CB Financial Services, Inc. Announces Second Quarter and Year-to-Date 2023 Financial Results and Declares Quarterly Cash Dividend

Provided By Business Wire

Last update: Jul 28, 2023

CB Financial Services, Inc. (“CB” or the “Company”) (NASDAQGM: CBFV), the holding company of Community Bank (the “Bank”) and Exchange Underwriters, Inc. (“EU”), a wholly-owned insurance subsidiary of the Bank, today announced its second quarter and year-to-date 2023 financial results.

2023 Second Quarter Financial Highlights

(Comparisons to three months ended June 30, 2022 unless otherwise noted)

Net income was $2.8 million, compared to $118,000. Prior period results were negatively impacted by provision for credit losses expense of approximately $3.8 million due primarily to a single commercial loan charge-off of $2.7 million. Current period results were positively impacted by net interest margin (NIM) expansion coupled with a modest increase in noninterest income, partially offset by an increase in noninterest expense.
- Income before income tax expense (benefit) was $3.5 million compared to $74,000.
- Pre-provision net revenue (PPNR) (non-GAAP) was $3.95 million compared to $3.86 million.
Earnings per diluted common share (EPS) increased to $0.54 from $0.02.
Return on average assets (annualized) was 0.79%, compared to 0.03%.
Return on average equity (annualized) was 9.38%, compared to 0.40%.
NIM improved to 3.29% from 3.12%.
Net interest and dividend income was $11.1 million, compared to $10.2 million.
Noninterest income increased to $2.3 million, compared to $2.1 million. The most significant changes in noninterest income included an increase in insurance commissions of $142,000 and a decrease in net losses on securities of $99,000.
Noninterest expense increased to $9.5 million, compared to $8.4 million, primarily due to increases in compensation and benefits, equipment and data processing costs.

(Amounts at June 30, 2023; comparisons to December 31, 2022, unless otherwise noted)

Total assets increased to $1.43 billion from $1.41 billion.
Total loans increased $51.3 million, or 4.9%, to $1.10 billion compared to $1.05 billion, and included increases of $32.2 million, or 46.0%, in commercial and industrial loans, $21.8 million, or 5.0%, in commercial real estate loans, and $7.8 million, or 2.3%, in residential mortgage loans, partially offset by a decrease of $12.1 million, or 8.3%, in consumer loans, which is primarily comprised of indirect automobile loans.
Nonperforming loans to total loans was 0.37%, a decrease of 18 basis points (“bps”), compared to 0.55%.
Total deposits were $1.26 billion, a decrease of $5.2 million, compared to $1.27 billion.
Book value per share was $22.81, compared to $22.90 as of March 31, 2023 and $21.60 as of December 31, 2022.
Tangible book value per share (Non-GAAP) was $20.39, compared to $20.40 as of March 31, 2023 and $19.00 as of December 31, 2022. The year-to-date change was due to an increase in stockholders’ equity primarily related to current period net income of $6.9 million and a $2.1 million positive adjustment due to the Company’s January 1, 2023 adoption of CECL, partially offset by current period dividends paid to stockholders of $2.6 million.

Management Commentary

President and CEO John H. Montgomery stated, “Our second quarter results demonstrated the durability of both our franchise and the community bank model in general. While macro dislocations seen in the banking industry during the first quarter have abated, we continue to face headwinds resulting from a rising interest rate environment. First and foremost, we are focused on ensuring the bank maintains adequate liquidity and a strong capital position. In doing so, we are able to navigate challenging economic times from a position of strength which also allows us to maintain relationships with trusted customers and develop new ones, as evidenced by our continued loan growth during the quarter. The markets we serve in southwestern Pennsylvania, eastern Ohio and northern West Virginia have remained resilient despite continued interest rate increases by the Federal Reserve. In recent years, our markets have exhibited more stability than others in key areas such as real estate values and employment, allowing Community Bank to experience less volatility.”

Mr. Montgomery continued, “We have noted for several quarters that our funding costs have been rising, with net interest margin decreasing from first quarter levels while improving compared with the second quarter last year. As we highlighted last quarter, our deposit base is well-diversified, with a significant majority insured or collateralized. Within our deposit base, the most significant change during the second quarter was a shift to interest-bearing from noninterest-bearing deposits as our customers responded to the overall increase in market interest rates. The other half of our NIM calculation is our interest income, which has been supported by the repricing of variable rate loans and the addition of new, higher priced loans via the continued growth of our loan book during the second quarter, with C&I loans having been the biggest contributor, followed by commercial real estate loans. Moving forward, our NIM will also benefit as we reposition our loan book by reducing transactional indirect auto loans with higher yielding C&I and CRE loans ”

Mr. Montgomery concluded, “As I noted previously, our team here at Community Bank is focused on maintaining solid capital and liquidity positions. Success on those fronts provides a range of positive outcomes for our business that ultimately lead to long-term value creation which benefits all our constituents - shareholders, employees, customers, and our communities at large. While the near-term economic picture remains somewhat muddled, we are also committed to making proper investments in our franchise to position the bank for long-term growth. During the second quarter we added revenue producing members to our team while also continuing to make targeted technology investments necessary for our competitive positioning. We also declared and paid a $0.25 cash dividend during the quarter while allowing our previous share repurchase program to expire. I am proud of our entire team for all their hard work and look forward to our continued success.”

Dividend Information

The Company’s Board of Directors declared a $0.25 quarterly cash dividend per outstanding share of common stock, payable on or about August 31, 2023, to stockholders of record as of the close of business on August 15, 2023.

Stock Repurchase Program

On April 21, 2022, CB announced a program to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. The Company purchased a total of 74,656 shares of the Company’s common stock at an average price of $22.38 per share prior to the program expiration on May 1, 2023.

2023 Second Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income increased $1.0 million, or 9.4%, to $11.1 million for the three months ended June 30, 2023 compared to $10.2 million for the three months ended June 30, 2022.

Net interest margin (GAAP) increased to 3.29% for the three months ended June 30, 2023 compared to 3.12% for the three months ended June 30, 2022. Fully tax equivalent (FTE) net interest margin (Non-GAAP) increased 17 bps to 3.30% for the three months ended June 30, 2023 compared to 3.13% for the three months ended June 30, 2022.
Interest and dividend income increased $4.2 million, or 38.7%, to $15.2 million for the three months ended June 30, 2023 compared to $11.0 million for the three months ended June 30, 2022.
- Interest income on loans increased $3.7 million, or 37.9%, to $13.4 million for the three months ended June 30, 2023 compared to $9.7 million for the three months ended June 30, 2022. The average balance of loans increased $71.5 million to $1.08 billion from $1.01 billion, generating $724,000 of additional interest income on loans. The average yield increased 112 bps to 5.00% compared to 3.88% causing a $3.0 million increase in interest income on loans.
- Interest income on interest-earning deposits at other banks increased $599,000, to $721,000 for the three months ended June 30, 2023 compared to $122,000 for the three months ended June 30, 2022 as the average yield increased 443 bps, partially offset by a $1.9 million decrease in average balances. The increase in the average yield was the result of the Federal Reserve Board’s interest rate increases.
Interest expense increased $3.3 million, or 413.6%, to $4.1 million for the three months ended June 30, 2023 compared to $795,000 for the three months ended June 30, 2022.
- Interest expense on deposits increased $3.2 million, or 536.1%, to $3.8 million for the three months ended June 30, 2023 compared to $604,000 for the three months ended June 30, 2022. Rising market interest rates led to the repricing of interest-bearing demand and money market deposits and a shift in deposits from non interest-bearing to interest-bearing demand and time deposits and resulted in a 137 bps, or 466.9%, increase in the average cost of interest-bearing deposits compared to the three months ended June 30, 2022. This accounted for a $3.2 million increase in interest expense. Additionally, interest-bearing deposit balances increased $104.5 million, or 12.7%, to $930.1 million as of June 30, 2023 compared to $825.6 million as of June 30, 2022, accounting for a $70,000 increase in interest expense.

Provision for Credit Losses

Effective January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The provision for credit losses recorded for the three months ended June 30, 2023 was $432,000 and was required primarily due to loan growth coupled with a modeled slowdown in loan prepayment speeds. This compared to $3.8 million in provision for credit losses recorded for the three months ended June 30, 2022, primarily due to the charge-off of a $2.7 million commercial and industrial loan to a borrower that ceased operations.

Noninterest income

Noninterest income increased $164,000, or 7.8%, to $2.3 million for the three months ended June 30, 2023, compared to $2.1 million for the three months ended June 30, 2022. This increase was primarily related to a $142,000 increase in commercial and personal insurance commissions and a decrease in net losses on securities of $99,000.

Noninterest Expense

Noninterest expense increased $1.1 million, or 13.0%, to $9.5 million for the three months ended June 30, 2023 compared to $8.4 million for the three months ended June 30, 2022. Salaries and benefits increased $692,000, or 15.2%, to $5.2 million primarily due to merit increases, revenue producing staff additions and associated $160,000 of recruiting costs, and $96,000 of severance costs related to the discontinuation of indirect automobile lending. Data processing expense increased $272,000, or 61.0%, to $718,000, due to increased ongoing costs related to the fourth quarter 2022 core conversion and equipment expense increased $101,000 or 55.5%, to $283,000, due to costs associated with the implementation of new interactive teller machines.

Statement of Financial Condition Review

Assets

Total assets increased $23.8 million, or 1.7%, to $1.43 billion at June 30, 2023, compared to $1.41 billion at December 31, 2022.

Cash and due from banks decreased $25.6 million, or 24.7%, to $78.1 million at June 30, 2023, compared to $103.7 million at December 31, 2022, due to significant loan growth.
Securities decreased $8.6 million, or 4.5%, to $181.4 million at June 30, 2023, compared to $190.1 million at December 31, 2022. The securities balance was primarily impacted by $8.1 million of repayments on mortgage-backed and collateralized mortgage obligation securities and a $332,000 decrease in the market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Loans and Credit Quality

Total loans increased $51.3 million, or 4.9%, to $1.10 billion at June 30, 2023 compared to $1.05 billion at December 31, 2022. Loan growth was driven by increases in commercial and industrial loans, commercial real estate loans and residential mortgage loans of $32.2 million, $21.8 million, and $7.8 million, respectively, partially offset by a decrease in consumer loans of $12.1 million. The decrease in consumer loans resulted from a reduction in indirect automobile loan production due to rising market interest rates. Further decreases in this portfolio is expected as the Bank discontinued this product offering at June 30, 2023 to allocate resources and focus production efforts on more profitable commercial products.
The allowance for credit losses (ACL) was $10.7 million at June 30, 2023 and $12.8 million at December 31, 2022. As a result, the ACL to total loans was 0.97% at June 30, 2023 compared to 1.22% at December 31, 2022. The change in the ACL was primarily due to the Company's aforementioned adoption of CECL. At adoption, the Company decreased its ACL by $3.4 million. Contributing to the change in ACL was a prior year charge-off of $2.7 million and qualitative factors that significantly impacted the incurred loss model driven by historical activity compared to the adopted CECL methodology that is centered around current expected credit loss (CECL) activity using a forecast approach.
Net charge-offs for the three months ended June 30, 2023 were $96,000, or 0.04% of average loans on an annualized basis. 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 primarily due to the aforementioned $2.7 million charge-off of a commercial and industrial loan. Net recoveries for the six months ended June 30, 2023 were $660,000 primarily due to recoveries totaling $750,000 related to the prior year charged-off loan. Net charge-offs for the six months ended June 30, 2022 were $2.5 million.
Nonperforming loans, which includes nonaccrual loans and accruing loans past due 90 days or more, were $4.1 million at June 30, 2023 compared to $5.8 million at December 31, 2022. The decrease of $1.7 million was due to ten loans totaling $1.7 million being moved from nonaccrual to accrual status during the current period. Current nonperforming loans to total loans ratio was 0.37% compared to 0.55% at December 31, 2022.

Other

Intangible assets decreased $891,000, or 25.6%, to $2.6 million at June 30, 2023 compared to $3.5 million at December 31, 2022 due to amortization expense recognized during the period.
Accrued interest and other assets increased $5.6 million, or 26.8%, to $26.7 million at June 30, 2023, compared to $21.1 million at December 31, 2022 due to the sale of a $2.0 million syndicated loan which was sold but not yet settled at the end of the period, and increases in accounts receivable for EU, income taxes receivable and BOLI death benefit claims receivable $853,000, $761,000 and $664,000.

Total liabilities increased $17.4 million, or 1.3%, to $1.32 billion at June 30, 2023 compared to $1.30 billion at December 31, 2022.

Deposits

Total deposits decreased $5.2 million to $1.26 billion as of June 30, 2023 compared to $1.27 billion at December 31, 2022. Interest-bearing demand deposits increased $62.8 million and time deposits increased $60.4 million, while non interest-bearing demand deposits decreased $74.3 million, money market deposits decreased $23.3 million and savings deposits decreased $30.8 million. The increase in interest-bearing demand deposits is primarily the result of higher interest rates attracting more customers and additional deposits from existing customers while higher time deposits resulted from the offering of a higher-rate certificate of deposit product. FDIC insured deposits totaled approximately 61.1% of total deposits while an additional 16.5% of deposits were collateralized with investment securities.

Borrowed Funds

Long-term borrowings increased $20.0 million, or 136.6%, to $34.7 million at June 30, 2023, compared to $14.6 million at December 31, 2022. During the second quarter, the Bank entered into $20.0 million of FHLB advances for a term of 24 months at 4.92%, the proceeds of which were utilized to match fund originations within the Bank’s commercial and industrial loan portfolio.
Short-term borrowings decreased $8.1 million, or 100.0%, as there were no short-term borrowings at June 30, 2023, compared to $8.1 million at December 31, 2022. At December 31, 2022, short-term borrowings were comprised entirely of securities sold under agreements to repurchase. These accounts were transitioned into other deposit products and account for a portion of the interest-bearing demand deposit increase.

Accrued Interest Payable and Other Liabilities

Accrued interest payable and other liabilities increased $10.6 million, or 139.8%, to $18.2 million at June 30, 2023, compared to $7.6 million at December 31, 2022 primarily due to the purchase of $8.9 million of syndicated loans which were unfunded at the end of the period.

Stockholders’ Equity

Stockholders’ equity increased $6.4 million, or 5.8%, to $116.6 million at June 30, 2023, compared to $110.2 million at December 31, 2022. Key factors positively impacting stockholders’ equity included $6.9 million of net income for the current period and a $2.1 million positive adjustment, net of tax, due to the Company’s January 1, 2023 adoption of CECL as described above. These factors were partially offset by the payment of $2.6 million in dividends since December 31, 2022 and activity under share repurchase programs. On April 21, 2022, a $10.0 million repurchase program was authorized, with the Company repurchasing 74,656 shares at an average price of $22.38 per share since the inception of the plan. In total, the Company repurchased $274,000 of common stock since December 31, 2022. The plan expired on May 1, 2023.

Book value per share

Book value per common share was $22.81 at June 30, 2023 compared to $21.60 at December 31, 2022, an increase of $1.21.

Tangible book value per common share (Non-GAAP) was $20.39 at June 30, 2023, compared to $19.00 at December 31, 2022, an increase of $1.39.

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, 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	6/30/23			3/31/23			12/31/22			9/30/22			6/30/22
Assets
Cash and Due From Banks	$	78,093		$	103,545		$	103,700		$	122,801		$	81,121
Securities		181,427			189,025			190,058			193,846			213,505
Loans
Real Estate:
Residential		338,493			332,840			330,725			328,248			325,138
Commercial		458,614			452,770			436,805			432,516			426,105
Construction		44,523			39,522			44,923			49,502			41,277
Commercial and Industrial:
Commercial and Industrial		102,232			79,436			69,918			61,428			62,054
PPP		34			65			126			768			3,853
Consumer		134,788			146,081			146,927			150,615			148,921
Other		22,470			21,151			20,449			19,865			20,621
Total Loans		1,101,154			1,071,865			1,049,873			1,042,942			1,027,969
Allowance for Credit Losses		(10,666	)		(10,270	)		(12,819	)		(12,854	)		(12,833	)
Loans, Net		1,090,488			1,061,595			1,037,054			1,030,088			1,015,136
Premises and Equipment, Net		18,582			17,732			17,844			18,064			18,196
Bank-Owned Life Insurance		25,082			24,943			25,893			25,750			25,610
Goodwill		9,732			9,732			9,732			9,732			9,732
Intangible Assets, Net		2,622			3,068			3,513			3,959			4,404
Accrued Interest Receivable and Other Assets		26,707			21,068			21,144			21,680			18,757
Total Assets	$	1,432,733		$	1,430,708		$	1,408,938		$	1,425,920		$	1,386,461


Liabilities
Deposits
Noninterest-Bearing Demand Accounts	$	316,098		$	350,911		$	390,405		$	407,107		$	389,127
Interest-Bearing Demand Accounts		374,654			359,051			311,825			298,755			265,347
Money Market Accounts		185,814			206,174			209,125			198,715			185,308
Savings Accounts		217,267			234,935			248,022			250,378			250,226
Time Deposits		169,482			130,449			109,126			120,879			125,182
Total Deposits		1,263,315			1,281,520			1,268,503			1,275,834			1,215,190

Short-Term Borrowings		—			121			8,060			18,108			32,178
Other Borrowings		34,658			14,648			14,638			17,627			17,618
Accrued Interest Payable and Other Liabilities		18,171			17,224			7,582			7,645			7,703
Total Liabilities		1,316,144			1,313,513			1,298,783			1,319,214			1,272,689

Stockholders’ Equity		116,589			117,195			110,155			106,706			113,772
Total Liabilities and Stockholders’ Equity	$	1,432,733		$	1,430,708		$	1,408,938		$	1,425,920		$	1,386,461


(Dollars in thousands, except share and per share data) (Unaudited)

	Three Months Ended															Six Months Ended
Selected Operating Data	6/30/23			3/31/23			12/31/22			9/30/22			6/30/22			6/30/23			6/30/22
Interest and Dividend Income:
Loans, Including Fees	$	13,426		$	12,371		$	11,835		$	10,815		$	9,733		$	25,797		$	19,284
Securities:
Taxable		950			964			974			985			988			1,914			1,893
Tax-Exempt		42			41			40			49			57			83			123
Dividends		25			24			28			21			20			49			42
Other Interest and Dividend Income		760			844			978			417			160			1,605			232
Total Interest and Dividend Income		15,203			14,244			13,855			12,287			10,958			29,448			21,574
Interest Expense:
Deposits		3,842			2,504			1,811			1,079			604			6,346			1,134
Short-Term Borrowings		3			2			7			19			18			5			37
Other Borrowings		238			155			171			174			173			393			347
Total Interest Expense		4,083			2,661			1,989			1,272			795			6,744			1,518
Net Interest and Dividend Income		11,120			11,583			11,866			11,015			10,163			22,704			20,056
Provision for Credit Losses - Loans		492			80			—			—			3,784			572			3,784
Recovery for Credit Losses - Unfunded Commitments		(60	)		—			—			—			—			(60	)		—
Net Interest and Dividend Income After Provision for Credit Losses		10,688			11,503			11,866			11,015			6,379			22,192			16,272
Noninterest Income:
Service Fees		448			445			530			544			559			892			1,085
Insurance Commissions		1,511			1,922			1,399			1,368			1,369			3,434			3,167
Other Commissions		224			144			157			244			179			368			268
Net (Loss) Gain on Sales of Loans		(5	)		2			—			—			—			(3	)		—
Net (Loss) Gain on Securities		(100	)		(232	)		83			(46	)		(199	)		(332	)		(206	)
Net Gain on Purchased Tax Credits		7			7			14			14			14			14			28
Net Gain (Loss) on Disposal of Fixed Assets		—			11			—			439			—			11			(8	)
Income from Bank-Owned Life Insurance		139			140			143			140			142			280			278
Net Gain on Bank-Owned Life Insurance Claims		1			302			—			—			—			303			—
Other Income		44			69			34			36			41			113			106
Total Noninterest Income		2,269			2,810			2,360			2,739			2,105			5,080			4,718
Noninterest Expense:
Salaries and Employee Benefits		5,231			5,079			4,625			4,739			4,539			10,310			9,104
Occupancy		789			701			817			768			776			1,490			1,462
Equipment		283			218			178			170			182			501			392
Data Processing		718			857			681			540			446			1,575			931
FDIC Assessment		224			152			154			147			128			376			337
PA Shares Tax		195			260			258			240			240			455			480
Contracted Services		434			147			405			288			348			581			935
Legal and Professional Fees		246			182			362			334			389			428			541
Advertising		75			79			165			131			115			154			231
Other Real Estate Owned (Income)		(35	)		(37	)		(38	)		(38	)		(37	)		(72	)		(75	)
Amortization of Intangible Assets		446			445			446			445			446			891			891
Other		895			945			945			1,063			838			1,841			1,837
Total Noninterest Expense		9,501			9,028			8,998			8,827			8,410			18,530			17,066
Income Before Income Tax Expense (Benefit)		3,456			5,285			5,228			4,927			74			8,742			3,924
Income Tax Expense (Benefit)		699			1,129			1,076			998			(44	)		1,827			759
Net Income	$	2,757		$	4,156		$	4,152		$	3,929		$	118		$	6,915		$	3,165

	Three Months Ended										Six Months Ended
Per Common Share Data	6/30/23		3/31/23		12/31/22		9/30/22		6/30/22		6/30/23		6/30/22
Dividends Per Common Share	$	0.25	$	0.25	$	0.24	$	0.24	$	0.24	$	0.50	$	0.48
Earnings Per Common Share - Basic		0.54		0.81		0.81		0.77		0.02		1.35		0.61
Earnings Per Common Share - Diluted		0.54		0.81		0.81		0.77		0.02		1.35		0.61

Weighted Average Common Shares Outstanding - Basic		5,111,987		5,109,597		5,095,237		5,106,861		5,147,846		5,110,799		5,172,881
Weighted Average Common Shares Outstanding - Diluted		5,116,134		5,115,705		5,104,254		5,118,627		5,156,975		5,118,396		5,189,144

	6/30/23			3/31/23			12/31/22			9/30/22			6/30/22
Common Shares Outstanding		5,111,678			5,116,830			5,100,189			5,096,672			5,128,333
Book Value Per Common Share	$	22.81		$	22.90		$	21.60		$	20.94		$	22.18
Tangible Book Value per Common Share ⁽¹⁾		20.39			20.40			19.00			18.25			19.43
Stockholders’ Equity to Assets		8.1	%		8.2	%		7.8	%		7.5	%		8.2	%
Tangible Common Equity to Tangible Assets ⁽¹⁾		7.3			7.4			6.9			6.6			7.3

	Three Months Ended										Six Months Ended
Selected Financial Ratios ⁽²⁾	6/30/23		3/31/23		12/31/22		9/30/22		6/30/22		6/30/23		6/30/22
Return on Average Assets	0.79	%	1.21	%	1.16	%	1.12	%	0.03	%	1.00	%	0.45	%
Return on Average Equity	9.38		14.69		15.26		13.60		0.40		11.98		5.15
Average Interest-Earning Assets to Average Interest-Bearing Liabilities	142.37		147.53		149.04		149.41		149.03		144.88		146.74
Average Equity to Average Assets	8.38		8.27		7.63		8.20		8.49		8.33		8.81
Net Interest Rate Spread	2.78		3.12		3.17		3.10		3.00		2.95		3.00
Net Interest Rate Spread (FTE) ⁽¹⁾	2.79		3.13		3.18		3.11		3.01		2.96		3.01
Net Interest Margin	3.29		3.51		3.45		3.29		3.12		3.40		3.10
Net Interest Margin (FTE) ⁽¹⁾	3.30		3.52		3.46		3.30		3.13		3.41		3.11
Net Charge-Offs (Recoveries) to Average Loans	0.04		(0.29	)	0.01		(0.01	)	1.01		(0.12	)	0.50
Efficiency Ratio	70.96		62.72		63.25		64.18		68.55		66.69		68.89

Asset Quality Ratios	6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Allowance for Credit Losses to Total Loans	0.97	%	0.96	%	1.22	%	1.23	%	1.25	%
Allowance for Credit Losses to Nonperforming Loans ⁽³⁾	260.46		189.73		221.06		218.61		219.89
Allowance for Credit Losses to Noncurrent Loans ⁽⁴⁾	260.46		189.73		320.64		318.96		329.47
Delinquent and Nonaccrual Loans to Total Loans ^{(4) (5)}	0.68		1.02		0.81		0.46		0.45
Nonperforming Loans to Total Loans ⁽³⁾	0.37		0.51		0.55		0.56		0.57
Noncurrent Loans to Total Loans ⁽⁴⁾	0.37		0.51		0.38		0.39		0.38
Nonperforming Assets to Total Assets ⁽⁶⁾	0.30		0.40		0.41		0.41		0.42

Capital Ratios ⁽⁷⁾	6/30/23		3/31/23		12/31/22		9/30/22		6/30/22
Common Equity Tier 1 Capital (to Risk Weighted Assets)	12.54	%	12.60	%	12.33	%	12.02	%	11.83	%
Tier 1 Capital (to Risk Weighted Assets)	12.54		12.60		12.33		12.02		11.83
Total Capital (to Risk Weighted Assets)	13.64		13.69		13.58		13.27		13.08
Tier 1 Leverage (to Adjusted Total Assets)	9.26		9.24		8.66		8.51		8.33

(1)		Refer to Explanation of Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.
(2)		Interim period ratios are calculated on an annualized basis.
(3)		Nonperforming loans consist of all nonaccrual loans and accruing loans that are 90 days or more past due.
(4)		Noncurrent loans consist of nonaccrual loans and accruing loans that are 90 days or more past due.
(5)		Delinquent loans consist of accruing loans that are 30 days or more past due.
(6)		Nonperforming assets consist of nonperforming loans and other real estate owned.
(7)		Capital ratios are for Community Bank only.

Certain items previously reported may have been reclassified to conform with the current reporting period’s format.

AVERAGE BALANCES AND YIELDS

	Three Months Ended
	June 30, 2023						March 31, 2023						December 31, 2022						September 30, 2022						June 30, 2022
	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⁾	$	1,079,399	$	13,450	5.00	%	$	1,040,570	$	12,391	4.83	%	$	1,034,714	$	11,853	4.54	%	$	1,024,363	$	10,833	4.20	%	$	1,007,874	$	9,751	3.88	%
Debt Securities
Taxable		209,292		950	1.82			213,158		964	1.81			216,915		974	1.80			222,110		985	1.77			228,315		988	1.73
Exempt From Federal Tax		6,180		53	3.43			6,270		52	3.32			6,277		51	3.25			7,998		62	3.10			9,109		73	3.21
Equity Securities		2,693		25	3.71			2,693		24	3.56			2,693		28	4.16			2,693		21	3.12			2,693		20	2.97
Interest-Earning Deposits at Banks		54,466		721	5.30			74,555		805	4.32			99,108		939	3.79			67,870		378	2.23			56,379		122	0.87
Other Interest-Earning Assets		2,783		39	5.62			2,633		39	6.01			2,875		39	5.38			2,784		39	5.56			3,235		38	4.71
Total Interest-Earning Assets		1,354,813		15,238	4.51			1,339,879		14,275	4.32			1,362,582		13,884	4.04			1,327,818		12,318	3.68			1,307,605		10,992	3.37
Noninterest-Earning Assets		51,928						48,369						51,718						68,796						84,323
Total Assets	$	1,406,741					$	1,388,248					$	1,414,300					$	1,396,614					$	1,391,928
Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Accounts	$	354,497	$	1,582	1.79	%	$	335,327	$	1,191	1.44	%	$	315,352	$	810	1.02	%	$	278,412	$	393	0.56	%	$	260,655	$	111	0.17	%
Savings Accounts		225,175		53	0.09			242,298		37	0.06			249,948		29	0.05			251,148		20	0.03			248,356		20	0.03
Money Market Accounts		194,565		1,033	2.13			213,443		939	1.78			206,192		604	1.16			189,371		269	0.56			188,804		61	0.13
Time Deposits		155,867		1,174	3.02			101,147		337	1.35			116,172		368	1.26			123,438		397	1.28			127,832		412	1.29
Total Interest-Bearing Deposits		930,104		3,842	1.66			892,215		2,504	1.14			887,664		1,811	0.81			842,369		1,079	0.51			825,647		604	0.29
Short-Term Borrowings		480		3	2.51			1,344		2	0.60			8,985		7	0.31			28,738		19	0.26			34,135		18	0.21
Other Borrowings		21,026		238	4.54			14,641		155	4.29			17,598		171	3.86			17,621		174	3.92			17,611		173	3.94
Total Interest-Bearing Liabilities		951,610		4,083	1.72			908,200		2,661	1.19			914,247		1,989	0.86			888,728		1,272	0.57			877,393		795	0.36
Noninterest-Bearing Demand Deposits		326,262						362,343						391,300						390,658						391,975
Other Liabilities		10,920						2,953						788						2,636						4,415
Total Liabilities		1,288,792						1,273,496						1,306,335						1,282,022						1,273,783
Stockholders' Equity		117,949						114,752						107,965						114,592						118,145
Total Liabilities and Stockholders' Equity	$	1,406,741					$	1,388,248					$	1,414,300					$	1,396,614					$	1,391,928
Net Interest Income (FTE) (Non-GAAP) ⁽³⁾			$	11,155					$	11,614					$	11,895					$	11,046					$	10,197
Net Interest-Earning Assets ⁽⁴⁾		403,203						431,679						448,335						439,090						430,212
Net Interest Rate Spread (FTE) (Non-GAAP) ^{(3) (5)}					2.79	%					3.13	%					3.18	%					3.11	%					3.01	%
Net Interest Margin (FTE) (Non-GAAP)⁽³⁾⁽⁶⁾					3.30						3.52						3.46						3.30						3.13
PPP Loans		38		1	10.56			100		3	12.17			216		22	40.41			2,424		123	20.13			5,546		144	10.41

(1)		Annualized based on three months ended results.
(2)		Net of the allowance for credit losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.
(3)		Refer to Explanation and Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.
(4)		Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(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 annualized net interest income divided by average total interest-earning assets.

AVERAGE BALANCES AND YIELDS

	Six Months Ended
	June 30, 2023						June 30, 2022
	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⁾	$	1,060,092	$	25,840	4.92	%	$	1,008,539	$	19,322	3.86	%
Debt Securities
Taxable		211,213		1,914	1.81			222,144		1,893	1.70
Exempt From Federal Tax		6,225		105	3.37			9,649		156	3.23
Marketable Equity Securities		2,693		49	3.64			2,693		42	3.12
Interest-Earning Deposits at Banks		64,455		1,526	4.74			57,829		156	0.54
Other Interest-Earning Assets		2,709		79	5.88			3,358		76	4.56
Total Interest-Earning Assets		1,347,387		29,513	4.42			1,304,212		21,645	3.35
Noninterest-Earning Assets		50,159						103,201
Total Assets	$	1,397,546					$	1,407,413

Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Accounts	$	344,965	$	2,773	1.62	%	$	268,585	$	160	0.12	%
Savings Accounts		233,689		90	0.08			246,084		38	0.03
Money Market Accounts		203,952		1,972	1.95			190,605		102	0.11
Time Deposits		128,659		1,511	2.37			129,914		834	1.29
Total Interest-Bearing Deposits		911,265		6,346	1.40			835,188		1,134	0.27
Short-Term Borrowings		910		5	1.11			36,000		37	0.21
Other Borrowings		17,850		393	4.44			17,608		347	3.97
Total Interest-Bearing Liabilities		930,025		6,744	1.46			888,796		1,518	0.34
Noninterest-Bearing Demand Deposits		344,203						388,103
Other Liabilities		6,959						6,468
Total Liabilities		1,281,187						1,283,367
Stockholders' Equity		116,359						124,046
Total Liabilities and Stockholders' Equity	$	1,397,546					$	1,407,413
Net Interest Income (FTE) (Non-GAAP) ⁽³⁾				22,769						20,127
Net Interest-Earning Assets ⁽⁴⁾		417,362						415,416
Net Interest Rate Spread (FTE) (Non-GAAP) ⁽³⁾⁽⁵⁾					2.96	%					3.01	%
Net Interest Margin (FTE) (Non-GAAP)⁽³⁾⁽⁶⁾					3.41						3.11
PPP Loans		69		4	11.69			10,085		589	11.78

(1)		Annualized based on six months ended results
(2)		Net of the allowance for credit losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.
(3)		Refer to Explanation and Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.
(4)		Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(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 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 similar 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.

	6/30/23			3/31/23			12/31/22			9/30/22			6/30/22
(Dollars in thousands, except share and per share data) (Unaudited)

Assets (GAAP)	$	1,432,733		$	1,430,708		$	1,408,938		$	1,425,920		$	1,386,461
Goodwill and Intangible Assets, Net		(12,354	)		(12,800	)		(13,245	)		(13,691	)		(14,136	)
Tangible Assets (Non-GAAP) (Numerator)	$	1,420,379		$	1,417,908		$	1,395,693		$	1,412,229		$	1,372,325

Stockholders' Equity (GAAP)	$	116,589		$	117,195		$	110,155		$	106,706		$	113,772
Goodwill and Intangible Assets, Net		(12,354	)		(12,800	)		(13,245	)		(13,691	)		(14,136	)
Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator)	$	104,235		$	104,395		$	96,910		$	93,015		$	99,636

Stockholders’ Equity to Assets (GAAP)		8.1	%		8.2	%		7.8	%		7.5	%		8.2	%
Tangible Common Equity to Tangible Assets (Non-GAAP)		7.3	%		7.4	%		6.9	%		6.6	%		7.3	%

Common Shares Outstanding (Denominator)		5,111,678			5,116,830			5,100,189			5,096,672			5,128,333

Book Value per Common Share (GAAP)	$	22.81		$	22.90		$	21.60		$	20.94		$	22.18
Tangible Book Value per Common Share (Non-GAAP)	$	20.39		$	20.40		$	19.00		$	18.25		$	19.43

	Three Months Ended															Six Months Ended
	6/30/23			3/31/23			12/31/22			9/30/22			6/30/22			6/30/23			6/30/22
(Dollars in thousands) (Unaudited)

Net Income (GAAP)	$	2,757		$	4,156		$	4,152		$	3,929		$	118		$	6,915		$	3,165
Amortization of Intangible Assets, Net		446			445			446			445			446			891			891
Adjusted Net Income (Non-GAAP) (Numerator)	$	3,203		$	4,601		$	4,598		$	4,374		$	564		$	7,806		$	4,056

Annualization Factor		4.01			4.06			3.97			3.97			4.01			2.02			2.02

Average Stockholders' Equity (GAAP)	$	117,949		$	114,752		$	107,965		$	114,592		$	118,145		$	116,359		$	124,046
Average Goodwill and Intangible Assets, Net		(12,626	)		(13,080	)		(13,534	)		(13,968	)		(14,414	)		(12,852	)		(14,641	)
Average Tangible Common Equity (Non-GAAP) (Denominator)	$	105,323		$	101,672		$	94,431		$	100,624		$	103,731		$	103,507		$	109,405

Return on Average Equity (GAAP)		9.38	%		14.69	%		15.26	%		13.60	%		0.40	%		11.98	%		5.15	%
Return on Average Tangible Common Equity (Non-GAAP)		12.20	%		18.35	%		19.32	%		17.25	%		2.18	%		15.21	%		7.48	%

	Three Months Ended															Six Months Ended
	6/30/23			3/31/23			12/31/22			9/30/22			6/30/22			6/30/23			6/30/22
(Dollars in thousands) (Unaudited)

Interest Income (GAAP)	$	15,203		$	14,244		$	13,855		$	12,287		$	10,958		$	29,448		$	21,574
Adjustment to FTE Basis		35			31			29			31			34			65			71
Interest Income (FTE) (Non-GAAP)		15,238			14,275			13,884			12,318			10,992			29,513			21,645
Interest Expense (GAAP)		4,083			2,661			1,989			1,272			795			6,744			1,518
Net Interest Income (FTE) (Non-GAAP)	$	11,155		$	11,614		$	11,895		$	11,046		$	10,197		$	22,769		$	20,127

Net Interest Rate Spread (GAAP)		2.78	%		3.12	%		3.17	%		3.10	%		3.00	%		2.95	%		3.00	%
Adjustment to FTE Basis		0.01			0.01			0.01			0.01			0.01			0.01			0.01
Net Interest Rate Spread (FTE) (Non-GAAP)		2.79			3.13			3.18			3.11			3.01			2.96			3.01

Net Interest Margin (GAAP)		3.29	%		3.51	%		3.45	%		3.29	%		3.12	%		3.40	%		3.10	%
Adjustment to FTE Basis		0.01			0.01			0.01			0.01			0.01			0.01			0.01
Net Interest Margin (FTE) (Non-GAAP)		3.30			3.52			3.46			3.30			3.13			3.41			3.11

	Three Months Ended															Six Months Ended
	6/30/23			3/31/23			12/31/22			9/30/22			6/30/22			6/30/23			6/30/22
(Dollars in thousands) (Unaudited)

Net Income Before Income Tax Expense (Benefit) (GAAP)	$	3,456		$	5,285		$	5,228		$	4,927		$	74		$	8,742		$	3,924
Provision for Credit Losses		492			80			—			—			3,784			572			3,784
PPNR (Non-GAAP) (Numerator)	$	3,948		$	5,365		$	5,228		$	4,927		$	3,858		$	9,314		$	7,708

Annualization Factor		4.01			4.06			3.97			3.97			4.01			2.02			2.02

Average Assets (Denominator)	$	1,406,741		$	1,388,248		$	1,414,300		$	1,396,614		$	1,391,928		$	1,397,546		$	1,407,413

PPNR Return on Average Assets (Non-GAAP)		1.13	%		1.57	%		1.47	%		1.40	%		1.11	%		1.34	%		1.10	%

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