CB Financial Services, Inc. Announces Third Quarter and Year-to-Date 2021 Financial Results and Declares Quarterly Cash Dividend

Provided By Business Wire

Last update: Oct 28, 2021

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)

Net income was $2.0 million, compared to a net loss of $17.4 million, largely due to noninterest expense reductions as part of the previously announced bank optimization initiative as well as the absence in the current year period of non-cash charges from the prior year period related to goodwill impairment that were due to economic conditions triggered by the COVID-19 pandemic.
- Adjusted net income (non-GAAP) improved to $2.0 million, compared to adjusted net income of $1.9 million.
Earnings per diluted common share (EPS) increased to $0.37 from loss per diluted common share of $(3.22).
- Adjusted earnings per common share - diluted (non-GAAP) was $0.36, compared to $0.36.
Return on average assets (annualized) of 0.54%, compared to loss on average assets (annualized) of (4.90)%.
- Adjusted return on average assets (annualized) (non-GAAP) of 0.53%, compared to 0.55%.
Return on average equity (annualized) of 5.93%, compared to loss on average equity (annualized) of (45.13)%.
- Adjusted return on average equity (annualized) (non-GAAP) of 5.88%, compared to 5.04%.
Net interest margin (NIM) improved quarter over quarter to 2.88% from 2.84% for the three months ended June 30, 2021. NIM was 3.19% for the prior year period.
Net interest and dividend income was $10.0 million, compared to $10.4 million.
Noninterest income was $2.2 million and remained consistent.

(Amounts at September 30, 2021; comparisons to December 31, 2020, unless otherwise noted)

Total loans, including Payroll Protection Program (“PPP”) loans and loans held for sale, were $1.02 billion, a decrease of $25.7 million.
Total loans, including loans held for sale and excluding PPP loans, increased $17.0 million, or 7.0% annualized, to $986.3 million compared to June 30, 2021. Total loans, including loans held for sale and excluding PPP loans, were $989.7 million at December 31, 2020.
Total deposits, including deposits held for sale, were $1.29 billion, an increase of $63.2 million.
Total assets increased to $1.47 billion, compared to $1.42 billion.
Book value per share was $24.57, compared to $24.76 and $24.50 at June 30, 2021.
Tangible book value per share (Non-GAAP) increased to $21.67, compared to $21.42 and $21.56 at June 30, 2021.

Branch Optimization and Operational Efficiency Update

As previously announced in February 2021, CB has implemented strategic initiatives to improve Community Bank’s financial performance and to position the bank for continued profitable growth. Since that announcement, the Company has made substantive progress, including:

The consolidation of six branches that was completed on June 30, 2021;
The sale of two branches expected to be finalized in the fourth quarter of 2021; and
The identification and enhancement of over 185 individualized processes within its remaining branch network and operating environment designed to improve the Bank’s infrastructure, client experience, efficiency and profitability.

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.

Net interest margin (FTE) (Non-GAAP) decreased 32 basis points (“bps”) to 2.89% for the three months ended September 30, 2021 compared to 3.21% for the three months ended September 30, 2020. Net interest margin (GAAP) decreased to 2.88% for the three months ended September 30, 2021 compared to 3.19% for the three months ended September 30, 2020. While CB has further controlled its deposit cost structure as deposit balances increased and benefited from nonrenewal or repricing of higher cost time deposits, the net interest margin decreased year-over-year due to the low interest rate environment decreasing yields on loans and securities. Net interest margin (GAAP) for the three months ended June 30, 2021 was 2.84%.
Interest and dividend income decreased $870,000, or 7.5%, to $10.8 million for the three months ended September 30, 2021 compared to $11.7 million for the three months ended September 30, 2020.
- Interest income on loans decreased $991,000, or 9.3%, to $9.7 million for the three months ended September 30, 2021 compared to $10.7 million for the three months ended September 30, 2020. The average balance of loans decreased $31.0 million and the average yield decreased 28 bps to 3.85% compared to the three months ended September 30, 2020. Interest and fee income on PPP loans was $484,000 for the three months ended September 30, 2021 and contributed 4 bps to loan yield, compared to $454,000 for the three months ended September 30, 2020, which decreased loan yield 11 bps. The impact of the accretion of the credit mark on acquired loan portfolios was $94,000 for the three months ended September 30, 2021 compared to $127,000 for the three months ended September 30, 2020, or 4 bps in the current period compared to 5 bps in the prior period.
- Interest income on taxable investment securities increased $90,000, or 12.0%, to $843,000 for the three months ended September 30, 2021 compared to $753,000 for the three months ended September 30, 2020 driven by a $74.4 million increase in average balance and 73 bps decrease in average yield. The Federal Reserve’s pandemic-driven decision to drop the benchmark interest rate in 2020 resulted in significant calls of U.S. government agency securities and paydowns on mortgage-backed securities in the declining interest rate environment, which were replaced with lower-yielding securities or maintained in cash.
- Other interest and dividend income, which primarily consists of interest-bearing cash, increased $39,000, or 40.6% to $135,000 for the three months ended September 30, 2021 compared to $96,000 for the three months ended September 30, 2020. While the average yield remained comparable to the three months ended September 30, 2020, the average balance of other interest-earning assets increased $41.3 million primarily from buildup of cash as a result of securities activity, PPP loan funds and government stimulus payments deposited with the Bank.
Interest expense decreased $464,000, or 37.4%, to $776,000 for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020.
- Interest expense on deposits decreased $435,000, or 37.8%, to $715,000 for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. While average interest-earning deposit balances increased $33.7 million compared to the three months ended September 30, 2020, interest rate declines for all products driven by pandemic-related market interest rate cuts resulted in a 21 bp, or 39.5%, decrease in average cost compared to the three months ended September 30, 2020. In addition, the average balance of time deposits and the related average cost decreased $29.5 million and 37 bps, respectively.

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.

Cash and due from banks increased $12.6 million, or 7.8%, to $173.5 million at September 30, 2021, compared to $160.9 million at December 31, 2020. The change is primarily due to an increase in deposits as further described below in the Liabilities section.
Securities increased $76.0 million, or 52.3%, to $221.4 million at September 30, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $119.9 million of purchases, $29.6 million of paydowns, and $12.0 million of sales, primarily of mortgage-backed securities, which resulted in the recognition of a $231,000 gain. The purchases were made to earn a higher yield on excess cash. The sales recognized gains on higher-interest securities with faster prepayment speeds. In addition, there was a $2.9 million decrease in the market value of the debt securities portfolio and a $251,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program (“PPP”) Update

PPP loans decreased $22.4 million to $32.7 million at September 30, 2021 compared to $55.1 million at December 31, 2020, which includes $34.6 million in originations in the current period offset by loan forgiveness.
$1.1 million of net PPP loan origination fees were unearned at December 31, 2020. Due to activity in the current period, $1.4 million of net PPP loan origination fees were unearned at September 30, 2021. $380,000 of net PPP loan origination fees were earned in the third quarter of 2021 compared to $489,000 for the three months ended June 30, 2021.

Loans and Credit Quality

Total loans held for investment decreased $43.2 million to $1.00 billion at September 30, 2021. This includes the impact of reclassifying $17.4 million of loans to held for sale. Excluding the net decline of $22.4 million in PPP loans in the current period and including $17.4 million of held for sale loans, loans declined $3.4 million. Compared to June 30, 2021, total loans, including loans held for sale and excluding PPP loans, increased $17.0 million, primarily from $23.1 million in commercial real estate loan growth.
The allowance for loan losses was $11.6 million at September 30, 2021 compared to $12.8 million at December 31, 2020. There was a net recovery of $1.2 million of provision for loan losses in the current year primarily due to a decrease in specific reserves on impaired loans and improvements in the economic and industry outlook combined with a decrease in loan balances that require a loan loss reserve, which excludes PPP loans and loans held for sale. A $20.8 million decrease in net reservable loans in the current period, which excludes PPP loans and includes the reclassification of $17.4 million of loans to held for sale that do not require a reserve, as well as a decrease in specifically impaired loans and improving economic and industry conditions contributed to the net recovery in the current period. As a result, the allowance for loan losses to total loans was 1.16% at September 30, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.20% at September 30, 2021 compared to 1.29% at December 31, 2020.
Net recoveries for the three months ended September 30, 2021 were $37,000, or (0.01)% of average loans on an annualized basis. Net charge-offs for the three months ended September 30, 2020 were $68,000, or 0.03% of average loans on an annualized basis. Net recoveries for the nine months ended September 30, 2021 were $10,000, or 0.00% of average loans on an annualized basis. Net charge-offs for the nine months ended September 30, 2020 were $87,000, 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 within the loans held for investment portfolio, were $10.9 million at September 30, 2021 compared to $14.5 million at December 31, 2020. Nonperforming loans to total loans ratio was 1.09% at September 30, 2021 compared to 1.39% at December 31, 2020. A $3.6 million nonaccrual commercial real estate loan under agreement to sell and transferred into the held for sale portfolio at September 30, 2021 was sold in October and will result in the recognition of an $897,000 gain on sale of loans in the fourth quarter of 2021. This loan previously incurred a $931,000 charge-off in the prior year.
There were no loans in forbearance at September 30, 2021 compared to 9 loans totaling $7.8 million at June 30, 2021, and 31 loans totaling $24.1 million at December 31, 2020. The remaining loans exited forbearance in July and begun making regularly scheduled payments.

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

Total deposits, including deposits held for sale, increased $63.2 million to $1.29 billion as of September 30, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $47.8 million, $15.6 million and $18.4 million, respectively, partially offset by a decrease of $27.6 million in time deposits. IRS and stimulus-related payments totaled $29.9 million in the first quarter and the impact of the PPP loans that were originated and the proceeds of which were initially deposited at the Bank was approximately $28.7 million. Annualized deposit growth rate was 6.9% including IRS and PPP loan deposits. Average total deposits decreased $5.7 million, primarily in time deposits, for the three months ended September 30, 2021 compared to the three months ended June 30, 2021.

Borrowed Funds

Short-term borrowings increased $1.6 million, or 3.9%, to $42.6 million at September 30, 2021, compared to $41.1 million at December 31, 2020. At September 30, 2021 and December 31, 2020, short-term borrowings were comprised entirely of securities sold under agreements to repurchase, which are related to business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase. $10.7 million was excluded from short-term borrowings at September 30, 2021 and reported as deposits held for sale.
Other borrowed funds decreased $2.0 million to $6.0 million at September 30, 2021 due to a Federal Home Loan Bank borrowing that matured in the current period.

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/