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 Second Quarter and Year-to-Date 2022 Financial Results and Declares Quarterly Cash Dividend By: CB Financial Services, Inc. via Business Wire July 28, 2022 at 16:15 PM EDT 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 second quarter and year-to-date 2022 financial results. Three Months Ended Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands, except per share data) (Unaudited) Net Income (Loss) (GAAP) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Non-Recurring Items 157 12 (4,122 ) (17 ) 3,440 169 3,087 Adjusted Net Income (Non-GAAP) (1) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Earnings (Loss) per Common Share - Diluted (GAAP) $ 0.02 $ 0.58 $ 1.31 $ 0.37 $ (0.04 ) $ 0.61 $ 0.48 Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1) $ 0.05 $ 0.59 $ 0.53 $ 0.36 $ 0.59 $ 0.64 $ 1.05 (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. 2022 Second Quarter Financial Highlights (Comparisons to three months ended June 30, 2021 unless otherwise noted) Net income was $118,000, compared to a net loss of $223,000. Current period results were negatively impacted by provision expense of approximately $3.8 million driven, largely, by a loan charge-off of $2.7 million while the prior year period included an intangible asset impairment and asset write down of $3.4 million, associated with the Company’s optimization program. Current period results were aided by the completion of the Company’s optimization program in 2021, which resulted in a reduction of noninterest expense of $1.9 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 (excluding noninterest expense of $3.4 million related to intangible impairment and fixed asset write-down). Adjusted net income (non-GAAP) was $275,000, compared to $3.2 million. Earnings per diluted common share (EPS) increased to $0.02 from loss per diluted common share of $0.04. Adjusted earnings per common share - diluted (non-GAAP) was $0.05, compared to $0.59. Return on average assets (annualized) of 0.03%, compared to loss on average assets (annualized) of 0.06%. Adjusted return on average assets (annualized) (non-GAAP) of 0.08%, compared to 0.87%. Return on average equity (annualized) of 0.40%, compared to loss on average equity (annualized) of 0.66%. Adjusted return on average equity (annualized) (non-GAAP) of 0.93%, compared to 9.57%. Net interest margin (NIM) improved to 3.12% from 2.84%. Net interest and dividend income was $10.2 million, compared to $9.9 million. Noninterest income decreased to $2.1 million, compared to $2.2 million. The most significant change in noninterest income was a $210,000 reduction in securities gains resulting from mark-to-market accounting, partially offset by an increase of $160,000 in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher than lock-in amounts received and core business including commercial and personal insurance lines. (Amounts at June 30, 2022; comparisons to December 31, 2021, unless otherwise noted) Total loans, including Payroll Protection Program (“PPP”) loans, were $1.03 billion, an increase of $7.2 million from $1.02 billion. Total loans held for investment, excluding PPP loans, increased $27.8 million, or 5.6% annualized, to $1.02 billion compared to $996.3 million, and included increases of $26.8 million, or 44.2% annualized, in consumer loans, and $34.0 million, or 17.6% annualized, growth in commercial real estate loans, partially offset by decreases in construction real estate and commercial and industrial loans. Compared to June 30, 2021, loans held for investment, excluding PPP loans, increased $66.2 million, or 6.9%, primarily from increases of $65.6 million in commercial real estate loans and $42.5 million in consumer loans as noted above, partially offset by decreases of $43.9 million in construction real estate loans and $8.6 million in commercial and industrial loans. Nonperforming loans to total loans was 0.57%, a decrease of 14 basis points (“bps”), compared to 0.71%. Total deposits were $1.22 billion, a decrease of $11.4 million, compared to $1.23 billion. Total assets decreased by $39 million to $1.39 billion, compared to $1.43 billion. Book value per share was $22.18, compared to $23.69 as of March 31, 2022 and $25.31 as of December 31, 2021. Tangible book value per share (Non-GAAP) decreased to $19.43, compared to $20.86 as of March 31, 2022 and $22.45 as of December 31, 2021, reflecting impact to Accumulated Other Comprehensive Income from unrealized losses on securities portfolios. Management Commentary President and CEO John H. Montgomery stated, “Despite the looming macroeconomic uncertainty, we are optimistic about our business for a number of reasons. Our core earnings, as measured by pre-tax, pre-provision income, are accelerating and that is due primarily to the steps we took in 2021 to optimize our operations, coupled with growth investments we have made this year. Continuing the trend we saw in the first quarter, second quarter results included further loan growth, led by consumer and commercial real estate loans, and a lower noninterest expense run rate. Underpinning our growth is a stable, low volatility metropolitan service area anchored by leading higher education institutions and major healthcare companies, in addition to a strong technology presence.” Mr. Montgomery continued, “As we reported on June 6th, we incurred a $2.7 million charge-off associated with a loan to a long-time customer that unexpectedly decided to wind down their operations. Although the charge negatively impacted our results in the quarter, a subsequent examination of our entire credit portfolio confirmed our view that this was an isolated event. We also believe our senior leadership team, and our credit management team in particular, is a key asset, as they delivered outstanding performance during the recessionary period from 2008 to 2010. During that period, we did not need to take a government TARP loan and our total credit losses during the period were less than $5.0 million. That experience allows us to face the current economic headwinds with confidence that we can not only adeptly manage our credit risk but also continue to grow our core earnings. During the second quarter we furthered our commitment to CB shareholders as we announced a new $10.0 million share repurchase program, in addition to our regular quarterly dividend. We remain well-capitalized with the ability to support growth along with these shareholder-friendly actions.” 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 August 31, 2022, to stockholders of record as of the close of business on August 19, 2022. Stock Repurchase Program On April 21, 2022, CB announced a program to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. Based on the Company’s closing stock price on July 26, 2022, the repurchase program, if fully completed, would encompass 428,082 shares, or approximately 8.3% of the shares currently outstanding. 2022 Second Quarter Financial Review Net Interest and Dividend Income Net interest and dividend income increased $229,000, or 2.3%, to $10.2 million for the three months ended June 30, 2022 compared to $9.9 million for the three months ended June 30, 2021. Net interest margin (GAAP) increased to 3.12% for the three months ended June 30, 2022 compared to 2.84% for the three months ended June 30, 2021. Net interest margin (FTE) (Non-GAAP) increased 28 bps to 3.13% for the three months ended June 30, 2022 compared to 2.85% for the three months ended June 30, 2021. Interest and dividend income increased $138,000, or 1.3%, to $11.0 million for the three months ended June 30, 2022 compared to $10.8 million for the three months ended June 30, 2021. Interest income on loans decreased $203,000, or 2.0%, to $9.7 million for the three months ended June 30, 2022 compared to $9.9 million for the three months ended June 30, 2021. The average balance of loans decreased $9.0 million to $1.01 billion from $1.02 billion and the average yield decreased 5 bps to 3.88% compared to 3.93%. Interest and fee income on PPP loans was $144,000 for the three months ended June 30, 2022 and contributed 4 bps to loan yield, compared to $636,000 for the three months ended June 30, 2021, which contributed 3 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $75,000 for the three months ended June 30, 2022 compared to $153,000 for the three months ended June 30, 2021, or 3 bps in the current period compared to 6 bps in the prior period. Interest income on taxable investment securities increased $353,000, or 55.6%, to $988,000 for the three months ended June 30, 2022 compared to $635,000 for the three months ended June 30, 2021 driven by a $103.6 million increase in average balance partially offset by a 31 bps decrease in average yield. Interest expense decreased $91,000, or 10.3%, to $795,000 for the three months ended June 30, 2022 compared to $886,000 for the three months ended June 30, 2021. Interest expense on deposits decreased $223,000, or 27.0%, to $604,000 for the three months ended June 30, 2022 compared to $827,000 for the three months ended June 30, 2021. While average interest-earning deposit balances decreased $74.5 million, or 8%, from $900.1 million as of June 30, 2021 compared to $825.6 million as of June 30, 2022, controlling the deposit cost structure combined with non-renewal or repricing of higher-cost time deposit resulted in a 8 bps, or 21.7%, decrease in average cost compared to the three months ended June 30, 2021. In addition, the average balance of time deposits and the related average cost decreased $49.7 million and 24 bps, respectively. These decreases are partially offset by a 9 bps increase in interest-bearing demand deposit average cost as well as an increase in average other borrowings of $11.6 million or 193.5% to $17.6 million as of June 30, 2022 compared to $6.0 million as of June 30, 2021, which was driven by an increase in subordinated debt balance. Provision for Loan Losses There was $3.8 million provision for loan losses for the three months ended June 30, 2022 compared with a recovery of $1.2 million for the three months ended June 30, 2021. The increased provision for loan losses was primarily due to a provision for a single loan charge-off of $2.7 million (pre-tax) with respect to a commercial and industrial loan. As previously reported, the charge-off relates to a borrower which is ceasing operations and carried a $3.5 million revolving line of credit which had an outstanding balance of $2.7 million. The remaining increase to the provision was a result of adjustments made to historical loss factors and changes in qualitative factors in particular economic and industry conditions between the three months ended June 30, 2022 and three months ended June 30, 2021. Noninterest income Noninterest income decreased $114,000, or 5.1%, to $2.1 million for the three months ended June 30, 2022, compared to $2.2 million for the three months ended June 30, 2021. The decrease was largely due to a $210,000 reduction in securities gains due to a decline of $199,000 in the market value of equity securities, comprised mainly of bank stocks, partially offset by a $160,000 increase in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher than lock-in amounts received and core business including commercial and personal insurance lines. In addition, net gain on sale of loans decreased $31,000 as there were no loans sold during the three months ended June 30, 2022. Noninterest Expense Noninterest expense decreased $5.3 million, or 38.7%, to $8.4 million for the three months ended June 30, 2022 compared to $13.7 million for the three months ended June 30, 2021, and compared to $8.7 million for the three months ended March 31, 2022. The primary drivers were decreases of $2.3 million and $1.2 million related to the writedown of fixed assets and intangible impairment associated with branch consolidation and sale initiatives in 2021, respectively. In addition, salaries and benefits decreased $537,000 and occupancy decreased $248,000, primarily related to the reduction of footprint and related headcount resulting from the consolidation and sale of branches during 2021. Contracted services decreased $402,000 to $348,000 for the three months ended June 30, 2022 compared to $750,000 for the three months ended June 30, 2021. This was a result of branch optimization initiatives completed in the prior year. Statement of Financial Condition Review Assets Total assets decreased $39.0 million, or 2.7%, to $1.39 billion at June 30, 2022, compared to $1.43 billion at December 31, 2021. Cash and due from banks decreased $38.6 million, or 32.2%, to $81.1 million at June 30, 2022, compared to $119.7 million at December 31, 2021. The change is primarily due to a decrease in deposits as further described below in the Liabilities section. Securities decreased $11.5 million, or 5.1%, to $213.5 million at June 30, 2022, compared to $225.0 million at December 31, 2021. Current period activity included $26.8 million of purchases, and $17.0 million of pay downs. The purchases were made to earn a higher yield on excess cash. In addition, there was a $21.0 million decrease in the market value of the debt securities portfolio, primarily due to the increase in market interest rates, and a $206,000 loss in market value in the equity securities portfolio, which is primarily comprised of bank stocks. Payroll Protection Program (“PPP”) Update PPP loans decreased $20.7 million to $3.9 million at June 30, 2022 compared to $24.5 million at December 31, 2021. $144,000 of net PPP loan origination fees were unearned at June 30, 2022 compared to $678,000 at December 31, 2021. $130,000 of net PPP loan origination fees were earned in the three months ended June 30, 2022 compared to $404,000 for the three months ended March 31, 2022. Loans and Credit Quality Total loans held for investment increased $7.2 million, or 0.70%, to $1.03 billion at June 30, 2022 compared to $1.02 billion at December 31, 2021. Excluding the net decline of $20.7 million in PPP loans in the current period, loans increased $27.8 million. The allowance for loan losses was $12.8 million at June 30, 2022 and $11.6 million at December 31, 2021. As a result, the allowance for loan losses to total loans was 1.25% at June 30, 2022 compared to 1.13% at December 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.25% at June 30, 2022 compared to 1.16% at December 31, 2021. The change in the allowance for loan losses was primarily due to adjustments to historical loss factors and changes in qualitative factors in particular economic and industry conditions since December 31, 2021. Net charge-offs for the three months ended June 30, 2022 were $2.5 million, or 1.01% of average loans on an annualized basis. Net recoveries for the three months ended June 30, 2021 were $19,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2022 were $2.5 million, or 0.50% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2021 were $27,000, or 0.01% 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 $5.8 million at June 30, 2022 compared to $7.3 million at December 31, 2021. Nonperforming loans to total loans ratio was 0.57% at June 30, 2022 compared to 0.71% at December 31, 2021. Other Intangible Assets decreased $891,000, or 17.0%, to $4.4 million at June 30, 2022 compared to $5.3 million at December 31, 2021 primarily due to amortization expense recognized during the period. Accrued interest receivable and other assets increased $5.9 million, or 45.9%; to $18.8 million at June 30, 2022, compared to $12.9 million at December 31, 2021. This change was primarily driven by deferred taxes as a result of the increase in market interest rates conditions and the decrease in the market value of the securities portfolio. Liabilities Total liabilities decreased $19.7 million, or 1.5%, to $1.27 billion at June 30, 2022 compared to $1.29 billion at December 31, 2021. Deposits Total deposits decreased $11.4 million to $1.22 billion as of June 30, 2022 compared to $1.23 billion at December 31, 2021, an annualized decrease of 1.9%. Interest-bearing demand deposits and time deposits decreased $7.2 million and $11.5 million, respectively, partially offset by increases in noninterest bearing demand deposits and savings accounts by $3.4 million and $10.7 million, respectively. Average total deposits decreased $11.4 million, primarily in interest-bearing demand deposits and time deposits for the three months ended June 30, 2022 compared to the three months ended March 31, 2022, Borrowed Funds Short-term borrowings decreased $7.1 million, or 18.1%, to $32.2 million at June 30, 2022, compared to $39.3 million at December 31, 2021. At June 30, 2022 and December 31, 2021, 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. Stockholders’ Equity Stockholders’ equity decreased $19.4 million, or 14.6%, to $113.8 million at June 30, 2022, compared to $133.1 million at December 31, 2021. Since December 31, 2021, the Company has paid $2.5 million in dividends. On February 15, 2022, the Company completed its stock repurchase program that was implemented on June 10, 2021. On April 21, 2022, a new $10 million repurchase program was authorized, with the Company repurchasing 27,439 shares at an average price of $22.06 per share during the second quarter. In total, the Company has repurchased $4.0 million since December 31, 2021. In addition, accumulated other comprehensive loss decreased $16.5 million primarily due to the effect of rising market interest rates on the Bank’s debt securities. This was partially offset by $3.2 million of net income. Book value per share Book value per common share was $22.18 at June 30, 2022 compared to $25.31 at December 31, 2021, a decrease of $3.13. Tangible book value per common share (Non-GAAP) was $19.43 at June 30, 2022, compared to $22.45 at December 31, 2021, a decrease of $3.02. 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 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 ASSETS Cash and Due From Banks $ 81,121 $ 123,588 $ 119,674 $ 173,523 $ 172,010 Securities 213,505 231,097 224,974 221,351 208,472 Loans Held for Sale — — — 17,407 11,409 Loans Real Estate: Residential 325,138 317,254 320,798 317,373 322,480 Commercial 426,105 427,227 392,124 379,621 360,518 Construction 41,277 54,227 85,028 78,075 85,187 Commercial and Industrial Commercial and Industrial 62,054 59,601 64,487 69,657 70,666 PPP 3,853 8,242 24,523 32,703 49,525 Consumer 148,921 143,422 122,152 112,087 106,404 Other 20,621 10,669 11,684 12,083 12,666 Total Loans 1,027,969 1,020,642 1,020,796 1,001,599 1,007,446 Allowance for Loan Losses (12,833 ) (11,595 ) (11,582 ) (11,581 ) (11,544 ) Loans, Net 1,015,136 1,009,047 1,009,214 990,018 995,902 Premises and Equipment Held for Sale — — — 795 795 Premises and Equipment, Net 18,196 18,349 18,399 18,502 18,682 Bank-Owned Life Insurance 25,610 25,468 25,332 25,190 25,052 Goodwill 9,732 9,732 9,732 9,732 9,732 Intangible Assets, Net 4,404 4,850 5,295 5,740 6,186 Accrued Interest and Other Assets 18,757 16,539 12,859 12,560 13,373 Total Assets $ 1,386,461 $ 1,438,670 $ 1,425,479 $ 1,474,818 $ 1,461,613 LIABILITIES Deposits Held for Sale $ — $ — $ — $ 102,647 $ 102,557 Deposits Non-Interest Bearing Demand Deposits 389,127 400,105 385,775 373,320 368,452 Interest Bearing Demand Accounts 265,347 280,455 272,518 244,004 246,920 Money Market Accounts 185,308 192,929 192,125 190,426 176,824 Savings Accounts 250,226 247,589 239,482 232,679 226,639 Time Deposits 125,182 129,235 136,713 144,727 154,718 Total Deposits 1,215,190 1,250,313 1,226,613 1,185,156 1,173,553 Short-Term Borrowings 32,178 39,219 39,266 42,623 39,054 Other Borrowings 17,618 17,607 17,601 6,000 6,000 Accrued Interest Payable and Other Liabilities 7,703 9,375 8,875 7,405 7,913 Total Liabilities 1,272,689 1,316,514 1,292,355 1,343,831 1,329,077 STOCKHOLDERS’ EQUITY $ 113,772 $ 122,156 $ 133,124 $ 130,987 $ 132,536 Three Months Ended Six Months Ended Selected Operating Data 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Interest and Dividend Income Loans, Including Fees $ 9,733 $ 9,551 $ 9,904 $ 9,718 $ 9,936 $ 19,284 $ 20,082 Securities: Taxable 988 905 866 843 635 1,893 1,281 Tax-Exempt 57 66 66 71 74 123 152 Dividends 20 22 21 19 24 42 44 Other Interest and Dividend Income 160 72 106 135 151 232 249 Total Interest and Dividend Income 10,958 10,616 10,963 10,786 10,820 21,574 21,808 Interest Expense Deposits 604 530 636 715 827 1,134 1,774 Short-Term Borrowings 18 19 26 25 24 37 47 Other Borrowings 173 174 70 36 35 347 76 Total Interest Expense 795 723 732 776 886 1,518 1,897 Net Interest and Dividend Income 10,163 9,893 10,231 10,010 9,934 20,056 19,911 Provision (Recovery) for Loan Losses 3,784 — 75 — (1,200 ) 3,784 (1,200 ) Net Interest and Dividend Income After Provision (Recovery) for Loan Losses 6,379 9,893 10,156 10,010 11,134 16,272 21,111 Noninterest Income: Service Fees 559 526 569 602 614 1,085 1,160 Insurance Commissions 1,369 1,798 1,618 1,194 1,209 3,167 2,804 Other Commissions 179 89 90 93 173 268 338 Net Gain on Sales of Loans — — 977 49 31 — 117 Net (Loss) Gain on Securities (199 ) (7 ) 44 24 11 (206 ) 458 Net Gain on Purchased Tax Credits 14 14 17 18 17 28 35 Gain on Sale of Branches — — 5,203 — — — — Net Loss on Disposal of Fixed Assets — (8 ) — — (3 ) (8 ) (3 ) Income from Bank-Owned Life Insurance 142 136 142 138 136 278 273 Other Income 41 65 29 80 31 106 211 Total Noninterest Income 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Noninterest Expense: Salaries and Employee Benefits 4,539 4,565 5,181 4,787 5,076 9,104 9,970 Occupancy 776 686 619 615 1,024 1,462 1,734 Equipment 182 210 252 205 311 392 577 Data Processing 446 485 488 541 607 931 1,125 FDIC Assessment 128 209 222 293 249 337 499 PA Shares Tax 240 240 173 224 225 480 490 Contracted Services 348 587 1,133 1,441 750 935 1,437 Legal and Professional Fees 389 152 206 180 419 541 608 Advertising 115 116 191 225 193 231 333 Other Real Estate Owned (Income) (37 ) (38 ) (30 ) (89 ) (26 ) (75 ) (64 ) Amortization of Intangible Assets 446 445 445 446 503 891 1,035 Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown of Fixed Assets — — 23 2 2,268 — 2,268 Other 838 999 1,069 903 945 1,837 1,927 Total Noninterest Expense 8,410 8,656 9,972 9,773 13,722 17,066 23,117 Income (Loss) Before Income Tax (Benefit) Expense 74 3,850 8,873 2,435 (369 ) 3,924 3,387 Income Tax (Benefit) Expense (44 ) 803 1,908 452 (146 ) 759 765 Net Income (Loss) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Three Months Ended Six Months Ended Per Common Share Data 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Dividends Per Common Share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.48 $ 0.48 Earnings (Loss) Per Common Share - Basic 0.02 0.59 1.32 0.37 (0.04 ) 0.61 0.48 Earnings (Loss) Per Common Share - Diluted 0.02 0.58 1.31 0.37 (0.04 ) 0.61 0.48 Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1) 0.05 0.59 0.53 0.36 0.59 0.64 1.05 Weighted Average Common Shares Outstanding - Basic 5,147,846 5,198,194 5,291,795 5,373,032 5,432,234 5,172,881 5,433,298 Weighted Average Common Shares Outstanding - Diluted 5,156,975 5,220,887 5,314,537 5,390,128 5,432,234 5,189,144 5,438,401 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Common Shares Outstanding 5,128,333 5,156,897 5,260,672 5,330,401 5,409,077 Book Value Per Common Share $ 22.18 $ 23.69 $ 25.31 $ 24.57 $ 24.50 Tangible Book Value per Common Share (1) 19.43 20.86 22.45 21.67 21.56 Stockholders’ Equity to Assets 8.2 % 8.5 % 9.3 % 8.9 % 9.1 % Tangible Common Equity to Tangible Assets (1) 7.3 7.6 8.4 7.9 8.1 Three Months Ended Six Months Ended Selected Financial Ratios (2) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Return on Average Assets 0.03 % 0.87 % 1.87 % 0.54 % (0.06) % 0.45 % 0.36 % Adjusted Return on Average Assets (1) 0.08 0.87 0.76 0.53 0.87 0.48 0.79 Return on Average Equity 0.40 9.50 20.95 5.93 (0.66) 5.15 3.92 Adjusted Return on Average Equity (1) 0.93 9.54 8.55 5.88 9.57 5.42 8.53 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 149.03 144.48 145.09 146.78 146.82 146.74 144.94 Average Equity to Average Assets 8.49 9.14 8.93 9.03 9.08 8.81 9.27 Net Interest Rate Spread 3.00 2.98 2.85 2.77 2.72 3.00 2.81 Net Interest Rate Spread (FTE) (1) 3.01 2.99 2.86 2.78 2.74 3.01 2.82 Net Interest Margin 3.12 3.08 2.95 2.88 2.84 3.10 2.94 Net Interest Margin (FTE) (1) 3.13 3.10 2.96 2.89 2.85 3.11 2.95 Net Charge-offs (Recoveries) to Average Loans 1.01 (0.01) 0.03 (0.01) (0.01) 0.50 0.01 Efficiency Ratio 68.55 69.21 52.71 80.05 112.91 68.89 91.36 Adjusted Efficiency Ratio (1) 64.18 65.88 69.73 77.27 80.68 65.03 75.25 Asset Quality Ratios 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Allowance for Loan Losses to Total Loans 1.25 % 1.14 % 1.13 % 1.16 % 1.15 % Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1) 1.25 1.15 1.16 1.20 1.21 Allowance for Loan Losses to Nonperforming Loans (3) 219.89 158.88 159.40 106.18 74.92 Allowance for Loan Losses to Noncurrent Loans (4) 329.47 218.28 233.37 135.37 90.83 Delinquent and Nonaccrual Loans to Total Loans (4) (5) 0.45 0.79 0.78 0.97 1.37 Nonperforming Loans to Total Loans (3) 0.57 0.72 0.71 1.09 1.53 Noncurrent Loans to Total Loans (4) 0.38 0.52 0.49 0.85 1.26 Nonperforming Assets to Total Assets (6) 0.42 0.51 0.51 0.74 1.07 Capital Ratios (7) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Common Equity Tier 1 Capital (to Risk Weighted Assets) 11.83 % 11.99 % 11.95 % 11.53 % 11.67 % Tier 1 Capital (to Risk Weighted Assets) 11.83 11.99 11.95 11.53 11.67 Total Capital (to Risk Weighted Assets) 13.08 13.20 13.18 12.77 12.92 Tier 1 Leverage (to Adjusted Total Assets) 8.33 8.19 7.76 7.38 7.23 (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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 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) $ 1,007,874 $ 9,751 3.88 % $ 1,009,210 $ 9,573 3.85 % $ 1,004,827 $ 9,927 3.92 % $ 1,004,474 $ 9,740 3.85 % $ 1,016,868 $ 9,959 3.93 % Debt Securities Taxable 228,315 988 1.73 215,906 905 1.68 205,328 866 1.69 197,763 843 1.71 124,685 635 2.04 Exempt From Federal Tax 9,109 73 3.21 10,195 84 3.30 10,477 84 3.21 11,647 90 3.09 12,276 94 3.06 Equity Securities 2,693 20 2.97 2,693 22 3.27 2,693 21 3.12 2,655 19 2.86 2,649 24 3.62 Interest Bearing Deposits at Banks 56,379 122 0.87 59,296 33 0.22 150,102 61 0.16 160,935 92 0.23 242,348 106 0.17 Other Interest-Earning Assets 3,235 38 4.71 3,483 39 4.54 3,475 45 5.14 3,512 43 4.86 4,044 45 4.46 Total Interest-Earning Assets 1,307,605 10,992 3.37 1,300,783 10,656 3.32 1,376,902 11,004 3.17 1,380,986 10,827 3.11 1,402,870 10,863 3.11 Noninterest-Earning Assets 84,323 122,288 100,607 88,291 82,794 Total Assets $ 1,391,928 $ 1,423,071 $ 1,477,509 $ 1,469,277 $ 1,485,664 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 260,655 111 0.17 % $ 276,603 48 0.07 % $ 278,546 51 0.07 $ 275,411 48 0.07 $ 275,752 55 0.08 % Savings (3) 248,356 20 0.03 243,786 19 0.03 252,387 20 0.03 251,801 21 0.03 247,238 25 0.04 Money Market (3) 188,804 61 0.13 192,425 41 0.09 209,572 57 0.11 198,167 55 0.11 199,652 71 0.14 Time Deposits (3) 127,832 412 1.29 132,015 422 1.30 154,342 508 1.31 168,654 591 1.39 177,506 676 1.53 Total Interest-Bearing Deposits (3) 825,647 604 0.29 844,829 530 0.25 894,847 636 0.28 894,033 715 0.32 900,148 827 0.37 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 34,135 18 0.21 37,884 19 0.20 44,709 26 0.23 40,818 25 0.24 49,325 24 0.20 Other Borrowings 17,611 173 3.94 17,604 174 4.01 9,474 70 2.93 6,000 36 2.38 6,000 35 2.34 Total Interest-Bearing Liabilities 877,393 795 0.36 900,317 723 0.33 949,030 732 0.31 940,851 776 0.33 955,473 886 0.37 Noninterest-Bearing Demand Deposits 391,975 384,188 388,787 387,746 387,317 Other Liabilities 4,415 8,554 7,800 8,019 7,999 Total Liabilities 1,273,783 1,293,059 1,345,617 1,336,616 1,350,789 Stockholders' Equity 118,145 130,012 131,892 132,661 134,875 Total Liabilities and Stockholders' Equity $ 1,391,928 $ 1,423,071 $ 1,477,509 $ 1,469,277 $ 1,485,664 Net Interest Income (FTE) (Non-GAAP) (4) 10,197 9,933 10,272 10,051 9,977 Net Interest-Earning Assets (5) 430,212 400,466 427,872 440,135 447,397 Net Interest Rate Spread (FTE) (Non-GAAP) (4) (6) 3.01 % 2.99 % 2.86 2.78 2.74 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 3.13 �� 3.10 2.96 2.89 2.85 PPP Loans 5,546 144 10.41 14,673 445 12.30 29,067 391 5.34 40,313 484 4.76 57,661 636 4.42 (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 if applicable. (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 Six Months Ended June 30, 2022 June 30, 2021 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) $ 1,008,539 $ 19,322 3.86 % $ 1,024,319 $ 20,131 3.96 % Debt Securities Taxable 222,144 1,893 1.70 123,790 1,281 2.07 Exempt From Federal Tax 9,649 156 3.23 12,608 192 3.05 Marketable Equity Securities 2,693 42 3.12 2,641 44 3.33 Interest Bearing Deposits at Banks 57,829 156 0.54 200,388 150 0.15 Other Interest-Earning Assets 3,358 76 4.56 3,977 99 5.02 Total Interest-Earning Assets 1,304,212 21,645 3.35 1,367,723 21,897 3.23 Noninterest-Earning Assets 103,201 87,645 Total Assets $ 1,407,413 $ 1,455,368 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 268,585 160 0.12 % $ 267,455 133 0.10 % Savings (3) 246,084 38 0.03 243,565 57 0.05 Money Market (3) 190,605 102 0.11 198,530 168 0.17 Time Deposits (3) 129,914 834 1.29 182,283 1,416 1.57 Total Interest-Bearing Deposits (3) 835,188 1,134 0.27 891,833 1,774 0.40 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 36,000 37 0.21 45,232 47 0.21 Other Borrowings 17,608 347 3.97 6,597 76 2.32 Total Interest-Bearing Liabilities 888,796 1,518 0.34 943,662 1,897 0.41 Noninterest-Bearing Demand Deposits 388,103 368,318 Other Liabilities 6,468 8,433 Total Liabilities 1,283,367 1,320,413 Stockholders' Equity 124,046 134,955 Total Liabilities and Stockholders' Equity $ 1,407,413 $ 1,455,368 Net Interest Income (FTE) (Non-GAAP) (4) 20,127 20,000 Net Interest-Earning Assets (5) 415,416 424,061 Net Interest Rate Spread (FTE) (Non-GAAP) (4)(6) 3.01 % 2.82 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 3.11 2.95 PPP Loans 10,085 589 11.78 57,305 1,313 4.62 (1) Annualized based on six months ended results. (2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable. (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. 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands, except share and per share data) (Unaudited) Net Income (Loss) (GAAP) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Adjustments Loss (Gain) on Securities 199 7 (44 ) (24 ) (11 ) 206 (458 ) Gain on Sale of Branches — — (5,203 ) — — — — Loss on Disposal of Fixed Assets — 8 — — 3 8 3 Tax effect (42 ) (3 ) 1,102 5 2 (45 ) 96 Non-Cash Charges: Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown on Fixed Assets — — 23 2 2,268 — 2,268 Tax Effect — — — — — Adjusted Net Income (Non-GAAP) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding 5,156,975 5,220,887 5,314,537 5,390,128 5,432,234 5,189,144 5,438,401 Earnings (Loss) per Common Share - Diluted (GAAP) $ 0.02 $ 0.58 $ 1.31 $ 0.37 $ (0.04 ) $ 0.61 $ 0.48 Adjusted Earnings per Common Share - Diluted (Non-GAAP) $ 0.05 $ 0.59 $ 0.53 $ 0.36 $ 0.59 $ 0.64 $ 1.05 Net Income (Loss) (GAAP) (Numerator) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Assets (Denominator) 1,391,928 1,423,071 1,477,509 1,469,277 1,485,664 1,407,413 1,455,368 Return on Average Assets (GAAP) 0.03 % 0.87 % 1.87 % 0.54 % (0.06 ) % 0.45 % 0.36 % Adjusted Net Income (Non-GAAP) (Numerator) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Assets (Denominator) 1,391,928 1,423,071 1,477,509 1,469,277 1,485,664 1,407,413 1,455,368 Adjusted Return on Average Assets (Non-GAAP) 0.08 % 0.87 % 0.76 % 0.53 % 0.87 % 0.48 % 0.79 % Three Months Ended Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Net Income (Loss) (GAAP) (Numerator) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Equity (Denominator) (GAAP) 118,145 130,012 131,892 132,661 134,875 124,046 134,955 Return on Average Equity (GAAP) 0.40 % 9.50 % 20.95 % 5.93 % (0.66 ) % 5.15 % 3.92 % Adjusted Net Income (Non-GAAP) (Numerator) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Equity (Denominator) (GAAP) 118,145 130,012 131,892 132,661 134,875 124,046 134,955 Adjusted Return on Average Equity (Non-GAAP) 0.93 % 9.54 % 8.55 % 5.88 % 9.57 % 5.42 % 8.53 % 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. 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 (Dollars in thousands, except share and per share data) (Unaudited) Assets (GAAP) $ 1,386,461 $ 1,438,670 $ 1,425,479 $ 1,474,818 $ 1,461,613 Goodwill and Intangible Assets, Net (14,136 ) (14,582 ) (15,027 ) (15,472 ) (15,918 ) Tangible Assets (Non-GAAP) (Numerator) $ 1,372,325 $ 1,424,088 $ 1,410,452 $ 1,459,346 $ 1,445,695 Stockholders' Equity (GAAP) $ 113,772 $ 122,156 $ 133,124 $ 130,987 $ 132,536 Goodwill and Intangible Assets, Net (14,136 ) (14,582 ) (15,027 ) (15,472 ) (15,918 ) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator) $ 99,636 $ 107,574 $ 118,097 $ 115,515 $ 116,618 Stockholders’ Equity to Assets (GAAP) 8.2 % 8.5 % 9.3 % 8.9 % 9.1 % Tangible Common Equity to Tangible Assets (Non-GAAP) 7.3 % 7.6 % 8.4 % 7.9 % 8.1 % Common Shares Outstanding (Denominator) 5,128,333 5,156,897 5,260,672 5,330,401 5,409,077 Book Value per Common Share (GAAP) $ 22.18 $ 23.69 $ 25.31 $ 24.57 $ 24.50 Tangible Book Value per Common Share (Non-GAAP) $ 19.43 $ 20.86 $ 22.45 $ 21.67 $ 21.56 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Interest Income (GAAP) $ 10,958 $ 10,616 $ 10,963 $ 10,786 $ 10,820 $ 21,574 $ 21,808 Adjustment to FTE Basis 34 40 41 41 43 71 89 Interest Income (FTE) (Non-GAAP) 10,992 10,656 11,004 10,827 10,863 21,645 21,897 Interest Expense (GAAP) 795 723 732 776 886 1,518 1,897 Net Interest Income (FTE) (Non-GAAP) $ 10,197 $ 9,933 $ 10,272 $ 10,051 $ 9,977 $ 20,127 $ 20,000 Net Interest Rate Spread (GAAP) 3.00 % 2.98 % 2.85 % 2.77 % 2.72 % 3.00 % 2.81 % Adjustment to FTE Basis 0.01 0.01 0.01 0.01 0.02 0.01 0.01 Net Interest Rate Spread (FTE) (Non-GAAP) 3.01 2.99 2.86 2.78 2.74 3.01 2.82 Net Interest Margin (GAAP) 3.12 % 3.08 % 2.95 % 2.88 % 2.84 % 3.10 % 2.94 % Adjustment to FTE Basis 0.01 0.02 0.01 0.01 0.01 0.01 0.01 Net Interest Margin (FTE) (Non-GAAP) 3.13 3.10 2.96 2.89 2.85 3.11 2.95 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Noninterest Expense (GAAP) $ 8,410 $ 8,656 $ 9,972 $ 9,773 $ 13,722 $ 17,066 $ 23,117 Net Interest and Dividend Income (GAAP) $ 10,163 $ 9,893 $ 10,231 $ 10,010 $ 9,934 $ 20,056 $ 19,911 Noninterest Income (GAAP) 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Operating Revenue (GAAP) $ 12,268 $ 12,506 $ 18,920 $ 12,208 $ 12,153 $ 24,774 $ 25,304 Efficiency Ratio (GAAP) 68.55 % 69.21 % 52.71 % 80.05 % 112.91 % 68.89 % 91.36 % Noninterest Expense (GAAP) $ 8,410 $ 8,656 $ 9,972 $ 9,773 $ 13,722 $ 17,066 $ 23,117 Less: Other Real Estate Owned (Income) (37 ) (38 ) (30 ) (89 ) (26 ) (75 ) (64 ) Amortization of Intangible Assets 446 445 445 446 503 891 1,035 Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown on Fixed Assets — — 23 2 2,268 — 2,268 Adjusted Noninterest Expense (Non-GAAP) $ 8,001 $ 8,249 $ 9,534 $ 9,414 $ 9,799 $ 16,250 $ 18,700 Net Interest and Dividend Income (GAAP) $ 10,163 $ 9,893 $ 10,231 $ 10,010 $ 9,934 $ 20,056 $ 19,911 Noninterest Income (GAAP) 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Less: Net (Loss) Gain on Securities (199 ) (7 ) 44 24 11 (206 ) 458 Gain on Sale of Branches — — 5,203 — — — — Net Loss on Disposal of Fixed Assets — (8 ) — — (3 ) (8 ) (3 ) Adjusted Noninterest Income (Non-GAAP) $ 2,304 $ 2,628 $ 3,442 $ 2,174 $ 2,211 $ 4,932 $ 4,938 Adjusted Operating Revenue (Non-GAAP) $ 12,467 $ 12,521 $ 13,673 $ 12,184 $ 12,145 $ 24,988 $ 24,849 Adjusted Efficiency Ratio (Non-GAAP) 64.18 % 65.88 % 69.73 % 77.27 % 80.68 % 65.03 % 75.25 % 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. 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 (Dollars in thousands) (Unaudited) Allowance for Loan Losses $ 12,833 $ 11,595 $ 11,582 $ 11,581 $ 11,544 Total Loans 1,027,969 $ 1,020,642 1,020,796 $ 1,001,599 $ 1,007,446 PPP Loans (3,853 ) (8,242 ) (24,523 ) (32,703 ) (49,525 ) Total Loans, Excluding PPP Loans (Non-GAAP) $ 1,024,116 $ 1,012,400 $ 996,273 $ 968,896 $ 957,921 Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) 1.25 % 1.15 % 1.16 % 1.20 % 1.21 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006003/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 Second Quarter and Year-to-Date 2022 Financial Results and Declares Quarterly Cash Dividend By: CB Financial Services, Inc. via Business Wire July 28, 2022 at 16:15 PM EDT 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 second quarter and year-to-date 2022 financial results. Three Months Ended Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands, except per share data) (Unaudited) Net Income (Loss) (GAAP) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Non-Recurring Items 157 12 (4,122 ) (17 ) 3,440 169 3,087 Adjusted Net Income (Non-GAAP) (1) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Earnings (Loss) per Common Share - Diluted (GAAP) $ 0.02 $ 0.58 $ 1.31 $ 0.37 $ (0.04 ) $ 0.61 $ 0.48 Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1) $ 0.05 $ 0.59 $ 0.53 $ 0.36 $ 0.59 $ 0.64 $ 1.05 (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. 2022 Second Quarter Financial Highlights (Comparisons to three months ended June 30, 2021 unless otherwise noted) Net income was $118,000, compared to a net loss of $223,000. Current period results were negatively impacted by provision expense of approximately $3.8 million driven, largely, by a loan charge-off of $2.7 million while the prior year period included an intangible asset impairment and asset write down of $3.4 million, associated with the Company’s optimization program. Current period results were aided by the completion of the Company’s optimization program in 2021, which resulted in a reduction of noninterest expense of $1.9 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 (excluding noninterest expense of $3.4 million related to intangible impairment and fixed asset write-down). Adjusted net income (non-GAAP) was $275,000, compared to $3.2 million. Earnings per diluted common share (EPS) increased to $0.02 from loss per diluted common share of $0.04. Adjusted earnings per common share - diluted (non-GAAP) was $0.05, compared to $0.59. Return on average assets (annualized) of 0.03%, compared to loss on average assets (annualized) of 0.06%. Adjusted return on average assets (annualized) (non-GAAP) of 0.08%, compared to 0.87%. Return on average equity (annualized) of 0.40%, compared to loss on average equity (annualized) of 0.66%. Adjusted return on average equity (annualized) (non-GAAP) of 0.93%, compared to 9.57%. Net interest margin (NIM) improved to 3.12% from 2.84%. Net interest and dividend income was $10.2 million, compared to $9.9 million. Noninterest income decreased to $2.1 million, compared to $2.2 million. The most significant change in noninterest income was a $210,000 reduction in securities gains resulting from mark-to-market accounting, partially offset by an increase of $160,000 in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher than lock-in amounts received and core business including commercial and personal insurance lines. (Amounts at June 30, 2022; comparisons to December 31, 2021, unless otherwise noted) Total loans, including Payroll Protection Program (“PPP”) loans, were $1.03 billion, an increase of $7.2 million from $1.02 billion. Total loans held for investment, excluding PPP loans, increased $27.8 million, or 5.6% annualized, to $1.02 billion compared to $996.3 million, and included increases of $26.8 million, or 44.2% annualized, in consumer loans, and $34.0 million, or 17.6% annualized, growth in commercial real estate loans, partially offset by decreases in construction real estate and commercial and industrial loans. Compared to June 30, 2021, loans held for investment, excluding PPP loans, increased $66.2 million, or 6.9%, primarily from increases of $65.6 million in commercial real estate loans and $42.5 million in consumer loans as noted above, partially offset by decreases of $43.9 million in construction real estate loans and $8.6 million in commercial and industrial loans. Nonperforming loans to total loans was 0.57%, a decrease of 14 basis points (“bps”), compared to 0.71%. Total deposits were $1.22 billion, a decrease of $11.4 million, compared to $1.23 billion. Total assets decreased by $39 million to $1.39 billion, compared to $1.43 billion. Book value per share was $22.18, compared to $23.69 as of March 31, 2022 and $25.31 as of December 31, 2021. Tangible book value per share (Non-GAAP) decreased to $19.43, compared to $20.86 as of March 31, 2022 and $22.45 as of December 31, 2021, reflecting impact to Accumulated Other Comprehensive Income from unrealized losses on securities portfolios. Management Commentary President and CEO John H. Montgomery stated, “Despite the looming macroeconomic uncertainty, we are optimistic about our business for a number of reasons. Our core earnings, as measured by pre-tax, pre-provision income, are accelerating and that is due primarily to the steps we took in 2021 to optimize our operations, coupled with growth investments we have made this year. Continuing the trend we saw in the first quarter, second quarter results included further loan growth, led by consumer and commercial real estate loans, and a lower noninterest expense run rate. Underpinning our growth is a stable, low volatility metropolitan service area anchored by leading higher education institutions and major healthcare companies, in addition to a strong technology presence.” Mr. Montgomery continued, “As we reported on June 6th, we incurred a $2.7 million charge-off associated with a loan to a long-time customer that unexpectedly decided to wind down their operations. Although the charge negatively impacted our results in the quarter, a subsequent examination of our entire credit portfolio confirmed our view that this was an isolated event. We also believe our senior leadership team, and our credit management team in particular, is a key asset, as they delivered outstanding performance during the recessionary period from 2008 to 2010. During that period, we did not need to take a government TARP loan and our total credit losses during the period were less than $5.0 million. That experience allows us to face the current economic headwinds with confidence that we can not only adeptly manage our credit risk but also continue to grow our core earnings. During the second quarter we furthered our commitment to CB shareholders as we announced a new $10.0 million share repurchase program, in addition to our regular quarterly dividend. We remain well-capitalized with the ability to support growth along with these shareholder-friendly actions.” 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 August 31, 2022, to stockholders of record as of the close of business on August 19, 2022. Stock Repurchase Program On April 21, 2022, CB announced a program to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. Based on the Company’s closing stock price on July 26, 2022, the repurchase program, if fully completed, would encompass 428,082 shares, or approximately 8.3% of the shares currently outstanding. 2022 Second Quarter Financial Review Net Interest and Dividend Income Net interest and dividend income increased $229,000, or 2.3%, to $10.2 million for the three months ended June 30, 2022 compared to $9.9 million for the three months ended June 30, 2021. Net interest margin (GAAP) increased to 3.12% for the three months ended June 30, 2022 compared to 2.84% for the three months ended June 30, 2021. Net interest margin (FTE) (Non-GAAP) increased 28 bps to 3.13% for the three months ended June 30, 2022 compared to 2.85% for the three months ended June 30, 2021. Interest and dividend income increased $138,000, or 1.3%, to $11.0 million for the three months ended June 30, 2022 compared to $10.8 million for the three months ended June 30, 2021. Interest income on loans decreased $203,000, or 2.0%, to $9.7 million for the three months ended June 30, 2022 compared to $9.9 million for the three months ended June 30, 2021. The average balance of loans decreased $9.0 million to $1.01 billion from $1.02 billion and the average yield decreased 5 bps to 3.88% compared to 3.93%. Interest and fee income on PPP loans was $144,000 for the three months ended June 30, 2022 and contributed 4 bps to loan yield, compared to $636,000 for the three months ended June 30, 2021, which contributed 3 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $75,000 for the three months ended June 30, 2022 compared to $153,000 for the three months ended June 30, 2021, or 3 bps in the current period compared to 6 bps in the prior period. Interest income on taxable investment securities increased $353,000, or 55.6%, to $988,000 for the three months ended June 30, 2022 compared to $635,000 for the three months ended June 30, 2021 driven by a $103.6 million increase in average balance partially offset by a 31 bps decrease in average yield. Interest expense decreased $91,000, or 10.3%, to $795,000 for the three months ended June 30, 2022 compared to $886,000 for the three months ended June 30, 2021. Interest expense on deposits decreased $223,000, or 27.0%, to $604,000 for the three months ended June 30, 2022 compared to $827,000 for the three months ended June 30, 2021. While average interest-earning deposit balances decreased $74.5 million, or 8%, from $900.1 million as of June 30, 2021 compared to $825.6 million as of June 30, 2022, controlling the deposit cost structure combined with non-renewal or repricing of higher-cost time deposit resulted in a 8 bps, or 21.7%, decrease in average cost compared to the three months ended June 30, 2021. In addition, the average balance of time deposits and the related average cost decreased $49.7 million and 24 bps, respectively. These decreases are partially offset by a 9 bps increase in interest-bearing demand deposit average cost as well as an increase in average other borrowings of $11.6 million or 193.5% to $17.6 million as of June 30, 2022 compared to $6.0 million as of June 30, 2021, which was driven by an increase in subordinated debt balance. Provision for Loan Losses There was $3.8 million provision for loan losses for the three months ended June 30, 2022 compared with a recovery of $1.2 million for the three months ended June 30, 2021. The increased provision for loan losses was primarily due to a provision for a single loan charge-off of $2.7 million (pre-tax) with respect to a commercial and industrial loan. As previously reported, the charge-off relates to a borrower which is ceasing operations and carried a $3.5 million revolving line of credit which had an outstanding balance of $2.7 million. The remaining increase to the provision was a result of adjustments made to historical loss factors and changes in qualitative factors in particular economic and industry conditions between the three months ended June 30, 2022 and three months ended June 30, 2021. Noninterest income Noninterest income decreased $114,000, or 5.1%, to $2.1 million for the three months ended June 30, 2022, compared to $2.2 million for the three months ended June 30, 2021. The decrease was largely due to a $210,000 reduction in securities gains due to a decline of $199,000 in the market value of equity securities, comprised mainly of bank stocks, partially offset by a $160,000 increase in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher than lock-in amounts received and core business including commercial and personal insurance lines. In addition, net gain on sale of loans decreased $31,000 as there were no loans sold during the three months ended June 30, 2022. Noninterest Expense Noninterest expense decreased $5.3 million, or 38.7%, to $8.4 million for the three months ended June 30, 2022 compared to $13.7 million for the three months ended June 30, 2021, and compared to $8.7 million for the three months ended March 31, 2022. The primary drivers were decreases of $2.3 million and $1.2 million related to the writedown of fixed assets and intangible impairment associated with branch consolidation and sale initiatives in 2021, respectively. In addition, salaries and benefits decreased $537,000 and occupancy decreased $248,000, primarily related to the reduction of footprint and related headcount resulting from the consolidation and sale of branches during 2021. Contracted services decreased $402,000 to $348,000 for the three months ended June 30, 2022 compared to $750,000 for the three months ended June 30, 2021. This was a result of branch optimization initiatives completed in the prior year. Statement of Financial Condition Review Assets Total assets decreased $39.0 million, or 2.7%, to $1.39 billion at June 30, 2022, compared to $1.43 billion at December 31, 2021. Cash and due from banks decreased $38.6 million, or 32.2%, to $81.1 million at June 30, 2022, compared to $119.7 million at December 31, 2021. The change is primarily due to a decrease in deposits as further described below in the Liabilities section. Securities decreased $11.5 million, or 5.1%, to $213.5 million at June 30, 2022, compared to $225.0 million at December 31, 2021. Current period activity included $26.8 million of purchases, and $17.0 million of pay downs. The purchases were made to earn a higher yield on excess cash. In addition, there was a $21.0 million decrease in the market value of the debt securities portfolio, primarily due to the increase in market interest rates, and a $206,000 loss in market value in the equity securities portfolio, which is primarily comprised of bank stocks. Payroll Protection Program (“PPP”) Update PPP loans decreased $20.7 million to $3.9 million at June 30, 2022 compared to $24.5 million at December 31, 2021. $144,000 of net PPP loan origination fees were unearned at June 30, 2022 compared to $678,000 at December 31, 2021. $130,000 of net PPP loan origination fees were earned in the three months ended June 30, 2022 compared to $404,000 for the three months ended March 31, 2022. Loans and Credit Quality Total loans held for investment increased $7.2 million, or 0.70%, to $1.03 billion at June 30, 2022 compared to $1.02 billion at December 31, 2021. Excluding the net decline of $20.7 million in PPP loans in the current period, loans increased $27.8 million. The allowance for loan losses was $12.8 million at June 30, 2022 and $11.6 million at December 31, 2021. As a result, the allowance for loan losses to total loans was 1.25% at June 30, 2022 compared to 1.13% at December 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.25% at June 30, 2022 compared to 1.16% at December 31, 2021. The change in the allowance for loan losses was primarily due to adjustments to historical loss factors and changes in qualitative factors in particular economic and industry conditions since December 31, 2021. Net charge-offs for the three months ended June 30, 2022 were $2.5 million, or 1.01% of average loans on an annualized basis. Net recoveries for the three months ended June 30, 2021 were $19,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2022 were $2.5 million, or 0.50% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2021 were $27,000, or 0.01% 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 $5.8 million at June 30, 2022 compared to $7.3 million at December 31, 2021. Nonperforming loans to total loans ratio was 0.57% at June 30, 2022 compared to 0.71% at December 31, 2021. Other Intangible Assets decreased $891,000, or 17.0%, to $4.4 million at June 30, 2022 compared to $5.3 million at December 31, 2021 primarily due to amortization expense recognized during the period. Accrued interest receivable and other assets increased $5.9 million, or 45.9%; to $18.8 million at June 30, 2022, compared to $12.9 million at December 31, 2021. This change was primarily driven by deferred taxes as a result of the increase in market interest rates conditions and the decrease in the market value of the securities portfolio. Liabilities Total liabilities decreased $19.7 million, or 1.5%, to $1.27 billion at June 30, 2022 compared to $1.29 billion at December 31, 2021. Deposits Total deposits decreased $11.4 million to $1.22 billion as of June 30, 2022 compared to $1.23 billion at December 31, 2021, an annualized decrease of 1.9%. Interest-bearing demand deposits and time deposits decreased $7.2 million and $11.5 million, respectively, partially offset by increases in noninterest bearing demand deposits and savings accounts by $3.4 million and $10.7 million, respectively. Average total deposits decreased $11.4 million, primarily in interest-bearing demand deposits and time deposits for the three months ended June 30, 2022 compared to the three months ended March 31, 2022, Borrowed Funds Short-term borrowings decreased $7.1 million, or 18.1%, to $32.2 million at June 30, 2022, compared to $39.3 million at December 31, 2021. At June 30, 2022 and December 31, 2021, 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. Stockholders’ Equity Stockholders’ equity decreased $19.4 million, or 14.6%, to $113.8 million at June 30, 2022, compared to $133.1 million at December 31, 2021. Since December 31, 2021, the Company has paid $2.5 million in dividends. On February 15, 2022, the Company completed its stock repurchase program that was implemented on June 10, 2021. On April 21, 2022, a new $10 million repurchase program was authorized, with the Company repurchasing 27,439 shares at an average price of $22.06 per share during the second quarter. In total, the Company has repurchased $4.0 million since December 31, 2021. In addition, accumulated other comprehensive loss decreased $16.5 million primarily due to the effect of rising market interest rates on the Bank’s debt securities. This was partially offset by $3.2 million of net income. Book value per share Book value per common share was $22.18 at June 30, 2022 compared to $25.31 at December 31, 2021, a decrease of $3.13. Tangible book value per common share (Non-GAAP) was $19.43 at June 30, 2022, compared to $22.45 at December 31, 2021, a decrease of $3.02. 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 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 ASSETS Cash and Due From Banks $ 81,121 $ 123,588 $ 119,674 $ 173,523 $ 172,010 Securities 213,505 231,097 224,974 221,351 208,472 Loans Held for Sale — — — 17,407 11,409 Loans Real Estate: Residential 325,138 317,254 320,798 317,373 322,480 Commercial 426,105 427,227 392,124 379,621 360,518 Construction 41,277 54,227 85,028 78,075 85,187 Commercial and Industrial Commercial and Industrial 62,054 59,601 64,487 69,657 70,666 PPP 3,853 8,242 24,523 32,703 49,525 Consumer 148,921 143,422 122,152 112,087 106,404 Other 20,621 10,669 11,684 12,083 12,666 Total Loans 1,027,969 1,020,642 1,020,796 1,001,599 1,007,446 Allowance for Loan Losses (12,833 ) (11,595 ) (11,582 ) (11,581 ) (11,544 ) Loans, Net 1,015,136 1,009,047 1,009,214 990,018 995,902 Premises and Equipment Held for Sale — — — 795 795 Premises and Equipment, Net 18,196 18,349 18,399 18,502 18,682 Bank-Owned Life Insurance 25,610 25,468 25,332 25,190 25,052 Goodwill 9,732 9,732 9,732 9,732 9,732 Intangible Assets, Net 4,404 4,850 5,295 5,740 6,186 Accrued Interest and Other Assets 18,757 16,539 12,859 12,560 13,373 Total Assets $ 1,386,461 $ 1,438,670 $ 1,425,479 $ 1,474,818 $ 1,461,613 LIABILITIES Deposits Held for Sale $ — $ — $ — $ 102,647 $ 102,557 Deposits Non-Interest Bearing Demand Deposits 389,127 400,105 385,775 373,320 368,452 Interest Bearing Demand Accounts 265,347 280,455 272,518 244,004 246,920 Money Market Accounts 185,308 192,929 192,125 190,426 176,824 Savings Accounts 250,226 247,589 239,482 232,679 226,639 Time Deposits 125,182 129,235 136,713 144,727 154,718 Total Deposits 1,215,190 1,250,313 1,226,613 1,185,156 1,173,553 Short-Term Borrowings 32,178 39,219 39,266 42,623 39,054 Other Borrowings 17,618 17,607 17,601 6,000 6,000 Accrued Interest Payable and Other Liabilities 7,703 9,375 8,875 7,405 7,913 Total Liabilities 1,272,689 1,316,514 1,292,355 1,343,831 1,329,077 STOCKHOLDERS’ EQUITY $ 113,772 $ 122,156 $ 133,124 $ 130,987 $ 132,536 Three Months Ended Six Months Ended Selected Operating Data 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Interest and Dividend Income Loans, Including Fees $ 9,733 $ 9,551 $ 9,904 $ 9,718 $ 9,936 $ 19,284 $ 20,082 Securities: Taxable 988 905 866 843 635 1,893 1,281 Tax-Exempt 57 66 66 71 74 123 152 Dividends 20 22 21 19 24 42 44 Other Interest and Dividend Income 160 72 106 135 151 232 249 Total Interest and Dividend Income 10,958 10,616 10,963 10,786 10,820 21,574 21,808 Interest Expense Deposits 604 530 636 715 827 1,134 1,774 Short-Term Borrowings 18 19 26 25 24 37 47 Other Borrowings 173 174 70 36 35 347 76 Total Interest Expense 795 723 732 776 886 1,518 1,897 Net Interest and Dividend Income 10,163 9,893 10,231 10,010 9,934 20,056 19,911 Provision (Recovery) for Loan Losses 3,784 — 75 — (1,200 ) 3,784 (1,200 ) Net Interest and Dividend Income After Provision (Recovery) for Loan Losses 6,379 9,893 10,156 10,010 11,134 16,272 21,111 Noninterest Income: Service Fees 559 526 569 602 614 1,085 1,160 Insurance Commissions 1,369 1,798 1,618 1,194 1,209 3,167 2,804 Other Commissions 179 89 90 93 173 268 338 Net Gain on Sales of Loans — — 977 49 31 — 117 Net (Loss) Gain on Securities (199 ) (7 ) 44 24 11 (206 ) 458 Net Gain on Purchased Tax Credits 14 14 17 18 17 28 35 Gain on Sale of Branches — — 5,203 — — — — Net Loss on Disposal of Fixed Assets — (8 ) — — (3 ) (8 ) (3 ) Income from Bank-Owned Life Insurance 142 136 142 138 136 278 273 Other Income 41 65 29 80 31 106 211 Total Noninterest Income 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Noninterest Expense: Salaries and Employee Benefits 4,539 4,565 5,181 4,787 5,076 9,104 9,970 Occupancy 776 686 619 615 1,024 1,462 1,734 Equipment 182 210 252 205 311 392 577 Data Processing 446 485 488 541 607 931 1,125 FDIC Assessment 128 209 222 293 249 337 499 PA Shares Tax 240 240 173 224 225 480 490 Contracted Services 348 587 1,133 1,441 750 935 1,437 Legal and Professional Fees 389 152 206 180 419 541 608 Advertising 115 116 191 225 193 231 333 Other Real Estate Owned (Income) (37 ) (38 ) (30 ) (89 ) (26 ) (75 ) (64 ) Amortization of Intangible Assets 446 445 445 446 503 891 1,035 Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown of Fixed Assets — — 23 2 2,268 — 2,268 Other 838 999 1,069 903 945 1,837 1,927 Total Noninterest Expense 8,410 8,656 9,972 9,773 13,722 17,066 23,117 Income (Loss) Before Income Tax (Benefit) Expense 74 3,850 8,873 2,435 (369 ) 3,924 3,387 Income Tax (Benefit) Expense (44 ) 803 1,908 452 (146 ) 759 765 Net Income (Loss) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Three Months Ended Six Months Ended Per Common Share Data 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Dividends Per Common Share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.48 $ 0.48 Earnings (Loss) Per Common Share - Basic 0.02 0.59 1.32 0.37 (0.04 ) 0.61 0.48 Earnings (Loss) Per Common Share - Diluted 0.02 0.58 1.31 0.37 (0.04 ) 0.61 0.48 Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1) 0.05 0.59 0.53 0.36 0.59 0.64 1.05 Weighted Average Common Shares Outstanding - Basic 5,147,846 5,198,194 5,291,795 5,373,032 5,432,234 5,172,881 5,433,298 Weighted Average Common Shares Outstanding - Diluted 5,156,975 5,220,887 5,314,537 5,390,128 5,432,234 5,189,144 5,438,401 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Common Shares Outstanding 5,128,333 5,156,897 5,260,672 5,330,401 5,409,077 Book Value Per Common Share $ 22.18 $ 23.69 $ 25.31 $ 24.57 $ 24.50 Tangible Book Value per Common Share (1) 19.43 20.86 22.45 21.67 21.56 Stockholders’ Equity to Assets 8.2 % 8.5 % 9.3 % 8.9 % 9.1 % Tangible Common Equity to Tangible Assets (1) 7.3 7.6 8.4 7.9 8.1 Three Months Ended Six Months Ended Selected Financial Ratios (2) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Return on Average Assets 0.03 % 0.87 % 1.87 % 0.54 % (0.06) % 0.45 % 0.36 % Adjusted Return on Average Assets (1) 0.08 0.87 0.76 0.53 0.87 0.48 0.79 Return on Average Equity 0.40 9.50 20.95 5.93 (0.66) 5.15 3.92 Adjusted Return on Average Equity (1) 0.93 9.54 8.55 5.88 9.57 5.42 8.53 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 149.03 144.48 145.09 146.78 146.82 146.74 144.94 Average Equity to Average Assets 8.49 9.14 8.93 9.03 9.08 8.81 9.27 Net Interest Rate Spread 3.00 2.98 2.85 2.77 2.72 3.00 2.81 Net Interest Rate Spread (FTE) (1) 3.01 2.99 2.86 2.78 2.74 3.01 2.82 Net Interest Margin 3.12 3.08 2.95 2.88 2.84 3.10 2.94 Net Interest Margin (FTE) (1) 3.13 3.10 2.96 2.89 2.85 3.11 2.95 Net Charge-offs (Recoveries) to Average Loans 1.01 (0.01) 0.03 (0.01) (0.01) 0.50 0.01 Efficiency Ratio 68.55 69.21 52.71 80.05 112.91 68.89 91.36 Adjusted Efficiency Ratio (1) 64.18 65.88 69.73 77.27 80.68 65.03 75.25 Asset Quality Ratios 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Allowance for Loan Losses to Total Loans 1.25 % 1.14 % 1.13 % 1.16 % 1.15 % Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1) 1.25 1.15 1.16 1.20 1.21 Allowance for Loan Losses to Nonperforming Loans (3) 219.89 158.88 159.40 106.18 74.92 Allowance for Loan Losses to Noncurrent Loans (4) 329.47 218.28 233.37 135.37 90.83 Delinquent and Nonaccrual Loans to Total Loans (4) (5) 0.45 0.79 0.78 0.97 1.37 Nonperforming Loans to Total Loans (3) 0.57 0.72 0.71 1.09 1.53 Noncurrent Loans to Total Loans (4) 0.38 0.52 0.49 0.85 1.26 Nonperforming Assets to Total Assets (6) 0.42 0.51 0.51 0.74 1.07 Capital Ratios (7) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Common Equity Tier 1 Capital (to Risk Weighted Assets) 11.83 % 11.99 % 11.95 % 11.53 % 11.67 % Tier 1 Capital (to Risk Weighted Assets) 11.83 11.99 11.95 11.53 11.67 Total Capital (to Risk Weighted Assets) 13.08 13.20 13.18 12.77 12.92 Tier 1 Leverage (to Adjusted Total Assets) 8.33 8.19 7.76 7.38 7.23 (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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 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) $ 1,007,874 $ 9,751 3.88 % $ 1,009,210 $ 9,573 3.85 % $ 1,004,827 $ 9,927 3.92 % $ 1,004,474 $ 9,740 3.85 % $ 1,016,868 $ 9,959 3.93 % Debt Securities Taxable 228,315 988 1.73 215,906 905 1.68 205,328 866 1.69 197,763 843 1.71 124,685 635 2.04 Exempt From Federal Tax 9,109 73 3.21 10,195 84 3.30 10,477 84 3.21 11,647 90 3.09 12,276 94 3.06 Equity Securities 2,693 20 2.97 2,693 22 3.27 2,693 21 3.12 2,655 19 2.86 2,649 24 3.62 Interest Bearing Deposits at Banks 56,379 122 0.87 59,296 33 0.22 150,102 61 0.16 160,935 92 0.23 242,348 106 0.17 Other Interest-Earning Assets 3,235 38 4.71 3,483 39 4.54 3,475 45 5.14 3,512 43 4.86 4,044 45 4.46 Total Interest-Earning Assets 1,307,605 10,992 3.37 1,300,783 10,656 3.32 1,376,902 11,004 3.17 1,380,986 10,827 3.11 1,402,870 10,863 3.11 Noninterest-Earning Assets 84,323 122,288 100,607 88,291 82,794 Total Assets $ 1,391,928 $ 1,423,071 $ 1,477,509 $ 1,469,277 $ 1,485,664 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 260,655 111 0.17 % $ 276,603 48 0.07 % $ 278,546 51 0.07 $ 275,411 48 0.07 $ 275,752 55 0.08 % Savings (3) 248,356 20 0.03 243,786 19 0.03 252,387 20 0.03 251,801 21 0.03 247,238 25 0.04 Money Market (3) 188,804 61 0.13 192,425 41 0.09 209,572 57 0.11 198,167 55 0.11 199,652 71 0.14 Time Deposits (3) 127,832 412 1.29 132,015 422 1.30 154,342 508 1.31 168,654 591 1.39 177,506 676 1.53 Total Interest-Bearing Deposits (3) 825,647 604 0.29 844,829 530 0.25 894,847 636 0.28 894,033 715 0.32 900,148 827 0.37 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 34,135 18 0.21 37,884 19 0.20 44,709 26 0.23 40,818 25 0.24 49,325 24 0.20 Other Borrowings 17,611 173 3.94 17,604 174 4.01 9,474 70 2.93 6,000 36 2.38 6,000 35 2.34 Total Interest-Bearing Liabilities 877,393 795 0.36 900,317 723 0.33 949,030 732 0.31 940,851 776 0.33 955,473 886 0.37 Noninterest-Bearing Demand Deposits 391,975 384,188 388,787 387,746 387,317 Other Liabilities 4,415 8,554 7,800 8,019 7,999 Total Liabilities 1,273,783 1,293,059 1,345,617 1,336,616 1,350,789 Stockholders' Equity 118,145 130,012 131,892 132,661 134,875 Total Liabilities and Stockholders' Equity $ 1,391,928 $ 1,423,071 $ 1,477,509 $ 1,469,277 $ 1,485,664 Net Interest Income (FTE) (Non-GAAP) (4) 10,197 9,933 10,272 10,051 9,977 Net Interest-Earning Assets (5) 430,212 400,466 427,872 440,135 447,397 Net Interest Rate Spread (FTE) (Non-GAAP) (4) (6) 3.01 % 2.99 % 2.86 2.78 2.74 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 3.13 �� 3.10 2.96 2.89 2.85 PPP Loans 5,546 144 10.41 14,673 445 12.30 29,067 391 5.34 40,313 484 4.76 57,661 636 4.42 (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 if applicable. (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 Six Months Ended June 30, 2022 June 30, 2021 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) $ 1,008,539 $ 19,322 3.86 % $ 1,024,319 $ 20,131 3.96 % Debt Securities Taxable 222,144 1,893 1.70 123,790 1,281 2.07 Exempt From Federal Tax 9,649 156 3.23 12,608 192 3.05 Marketable Equity Securities 2,693 42 3.12 2,641 44 3.33 Interest Bearing Deposits at Banks 57,829 156 0.54 200,388 150 0.15 Other Interest-Earning Assets 3,358 76 4.56 3,977 99 5.02 Total Interest-Earning Assets 1,304,212 21,645 3.35 1,367,723 21,897 3.23 Noninterest-Earning Assets 103,201 87,645 Total Assets $ 1,407,413 $ 1,455,368 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 268,585 160 0.12 % $ 267,455 133 0.10 % Savings (3) 246,084 38 0.03 243,565 57 0.05 Money Market (3) 190,605 102 0.11 198,530 168 0.17 Time Deposits (3) 129,914 834 1.29 182,283 1,416 1.57 Total Interest-Bearing Deposits (3) 835,188 1,134 0.27 891,833 1,774 0.40 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 36,000 37 0.21 45,232 47 0.21 Other Borrowings 17,608 347 3.97 6,597 76 2.32 Total Interest-Bearing Liabilities 888,796 1,518 0.34 943,662 1,897 0.41 Noninterest-Bearing Demand Deposits 388,103 368,318 Other Liabilities 6,468 8,433 Total Liabilities 1,283,367 1,320,413 Stockholders' Equity 124,046 134,955 Total Liabilities and Stockholders' Equity $ 1,407,413 $ 1,455,368 Net Interest Income (FTE) (Non-GAAP) (4) 20,127 20,000 Net Interest-Earning Assets (5) 415,416 424,061 Net Interest Rate Spread (FTE) (Non-GAAP) (4)(6) 3.01 % 2.82 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 3.11 2.95 PPP Loans 10,085 589 11.78 57,305 1,313 4.62 (1) Annualized based on six months ended results. (2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable. (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. 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands, except share and per share data) (Unaudited) Net Income (Loss) (GAAP) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Adjustments Loss (Gain) on Securities 199 7 (44 ) (24 ) (11 ) 206 (458 ) Gain on Sale of Branches — — (5,203 ) — — — — Loss on Disposal of Fixed Assets — 8 — — 3 8 3 Tax effect (42 ) (3 ) 1,102 5 2 (45 ) 96 Non-Cash Charges: Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown on Fixed Assets — — 23 2 2,268 — 2,268 Tax Effect — — — — — Adjusted Net Income (Non-GAAP) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding 5,156,975 5,220,887 5,314,537 5,390,128 5,432,234 5,189,144 5,438,401 Earnings (Loss) per Common Share - Diluted (GAAP) $ 0.02 $ 0.58 $ 1.31 $ 0.37 $ (0.04 ) $ 0.61 $ 0.48 Adjusted Earnings per Common Share - Diluted (Non-GAAP) $ 0.05 $ 0.59 $ 0.53 $ 0.36 $ 0.59 $ 0.64 $ 1.05 Net Income (Loss) (GAAP) (Numerator) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Assets (Denominator) 1,391,928 1,423,071 1,477,509 1,469,277 1,485,664 1,407,413 1,455,368 Return on Average Assets (GAAP) 0.03 % 0.87 % 1.87 % 0.54 % (0.06 ) % 0.45 % 0.36 % Adjusted Net Income (Non-GAAP) (Numerator) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Assets (Denominator) 1,391,928 1,423,071 1,477,509 1,469,277 1,485,664 1,407,413 1,455,368 Adjusted Return on Average Assets (Non-GAAP) 0.08 % 0.87 % 0.76 % 0.53 % 0.87 % 0.48 % 0.79 % Three Months Ended Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Net Income (Loss) (GAAP) (Numerator) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Equity (Denominator) (GAAP) 118,145 130,012 131,892 132,661 134,875 124,046 134,955 Return on Average Equity (GAAP) 0.40 % 9.50 % 20.95 % 5.93 % (0.66 ) % 5.15 % 3.92 % Adjusted Net Income (Non-GAAP) (Numerator) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Equity (Denominator) (GAAP) 118,145 130,012 131,892 132,661 134,875 124,046 134,955 Adjusted Return on Average Equity (Non-GAAP) 0.93 % 9.54 % 8.55 % 5.88 % 9.57 % 5.42 % 8.53 % 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. 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 (Dollars in thousands, except share and per share data) (Unaudited) Assets (GAAP) $ 1,386,461 $ 1,438,670 $ 1,425,479 $ 1,474,818 $ 1,461,613 Goodwill and Intangible Assets, Net (14,136 ) (14,582 ) (15,027 ) (15,472 ) (15,918 ) Tangible Assets (Non-GAAP) (Numerator) $ 1,372,325 $ 1,424,088 $ 1,410,452 $ 1,459,346 $ 1,445,695 Stockholders' Equity (GAAP) $ 113,772 $ 122,156 $ 133,124 $ 130,987 $ 132,536 Goodwill and Intangible Assets, Net (14,136 ) (14,582 ) (15,027 ) (15,472 ) (15,918 ) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator) $ 99,636 $ 107,574 $ 118,097 $ 115,515 $ 116,618 Stockholders’ Equity to Assets (GAAP) 8.2 % 8.5 % 9.3 % 8.9 % 9.1 % Tangible Common Equity to Tangible Assets (Non-GAAP) 7.3 % 7.6 % 8.4 % 7.9 % 8.1 % Common Shares Outstanding (Denominator) 5,128,333 5,156,897 5,260,672 5,330,401 5,409,077 Book Value per Common Share (GAAP) $ 22.18 $ 23.69 $ 25.31 $ 24.57 $ 24.50 Tangible Book Value per Common Share (Non-GAAP) $ 19.43 $ 20.86 $ 22.45 $ 21.67 $ 21.56 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Interest Income (GAAP) $ 10,958 $ 10,616 $ 10,963 $ 10,786 $ 10,820 $ 21,574 $ 21,808 Adjustment to FTE Basis 34 40 41 41 43 71 89 Interest Income (FTE) (Non-GAAP) 10,992 10,656 11,004 10,827 10,863 21,645 21,897 Interest Expense (GAAP) 795 723 732 776 886 1,518 1,897 Net Interest Income (FTE) (Non-GAAP) $ 10,197 $ 9,933 $ 10,272 $ 10,051 $ 9,977 $ 20,127 $ 20,000 Net Interest Rate Spread (GAAP) 3.00 % 2.98 % 2.85 % 2.77 % 2.72 % 3.00 % 2.81 % Adjustment to FTE Basis 0.01 0.01 0.01 0.01 0.02 0.01 0.01 Net Interest Rate Spread (FTE) (Non-GAAP) 3.01 2.99 2.86 2.78 2.74 3.01 2.82 Net Interest Margin (GAAP) 3.12 % 3.08 % 2.95 % 2.88 % 2.84 % 3.10 % 2.94 % Adjustment to FTE Basis 0.01 0.02 0.01 0.01 0.01 0.01 0.01 Net Interest Margin (FTE) (Non-GAAP) 3.13 3.10 2.96 2.89 2.85 3.11 2.95 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Noninterest Expense (GAAP) $ 8,410 $ 8,656 $ 9,972 $ 9,773 $ 13,722 $ 17,066 $ 23,117 Net Interest and Dividend Income (GAAP) $ 10,163 $ 9,893 $ 10,231 $ 10,010 $ 9,934 $ 20,056 $ 19,911 Noninterest Income (GAAP) 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Operating Revenue (GAAP) $ 12,268 $ 12,506 $ 18,920 $ 12,208 $ 12,153 $ 24,774 $ 25,304 Efficiency Ratio (GAAP) 68.55 % 69.21 % 52.71 % 80.05 % 112.91 % 68.89 % 91.36 % Noninterest Expense (GAAP) $ 8,410 $ 8,656 $ 9,972 $ 9,773 $ 13,722 $ 17,066 $ 23,117 Less: Other Real Estate Owned (Income) (37 ) (38 ) (30 ) (89 ) (26 ) (75 ) (64 ) Amortization of Intangible Assets 446 445 445 446 503 891 1,035 Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown on Fixed Assets — — 23 2 2,268 — 2,268 Adjusted Noninterest Expense (Non-GAAP) $ 8,001 $ 8,249 $ 9,534 $ 9,414 $ 9,799 $ 16,250 $ 18,700 Net Interest and Dividend Income (GAAP) $ 10,163 $ 9,893 $ 10,231 $ 10,010 $ 9,934 $ 20,056 $ 19,911 Noninterest Income (GAAP) 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Less: Net (Loss) Gain on Securities (199 ) (7 ) 44 24 11 (206 ) 458 Gain on Sale of Branches — — 5,203 — — — — Net Loss on Disposal of Fixed Assets — (8 ) — — (3 ) (8 ) (3 ) Adjusted Noninterest Income (Non-GAAP) $ 2,304 $ 2,628 $ 3,442 $ 2,174 $ 2,211 $ 4,932 $ 4,938 Adjusted Operating Revenue (Non-GAAP) $ 12,467 $ 12,521 $ 13,673 $ 12,184 $ 12,145 $ 24,988 $ 24,849 Adjusted Efficiency Ratio (Non-GAAP) 64.18 % 65.88 % 69.73 % 77.27 % 80.68 % 65.03 % 75.25 % 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. 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 (Dollars in thousands) (Unaudited) Allowance for Loan Losses $ 12,833 $ 11,595 $ 11,582 $ 11,581 $ 11,544 Total Loans 1,027,969 $ 1,020,642 1,020,796 $ 1,001,599 $ 1,007,446 PPP Loans (3,853 ) (8,242 ) (24,523 ) (32,703 ) (49,525 ) Total Loans, Excluding PPP Loans (Non-GAAP) $ 1,024,116 $ 1,012,400 $ 996,273 $ 968,896 $ 957,921 Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) 1.25 % 1.15 % 1.16 % 1.20 % 1.21 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006003/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 second quarter and year-to-date 2022 financial results. Three Months Ended Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands, except per share data) (Unaudited) Net Income (Loss) (GAAP) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Non-Recurring Items 157 12 (4,122 ) (17 ) 3,440 169 3,087 Adjusted Net Income (Non-GAAP) (1) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Earnings (Loss) per Common Share - Diluted (GAAP) $ 0.02 $ 0.58 $ 1.31 $ 0.37 $ (0.04 ) $ 0.61 $ 0.48 Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1) $ 0.05 $ 0.59 $ 0.53 $ 0.36 $ 0.59 $ 0.64 $ 1.05 (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. 2022 Second Quarter Financial Highlights (Comparisons to three months ended June 30, 2021 unless otherwise noted) Net income was $118,000, compared to a net loss of $223,000. Current period results were negatively impacted by provision expense of approximately $3.8 million driven, largely, by a loan charge-off of $2.7 million while the prior year period included an intangible asset impairment and asset write down of $3.4 million, associated with the Company’s optimization program. Current period results were aided by the completion of the Company’s optimization program in 2021, which resulted in a reduction of noninterest expense of $1.9 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 (excluding noninterest expense of $3.4 million related to intangible impairment and fixed asset write-down). Adjusted net income (non-GAAP) was $275,000, compared to $3.2 million. Earnings per diluted common share (EPS) increased to $0.02 from loss per diluted common share of $0.04. Adjusted earnings per common share - diluted (non-GAAP) was $0.05, compared to $0.59. Return on average assets (annualized) of 0.03%, compared to loss on average assets (annualized) of 0.06%. Adjusted return on average assets (annualized) (non-GAAP) of 0.08%, compared to 0.87%. Return on average equity (annualized) of 0.40%, compared to loss on average equity (annualized) of 0.66%. Adjusted return on average equity (annualized) (non-GAAP) of 0.93%, compared to 9.57%. Net interest margin (NIM) improved to 3.12% from 2.84%. Net interest and dividend income was $10.2 million, compared to $9.9 million. Noninterest income decreased to $2.1 million, compared to $2.2 million. The most significant change in noninterest income was a $210,000 reduction in securities gains resulting from mark-to-market accounting, partially offset by an increase of $160,000 in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher than lock-in amounts received and core business including commercial and personal insurance lines. (Amounts at June 30, 2022; comparisons to December 31, 2021, unless otherwise noted) Total loans, including Payroll Protection Program (“PPP”) loans, were $1.03 billion, an increase of $7.2 million from $1.02 billion. Total loans held for investment, excluding PPP loans, increased $27.8 million, or 5.6% annualized, to $1.02 billion compared to $996.3 million, and included increases of $26.8 million, or 44.2% annualized, in consumer loans, and $34.0 million, or 17.6% annualized, growth in commercial real estate loans, partially offset by decreases in construction real estate and commercial and industrial loans. Compared to June 30, 2021, loans held for investment, excluding PPP loans, increased $66.2 million, or 6.9%, primarily from increases of $65.6 million in commercial real estate loans and $42.5 million in consumer loans as noted above, partially offset by decreases of $43.9 million in construction real estate loans and $8.6 million in commercial and industrial loans. Nonperforming loans to total loans was 0.57%, a decrease of 14 basis points (“bps”), compared to 0.71%. Total deposits were $1.22 billion, a decrease of $11.4 million, compared to $1.23 billion. Total assets decreased by $39 million to $1.39 billion, compared to $1.43 billion. Book value per share was $22.18, compared to $23.69 as of March 31, 2022 and $25.31 as of December 31, 2021. Tangible book value per share (Non-GAAP) decreased to $19.43, compared to $20.86 as of March 31, 2022 and $22.45 as of December 31, 2021, reflecting impact to Accumulated Other Comprehensive Income from unrealized losses on securities portfolios. Management Commentary President and CEO John H. Montgomery stated, “Despite the looming macroeconomic uncertainty, we are optimistic about our business for a number of reasons. Our core earnings, as measured by pre-tax, pre-provision income, are accelerating and that is due primarily to the steps we took in 2021 to optimize our operations, coupled with growth investments we have made this year. Continuing the trend we saw in the first quarter, second quarter results included further loan growth, led by consumer and commercial real estate loans, and a lower noninterest expense run rate. Underpinning our growth is a stable, low volatility metropolitan service area anchored by leading higher education institutions and major healthcare companies, in addition to a strong technology presence.” Mr. Montgomery continued, “As we reported on June 6th, we incurred a $2.7 million charge-off associated with a loan to a long-time customer that unexpectedly decided to wind down their operations. Although the charge negatively impacted our results in the quarter, a subsequent examination of our entire credit portfolio confirmed our view that this was an isolated event. We also believe our senior leadership team, and our credit management team in particular, is a key asset, as they delivered outstanding performance during the recessionary period from 2008 to 2010. During that period, we did not need to take a government TARP loan and our total credit losses during the period were less than $5.0 million. That experience allows us to face the current economic headwinds with confidence that we can not only adeptly manage our credit risk but also continue to grow our core earnings. During the second quarter we furthered our commitment to CB shareholders as we announced a new $10.0 million share repurchase program, in addition to our regular quarterly dividend. We remain well-capitalized with the ability to support growth along with these shareholder-friendly actions.” 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 August 31, 2022, to stockholders of record as of the close of business on August 19, 2022. Stock Repurchase Program On April 21, 2022, CB announced a program to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. Based on the Company’s closing stock price on July 26, 2022, the repurchase program, if fully completed, would encompass 428,082 shares, or approximately 8.3% of the shares currently outstanding. 2022 Second Quarter Financial Review Net Interest and Dividend Income Net interest and dividend income increased $229,000, or 2.3%, to $10.2 million for the three months ended June 30, 2022 compared to $9.9 million for the three months ended June 30, 2021. Net interest margin (GAAP) increased to 3.12% for the three months ended June 30, 2022 compared to 2.84% for the three months ended June 30, 2021. Net interest margin (FTE) (Non-GAAP) increased 28 bps to 3.13% for the three months ended June 30, 2022 compared to 2.85% for the three months ended June 30, 2021. Interest and dividend income increased $138,000, or 1.3%, to $11.0 million for the three months ended June 30, 2022 compared to $10.8 million for the three months ended June 30, 2021. Interest income on loans decreased $203,000, or 2.0%, to $9.7 million for the three months ended June 30, 2022 compared to $9.9 million for the three months ended June 30, 2021. The average balance of loans decreased $9.0 million to $1.01 billion from $1.02 billion and the average yield decreased 5 bps to 3.88% compared to 3.93%. Interest and fee income on PPP loans was $144,000 for the three months ended June 30, 2022 and contributed 4 bps to loan yield, compared to $636,000 for the three months ended June 30, 2021, which contributed 3 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $75,000 for the three months ended June 30, 2022 compared to $153,000 for the three months ended June 30, 2021, or 3 bps in the current period compared to 6 bps in the prior period. Interest income on taxable investment securities increased $353,000, or 55.6%, to $988,000 for the three months ended June 30, 2022 compared to $635,000 for the three months ended June 30, 2021 driven by a $103.6 million increase in average balance partially offset by a 31 bps decrease in average yield. Interest expense decreased $91,000, or 10.3%, to $795,000 for the three months ended June 30, 2022 compared to $886,000 for the three months ended June 30, 2021. Interest expense on deposits decreased $223,000, or 27.0%, to $604,000 for the three months ended June 30, 2022 compared to $827,000 for the three months ended June 30, 2021. While average interest-earning deposit balances decreased $74.5 million, or 8%, from $900.1 million as of June 30, 2021 compared to $825.6 million as of June 30, 2022, controlling the deposit cost structure combined with non-renewal or repricing of higher-cost time deposit resulted in a 8 bps, or 21.7%, decrease in average cost compared to the three months ended June 30, 2021. In addition, the average balance of time deposits and the related average cost decreased $49.7 million and 24 bps, respectively. These decreases are partially offset by a 9 bps increase in interest-bearing demand deposit average cost as well as an increase in average other borrowings of $11.6 million or 193.5% to $17.6 million as of June 30, 2022 compared to $6.0 million as of June 30, 2021, which was driven by an increase in subordinated debt balance. Provision for Loan Losses There was $3.8 million provision for loan losses for the three months ended June 30, 2022 compared with a recovery of $1.2 million for the three months ended June 30, 2021. The increased provision for loan losses was primarily due to a provision for a single loan charge-off of $2.7 million (pre-tax) with respect to a commercial and industrial loan. As previously reported, the charge-off relates to a borrower which is ceasing operations and carried a $3.5 million revolving line of credit which had an outstanding balance of $2.7 million. The remaining increase to the provision was a result of adjustments made to historical loss factors and changes in qualitative factors in particular economic and industry conditions between the three months ended June 30, 2022 and three months ended June 30, 2021. Noninterest income Noninterest income decreased $114,000, or 5.1%, to $2.1 million for the three months ended June 30, 2022, compared to $2.2 million for the three months ended June 30, 2021. The decrease was largely due to a $210,000 reduction in securities gains due to a decline of $199,000 in the market value of equity securities, comprised mainly of bank stocks, partially offset by a $160,000 increase in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher than lock-in amounts received and core business including commercial and personal insurance lines. In addition, net gain on sale of loans decreased $31,000 as there were no loans sold during the three months ended June 30, 2022. Noninterest Expense Noninterest expense decreased $5.3 million, or 38.7%, to $8.4 million for the three months ended June 30, 2022 compared to $13.7 million for the three months ended June 30, 2021, and compared to $8.7 million for the three months ended March 31, 2022. The primary drivers were decreases of $2.3 million and $1.2 million related to the writedown of fixed assets and intangible impairment associated with branch consolidation and sale initiatives in 2021, respectively. In addition, salaries and benefits decreased $537,000 and occupancy decreased $248,000, primarily related to the reduction of footprint and related headcount resulting from the consolidation and sale of branches during 2021. Contracted services decreased $402,000 to $348,000 for the three months ended June 30, 2022 compared to $750,000 for the three months ended June 30, 2021. This was a result of branch optimization initiatives completed in the prior year. Statement of Financial Condition Review Assets Total assets decreased $39.0 million, or 2.7%, to $1.39 billion at June 30, 2022, compared to $1.43 billion at December 31, 2021. Cash and due from banks decreased $38.6 million, or 32.2%, to $81.1 million at June 30, 2022, compared to $119.7 million at December 31, 2021. The change is primarily due to a decrease in deposits as further described below in the Liabilities section. Securities decreased $11.5 million, or 5.1%, to $213.5 million at June 30, 2022, compared to $225.0 million at December 31, 2021. Current period activity included $26.8 million of purchases, and $17.0 million of pay downs. The purchases were made to earn a higher yield on excess cash. In addition, there was a $21.0 million decrease in the market value of the debt securities portfolio, primarily due to the increase in market interest rates, and a $206,000 loss in market value in the equity securities portfolio, which is primarily comprised of bank stocks. Payroll Protection Program (“PPP”) Update PPP loans decreased $20.7 million to $3.9 million at June 30, 2022 compared to $24.5 million at December 31, 2021. $144,000 of net PPP loan origination fees were unearned at June 30, 2022 compared to $678,000 at December 31, 2021. $130,000 of net PPP loan origination fees were earned in the three months ended June 30, 2022 compared to $404,000 for the three months ended March 31, 2022. Loans and Credit Quality Total loans held for investment increased $7.2 million, or 0.70%, to $1.03 billion at June 30, 2022 compared to $1.02 billion at December 31, 2021. Excluding the net decline of $20.7 million in PPP loans in the current period, loans increased $27.8 million. The allowance for loan losses was $12.8 million at June 30, 2022 and $11.6 million at December 31, 2021. As a result, the allowance for loan losses to total loans was 1.25% at June 30, 2022 compared to 1.13% at December 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.25% at June 30, 2022 compared to 1.16% at December 31, 2021. The change in the allowance for loan losses was primarily due to adjustments to historical loss factors and changes in qualitative factors in particular economic and industry conditions since December 31, 2021. Net charge-offs for the three months ended June 30, 2022 were $2.5 million, or 1.01% of average loans on an annualized basis. Net recoveries for the three months ended June 30, 2021 were $19,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2022 were $2.5 million, or 0.50% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2021 were $27,000, or 0.01% 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 $5.8 million at June 30, 2022 compared to $7.3 million at December 31, 2021. Nonperforming loans to total loans ratio was 0.57% at June 30, 2022 compared to 0.71% at December 31, 2021. Other Intangible Assets decreased $891,000, or 17.0%, to $4.4 million at June 30, 2022 compared to $5.3 million at December 31, 2021 primarily due to amortization expense recognized during the period. Accrued interest receivable and other assets increased $5.9 million, or 45.9%; to $18.8 million at June 30, 2022, compared to $12.9 million at December 31, 2021. This change was primarily driven by deferred taxes as a result of the increase in market interest rates conditions and the decrease in the market value of the securities portfolio. Liabilities Total liabilities decreased $19.7 million, or 1.5%, to $1.27 billion at June 30, 2022 compared to $1.29 billion at December 31, 2021. Deposits Total deposits decreased $11.4 million to $1.22 billion as of June 30, 2022 compared to $1.23 billion at December 31, 2021, an annualized decrease of 1.9%. Interest-bearing demand deposits and time deposits decreased $7.2 million and $11.5 million, respectively, partially offset by increases in noninterest bearing demand deposits and savings accounts by $3.4 million and $10.7 million, respectively. Average total deposits decreased $11.4 million, primarily in interest-bearing demand deposits and time deposits for the three months ended June 30, 2022 compared to the three months ended March 31, 2022, Borrowed Funds Short-term borrowings decreased $7.1 million, or 18.1%, to $32.2 million at June 30, 2022, compared to $39.3 million at December 31, 2021. At June 30, 2022 and December 31, 2021, 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. Stockholders’ Equity Stockholders’ equity decreased $19.4 million, or 14.6%, to $113.8 million at June 30, 2022, compared to $133.1 million at December 31, 2021. Since December 31, 2021, the Company has paid $2.5 million in dividends. On February 15, 2022, the Company completed its stock repurchase program that was implemented on June 10, 2021. On April 21, 2022, a new $10 million repurchase program was authorized, with the Company repurchasing 27,439 shares at an average price of $22.06 per share during the second quarter. In total, the Company has repurchased $4.0 million since December 31, 2021. In addition, accumulated other comprehensive loss decreased $16.5 million primarily due to the effect of rising market interest rates on the Bank’s debt securities. This was partially offset by $3.2 million of net income. Book value per share Book value per common share was $22.18 at June 30, 2022 compared to $25.31 at December 31, 2021, a decrease of $3.13. Tangible book value per common share (Non-GAAP) was $19.43 at June 30, 2022, compared to $22.45 at December 31, 2021, a decrease of $3.02. 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 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 ASSETS Cash and Due From Banks $ 81,121 $ 123,588 $ 119,674 $ 173,523 $ 172,010 Securities 213,505 231,097 224,974 221,351 208,472 Loans Held for Sale — — — 17,407 11,409 Loans Real Estate: Residential 325,138 317,254 320,798 317,373 322,480 Commercial 426,105 427,227 392,124 379,621 360,518 Construction 41,277 54,227 85,028 78,075 85,187 Commercial and Industrial Commercial and Industrial 62,054 59,601 64,487 69,657 70,666 PPP 3,853 8,242 24,523 32,703 49,525 Consumer 148,921 143,422 122,152 112,087 106,404 Other 20,621 10,669 11,684 12,083 12,666 Total Loans 1,027,969 1,020,642 1,020,796 1,001,599 1,007,446 Allowance for Loan Losses (12,833 ) (11,595 ) (11,582 ) (11,581 ) (11,544 ) Loans, Net 1,015,136 1,009,047 1,009,214 990,018 995,902 Premises and Equipment Held for Sale — — — 795 795 Premises and Equipment, Net 18,196 18,349 18,399 18,502 18,682 Bank-Owned Life Insurance 25,610 25,468 25,332 25,190 25,052 Goodwill 9,732 9,732 9,732 9,732 9,732 Intangible Assets, Net 4,404 4,850 5,295 5,740 6,186 Accrued Interest and Other Assets 18,757 16,539 12,859 12,560 13,373 Total Assets $ 1,386,461 $ 1,438,670 $ 1,425,479 $ 1,474,818 $ 1,461,613 LIABILITIES Deposits Held for Sale $ — $ — $ — $ 102,647 $ 102,557 Deposits Non-Interest Bearing Demand Deposits 389,127 400,105 385,775 373,320 368,452 Interest Bearing Demand Accounts 265,347 280,455 272,518 244,004 246,920 Money Market Accounts 185,308 192,929 192,125 190,426 176,824 Savings Accounts 250,226 247,589 239,482 232,679 226,639 Time Deposits 125,182 129,235 136,713 144,727 154,718 Total Deposits 1,215,190 1,250,313 1,226,613 1,185,156 1,173,553 Short-Term Borrowings 32,178 39,219 39,266 42,623 39,054 Other Borrowings 17,618 17,607 17,601 6,000 6,000 Accrued Interest Payable and Other Liabilities 7,703 9,375 8,875 7,405 7,913 Total Liabilities 1,272,689 1,316,514 1,292,355 1,343,831 1,329,077 STOCKHOLDERS’ EQUITY $ 113,772 $ 122,156 $ 133,124 $ 130,987 $ 132,536 Three Months Ended Six Months Ended Selected Operating Data 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Interest and Dividend Income Loans, Including Fees $ 9,733 $ 9,551 $ 9,904 $ 9,718 $ 9,936 $ 19,284 $ 20,082 Securities: Taxable 988 905 866 843 635 1,893 1,281 Tax-Exempt 57 66 66 71 74 123 152 Dividends 20 22 21 19 24 42 44 Other Interest and Dividend Income 160 72 106 135 151 232 249 Total Interest and Dividend Income 10,958 10,616 10,963 10,786 10,820 21,574 21,808 Interest Expense Deposits 604 530 636 715 827 1,134 1,774 Short-Term Borrowings 18 19 26 25 24 37 47 Other Borrowings 173 174 70 36 35 347 76 Total Interest Expense 795 723 732 776 886 1,518 1,897 Net Interest and Dividend Income 10,163 9,893 10,231 10,010 9,934 20,056 19,911 Provision (Recovery) for Loan Losses 3,784 — 75 — (1,200 ) 3,784 (1,200 ) Net Interest and Dividend Income After Provision (Recovery) for Loan Losses 6,379 9,893 10,156 10,010 11,134 16,272 21,111 Noninterest Income: Service Fees 559 526 569 602 614 1,085 1,160 Insurance Commissions 1,369 1,798 1,618 1,194 1,209 3,167 2,804 Other Commissions 179 89 90 93 173 268 338 Net Gain on Sales of Loans — — 977 49 31 — 117 Net (Loss) Gain on Securities (199 ) (7 ) 44 24 11 (206 ) 458 Net Gain on Purchased Tax Credits 14 14 17 18 17 28 35 Gain on Sale of Branches — — 5,203 — — — — Net Loss on Disposal of Fixed Assets — (8 ) — — (3 ) (8 ) (3 ) Income from Bank-Owned Life Insurance 142 136 142 138 136 278 273 Other Income 41 65 29 80 31 106 211 Total Noninterest Income 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Noninterest Expense: Salaries and Employee Benefits 4,539 4,565 5,181 4,787 5,076 9,104 9,970 Occupancy 776 686 619 615 1,024 1,462 1,734 Equipment 182 210 252 205 311 392 577 Data Processing 446 485 488 541 607 931 1,125 FDIC Assessment 128 209 222 293 249 337 499 PA Shares Tax 240 240 173 224 225 480 490 Contracted Services 348 587 1,133 1,441 750 935 1,437 Legal and Professional Fees 389 152 206 180 419 541 608 Advertising 115 116 191 225 193 231 333 Other Real Estate Owned (Income) (37 ) (38 ) (30 ) (89 ) (26 ) (75 ) (64 ) Amortization of Intangible Assets 446 445 445 446 503 891 1,035 Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown of Fixed Assets — — 23 2 2,268 — 2,268 Other 838 999 1,069 903 945 1,837 1,927 Total Noninterest Expense 8,410 8,656 9,972 9,773 13,722 17,066 23,117 Income (Loss) Before Income Tax (Benefit) Expense 74 3,850 8,873 2,435 (369 ) 3,924 3,387 Income Tax (Benefit) Expense (44 ) 803 1,908 452 (146 ) 759 765 Net Income (Loss) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Three Months Ended Six Months Ended Per Common Share Data 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Dividends Per Common Share $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.48 $ 0.48 Earnings (Loss) Per Common Share - Basic 0.02 0.59 1.32 0.37 (0.04 ) 0.61 0.48 Earnings (Loss) Per Common Share - Diluted 0.02 0.58 1.31 0.37 (0.04 ) 0.61 0.48 Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1) 0.05 0.59 0.53 0.36 0.59 0.64 1.05 Weighted Average Common Shares Outstanding - Basic 5,147,846 5,198,194 5,291,795 5,373,032 5,432,234 5,172,881 5,433,298 Weighted Average Common Shares Outstanding - Diluted 5,156,975 5,220,887 5,314,537 5,390,128 5,432,234 5,189,144 5,438,401 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Common Shares Outstanding 5,128,333 5,156,897 5,260,672 5,330,401 5,409,077 Book Value Per Common Share $ 22.18 $ 23.69 $ 25.31 $ 24.57 $ 24.50 Tangible Book Value per Common Share (1) 19.43 20.86 22.45 21.67 21.56 Stockholders’ Equity to Assets 8.2 % 8.5 % 9.3 % 8.9 % 9.1 % Tangible Common Equity to Tangible Assets (1) 7.3 7.6 8.4 7.9 8.1 Three Months Ended Six Months Ended Selected Financial Ratios (2) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 Return on Average Assets 0.03 % 0.87 % 1.87 % 0.54 % (0.06) % 0.45 % 0.36 % Adjusted Return on Average Assets (1) 0.08 0.87 0.76 0.53 0.87 0.48 0.79 Return on Average Equity 0.40 9.50 20.95 5.93 (0.66) 5.15 3.92 Adjusted Return on Average Equity (1) 0.93 9.54 8.55 5.88 9.57 5.42 8.53 Average Interest-Earning Assets to Average Interest-Bearing Liabilities 149.03 144.48 145.09 146.78 146.82 146.74 144.94 Average Equity to Average Assets 8.49 9.14 8.93 9.03 9.08 8.81 9.27 Net Interest Rate Spread 3.00 2.98 2.85 2.77 2.72 3.00 2.81 Net Interest Rate Spread (FTE) (1) 3.01 2.99 2.86 2.78 2.74 3.01 2.82 Net Interest Margin 3.12 3.08 2.95 2.88 2.84 3.10 2.94 Net Interest Margin (FTE) (1) 3.13 3.10 2.96 2.89 2.85 3.11 2.95 Net Charge-offs (Recoveries) to Average Loans 1.01 (0.01) 0.03 (0.01) (0.01) 0.50 0.01 Efficiency Ratio 68.55 69.21 52.71 80.05 112.91 68.89 91.36 Adjusted Efficiency Ratio (1) 64.18 65.88 69.73 77.27 80.68 65.03 75.25 Asset Quality Ratios 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Allowance for Loan Losses to Total Loans 1.25 % 1.14 % 1.13 % 1.16 % 1.15 % Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1) 1.25 1.15 1.16 1.20 1.21 Allowance for Loan Losses to Nonperforming Loans (3) 219.89 158.88 159.40 106.18 74.92 Allowance for Loan Losses to Noncurrent Loans (4) 329.47 218.28 233.37 135.37 90.83 Delinquent and Nonaccrual Loans to Total Loans (4) (5) 0.45 0.79 0.78 0.97 1.37 Nonperforming Loans to Total Loans (3) 0.57 0.72 0.71 1.09 1.53 Noncurrent Loans to Total Loans (4) 0.38 0.52 0.49 0.85 1.26 Nonperforming Assets to Total Assets (6) 0.42 0.51 0.51 0.74 1.07 Capital Ratios (7) 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 Common Equity Tier 1 Capital (to Risk Weighted Assets) 11.83 % 11.99 % 11.95 % 11.53 % 11.67 % Tier 1 Capital (to Risk Weighted Assets) 11.83 11.99 11.95 11.53 11.67 Total Capital (to Risk Weighted Assets) 13.08 13.20 13.18 12.77 12.92 Tier 1 Leverage (to Adjusted Total Assets) 8.33 8.19 7.76 7.38 7.23 (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 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 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) $ 1,007,874 $ 9,751 3.88 % $ 1,009,210 $ 9,573 3.85 % $ 1,004,827 $ 9,927 3.92 % $ 1,004,474 $ 9,740 3.85 % $ 1,016,868 $ 9,959 3.93 % Debt Securities Taxable 228,315 988 1.73 215,906 905 1.68 205,328 866 1.69 197,763 843 1.71 124,685 635 2.04 Exempt From Federal Tax 9,109 73 3.21 10,195 84 3.30 10,477 84 3.21 11,647 90 3.09 12,276 94 3.06 Equity Securities 2,693 20 2.97 2,693 22 3.27 2,693 21 3.12 2,655 19 2.86 2,649 24 3.62 Interest Bearing Deposits at Banks 56,379 122 0.87 59,296 33 0.22 150,102 61 0.16 160,935 92 0.23 242,348 106 0.17 Other Interest-Earning Assets 3,235 38 4.71 3,483 39 4.54 3,475 45 5.14 3,512 43 4.86 4,044 45 4.46 Total Interest-Earning Assets 1,307,605 10,992 3.37 1,300,783 10,656 3.32 1,376,902 11,004 3.17 1,380,986 10,827 3.11 1,402,870 10,863 3.11 Noninterest-Earning Assets 84,323 122,288 100,607 88,291 82,794 Total Assets $ 1,391,928 $ 1,423,071 $ 1,477,509 $ 1,469,277 $ 1,485,664 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 260,655 111 0.17 % $ 276,603 48 0.07 % $ 278,546 51 0.07 $ 275,411 48 0.07 $ 275,752 55 0.08 % Savings (3) 248,356 20 0.03 243,786 19 0.03 252,387 20 0.03 251,801 21 0.03 247,238 25 0.04 Money Market (3) 188,804 61 0.13 192,425 41 0.09 209,572 57 0.11 198,167 55 0.11 199,652 71 0.14 Time Deposits (3) 127,832 412 1.29 132,015 422 1.30 154,342 508 1.31 168,654 591 1.39 177,506 676 1.53 Total Interest-Bearing Deposits (3) 825,647 604 0.29 844,829 530 0.25 894,847 636 0.28 894,033 715 0.32 900,148 827 0.37 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 34,135 18 0.21 37,884 19 0.20 44,709 26 0.23 40,818 25 0.24 49,325 24 0.20 Other Borrowings 17,611 173 3.94 17,604 174 4.01 9,474 70 2.93 6,000 36 2.38 6,000 35 2.34 Total Interest-Bearing Liabilities 877,393 795 0.36 900,317 723 0.33 949,030 732 0.31 940,851 776 0.33 955,473 886 0.37 Noninterest-Bearing Demand Deposits 391,975 384,188 388,787 387,746 387,317 Other Liabilities 4,415 8,554 7,800 8,019 7,999 Total Liabilities 1,273,783 1,293,059 1,345,617 1,336,616 1,350,789 Stockholders' Equity 118,145 130,012 131,892 132,661 134,875 Total Liabilities and Stockholders' Equity $ 1,391,928 $ 1,423,071 $ 1,477,509 $ 1,469,277 $ 1,485,664 Net Interest Income (FTE) (Non-GAAP) (4) 10,197 9,933 10,272 10,051 9,977 Net Interest-Earning Assets (5) 430,212 400,466 427,872 440,135 447,397 Net Interest Rate Spread (FTE) (Non-GAAP) (4) (6) 3.01 % 2.99 % 2.86 2.78 2.74 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 3.13 �� 3.10 2.96 2.89 2.85 PPP Loans 5,546 144 10.41 14,673 445 12.30 29,067 391 5.34 40,313 484 4.76 57,661 636 4.42 (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 if applicable. (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 Six Months Ended June 30, 2022 June 30, 2021 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) $ 1,008,539 $ 19,322 3.86 % $ 1,024,319 $ 20,131 3.96 % Debt Securities Taxable 222,144 1,893 1.70 123,790 1,281 2.07 Exempt From Federal Tax 9,649 156 3.23 12,608 192 3.05 Marketable Equity Securities 2,693 42 3.12 2,641 44 3.33 Interest Bearing Deposits at Banks 57,829 156 0.54 200,388 150 0.15 Other Interest-Earning Assets 3,358 76 4.56 3,977 99 5.02 Total Interest-Earning Assets 1,304,212 21,645 3.35 1,367,723 21,897 3.23 Noninterest-Earning Assets 103,201 87,645 Total Assets $ 1,407,413 $ 1,455,368 Liabilities and Stockholders' Equity Interest-Bearing Liabilities: Interest-Bearing Demand Deposits (3) $ 268,585 160 0.12 % $ 267,455 133 0.10 % Savings (3) 246,084 38 0.03 243,565 57 0.05 Money Market (3) 190,605 102 0.11 198,530 168 0.17 Time Deposits (3) 129,914 834 1.29 182,283 1,416 1.57 Total Interest-Bearing Deposits (3) 835,188 1,134 0.27 891,833 1,774 0.40 Short-Term Borrowings Securities Sold Under Agreements to Repurchase 36,000 37 0.21 45,232 47 0.21 Other Borrowings 17,608 347 3.97 6,597 76 2.32 Total Interest-Bearing Liabilities 888,796 1,518 0.34 943,662 1,897 0.41 Noninterest-Bearing Demand Deposits 388,103 368,318 Other Liabilities 6,468 8,433 Total Liabilities 1,283,367 1,320,413 Stockholders' Equity 124,046 134,955 Total Liabilities and Stockholders' Equity $ 1,407,413 $ 1,455,368 Net Interest Income (FTE) (Non-GAAP) (4) 20,127 20,000 Net Interest-Earning Assets (5) 415,416 424,061 Net Interest Rate Spread (FTE) (Non-GAAP) (4)(6) 3.01 % 2.82 % Net Interest Margin (FTE) (Non-GAAP) (4)(7) 3.11 2.95 PPP Loans 10,085 589 11.78 57,305 1,313 4.62 (1) Annualized based on six months ended results. (2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable. (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. 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands, except share and per share data) (Unaudited) Net Income (Loss) (GAAP) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Adjustments Loss (Gain) on Securities 199 7 (44 ) (24 ) (11 ) 206 (458 ) Gain on Sale of Branches — — (5,203 ) — — — — Loss on Disposal of Fixed Assets — 8 — — 3 8 3 Tax effect (42 ) (3 ) 1,102 5 2 (45 ) 96 Non-Cash Charges: Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown on Fixed Assets — — 23 2 2,268 — 2,268 Tax Effect — — — — — Adjusted Net Income (Non-GAAP) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding 5,156,975 5,220,887 5,314,537 5,390,128 5,432,234 5,189,144 5,438,401 Earnings (Loss) per Common Share - Diluted (GAAP) $ 0.02 $ 0.58 $ 1.31 $ 0.37 $ (0.04 ) $ 0.61 $ 0.48 Adjusted Earnings per Common Share - Diluted (Non-GAAP) $ 0.05 $ 0.59 $ 0.53 $ 0.36 $ 0.59 $ 0.64 $ 1.05 Net Income (Loss) (GAAP) (Numerator) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Assets (Denominator) 1,391,928 1,423,071 1,477,509 1,469,277 1,485,664 1,407,413 1,455,368 Return on Average Assets (GAAP) 0.03 % 0.87 % 1.87 % 0.54 % (0.06 ) % 0.45 % 0.36 % Adjusted Net Income (Non-GAAP) (Numerator) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Assets (Denominator) 1,391,928 1,423,071 1,477,509 1,469,277 1,485,664 1,407,413 1,455,368 Adjusted Return on Average Assets (Non-GAAP) 0.08 % 0.87 % 0.76 % 0.53 % 0.87 % 0.48 % 0.79 % Three Months Ended Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Net Income (Loss) (GAAP) (Numerator) $ 118 $ 3,047 $ 6,965 $ 1,983 $ (223 ) $ 3,165 $ 2,622 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Equity (Denominator) (GAAP) 118,145 130,012 131,892 132,661 134,875 124,046 134,955 Return on Average Equity (GAAP) 0.40 % 9.50 % 20.95 % 5.93 % (0.66 ) % 5.15 % 3.92 % Adjusted Net Income (Non-GAAP) (Numerator) $ 275 $ 3,059 $ 2,843 $ 1,966 $ 3,217 $ 3,334 $ 5,709 Annualization Factor 4.01 4.06 3.97 3.97 4.01 2.02 2.02 Average Equity (Denominator) (GAAP) 118,145 130,012 131,892 132,661 134,875 124,046 134,955 Adjusted Return on Average Equity (Non-GAAP) 0.93 % 9.54 % 8.55 % 5.88 % 9.57 % 5.42 % 8.53 % 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. 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 (Dollars in thousands, except share and per share data) (Unaudited) Assets (GAAP) $ 1,386,461 $ 1,438,670 $ 1,425,479 $ 1,474,818 $ 1,461,613 Goodwill and Intangible Assets, Net (14,136 ) (14,582 ) (15,027 ) (15,472 ) (15,918 ) Tangible Assets (Non-GAAP) (Numerator) $ 1,372,325 $ 1,424,088 $ 1,410,452 $ 1,459,346 $ 1,445,695 Stockholders' Equity (GAAP) $ 113,772 $ 122,156 $ 133,124 $ 130,987 $ 132,536 Goodwill and Intangible Assets, Net (14,136 ) (14,582 ) (15,027 ) (15,472 ) (15,918 ) Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator) $ 99,636 $ 107,574 $ 118,097 $ 115,515 $ 116,618 Stockholders’ Equity to Assets (GAAP) 8.2 % 8.5 % 9.3 % 8.9 % 9.1 % Tangible Common Equity to Tangible Assets (Non-GAAP) 7.3 % 7.6 % 8.4 % 7.9 % 8.1 % Common Shares Outstanding (Denominator) 5,128,333 5,156,897 5,260,672 5,330,401 5,409,077 Book Value per Common Share (GAAP) $ 22.18 $ 23.69 $ 25.31 $ 24.57 $ 24.50 Tangible Book Value per Common Share (Non-GAAP) $ 19.43 $ 20.86 $ 22.45 $ 21.67 $ 21.56 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Interest Income (GAAP) $ 10,958 $ 10,616 $ 10,963 $ 10,786 $ 10,820 $ 21,574 $ 21,808 Adjustment to FTE Basis 34 40 41 41 43 71 89 Interest Income (FTE) (Non-GAAP) 10,992 10,656 11,004 10,827 10,863 21,645 21,897 Interest Expense (GAAP) 795 723 732 776 886 1,518 1,897 Net Interest Income (FTE) (Non-GAAP) $ 10,197 $ 9,933 $ 10,272 $ 10,051 $ 9,977 $ 20,127 $ 20,000 Net Interest Rate Spread (GAAP) 3.00 % 2.98 % 2.85 % 2.77 % 2.72 % 3.00 % 2.81 % Adjustment to FTE Basis 0.01 0.01 0.01 0.01 0.02 0.01 0.01 Net Interest Rate Spread (FTE) (Non-GAAP) 3.01 2.99 2.86 2.78 2.74 3.01 2.82 Net Interest Margin (GAAP) 3.12 % 3.08 % 2.95 % 2.88 % 2.84 % 3.10 % 2.94 % Adjustment to FTE Basis 0.01 0.02 0.01 0.01 0.01 0.01 0.01 Net Interest Margin (FTE) (Non-GAAP) 3.13 3.10 2.96 2.89 2.85 3.11 2.95 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 Six Months Ended 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 6/30/22 6/30/21 (Dollars in thousands) (Unaudited) Noninterest Expense (GAAP) $ 8,410 $ 8,656 $ 9,972 $ 9,773 $ 13,722 $ 17,066 $ 23,117 Net Interest and Dividend Income (GAAP) $ 10,163 $ 9,893 $ 10,231 $ 10,010 $ 9,934 $ 20,056 $ 19,911 Noninterest Income (GAAP) 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Operating Revenue (GAAP) $ 12,268 $ 12,506 $ 18,920 $ 12,208 $ 12,153 $ 24,774 $ 25,304 Efficiency Ratio (GAAP) 68.55 % 69.21 % 52.71 % 80.05 % 112.91 % 68.89 % 91.36 % Noninterest Expense (GAAP) $ 8,410 $ 8,656 $ 9,972 $ 9,773 $ 13,722 $ 17,066 $ 23,117 Less: Other Real Estate Owned (Income) (37 ) (38 ) (30 ) (89 ) (26 ) (75 ) (64 ) Amortization of Intangible Assets 446 445 445 446 503 891 1,035 Intangible Assets and Goodwill Impairment — — — — 1,178 — 1,178 Writedown on Fixed Assets — — 23 2 2,268 — 2,268 Adjusted Noninterest Expense (Non-GAAP) $ 8,001 $ 8,249 $ 9,534 $ 9,414 $ 9,799 $ 16,250 $ 18,700 Net Interest and Dividend Income (GAAP) $ 10,163 $ 9,893 $ 10,231 $ 10,010 $ 9,934 $ 20,056 $ 19,911 Noninterest Income (GAAP) 2,105 2,613 8,689 2,198 2,219 4,718 5,393 Less: Net (Loss) Gain on Securities (199 ) (7 ) 44 24 11 (206 ) 458 Gain on Sale of Branches — — 5,203 — — — — Net Loss on Disposal of Fixed Assets — (8 ) — — (3 ) (8 ) (3 ) Adjusted Noninterest Income (Non-GAAP) $ 2,304 $ 2,628 $ 3,442 $ 2,174 $ 2,211 $ 4,932 $ 4,938 Adjusted Operating Revenue (Non-GAAP) $ 12,467 $ 12,521 $ 13,673 $ 12,184 $ 12,145 $ 24,988 $ 24,849 Adjusted Efficiency Ratio (Non-GAAP) 64.18 % 65.88 % 69.73 % 77.27 % 80.68 % 65.03 % 75.25 % 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. 6/30/22 3/31/22 12/31/21 9/30/21 6/30/21 (Dollars in thousands) (Unaudited) Allowance for Loan Losses $ 12,833 $ 11,595 $ 11,582 $ 11,581 $ 11,544 Total Loans 1,027,969 $ 1,020,642 1,020,796 $ 1,001,599 $ 1,007,446 PPP Loans (3,853 ) (8,242 ) (24,523 ) (32,703 ) (49,525 ) Total Loans, Excluding PPP Loans (Non-GAAP) $ 1,024,116 $ 1,012,400 $ 996,273 $ 968,896 $ 957,921 Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) 1.25 % 1.15 % 1.16 % 1.20 % 1.21 % View source version on businesswire.com: https://www.businesswire.com/news/home/20220728006003/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