders' Equity 131,892 132,661 134,875 135,037 134,093 Total Liabilities and Stockholders' Equity $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 Net Interest Income (FTE) (Non-GAAP) (4) 10,272 10,051 9,977 10,017 10,679 Net Interest-Earning Assets (5) 427,872 440,135 447,397 400,464 387,230 Net Interest Rate Spread (FTE) (Non-GAAP) (4) (6) 2.86 % 2.78 % 2.74 2.92 3.08 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 2.96 2.89 2.85 3.05 3.22 PPP Loans 29,067 391 5.34 40,313 484 4.76 57,661 636 4.42 56,945 676 4.81 64,914 768 4.71 (1) Annualized based on three months ended results. (2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale. (3) Includes Deposits Held for Sale that were sold in December 2021. (4) 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. (5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (6) 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. (7) Net interest margin represents annualized net interest income divided by average total interest-earning assets. AVERAGE BALANCES AND YIELDS Year Ended December 31, 2021 December 31, 2020 Average Balance Interest and Dividends Yield / Cost Average Balance Interest and Dividends Yield / Cost (Dollars in thousands) (Unaudited) Assets: Interest-Earning Assets: Loans, Net (1) $ 1,014,405 $ 39,799 3.92 % $ 1,008,401 $ 43,013 4.27 % Debt Securities Taxable 162,987 2,990 1.83 138,015 3,619 2.62 Exempt From Federal Tax 11,829 366 3.09 14,244 450 3.16 Marketable Equity Securities 2,657 84 3.16 2,585 79 3.06 Other Interest-Earning Assets 181,502 490 0.27 105,588 517 0.49 Total Interest-Earning Assets 1,373,380 43,729 3.18 1,268,833 47,678 3.76 Noninterest-Earning Assets 91,075 109,241 Total Assets $ 1,464,455 $ 1,378,074 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (2) $ 272,256 232 0.09 % $ 240,372 590 0.25 % Savings (2) 247,864 98 0.04 227,277 188 0.08 Money Market (2) 201,222 281 0.14 187,095 708 0.38 Time Deposits (2) 171,805 2,514 1.46 203,128 3,686 1.81 Total Interest-Bearing Deposits (2) 893,147 3,125 0.35 857,872 5,172 0.60 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 43,988 98 0.22 37,819 137 0.36 Other Borrowings 7,172 182 2.54 11,328 254 2.24 Total Interest-Bearing Liabilities 944,307 3,405 0.36 907,019 5,563 0.61 Noninterest-Bearing Demand Deposits 378,374 313,858 Other Liabilities 8,168 9,065 Total Liabilities 1,330,849 1,229,942 Stockholders' Equity 133,605 148,132 Total Liabilities and Stockholders' Equity $ 1,464,454 $ 1,378,074 Net Interest Income (FTE) (Non-GAAP) (3) 40,324 42,115 Net Interest-Earning Assets (3)(4) 429,073 361,814 Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5) 2.82 % 3.15 % Net Interest Margin (FTE) (Non-GAAP) (3)(6) 2.94 3.32 PPP Loans 45,905 2,189 4.77 45,694 1,537 3.36 (1) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale. (2) Includes Deposits Held for Sale that were sold in December 2021. (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 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 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands, except share and per share data) (Unaudited) Net Income (Loss) (GAAP) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Adjustments Gain on Securities (44 ) (24 ) (11 ) (447 ) (213 ) (526 ) (233 ) Gain on Sale of Branches (5,203 ) — — — — (5,203 ) — Loss on Disposal of Fixed Assets — — 3 — 13 3 61 Tax effect 1,102 5 2 94 42 1,202 36 Non-Cash Charges: Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown on Fixed Assets 23 2 2,268 — 240 2,293 1,124 Tax Effect — — — — (42 ) — (338 ) Adjusted Net Income (Non-GAAP) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 Earnings (Loss) per Common Share - Diluted (GAAP) $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 ) Adjusted Earnings per Common Share - Diluted (Non-GAAP) $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 Net Income (Loss) (GAAP) (Numerator) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Assets (Denominator) 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 Return on Average Assets (GAAP) 1.87 % 0.54 % (0.06 ) % 0.81 % 0.87 % 0.79 % (0.77 ) % Adjusted Net Income (Non-GAAP) (Numerator) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Assets (Denominator) 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 Adjusted Return on Average Assets (Non-GAAP) 0.76 % 0.53 % 0.87 % 0.71 % 0.88 % 0.72 % 0.63 % Three Months Ended Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Net Income (Loss) (GAAP) (Numerator) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Equity (Denominator) (GAAP) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 Return on Average Equity (GAAP) 20.95 % 5.93 % (0.66 ) % 8.54 % 9.13 % 8.66 % (7.18 ) % Adjusted Net Income (Non-GAAP) (Numerator) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Equity (Denominator) (GAAP) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 Adjusted Return on Average Equity (Non-GAAP) 8.55 % 5.88 % 9.57 % 7.48 % 9.25 % 7.87 % 5.88 % 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. 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 (Dollars in thousands, except share and per share data) (Unaudited) Assets (GAAP) $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 Goodwill and Intangible Assets, Net (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 ) Tangible Assets (Non-GAAP) (Numerator) $ 1,410,452 $ 1,459,346 $ 1,445,695 $ 1,459,222 $ 1,398,589 Stockholders' Equity (GAAP) $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 Goodwill and Intangible Assets, Net (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 ) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator) $ 118,097 $ 115,515 $ 116,618 $ 116,177 $ 116,399 Stockholders’ Equity to Assets (GAAP) 9.3 % 8.9 % 9.1 % 9.1 % 9.5 % Tangible Common Equity to Tangible Assets (Non-GAAP) 8.4 % 7.9 % 8.1 % 8.0 % 8.3 % Common Shares Outstanding (Denominator) 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 Book Value per Common Share (GAAP) $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Tangible Book Value per Common Share (Non-GAAP) $ 22.45 $ 21.67 $ 21.56 $ 21.38 $ 21.42 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Interest Income (GAAP) $ 10,963 $ 10,786 $ 10,820 $ 10,988 $ 11,755 $ 43,557 $ 47,467 Adjustment to FTE Basis 41 41 43 40 45 172 211 Interest Income (FTE) (Non-GAAP) 11,004 10,827 10,863 11,028 11,800 43,729 47,678 Interest Expense (GAAP) 732 776 886 1,011 1,121 3,405 5,563 Net Interest Income (FTE) (Non-GAAP) $ 10,272 $ 10,051 $ 9,977 $ 10,017 $ 10,679 $ 40,324 $ 42,115 Net Interest Rate Spread (GAAP) 2.85 % 2.77 % 2.72 % 2.91 % 3.07 % 2.81 % 3.13 % Adjustment to FTE Basis 0.01 0.01 0.02 0.01 0.01 0.01 0.02 Net Interest Rate Spread (FTE) (Non-GAAP) 2.86 2.78 2.74 2.92 3.08 2.82 3.15 Net Interest Margin (GAAP) 2.95 % 2.88 % 2.84 % 3.04 % 3.21 % 2.92 % 3.30 % Adjustment to FTE Basis 0.01 0.01 0.01 0.01 0.01 0.02 0.02 Net Interest Margin (FTE) (Non-GAAP) 2.96 2.89 2.85 3.05 3.22 2.94 3.32 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Noninterest Expense (GAAP) $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 Net Interest and Dividend Income (GAAP) 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Noninterest Income (GAAP) 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Operating Revenue (GAAP) 18,920 12,208 12,153 13,151 13,412 56,432 51,375 Efficiency Ratio (GAAP) 52.71 % 80.05 % 112.91 % 71.44 % 72.51 % 75.95 % 110.50 % Noninterest Expense (GAAP) $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 Less: Other Real Estate Owned (Income) (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 ) Amortization of Intangible Assets 445 446 503 532 532 1,926 2,128 Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown on Fixed Assets 23 2 2,268 — 240 2,293 1,124 Adjusted Noninterest Expense (Non-GAAP) $ 9,534 $ 9,414 $ 9,799 $ 8,901 $ 8,992 $ 37,648 $ 34,891 Net Interest and Dividend Income (GAAP) 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Noninterest Income (GAAP) 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Less: Net Gain on Securities 44 24 11 447 213 526 233 Gain on Sale of Branches 5,203 — — — — 5,203 — Net Loss on Disposal of Fixed Assets — — (3 ) — (13 ) (3 ) (61 ) Adjusted Noninterest Income (Non-GAAP) 3,442 2,174 2,211 2,727 2,578 10,554 9,299 Adjusted Operating Revenue (Non-GAAP) 13,673 12,184 12,145 12,704 13,212 50,706 51,203 Adjusted Efficiency Ratio (Non-GAAP) 69.73 % 77.27 % 80.68 % 70.06 % 68.06 % 74.25 % 68.14 % Allowance for loan losses to total loans, excluding PPP loans, is a non-GAAP measure that serves as a useful measurement to evaluate the allowance for loan losses without the impact of SBA guaranteed loans. 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 (Dollars in thousands) (Unaudited) Allowance for Loan Losses $ 11,582 $ 11,581 $ 11,544 $ 12,725 $ 12,771 Total Loans 1,020,796 $ 1,001,599 1,007,446 $ 1,041,697 $ 1,044,753 PPP Loans (24,523 ) (32,703 ) (49,525 ) (60,380 ) (55,096 ) Total Loans, Excluding PPP Loans (Non-GAAP) $ 996,273 $ 968,896 $ 957,921 $ 981,317 $ 989,657 Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) 1.16 % 1.20 % 1.21 % 1.30 % 1.29 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220128005480/en/Contacts 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
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 fourth quarter and year-to-date 2021 financial results. Three Months Ended Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands, except per share data) (Unaudited) Net Income (Loss) (GAAP) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Excluding Non-Recurring Items (Non-GAAP) (1) (4,122 ) (17 ) 3,440 (353 ) 40 (1,053 ) 19,343 Adjusted Net Income (Non-GAAP) (1) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Earnings (Loss) per Common Share - Diluted (GAAP) $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 ) Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1) $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 (1) Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of net income (loss) and adjusted earnings per common share - diluted in this Press Release. 2021 Fourth Quarter Financial Highlights (Comparisons to three months ended December 31, 2020 unless otherwise noted) Net income was $7.0 million, compared to $3.1 million, largely due to the $5.2 million gain recognized from the sale of branches. Adjusted net income (non-GAAP) was $2.8 million, compared to $3.1 million. Earnings per diluted common share (EPS) increased to $1.31 from $0.57. Adjusted earnings per common share - diluted (non-GAAP) was $0.53, compared to $0.58. Return on average assets (annualized) of 1.87%, compared to 0.87%. Adjusted return on average assets (annualized) (non-GAAP) of 0.76%, compared to 0.88%. Return on average equity (annualized) of 20.95%, compared to 9.13%. Adjusted return on average equity (annualized) (non-GAAP) of 8.55%, compared to 9.25%. Net interest margin (NIM) improved quarter over quarter to 2.95% from 2.88% for the three months ended September 30, 2021. NIM was 3.21% for the prior year period. Net interest and dividend income was $10.2 million, compared to $10.6 million. Non-interest income increased to $8.7 million, compared to $2.8 million, primarily due to the $5.2 million gain on sale of branches. (Amounts at December 31, 2021; comparisons to December 31, 2020, unless otherwise noted) Total loans, including Payroll Protection Program (“PPP”) loans, were $1.02 billion, a decrease of $24.0 million. Total loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, to $996.3 million compared to $968.9 million at September 30, 2021 and included 35.9% and 13.2% annualized growth in consumer and commercial real estate loans, respectively. Total loans, excluding PPP loans, were $989.7 million at December 31, 2020. Nonperforming loans to total loans was 0.71%, a decrease of 68 bps, compared to 1.39%. Total deposits were $1.23 billion, an increase of $2.0 million, inclusive of selling $102.8 million of deposits of two branches in December 2021. Total assets increased to $1.43 billion, compared to $1.42 billion. Book value per share was $25.31, compared to $24.76 and $24.57 at September 30, 2021. Tangible book value per share (Non-GAAP) increased to $22.45, compared to $21.42 and $21.67 at September 30, 2021. Branch Optimization and Operational Efficiency Update As previously announced in February 2021, CB has implemented strategic initiatives to improve Community Bank’s financial performance and to position the Bank for continued profitable growth. Since that announcement, the Company has substantially completed this project, highlighted by: The consolidation of six branches that was completed on June 30, 2021 and the sale of two branches that was completed in December 2021 that resulted in a gain on sale of $5.2 million. $6.1 million of loans and $102.8 million of deposits were sold as part of the sale of the branches. The Company anticipates $3.0 million of ongoing pre-tax cost savings as a result of the branch optimization initiatives. The identification and enhancement of over 185 individualized processes within its branch network and operating environment designed to improve the Bank’s infrastructure, client experience, efficiency and profitability. The project was expensed in 2021. The majority of process improvements have been implemented with the remaining items to be implemented in 2022. CB anticipates cost savings from the operational efficiency initiative ranging from approximately $2.5 million to $3.5 million in 2022, as well as expected enhanced revenue and fee generating capacity in future years. Management Commentary President and CEO John H. Montgomery stated, “The fourth quarter was highlighted by the sale of two branches, which resulted in a $5.2 million gain for the bank while completing the optimization initiative announced early in 2021. We undertook that initiative with the primary goals of reducing our expenses while also positioning the bank for growth and I am proud of our team for succeeding on both fronts. With the optimization effort now substantially complete, we intend to focus all our energy on continuing the growth we saw take hold during the second half of 2021. Despite the reduction of our deposit balances resulting from the sale of two branches, we were still able to grow our loan book 11.3% in the current quarter, which is a result we’re proud of. Our loan book experienced solid demand across nearly all our end markets, fueled by the continuing economic recovery in our geographic region.” Mr. Montgomery continued, “As we enter 2022, we are well-positioned for a rising rate environment. We are squarely focused on capturing growth opportunities and are investing in our business in support of that. A key component of our optimization initiative was the reduction of low return uses of capital so that capital could be repurposed for higher growth investment. With that in mind, we expect to bring on a Chief Commercial Banking Officer and a Director of Client Experience and Retail Banking during the first quarter. Set against the backdrop of reduced annual expense levels and rising interest rates, our expectation is for continued growth and expansion of profitability. In addition, we remain committed to CB’s shareholders through the payment of dividends and an active share buy-back program.” Dividend Information The Company’s Board of Directors has declared a $0.24 quarterly cash dividend per outstanding share of common stock, payable on or about February 28, 2022, to stockholders of record as of the close of business on February 18, 2022. Stock Repurchase Program On June 10, 2021, CB authorized a program to repurchase up to $7.5 million of the Company’s outstanding common stock. The program was effective as of June 14, 2021 and is authorized through June 13, 2022. As of January 21, 2022, the Company had repurchased 191,314 shares at an average price of $23.34 per share for a total of $4.5 million. 2021 Fourth Quarter Financial Review Net Interest and Dividend Income Net interest and dividend income decreased $403,000, or 3.8%, to $10.2 million for the three months ended December 31, 2021 compared to $10.6 million for the three months ended December 31, 2020. Net interest margin (FTE) (Non-GAAP) decreased 26 basis points (“bps”) to 2.96% for the three months ended December 31, 2021 compared to 3.22% for the three months ended December 31, 2020. Net interest margin (GAAP) decreased to 2.95% for the three months ended December 31, 2021 compared to 3.21% for the three months ended December 31, 2020. While CB has further controlled its deposit cost structure as deposit balances increased and benefited from non-renewal or repricing of higher-cost time deposits, the net interest margin decreased year-over-year due to the low interest rate environment decreasing yields on loans and securities. The fourth quarter of 2021 was aided by the full payoff of a $3.1 million nonperforming commercial real estate loan in the hotel portfolio, which resulted in the recognition of $201,000 of interest income. Net interest margin (GAAP) for the three months ended September 30, 2021 was 2.88%. Interest and dividend income decreased $792,000, or 6.7%, to $11.0 million for the three months ended December 31, 2021 compared to $11.8 million for the three months ended December 31, 2020. Interest income on loans decreased $929,000, or 8.6%, to $9.9 million for the three months ended December 31, 2021 compared to $10.8 million for the three months ended December 31, 2020. The average balance of loans decreased $28.1 million and the average yield decreased 26 bps to 3.92% compared to the three months ended December 31, 2020. Interest and fee income on PPP loans was $391,000 for the three months ended December 31, 2021 and contributed 4 bps to loan yield, compared to $768,000 for the three months ended December 31, 2020, which contributed 3 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $83,000 for the three months ended December 31, 2021 compared to $141,000 for the three months ended December 31, 2020, or 3 bps in the current period compared to 5 bps in the prior period. Interest income on taxable investment securities increased $141,000, or 19.4%, to $866,000 for the three months ended December 31, 2021 compared to $725,000 for the three months ended December 31, 2020 driven by a $72.3 million increase in average balance partially offset by a 49 bps decrease in average yield. The Federal Reserve’s pandemic-driven decision to drop the benchmark interest rate in 2020 resulted in significant calls of U.S. government agency securities and pay-downs on mortgage-backed securities in the declining interest rate environment, which, in combination with excess liquidity, were replaced with purchases of lower-yielding securities. Interest expense decreased $389,000, or 34.7%, to $732,000 for the three months ended December 31, 2021 compared to $1.1 million for the three months ended December 31, 2020. Interest expense on deposits decreased $400,000, or 38.6%, to $636,000 for the three months ended December 31, 2021 compared to $1.0 million for the three months ended December 31, 2020. While average interest-earning deposit balances increased $17.5 million compared to the three months ended December 31, 2020, controlling the deposit cost structure as deposit balances increased combined with non-renewal or repricing of higher-cost time deposit resulted in a 19 bp, or 40.4%, decrease in average cost compared to the three months ended December 31, 2020. The average balance of time deposits and the related average cost decreased $38.9 million and 32 bps, respectively. Provision for Loan Losses There was a $75,000 provision for loan losses for the three months ended December 31, 2021 compared to no provision for loan losses for the three months ended December 31, 2020. The provision was primarily due to loan growth in the current period, exclusive of PPP loan forgiveness, offset by adjustments in the qualitative factors driven by improving economic and industry conditions. Noninterest income Noninterest income increased $5.9 million, or 212.8%, to $8.7 million for the three months ended December 31, 2021, compared to $2.8 million for the three months ended December 31, 2020. The increase was largely due to a gain of $5.2 million from the sale of two branches during the quarter. In addition, net gain on sale of loans increased $589,000 to $977,000 for the three months ended December 31, 2021 compared to $388,000 for the three months ended December 31, 2020 primarily due to the sale of a nonperforming commercial real estate loan in the hotel portfolio that resulted in the recognition of an $897,000 gain. The loan previously incurred a $931,000 charge-off in the fourth quarter of 2020. Noninterest Expense Noninterest expense increased $247,000, or 2.5%, to $10.0 million for the three months ended December 31, 2021 compared to $9.7 million for the three months ended December 31, 2020. Contracted services increased $556,000 to $1.1 million for the three months ended December 31, 2021 compared to $577,000 for the three months ended December 31, 2020 primarily due to $859,000 in expenses associated with the engagement of a third-party workflow optimization expert to assist in implementing robotic process automations and more effective sales management designed to improve operational efficiencies in the near and long-term and engagement of other third party specialists to assist in core platform improvements and efficiencies. Statement of Financial Condition Review Assets Total assets increased $8.8 million, or 0.6%, to $1.43 billion at December 31, 2021, compared to $1.42 billion at December 31, 2020. Cash and due from banks decreased $41.2 million, or 25.6%, to $119.7 million at December 31, 2021, compared to $160.9 million at December 31, 2020. The change is primarily related to securities purchases and sale of branches, partially offset by net repayments on loans. Securities increased $79.6 million, or 54.7%, to $225.0 million at December 31, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $135.0 million of purchases, $38.4 million of paydowns, and $12.0 million of sales, primarily of mortgage-backed securities, which resulted in the recognition of a $231,000 gain. The sales recognized gains on higher-interest securities with faster prepayment speeds. The purchases were made to earn a higher yield on excess cash. In addition, there was a $5.5 million decrease in the market value of the debt securities portfolio and a $295,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks. Payroll Protection Program (“PPP”) Update PPP loans decreased $30.6 million to $24.5 million at December 31, 2021 compared to $55.1 million at December 31, 2020, which includes $34.6 million in originations in the current period offset by loan forgiveness. $678,000 of net PPP loan origination fees were unearned at December 31, 2021 compared to $1.1 million at December 31, 2020. $321,000 of net PPP loan origination fees were earned for the three month ended December 31, 2021 compared to $604,000 for the three months ended December 31, 2020 and $380,000 for the three months ended September 30, 2021. Loans and Credit Quality Total loans held for investment decreased $24.0 million, or 2.3%, to $1.02 billion at December 31, 2021 compared to $1.04 billion at December 31, 2020. Excluding the net decline of $30.6 million in PPP loans in the current period, loans increased $6.6 million. Compared to September 30, 2021, loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, primarily from increases of $12.5 million in commercial real estate loans, $10.1 million in consumer loans driven by efficiencies in the indirect auto loan process that did not sacrifice credit quality, and $7.0 million in net construction loan disbursements. The allowance for loan losses was $11.6 million at December 31, 2021 compared to $12.8 million at December 31, 2020. There was a net recovery of $1.1 million of provision for loan losses in the current year primarily due to a decrease in specific reserves on impaired loans and improving economic and industry conditions resulting in a decrease in qualitative factors. As a result, the allowance for loan losses to total loans was 1.13% at December 31, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.16% at December 31, 2021 compared to 1.29% at December 31, 2020. Net charge-offs for the three months ended December 31, 2021 were $74,000, or 0.03% of average loans on an annualized basis. Net charge-offs for the three months ended December 31, 2020 were $1.0 million, or 0.39% of average loans on an annualized basis. In the prior period, there was a $931,000 charge-off on a commercial real estate loan related to a hotel. This loan was subsequently sold and resulted in the recognition of an $897,000 gain on sale in the current period. Net charge-offs for the year ended December 31, 2021 were $64,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the year ended December 31, 2020 were $1.1 million, or 0.11% of average loans on an annualized basis. Nonperforming loans, which includes nonaccrual loans, accruing loans past due 90 days or more, and accruing loans that are considered troubled debt restructurings, were $7.3 million at December 31, 2021 compared to $14.5 million at December 31, 2020. The decrease is primarily attributable to the full payoff and sale in the current year of two of the Bank’s larger nonperforming commercial real estate loans that were secured by hotels. Nonperforming loans to total loans ratio was 0.71% at December 31, 2021 compared to 1.39% at December 31, 2020. Liabilities Total liabilities increased $10.2 million, or 0.8%, to $1.29 billion at December 31, 2021 compared to $1.28 billion at December 31, 2020. Deposits Despite the impact of the sale of $102.8 million of deposits from the sale of two branches completed in December 2021, total deposits increased $2.0 million to $1.23 billion as of December 31, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $45.2 million, $12.6 million and $4.4 million, respectively, partially offset by a decrease of $53.3 million in time deposits. Borrowed Funds Short-term borrowings decreased $1.8 million, or 4.4%, to $39.3 million at December 31, 2021, compared to $41.1 million at December 31, 2020. At December 31, 2021 and December 31, 2020, short-term borrowings were comprised entirely of securities sold under agreements to repurchase, which are related to business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase. Other borrowed funds increased $9.6 million to $17.6 million at December 31, 2021 due to the issuance of subordinated debt in December 2021 with net proceeds of $14.6 million partially offset by $5.0 million of Federal Home Loan Bank borrowings that matured in the current period. The Company intends to utilize the subordinated debt proceeds to continue to proactively repurchase shares or for other general corporate matters. Stockholders’ Equity Stockholders’ equity decreased $1.4 million, or 1.0%, to $133.1 million at December 31, 2021, compared to $134.5 million at December 31, 2020. The Company paid $5.2 million in dividends and repurchased $4.1 million of its common stock as part of its stock repurchase program. In addition, accumulated other comprehensive income decreased $4.3 million primarily due to the effect of market interest rate conditions on the Bank’s debt securities. This was partially offset by $11.6 million of net income. Book value per share Book value per common share was $25.31 at December 31, 2021 compared to $24.76 at December 31, 2020, an increase of $0.55. Book value per share increased $0.74 compared to $24.57 at September 30, 2021. Tangible book value per common share (Non-GAAP) was $22.45 at December 31, 2021, compared to $21.42 at December 31, 2020, an increase of $1.03. Tangible book value per share increased $0.78 compared to $21.67 at September 30, 2021. 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. CB FINANCIAL SERVICES, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (Dollars in thousands, except share and per share data) (Unaudited) Selected Financial Condition Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 ASSETS Cash and Due From Banks $ 119,674 $ 173,523 $ 172,010 $ 230,000 $ 160,911 Securities 224,974 221,351 208,472 142,156 145,400 Loans Held for Sale — 17,407 11,409 — — Loans Real Estate: Residential 320,798 317,373 322,480 339,596 344,142 Commercial 392,124 379,621 360,518 370,118 373,555 Construction 85,028 78,075 85,187 77,714 72,600 Commercial and Industrial Commercial and Industrial 64,487 69,657 70,666 68,551 71,717 PPP 24,523 32,703 49,525 60,380 55,096 Consumer 122,152 112,087 106,404 111,650 113,854 Other 11,684 12,083 12,666 13,688 13,789 Total Loans 1,020,796 1,001,599 1,007,446 1,041,697 1,044,753 Allowance for Loan Losses (11,582 ) (11,581 ) (11,544 ) (12,725 ) (12,771 ) Loans, Net 1,009,214 990,018 995,902 1,028,972 1,031,982 Premises and Equipment Held for Sale — 795 795 — — Premises and Equipment, Net 18,399 18,502 18,682 20,240 20,302 Bank-Owned Life Insurance 25,332 25,190 25,052 24,916 24,779 Goodwill 9,732 9,732 9,732 9,732 9,732 Intangible Assets, Net 5,295 5,740 6,186 7,867 8,399 Accrued Interest and Other Assets 12,859 12,560 13,373 12,938 15,215 Total Assets $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 LIABILITIES Deposits Held for Sale $ — $ 102,647 $ 102,557 $ — $ — Deposits Non-Interest Bearing Demand Deposits 385,775 373,320 368,452 377,137 340,569 Interest Bearing Demand Accounts 272,518 244,004 246,920 280,929 259,870 Money Market Accounts 192,125 190,426 176,824 198,975 199,029 Savings Accounts 239,482 232,679 226,639 246,725 235,088 Time Deposits 136,713 144,727 154,718 180,697 190,013 Total Deposits 1,226,613 1,185,156 1,173,553 1,284,463 1,224,569 Short-Term Borrowings 39,266 42,623 39,054 45,352 41,055 Other Borrowings 17,601 6,000 6,000 6,000 8,000 Accrued Interest and Other Liabilities 8,875 7,405 7,913 7,230 8,566 Total Liabilities 1,292,355 1,343,831 1,329,077 1,343,045 1,282,190 STOCKHOLDERS’ EQUITY $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 Three Months Ended Year Ended Selected Operating Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Interest and Dividend Income Loans, Including Fees $ 9,904 $ 9,718 $ 9,936 $ 10,146 $ 10,833 $ 39,704 $ 42,883 Securities: Taxable 866 843 635 646 725 2,990 3,619 Tax-Exempt 66 71 74 78 78 289 369 Dividends 21 19 24 20 20 84 79 Other Interest and Dividend Income 106 135 151 98 99 490 517 Total Interest and Dividend Income 10,963 10,786 10,820 10,988 11,755 43,557 47,467 Interest Expense Deposits 636 715 827 947 1,036 3,125 5,172 Short-Term Borrowings 26 25 24 23 25 98 137 Other Borrowings 70 36 35 41 60 182 254 Total Interest Expense 732 776 886 1,011 1,121 3,405 5,563 Net Interest and Dividend Income 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Provision (Recovery) for Loan Losses 75 — (1,200 ) — — (1,125 ) 4,000 Net Interest and Dividend Income After Provision (Recovery) for Loan Losses 10,156 10,010 11,134 9,977 10,634 41,277 37,904 Noninterest Income: Service Fees 569 602 614 546 560 2,331 2,206 Insurance Commissions 1,618 1,194 1,209 1,595 1,403 5,616 4,878 Other Commissions 90 93 173 165 105 521 479 Net Gain on Sales of Loans 977 49 31 86 388 1,143 1,391 Net Gain on Securities 44 24 11 447 213 526 233 Net Gain on Purchased Tax Credits 17 18 17 18 16 70 62 Gain on Sale of Branches 5,203 — — — — 5,203 — Net Loss on Disposal of Fixed Assets — — (3 ) — (13 ) (3 ) (61 ) Income from Bank-Owned Life Insurance 142 138 136 137 140 553 557 Other Income (Loss) 29 80 31 180 (34 ) 320 (274 ) Total Noninterest Income 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Noninterest Expense: Salaries and Employee Benefits 5,181 4,787 5,076 4,894 5,126 19,938 19,809 Occupancy 619 615 1,024 710 606 2,968 2,797 Equipment 252 205 311 266 234 1,034 935 Data Processing 488 541 607 518 476 2,154 1,843 FDIC Assessment 222 293 249 250 344 1,014 837 PA Shares Tax 173 224 225 265 350 887 1,313 Contracted Services 1,133 1,441 750 687 577 4,011 2,048 Legal and Professional Fees 206 180 419 189 185 994 752 Advertising 191 225 193 140 178 749 664 Other Real Estate Owned (Income) (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 ) Amortization of Intangible Assets 445 446 503 532 532 1,926 2,128 Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown of Fixed Assets 23 2 2,268 — 240 2,293 1,124 Other 1,069 903 945 982 916 3,899 3,893 Total Noninterest Expense 9,972 9,773 13,722 9,395 9,725 42,862 56,767 Income (Loss) Before Income Tax Expense (Benefit) 8,873 2,435 (369 ) 3,756 3,687 14,695 (9,392 ) Income Tax Expense (Benefit) 1,908 452 (146 ) 911 608 3,125 1,248 Net Income (Loss) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Three Months Ended Year Ended Per Common Share Data 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Dividends Per Common Share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.96 $ 0.96 Earnings (Loss) Per Common Share - Basic 1.32 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 ) Earnings (Loss) Per Common Share - Diluted 1.31 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 ) Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1) 0.53 0.36 0.59 0.46 0.58 1.95 1.61 Weighted Average Common Shares Outstanding - Basic 5,291,795 5,373,032 5,432,234 5,434,374 5,404,874 5,382,441 5,406,290 Weighted Average Common Shares Outstanding - Diluted 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Common Shares Outstanding 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 Book Value Per Common Share $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Tangible Book Value per Common Share (1) 22.45 21.67 21.56 21.38 21.42 Stockholders’ Equity to Assets 9.3 % 8.9 % 9.1 % 9.1 % 9.5 % Tangible Common Equity to Tangible Assets (1) 8.4 7.9 8.1 8.0 8.3 Three Months Ended Year Ended Selected Financial Ratios (2) 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 Return on Average Assets 1.87 % 0.54 % (0.06 ) % 0.81 % 0.87 % 0.79 % (0.77 ) % Adjusted Return on Average Assets (1) 0.76 0.53 0.87 0.71 0.88 0.72 0.63 Return on Average Equity 20.95 5.93 (0.66 ) 8.54 9.13 8.66 (7.18 ) Adjusted Return on Average Equity (1) 8.55 5.88 9.57 7.48 9.25 7.87 5.88 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 145.09 146.78 146.82 142.98 141.58 145.44 139.89 Average Equity to Average Assets 8.93 9.03 9.08 9.48 9.49 9.12 10.75 Net Interest Rate Spread 2.85 2.77 2.72 2.91 3.07 2.81 3.13 Net Interest Rate Spread (FTE) (1) 2.86 2.78 2.74 2.92 3.08 2.82 3.15 Net Interest Margin 2.95 2.88 2.84 3.04 3.21 2.92 3.30 Net Interest Margin (FTE) (1) 2.96 2.89 2.85 3.05 3.22 2.94 3.32 Net Charge-offs (Recoveries) to Average Loans 0.03 (0.01 ) (0.01 ) 0.02 0.39 0.01 0.11 Efficiency Ratio 52.71 80.05 112.91 71.44 72.51 75.95 110.50 Adjusted Efficiency Ratio (1) 69.73 77.27 80.68 70.06 68.06 74.25 68.14 Asset Quality Ratios 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Allowance for Loan Losses to Total Loans 1.13 % 1.16 % 1.15 % 1.22 % 1.22 % Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1) 1.16 1.20 1.21 1.30 1.29 Allowance for Loan Losses to Nonperforming Loans (3) 159.40 106.18 74.92 89.29 88.15 Allowance for Loan Losses to Noncurrent Loans (4) 233.37 135.37 90.83 118.08 117.20 Delinquent and Nonaccrual Loans to Total Loans (4) (5) 0.78 0.97 1.37 1.18 1.50 Nonperforming Loans to Total Loans (3) 0.71 1.09 1.53 1.37 1.39 Noncurrent Loans to Total Loans (4) 0.49 0.85 1.26 1.03 1.04 Nonperforming Assets to Total Assets (6) 0.51 0.74 1.07 0.98 1.04 Capital Ratios (7) 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 Common Equity Tier 1 Capital (to Risk Weighted Assets) 11.95 % 11.53 % 11.67 % 11.85 % 11.79 % Tier 1 Capital (to Risk Weighted Assets) 11.95 11.53 11.67 11.85 11.79 Total Capital (to Risk Weighted Assets) 13.18 12.77 12.92 13.10 13.04 Tier 1 Leverage (to Adjusted Total Assets) 7.76 7.38 7.23 7.87 7.81 (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 nonaccrual loans, accruing loans that are 90 days or more past due, and troubled debt restructured loans. (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 December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 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) $ 1,004,827 $ 9,927 3.92 % $ 1,004,474 $ 9,740 3.85 % $ 1,016,868 $ 9,959 3.93 % $ 1,031,853 $ 10,168 4.00 % $ 1,032,942 $ 10,860 4.18 % Debt Securities Taxable 205,328 866 1.69 197,763 843 1.71 124,685 635 2.04 122,883 646 2.10 133,026 725 2.18 Exempt From Federal Tax 10,477 84 3.21 11,647 90 3.09 12,276 94 3.06 12,943 96 2.97 13,006 96 2.95 Equity Securities 2,693 21 3.12 2,655 19 2.86 2,649 24 3.62 2,632 20 3.04 2,612 20 3.06 Other Interest-Earning Assets 153,577 106 0.27 164,447 135 0.33 246,392 151 0.25 161,871 98 0.25 137,000 99 0.29 Total Interest-Earning Assets 1,376,902 11,004 3.17 1,380,986 10,827 3.11 1,402,870 10,863 3.11 1,332,182 11,028 3.36 1,318,586 11,800 3.56 Noninterest-Earning Assets 100,607 88,291 82,794 92,550 94,262 Total Assets $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 278,546 51 0.07 % $ 275,411 48 0.07 % $ 275,752 55 0.08 $ 259,065 77 0.12 $ 252,521 83 0.13 % Savings (3) 252,387 20 0.03 251,801 21 0.03 247,238 25 0.04 239,850 32 0.05 232,647 32 0.05 Money Market (3) 209,572 57 0.11 198,167 55 0.11 199,652 71 0.14 197,395 98 0.20 198,983 131 0.26 Time Deposits (3) 154,342 508 1.31 168,654 591 1.39 177,506 676 1.53 187,114 740 1.60 193,194 790 1.63 Total Interest-Bearing Deposits (3) 894,847 636 0.28 894,033 715 0.32 900,148 827 0.37 883,424 947 0.43 877,345 1,036 0.47 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 44,709 26 0.23 40,818 25 0.24 49,325 24 0.20 41,094 23 0.23 43,468 25 0.23 Other Borrowings 9,474 70 2.93 6,000 36 2.38 6,000 35 2.34 7,200 41 2.31 10,543 60 2.26 Total Interest-Bearing Liabilities 949,030 732 0.31 940,851 776 0.33 955,473 886 0.37 931,718 1,011 0.44 931,356 1,121 0.48 Noninterest-Bearing Demand Deposits 388,787 387,746 387,317 349,108 338,223 Other Liabilities 7,800 8,019 7,999 8,869 9,176 Total Liabilities 1,345,617 1,336,616 1,350,789 1,289,695 1,278,755 Stockholders' Equity 131,892 132,661 134,875 135,037 134,093 Total Liabilities and Stockholders' Equity $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 Net Interest Income (FTE) (Non-GAAP) (4) 10,272 10,051 9,977 10,017 10,679 Net Interest-Earning Assets (5) 427,872 440,135 447,397 400,464 387,230 Net Interest Rate Spread (FTE) (Non-GAAP) (4) (6) 2.86 % 2.78 % 2.74 2.92 3.08 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 2.96 2.89 2.85 3.05 3.22 PPP Loans 29,067 391 5.34 40,313 484 4.76 57,661 636 4.42 56,945 676 4.81 64,914 768 4.71 (1) Annualized based on three months ended results. (2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale. (3) Includes Deposits Held for Sale that were sold in December 2021. (4) 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. (5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (6) 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. (7) Net interest margin represents annualized net interest income divided by average total interest-earning assets. AVERAGE BALANCES AND YIELDS Year Ended December 31, 2021 December 31, 2020 Average Balance Interest and Dividends Yield / Cost Average Balance Interest and Dividends Yield / Cost (Dollars in thousands) (Unaudited) Assets: Interest-Earning Assets: Loans, Net (1) $ 1,014,405 $ 39,799 3.92 % $ 1,008,401 $ 43,013 4.27 % Debt Securities Taxable 162,987 2,990 1.83 138,015 3,619 2.62 Exempt From Federal Tax 11,829 366 3.09 14,244 450 3.16 Marketable Equity Securities 2,657 84 3.16 2,585 79 3.06 Other Interest-Earning Assets 181,502 490 0.27 105,588 517 0.49 Total Interest-Earning Assets 1,373,380 43,729 3.18 1,268,833 47,678 3.76 Noninterest-Earning Assets 91,075 109,241 Total Assets $ 1,464,455 $ 1,378,074 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (2) $ 272,256 232 0.09 % $ 240,372 590 0.25 % Savings (2) 247,864 98 0.04 227,277 188 0.08 Money Market (2) 201,222 281 0.14 187,095 708 0.38 Time Deposits (2) 171,805 2,514 1.46 203,128 3,686 1.81 Total Interest-Bearing Deposits (2) 893,147 3,125 0.35 857,872 5,172 0.60 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 43,988 98 0.22 37,819 137 0.36 Other Borrowings 7,172 182 2.54 11,328 254 2.24 Total Interest-Bearing Liabilities 944,307 3,405 0.36 907,019 5,563 0.61 Noninterest-Bearing Demand Deposits 378,374 313,858 Other Liabilities 8,168 9,065 Total Liabilities 1,330,849 1,229,942 Stockholders' Equity 133,605 148,132 Total Liabilities and Stockholders' Equity $ 1,464,454 $ 1,378,074 Net Interest Income (FTE) (Non-GAAP) (3) 40,324 42,115 Net Interest-Earning Assets (3)(4) 429,073 361,814 Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5) 2.82 % 3.15 % Net Interest Margin (FTE) (Non-GAAP) (3)(6) 2.94 3.32 PPP Loans 45,905 2,189 4.77 45,694 1,537 3.36 (1) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale. (2) Includes Deposits Held for Sale that were sold in December 2021. (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 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 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands, except share and per share data) (Unaudited) Net Income (Loss) (GAAP) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Adjustments Gain on Securities (44 ) (24 ) (11 ) (447 ) (213 ) (526 ) (233 ) Gain on Sale of Branches (5,203 ) — — — — (5,203 ) — Loss on Disposal of Fixed Assets — — 3 — 13 3 61 Tax effect 1,102 5 2 94 42 1,202 36 Non-Cash Charges: Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown on Fixed Assets 23 2 2,268 — 240 2,293 1,124 Tax Effect — — — — (42 ) — (338 ) Adjusted Net Income (Non-GAAP) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 Earnings (Loss) per Common Share - Diluted (GAAP) $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 ) Adjusted Earnings per Common Share - Diluted (Non-GAAP) $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 Net Income (Loss) (GAAP) (Numerator) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Assets (Denominator) 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 Return on Average Assets (GAAP) 1.87 % 0.54 % (0.06 ) % 0.81 % 0.87 % 0.79 % (0.77 ) % Adjusted Net Income (Non-GAAP) (Numerator) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Assets (Denominator) 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 Adjusted Return on Average Assets (Non-GAAP) 0.76 % 0.53 % 0.87 % 0.71 % 0.88 % 0.72 % 0.63 % Three Months Ended Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Net Income (Loss) (GAAP) (Numerator) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 ) Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Equity (Denominator) (GAAP) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 Return on Average Equity (GAAP) 20.95 % 5.93 % (0.66 ) % 8.54 % 9.13 % 8.66 % (7.18 ) % Adjusted Net Income (Non-GAAP) (Numerator) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Annualization Factor 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Average Equity (Denominator) (GAAP) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 Adjusted Return on Average Equity (Non-GAAP) 8.55 % 5.88 % 9.57 % 7.48 % 9.25 % 7.87 % 5.88 % 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. 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 (Dollars in thousands, except share and per share data) (Unaudited) Assets (GAAP) $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 Goodwill and Intangible Assets, Net (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 ) Tangible Assets (Non-GAAP) (Numerator) $ 1,410,452 $ 1,459,346 $ 1,445,695 $ 1,459,222 $ 1,398,589 Stockholders' Equity (GAAP) $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 Goodwill and Intangible Assets, Net (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 ) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator) $ 118,097 $ 115,515 $ 116,618 $ 116,177 $ 116,399 Stockholders’ Equity to Assets (GAAP) 9.3 % 8.9 % 9.1 % 9.1 % 9.5 % Tangible Common Equity to Tangible Assets (Non-GAAP) 8.4 % 7.9 % 8.1 % 8.0 % 8.3 % Common Shares Outstanding (Denominator) 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 Book Value per Common Share (GAAP) $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Tangible Book Value per Common Share (Non-GAAP) $ 22.45 $ 21.67 $ 21.56 $ 21.38 $ 21.42 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Interest Income (GAAP) $ 10,963 $ 10,786 $ 10,820 $ 10,988 $ 11,755 $ 43,557 $ 47,467 Adjustment to FTE Basis 41 41 43 40 45 172 211 Interest Income (FTE) (Non-GAAP) 11,004 10,827 10,863 11,028 11,800 43,729 47,678 Interest Expense (GAAP) 732 776 886 1,011 1,121 3,405 5,563 Net Interest Income (FTE) (Non-GAAP) $ 10,272 $ 10,051 $ 9,977 $ 10,017 $ 10,679 $ 40,324 $ 42,115 Net Interest Rate Spread (GAAP) 2.85 % 2.77 % 2.72 % 2.91 % 3.07 % 2.81 % 3.13 % Adjustment to FTE Basis 0.01 0.01 0.02 0.01 0.01 0.01 0.02 Net Interest Rate Spread (FTE) (Non-GAAP) 2.86 2.78 2.74 2.92 3.08 2.82 3.15 Net Interest Margin (GAAP) 2.95 % 2.88 % 2.84 % 3.04 % 3.21 % 2.92 % 3.30 % Adjustment to FTE Basis 0.01 0.01 0.01 0.01 0.01 0.02 0.02 Net Interest Margin (FTE) (Non-GAAP) 2.96 2.89 2.85 3.05 3.22 2.94 3.32 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 Year Ended 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 12/31/21 12/31/20 (Dollars in thousands) (Unaudited) Noninterest Expense (GAAP) $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 Net Interest and Dividend Income (GAAP) 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Noninterest Income (GAAP) 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Operating Revenue (GAAP) 18,920 12,208 12,153 13,151 13,412 56,432 51,375 Efficiency Ratio (GAAP) 52.71 % 80.05 % 112.91 % 71.44 % 72.51 % 75.95 % 110.50 % Noninterest Expense (GAAP) $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 Less: Other Real Estate Owned (Income) (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 ) Amortization of Intangible Assets 445 446 503 532 532 1,926 2,128 Intangible Assets and Goodwill Impairment — — 1,178 — — 1,178 18,693 Writedown on Fixed Assets 23 2 2,268 — 240 2,293 1,124 Adjusted Noninterest Expense (Non-GAAP) $ 9,534 $ 9,414 $ 9,799 $ 8,901 $ 8,992 $ 37,648 $ 34,891 Net Interest and Dividend Income (GAAP) 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Noninterest Income (GAAP) 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Less: Net Gain on Securities 44 24 11 447 213 526 233 Gain on Sale of Branches 5,203 — — — — 5,203 — Net Loss on Disposal of Fixed Assets — — (3 ) — (13 ) (3 ) (61 ) Adjusted Noninterest Income (Non-GAAP) 3,442 2,174 2,211 2,727 2,578 10,554 9,299 Adjusted Operating Revenue (Non-GAAP) 13,673 12,184 12,145 12,704 13,212 50,706 51,203 Adjusted Efficiency Ratio (Non-GAAP) 69.73 % 77.27 % 80.68 % 70.06 % 68.06 % 74.25 % 68.14 % Allowance for loan losses to total loans, excluding PPP loans, is a non-GAAP measure that serves as a useful measurement to evaluate the allowance for loan losses without the impact of SBA guaranteed loans. 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20 (Dollars in thousands) (Unaudited) Allowance for Loan Losses $ 11,582 $ 11,581 $ 11,544 $ 12,725 $ 12,771 Total Loans 1,020,796 $ 1,001,599 1,007,446 $ 1,041,697 $ 1,044,753 PPP Loans (24,523 ) (32,703 ) (49,525 ) (60,380 ) (55,096 ) Total Loans, Excluding PPP Loans (Non-GAAP) $ 996,273 $ 968,896 $ 957,921 $ 981,317 $ 989,657 Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) 1.16 % 1.20 % 1.21 % 1.30 % 1.29 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220128005480/en/
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