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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CB Financial Services Inc | NASDAQ:CBFV | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.01 | 0.04% | 22.61 | 22.70 | 22.90 | 22.61 | 22.61 | 22.61 | 87 | 17:14:22 |
CB Financial Services, Inc. (“CB” or the “Company”) (NASDAQGM: CBFV), the holding company of Community Bank (the “Bank”) and Exchange Underwriters, Inc. (“EU”), a wholly-owned insurance subsidiary of the Bank, today announced its third quarter and year-to-date 2021 financial results.
Three Months Ended
Nine Months Ended
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
(Dollars in thousands, except per share data) (Unaudited)
Net Income (Loss) (GAAP)
$
1,983
$
(223)
$
2,845
$
3,079
$
(17,395)
$
4,605
$
(13,719)
Excluding Non-Recurring Items (Non-GAAP) (1)
(17)
3,440
(353)
40
19,337
3,070
19,261
Adjusted Net Income (Non-GAAP) (1)
$
1,966
$
3,217
$
2,492
$
3,119
$
1,942
$
7,675
$
5,542
Earnings (Loss) per Common Share - Diluted (GAAP)
$
0.37
$
(0.04)
$
0.52
$
0.57
$
(3.22)
$
0.85
$
(2.54)
Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1)
$
0.36
$
0.59
$
0.46
$
0.58
$
0.36
$
1.42
$
1.03
(1)
Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of net income (loss) and adjusted earnings per common share - diluted in this Press Release.
2021 Third Quarter Financial Highlights
(Comparisons to three months ended September 30, 2020 unless otherwise noted)
(Amounts at September 30, 2021; comparisons to December 31, 2020, unless otherwise noted)
Branch Optimization and Operational Efficiency Update
As previously announced in February 2021, CB has implemented strategic initiatives to improve Community Bank’s financial performance and to position the bank for continued profitable growth. Since that announcement, the Company has made substantive progress, including:
CB presently expects to incur $7.9 million of non-recurring expenses in 2021 and, as of September 30, 2021, has incurred $6.3 million of expenses related to these items. The expenses include a $2.3 million writedown on fixed assets and a $1.2 million impairment of intangible assets associated with the branch consolidations in the second quarter and the pending branch sales expected to be finalized in the fourth quarter. In addition, as part of CB’s branch optimization and operational efficiency initiatives, the Company incurred $2.9 million of expenses related to contracted services, employee severance costs, branch lease impairment, professional fees, data processing fees, legal and other expenses.
The majority of the remaining expenses to be recognized in 2021 are related to approximately $600,000 in contracted services aimed at improving the operational and revenue efficiency at the bank in the long-term. CB anticipates cost savings from this initiative ranging from approximately $2.5 million to $3.5 million in 2022, as well as expected enhanced revenue and fee generating capacity in future years.
In addition, the Company expects an annual reduction in pre-tax operating expenses in 2021 of approximately $1.0 million, along with $3.0 million of ongoing pre-tax cost savings as a result of the branch optimization initiatives.
The Company expects these estimated cost savings to be incremental to net income beginning in 2022. These estimated cost savings exclude the favorable impact of the expected premium from sale of branches expected to be recognized in the fourth quarter of 2021 and currently estimated to be $5.1 million.
Management Commentary
President and CEO John H. Montgomery stated, “The third quarter reflected many of the positive changes implemented as part of our branch optimization strategy early in 2021, with substantive improvement in operating expenses that helped to drive improvements in net income and quarter-over-quarter growth in book value. The Bank increased deposits while our commercial loan book grew quarter over quarter excluding PPP loans that continue to roll-off our balance sheet. Commercial real-estate lending continued to improve due to a pipeline of activity in our core Southwestern Pennsylvania and Ohio Valley markets, and we remain conservatively optimistic about the overall economic recovery in our geographic regions. Our focus remains on driving loan production in advance of this recovery, expanding core deposit relationships with greater efficiency, and further reducing the overall cost of funds. During the period, CB improved in all aspects of its asset quality and we’re pleased to see quarter-over-quarter improvement in NIM despite a tightening environment.”
Mr. Montgomery continued, “Throughout the first half of 2021, our goal was to execute on a cost-savings program designed to enhance the operating efficiency of the Company without any disruption to our loyal customer base and commercial relationships. We moved quickly and were transparent, and have been very pleased to have achieved many of our initial objectives with minimal disruption. Moving forward, we intend to utilize a streamlined operating environment to drive revenue and compete with greater efficiency in core markets where CB has an acknowledged brand recognition and presence. In the coming months, we are implementing more digitization throughout the Bank with a review of each individual process from larger loans to each ATM. We have been very pleased with our progress to date and expect to drive operating returns that are better than our peers in local markets. In addition, we remain committed to CB’s shareholders through the payment of dividends and an active share buy-back program.”
Dividend Information
The Company’s Board of Directors has declared a $0.24 quarterly cash dividend per outstanding share of common stock, payable on or about November 30, 2021, to stockholders of record as of the close of business on November 19, 2021.
Stock Repurchase Program
On June 10, 2021, CB authorized a program to repurchase up to $7.5 million of the Company’s outstanding common stock. The program was effective as of June 14, 2021 and is authorized through June 13, 2022. As of October 25, 2021, the Company had expended $3.1 million to repurchase 135,968 shares at an average price of $23.02 per share.
2021 Third Quarter Financial Review
Net Interest and Dividend Income
Net interest and dividend income decreased $406,000, or 3.9%, to $10.0 million for the three months ended September 30, 2021 compared to $10.4 million for the three months ended September 30, 2020.
Provision for Loan Losses
There was no provision for loan losses for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. Specific loan loss reserves on impaired loans decreased in the current quarter. This was partially offset by an increase in loan balances that require a loan loss reserve, which excludes PPP loans and loans held for sale.
Noninterest income
Noninterest income increased $25,000, or 1.2%, to $2.2 million for the three months ended September 30, 2021, and remained consistent with $2.2 million for the three months ended September 30, 2020. The increase was largely due to lower net gains on securities and loans compared to the prior period, offset by an increase in other income due to the recognition of a $269,000 valuation allowance adjustment on mortgage servicing rights in the prior period and increase in service fees.
Noninterest Expense
Noninterest expense decreased $19.2 million, or 66.3%, to $9.8 million for the three months ended September 30, 2021 compared to $29.0 million for the three months ended September 30, 2020. The decrease was largely due to an $18.7 million goodwill impairment and an $884,000 writedown on fixed assets recognized in the prior year period.
Statement of Financial Condition Review
Assets
Total assets increased $58.1 million, or 4.1%, to $1.47 billion at September 30, 2021, compared to $1.42 billion at December 31, 2020. The change is primarily due to higher cash and due from banks and securities.
Payroll Protection Program (“PPP”) Update
Loans and Credit Quality
Liabilities
Total liabilities increased $61.6 million, or 4.8%, to $1.34 billion at September 30, 2021 compared to $1.28 billion at December 31, 2020.
Deposits
Borrowed Funds
Stockholders’ Equity
Stockholders’ equity decreased $3.5 million, or 2.6%, to $131.0 million at September 30, 2021, compared to $134.5 million at December 31, 2020. Accumulated other comprehensive income decreased $2.3 million primarily due to market interest rate conditions on the Bank’s debt securities. In addition, the Company repurchased $2.5 million of its common stock as part of its stock repurchase program.
Book value per share
Book value per share was $24.57 at September 30, 2021 compared to $24.76 at December 31, 2020, a decrease of $0.19. Book value per share increased $0.07 compared to $24.50 at June 30, 2021.
Tangible book value per share (Non-GAAP) was $21.67 at September 30, 2021, compared to $21.42 at December 31, 2020, an increase of $0.25. Tangible book value per share increased $0.11 compared to $21.56 at June 30, 2021. Refer to “Explanation of Use of Non-GAAP Financial Measures” at the end of this Press Release.
About CB Financial Services, Inc.
CB Financial Services, Inc. is the bank holding company for Community Bank, a Pennsylvania-chartered commercial bank. Community Bank operates its branch network in southwestern Pennsylvania and West Virginia. Community Bank offers a broad array of retail and commercial lending and deposit services and provides commercial and personal insurance brokerage services through Exchange Underwriters, Inc., its wholly owned subsidiary.
For more information about CB Financial Services, Inc. and Community Bank, visit our website at www.communitybank.tv.
Statement About Forward-Looking Statements
Statements contained in this press release that are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and such forward-looking statements are subject to significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Act. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, general and local economic conditions, the scope and duration of economic contraction as a result of the COVID-19 pandemic and its effects on the Company’s business and that of the Company’s customers, changes in market interest rates, deposit flows, demand for loans, real estate values and competition, competitive products and pricing, the ability of our customers to make scheduled loan payments, loan delinquency rates and trends, our ability to manage the risks involved in our business, our ability to control costs and expenses, inflation, market and monetary fluctuations, changes in federal and state legislation and regulation applicable to our business, actions by our competitors, and other factors that may be disclosed in the Company’s periodic reports as filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.
CB FINANCIAL SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Dollars in thousands, except share and per share data) (Unaudited)
Selected Financial Condition Data
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
ASSETS
Cash and Due From Banks
$
173,523
$
172,010
$
230,000
$
160,911
$
112,169
Securities
221,351
208,472
142,156
145,400
158,956
Loans Held for Sale
17,407
11,409
—
—
—
Loans
Real Estate:
Residential
317,373
322,480
339,596
344,142
343,955
Commercial
379,621
360,518
370,118
373,555
353,904
Construction
78,075
85,187
77,714
72,600
69,178
Commercial and Industrial
Commercial and Industrial
69,657
70,666
68,551
71,717
73,287
PPP
32,703
49,525
60,380
55,096
71,028
Consumer
112,087
106,404
111,650
113,854
117,364
Other
12,083
12,666
13,688
13,789
22,169
Total Loans
1,001,599
1,007,446
1,041,697
1,044,753
1,050,885
Allowance for Loan Losses
(11,581)
(11,544)
(12,725)
(12,771)
(13,780)
Loans, Net
990,018
995,902
1,028,972
1,031,982
1,037,105
Premises and Equipment Held for Sale
795
795
—
—
—
Premises and Equipment, Net
18,502
18,682
20,240
20,302
20,439
Bank-Owned Life Insurance
25,190
25,052
24,916
24,779
24,639
Goodwill
9,732
9,732
9,732
9,732
9,732
Intangible Assets, Net
5,740
6,186
7,867
8,399
8,931
Accrued Interest and Other Assets
12,560
13,373
12,938
15,215
20,905
Total Assets
$
1,474,818
$
1,461,613
$
1,476,821
$
1,416,720
$
1,392,876
LIABILITIES
Deposits Held for Sale
$
102,647
$
102,557
$
—
$
—
$
—
Deposits
Non-Interest Bearing Demand Deposits
373,320
368,452
377,137
340,569
335,287
Interest Bearing Demand Accounts
244,004
246,920
280,929
259,870
245,850
Money Market Accounts
190,426
176,824
198,975
199,029
188,958
Savings Accounts
232,679
226,639
246,725
235,088
232,691
Time Deposits
144,727
154,718
180,697
190,013
196,250
Total Deposits
1,185,156
1,173,553
1,284,463
1,224,569
1,199,036
Short-Term Borrowings
42,623
39,054
45,352
41,055
42,061
Other Borrowings
6,000
6,000
6,000
8,000
11,000
Accrued Interest and Other Liabilities
7,405
7,913
7,230
8,566
7,480
Total Liabilities
1,343,831
1,329,077
1,343,045
1,282,190
1,259,577
STOCKHOLDERS’ EQUITY
$
130,987
$
132,536
$
133,776
$
134,530
$
133,299
Three Months Ended
Nine Months Ended
Selected Operating Data
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
Interest and Dividend Income
Loans, Including Fees
$
9,718
$
9,936
$
10,146
$
10,833
$
10,709
$
29,800
$
32,050
Securities:
Taxable
843
635
646
725
753
2,124
2,894
Tax-Exempt
71
74
78
78
79
223
291
Dividends
19
24
20
20
19
63
59
Other Interest and Dividend Income
135
151
98
99
96
384
418
Total Interest and Dividend Income
10,786
10,820
10,988
11,755
11,656
32,594
35,712
Interest Expense
Deposits
715
827
947
1,036
1,150
2,489
4,136
Short-Term Borrowings
25
24
23
25
28
72
112
Other Borrowings
36
35
41
60
62
112
194
Total Interest Expense
776
886
1,011
1,121
1,240
2,673
4,442
Net Interest and Dividend Income
10,010
9,934
9,977
10,634
10,416
29,921
31,270
(Recovery) Provision for Loan Losses
—
(1,200)
—
—
1,200
(1,200)
4,000
Net Interest and Dividend Income After (Recovery) Provision for Loan Losses
10,010
11,134
9,977
10,634
9,216
31,121
27,270
Noninterest Income:
Service Fees
602
614
546
560
554
1,762
1,646
Insurance Commissions
1,194
1,209
1,595
1,403
1,079
3,998
3,475
Other Commissions
93
173
165
105
76
431
374
Net Gain on Sales of Loans
49
31
86
388
435
166
1,003
Net Gain (Loss) on Securities
24
11
447
213
(59)
482
20
Net Gain on Purchased Tax Credits
18
17
18
16
15
53
46
Net Loss on Disposal of Fixed Assets
—
(3)
—
(13)
(65)
(3)
(48)
Income from Bank-Owned Life Insurance
138
136
137
140
140
411
417
Other Income (Loss)
80
31
180
(34)
(2)
291
(240)
Total Noninterest Income
2,198
2,219
3,174
2,778
2,173
7,591
6,693
Noninterest Expense:
Salaries and Employee Benefits
4,787
5,076
4,894
5,126
5,124
14,757
14,683
Occupancy
615
1,024
710
606
759
2,349
2,191
Equipment
205
311
266
234
220
782
701
Data Processing
541
607
518
476
482
1,666
1,367
FDIC Assessment
293
249
250
344
172
792
493
PA Shares Tax
224
225
265
350
355
714
963
Contracted Services
1,441
750
687
577
531
2,878
1,471
Legal and Professional Fees
180
419
189
185
161
788
567
Advertising
225
193
140
178
148
558
486
Other Real Estate Owned (Income)
(89)
(26)
(38)
(39)
(12)
(153)
(30)
Amortization of Intangible Assets
446
503
532
532
532
1,481
1,596
Intangible Assets and Goodwill Impairment
—
1,178
—
—
18,693
1,178
18,693
Writedown of Fixed Assets
2
2,268
—
240
884
2,270
884
Other
903
945
982
916
919
2,830
2,977
Total Noninterest Expense
9,773
13,722
9,395
9,725
28,968
32,890
47,042
Income (Loss) Before Income Tax Expense (Benefit)
2,435
(369)
3,756
3,687
(17,579)
5,822
(13,079)
Income Tax Expense (Benefit)
452
(146)
911
608
(184)
1,217
640
Net Income (Loss)
$
1,983
$
(223)
$
2,845
$
3,079
$
(17,395)
$
4,605
$
(13,719)
Three Months Ended
Nine Months Ended
Per Common Share Data
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
Dividends Per Common Share
$
0.24
$
0.24
$
0.24
$
0.24
$
0.24
$
0.72
$
0.72
Earnings (Loss) Per Common Share - Basic
0.37
(0.04)
0.52
0.57
(3.22)
0.85
(2.54)
Earnings (Loss) Per Common Share - Diluted
0.37
(0.04)
0.52
0.57
(3.22)
0.85
(2.54)
Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1)
0.36
0.59
0.46
0.58
0.36
1.42
1.03
Weighted Average Common Shares Outstanding - Basic
5,373,032
5,432,234
5,434,374
5,404,874
5,395,342
5,412,989
5,406,710
Weighted Average Common Shares Outstanding - Diluted
5,390,128
5,432,234
5,436,881
5,406,068
5,395,342
5,420,792
5,406,710
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
Common Shares Outstanding
5,330,401
5,409,077
5,434,374
5,434,374
5,398,712
Book Value Per Common Share
$
24.57
$
24.50
$
24.62
$
24.76
$
24.69
Tangible Book Value per Common Share (1)
21.67
21.56
21.38
21.42
21.23
Stockholders’ Equity to Assets
8.9
%
9.1
%
9.1
%
9.5
%
9.6
%
Tangible Common Equity to Tangible Assets (1)
7.9
8.1
8.0
8.3
8.3
Three Months Ended
Nine Months Ended
Selected Financial Ratios (2)
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
Return on Average Assets
0.54
%
(0.06)
%
0.81
%
0.87
%
(4.90)
%
0.42
%
(1.34)
%
Adjusted Return on Average Assets (1)
0.53
0.87
0.71
0.88
0.55
0.70
0.54
Return on Average Equity
5.93
(0.66)
8.54
9.13
(45.13)
4.59
(11.99)
Adjusted Return on Average Equity (1)
5.88
9.57
7.48
9.25
5.04
7.65
4.84
Average Interest-Earning Assets to Average Interest-Bearing Liabilities
146.78
146.82
142.98
141.58
141.98
145.56
139.30
Average Equity to Average Assets
9.03
9.08
9.48
9.49
10.85
9.19
11.19
Net Interest Rate Spread
2.77
2.72
2.91
3.07
3.03
2.80
3.15
Net Interest Rate Spread (FTE) (1)
2.78
2.74
2.92
3.08
3.05
2.81
3.17
Net Interest Margin
2.88
2.84
3.04
3.21
3.19
2.92
3.34
Net Interest Margin (FTE) (1)
2.89
2.85
3.05
3.22
3.21
2.93
3.35
Net (Recoveries) Charge-offs to Average Loans
(0.01)
(0.01)
0.02
0.39
0.03
—
0.01
Efficiency Ratio
80.05
112.91
71.44
72.51
230.11
87.68
123.92
Adjusted Efficiency Ratio (1)
77.27
80.68
70.06
68.06
69.78
75.92
68.17
Asset Quality Ratios
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
Allowance for Loan Losses to Total Loans
1.16
%
1.15
%
1.22
%
1.22
%
1.31
%
Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1)
1.20
1.21
1.30
1.29
1.41
Allowance for Loan Losses to Nonperforming Loans (3)
106.18
74.92
89.29
88.15
91.84
Allowance for Loan Losses to Noncurrent Loans (4)
135.37
90.83
118.08
117.20
114.01
Delinquent and Nonaccrual Loans to Total Loans (4) (5)
0.97
1.37
1.18
1.50
1.23
Nonperforming Loans to Total Loans (3)
1.09
1.53
1.37
1.39
1.43
Noncurrent Loans to Total Loans (4)
0.85
1.26
1.03
1.04
1.15
Nonperforming Assets to Total Assets (6)
0.74
1.07
0.98
1.04
1.09
Capital Ratios (7)
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
Common Equity Tier 1 Capital (to Risk Weighted Assets)
11.53
%
11.67
%
11.85
%
11.79
%
11.62
%
Tier 1 Capital (to Risk Weighted Assets)
11.53
11.67
11.85
11.79
11.62
Total Capital (to Risk Weighted Assets)
12.78
12.92
13.10
13.04
12.88
Tier 1 Leverage (to Adjusted Total Assets)
7.38
7.23
7.87
7.81
7.63
(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
September 30, 2021
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
Average
Balance
Interest
and
Dividends
Yield / Cost (1)
Average
Balance
Interest
and
Dividends
Yield / Cost (1)
Average
Balance
Interest
and
Dividends
Yield / Cost (1)
Average
Balance
Interest
and
Dividends
Yield / Cost (1)
Average
Balance
Interest
and
Dividends
Yield / Cost (1)
(Dollars in thousands) (Unaudited)
Assets:
Interest-Earning Assets:
Loans, Net (2)
$
1,004,474
$
9,740
3.85
%
$
1,016,868
$
9,959
3.93
%
$
1,031,853
$
10,168
4.00
%
$
1,032,942
$
10,860
4.18
%
$
1,035,426
$
10,744
4.13
%
Debt Securities
Taxable
197,763
843
1.71
124,685
635
2.04
122,883
646
2.10
133,026
725
2.18
123,332
753
2.44
Exempt From Federal Tax
11,647
90
3.09
12,276
94
3.06
12,943
96
2.97
13,006
96
2.95
13,054
97
2.97
Equity Securities
2,655
19
2.86
2,649
24
3.62
2,632
20
3.04
2,612
20
3.06
2,580
19
2.95
Other Interest-Earning Assets
164,447
135
0.33
246,392
151
0.25
161,871
98
0.25
137,000
99
0.29
123,171
96
0.31
Total Interest-Earning Assets
1,380,986
10,827
3.11
1,402,870
10,863
3.11
1,332,182
11,028
3.36
1,318,586
11,800
3.56
1,297,563
11,709
3.59
Noninterest-Earning Assets
88,291
82,794
92,550
94,262
115,567
Total Assets
$
1,469,277
$
1,485,664
$
1,424,732
$
1,412,848
$
1,413,130
Liabilities and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits (3)
$
275,411
48
0.07
%
$
275,752
55
0.08
%
$
259,065
77
0.12
$
252,521
83
0.13
$
245,977
99
0.16
%
Savings (3)
251,801
21
0.03
247,238
25
0.04
239,850
32
0.05
232,647
32
0.05
230,567
32
0.06
Money Market (3)
198,167
55
0.11
199,652
71
0.14
197,395
98
0.20
198,983
131
0.26
185,644
140
0.30
Time Deposits (3)
168,654
591
1.39
177,506
676
1.53
187,114
740
1.60
193,194
790
1.63
198,184
879
1.76
Total Interest-Bearing Deposits (3)
894,033
715
0.32
900,148
827
0.37
883,424
947
0.43
877,345
1,036
0.47
860,372
1,150
0.53
Short-Term Borrowings
Securities Sold Under Agreements to Repurchase
40,818
25
0.24
49,325
24
0.20
41,094
23
0.23
43,468
25
0.23
42,512
28
0.26
Other Borrowings
6,000
36
2.38
6,000
35
2.34
7,200
41
2.31
10,543
60
2.26
11,000
62
2.24
Total Interest-Bearing Liabilities
940,851
776
0.33
955,473
886
0.37
931,718
1,011
0.44
931,356
1,121
0.48
913,884
1,240
0.54
Noninterest-Bearing Demand Deposits
387,746
387,317
349,108
338,223
337,441
Other Liabilities
8,019
7,999
8,869
9,176
8,477
Total Liabilities
1,336,616
1,350,789
1,289,695
1,278,755
1,259,802
Stockholders' Equity
132,661
134,875
135,037
134,093
153,328
Total Liabilities and Stockholders' Equity
$
1,469,277
$
1,485,664
$
1,424,732
$
1,412,848
$
1,413,130
Net Interest Income (FTE)
(Non-GAAP) (4)
10,051
9,977
10,017
10,679
10,469
Net Interest-Earning Assets (5)
440,135
447,397
400,464
387,230
383,679
Net Interest Rate Spread (FTE)
(Non-GAAP) (4) (6)
2.78
%
2.74
%
2.92
3.08
3.05
%
Net Interest Margin (FTE)
(Non-GAAP) (4)(7)
2.89
2.85
3.05
3.22
3.21
PPP Loans
40,313
484
4.76
57,661
636
4.42
56,945
676
4.81
64,914
768
4.71
70,571
454
2.56
(1)
Annualized based on three months ended results.
(2)
Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale.
(3)
Includes Deposits Held for Sale.
(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
Nine Months Ended
September 30, 2021
September 30, 2020
Average
Balance
Interest
and
Dividends
Yield /
Cost (7)
Average
Balance
Interest
and
Dividends
Yield /
Cost (7)
(Dollars in thousands) (Unaudited)
Assets:
Interest-Earning Assets:
Loans, Net (1)
$
1,017,632
$
29,872
3.92
%
$
1,000,157
$
32,152
4.29
%
Debt Securities
Taxable
148,718
2,124
1.90
139,691
2,894
2.76
Exempt From Federal Tax
12,284
282
3.06
14,660
354
3.22
Marketable Equity Securities
2,645
63
3.18
2,575
59
3.06
Other Interest-Earning Assets
190,913
384
0.27
95,040
418
0.59
Total Interest-Earning Assets
1,372,192
32,725
3.19
1,252,123
35,877
3.83
Noninterest-Earning Assets
87,863
114,271
Total Assets
$
1,460,055
$
1,366,394
Liabilities and Stockholders' Equity
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits (2)
$
270,136
181
0.09
%
$
236,293
506
0.29
%
Savings (2)
246,340
78
0.04
225,473
156
0.09
Money Market (2)
198,408
223
0.15
183,103
576
0.42
Time Deposits (2)
177,690
2,007
1.51
206,463
2,898
1.87
Total Interest-Bearing Deposits (2)
892,574
2,489
0.37
851,332
4,136
0.65
Short-Term Borrowings
Securities Sold Under Agreements to Repurchase
43,745
72
0.22
35,923
112
0.42
Other Borrowings
6,396
112
2.34
11,591
194
2.24
Total Interest-Bearing Liabilities
942,715
2,673
0.38
898,846
4,442
0.66
Noninterest-Bearing Demand Deposits
374,865
305,677
Other Liabilities
8,293
9,025
Total Liabilities
1,325,873
1,213,548
Stockholders' Equity
134,182
152,846
Total Liabilities and Stockholders' Equity
$
1,460,055
$
1,366,394
Net Interest Income (FTE) (Non-GAAP) (3)
30,052
31,435
Net Interest-Earning Assets (3)(4)
429,477
353,277
Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)
2.81
%
3.17
%
Net Interest Margin (FTE) (Non-GAAP) (3)(6)
2.93
3.35
PPP Loans
51,579
1,797
4.66
39,241
770
2.62
(1)
Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale.
(2)
Includes Deposits Held for Sale.
(3)
Refer to Explanation and Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.
(4)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(5)
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(6)
Net interest margin represents net interest income divided by average total interest-earning assets.
(7)
Annualized.
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
Nine Months Ended
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
(Dollars in thousands, except share and per share data) (Unaudited)
Net Income (Loss) (GAAP)
$
1,983
$
(223)
$
2,845
$
3,079
$
(17,395)
$
4,605
$
(13,719)
Adjustments
(Gain) Loss on Sale of Securities
(24)
(11)
(447)
(213)
59
(482)
(20)
Loss on Disposal of Fixed Assets
—
3
—
13
65
3
48
Tax effect
5
2
94
42
(26)
101
(6)
Non-Cash Charges:
Intangible Assets and Goodwill Impairment
—
1,178
—
—
18,693
1,178
18,693
Writedown on Fixed Assets
2
2,268
—
240
884
2,270
884
Tax Effect
—
—
—
(42)
(338)
—
(338)
Adjusted Net Income (Non-GAAP)
$
1,966
$
3,217
$
2,492
$
3,119
$
1,942
$
7,675
$
5,542
Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding
5,390,128
5,432,234
5,436,881
5,406,068
5,395,342
5,420,792
5,406,710
Earnings (Loss) per Common Share - Diluted (GAAP)
$
0.37
$
(0.04)
$
0.52
$
0.57
$
(3.22)
$
0.85
$
(2.54)
Adjusted Earnings per Common Share - Diluted (Non-GAAP)
$
0.36
$
0.59
$
0.46
$
0.58
$
0.36
$
1.42
$
1.03
Net Income (Loss) (GAAP) (Numerator)
$
1,983
$
(223)
$
2,845
$
3,079
$
(17,395)
$
4,605
$
(13,719)
Annualization Factor
3.97
4.01
4.06
3.98
3.98
1.34
1.34
Average Assets (Denominator)
1,469,277
1,485,664
1,424,732
1,412,848
1,413,130
1,460,055
1,366,394
Return on Average Assets (GAAP)
0.54
%
(0.06)
%
0.81
%
0.87
%
(4.90)
%
0.42
%
(1.34)
%
Adjusted Net Income (Non-GAAP) (Numerator)
$
1,966
$
3,217
$
2,492
$
3,119
$
1,942
$
7,675
$
5,542
Annualization Factor
3.97
4.01
4.06
3.98
3.98
1.34
1.34
Average Assets (Denominator)
1,469,277
1,485,664
1,424,732
1,412,848
1,413,130
1,460,055
1,366,394
Adjusted Return on Average Assets (Non-GAAP)
0.53
%
0.87
%
0.71
%
0.88
%
0.55
%
0.70
%
0.54
%
Three Months Ended
Nine Months Ended
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
(Dollars in thousands) (Unaudited)
Net Income (Loss) (GAAP) (Numerator)
$
1,983
$
(223)
$
2,845
$
3,079
$
(17,395)
$
4,605
$
(13,719)
Annualization Factor
3.97
4.01
4.06
3.98
3.98
1.34
1.34
Average Equity (Denominator) (GAAP)
132,661
134,875
135,037
134,093
153,328
134,182
152,846
Return on Average Equity (GAAP)
5.93
%
(0.66)
%
8.54
%
9.13
%
(45.13)
%
4.59
%
(11.99)
%
Adjusted Net Income (Non-GAAP) (Numerator)
$
1,966
$
3,217
$
2,492
$
3,119
$
1,942
$
7,675
$
5,542
Annualization Factor
3.97
4.01
4.06
3.98
3.98
1.34
1.34
Average Equity (Denominator) (GAAP)
132,661
134,875
135,037
134,093
153,328
134,182
152,846
Adjusted Return on Average Equity (Non-GAAP)
5.88
%
9.57
%
7.48
%
9.25
%
5.04
%
7.65
%
4.84
%
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.
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
(Dollars in thousands, except share and per share data) (Unaudited)
Assets (GAAP)
$
1,474,818
$
1,461,613
$
1,476,821
$
1,416,720
$
1,392,876
Goodwill and Intangible Assets, Net
(15,472)
(15,918)
(17,599)
(18,131)
(18,663)
Tangible Assets (Non-GAAP) (Numerator)
$
1,459,346
$
1,445,695
$
1,459,222
$
1,398,589
$
1,374,213
Stockholders' Equity (GAAP)
$
130,987
$
132,536
$
133,776
$
134,530
$
133,299
Goodwill and Intangible Assets, Net
(15,472)
(15,918)
(17,599)
(18,131)
(18,663)
Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator)
$
115,515
$
116,618
$
116,177
$
116,399
$
114,636
Stockholders’ Equity to Assets (GAAP)
8.9
%
9.1
%
9.1
%
9.5
%
9.6
%
Tangible Common Equity to Tangible Assets (Non-GAAP)
7.9
%
8.1
%
8.0
%
8.3
%
8.3
%
Common Shares Outstanding (Denominator)
5,330,401
5,409,077
5,434,374
5,434,374
5,398,712
Book Value per Common Share (GAAP)
$
24.57
$
24.50
$
24.62
$
24.76
$
24.69
Tangible Book Value per Common Share (Non-GAAP)
$
21.67
$
21.56
$
21.38
$
21.42
$
21.23
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
Nine Months Ended
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
(Dollars in thousands) (Unaudited)
Interest Income (GAAP)
$
10,786
$
10,820
$
10,988
$
11,755
$
11,656
$
32,594
$
35,712
Adjustment to FTE Basis
41
43
40
45
53
131
165
Interest Income (FTE) (Non-GAAP)
10,827
10,863
11,028
11,800
11,709
32,725
35,877
Interest Expense (GAAP)
776
886
1,011
1,121
1,240
2,673
4,442
Net Interest Income (FTE) (Non-GAAP)
$
10,051
$
9,977
$
10,017
$
10,679
$
10,469
$
30,052
$
31,435
Net Interest Rate Spread (GAAP)
2.77
%
2.72
%
2.91
%
3.07
%
3.03
%
2.80
%
3.15
%
Adjustment to FTE Basis
0.01
0.02
0.01
0.01
0.02
0.01
0.02
Net Interest Rate Spread (FTE) (Non-GAAP)
2.78
2.74
2.92
3.08
3.05
2.81
3.17
Net Interest Margin (GAAP)
2.88
%
2.84
%
3.04
%
3.21
%
3.19
%
2.92
%
3.34
%
Adjustment to FTE Basis
0.01
0.01
0.01
0.01
0.02
0.01
0.01
Net Interest Margin (FTE) (Non-GAAP)
2.89
2.85
3.05
3.22
3.21
2.93
3.35
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
Nine Months Ended
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
9/30/21
9/30/20
(Dollars in thousands) (Unaudited)
Noninterest Expense (GAAP)
$
9,773
$
13,722
$
9,395
$
9,725
$
28,968
$
32,890
$
47,042
Net Interest and Dividend Income (GAAP)
10,010
9,934
9,977
10,634
10,416
29,921
31,270
Noninterest Income (GAAP)
2,198
2,219
3,174
2,778
2,173
7,591
6,693
Operating Revenue (GAAP)
12,208
12,153
13,151
13,412
12,589
37,512
37,963
Efficiency Ratio (GAAP)
80.05
%
112.91
%
71.44
%
72.51
%
230.11
%
87.68
%
123.92
%
Noninterest Expense (GAAP)
$
9,773
$
13,722
$
9,395
$
9,725
$
28,968
$
32,890
$
47,042
Less:
Other Real Estate Owned (Income)
(89)
(26)
(38)
(39)
(12)
(153)
(30)
Amortization of Intangible Assets
446
503
532
532
532
1,481
1,596
Intangible Assets and Goodwill Impairment
—
1,178
—
—
18,693
1,178
18,693
Writedown on Fixed Assets
2
2,268
—
240
884
2,270
884
Adjusted Noninterest Expense (Non-GAAP)
$
9,414
$
9,799
$
8,901
$
8,992
$
8,871
$
28,114
$
25,899
Net Interest and Dividend Income (GAAP)
10,010
9,934
9,977
10,634
10,416
29,921
31,270
Noninterest Income (GAAP)
2,198
2,219
3,174
2,778
2,173
7,591
6,693
Less:
Net Gain (Loss) on Securities
24
11
447
213
(59)
482
20
Net Loss on Disposal of Fixed Assets
—
(3)
—
(13)
(65)
(3)
(48)
Adjusted Noninterest Income (Non-GAAP)
2,174
2,211
2,727
2,578
2,297
7,112
6,721
Adjusted Operating Revenue (Non-GAAP)
12,184
12,145
12,704
13,212
12,713
37,033
37,991
Adjusted Efficiency Ratio (Non-GAAP)
77.27
%
80.68
%
70.06
%
68.06
%
69.78
%
75.92
%
68.17
%
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.
9/30/21
6/30/21
3/31/21
12/31/20
9/30/20
(Dollars in thousands) (Unaudited)
Allowance for Loan Losses
$
11,581
$
11,544
$
12,725
$
12,771
$
13,780
Total Loans
1,001,599
$
1,007,446
1,041,697
$
1,044,753
$
1,050,885
PPP Loans
(32,703)
(49,525)
(60,380)
(55,096)
(71,028)
Total Loans, Excluding PPP Loans (Non-GAAP)
$
968,896
$
957,921
$
981,317
$
989,657
$
979,857
Allowance for Loan Losses to Total Loans, Excluding
PPP Loans (Non-GAAP)
1.20
%
1.21
%
1.30
%
1.29
%
1.41
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20211028005288/en/
Company Contact: John H. Montgomery President and Chief Executive Officer Phone: (724) 225-2400 Investor Relations: Adam Prior, Senior Vice President The Equity Group Inc. Phone: (212) 836-9606 Email: aprior@equityny.com
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