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 2023 financial results.
2023 Third Quarter Financial
Highlights
(Comparisons to three months ended September 30, 2022 unless
otherwise noted)
- Net income was $2.7 million, compared to $3.9 million. Current
period results were negatively impacted by net interest margin
(NIM) compression coupled with increases in the provision for
credit losses and noninterest expense and a decrease in noninterest
income, partially offset by a decrease in income tax expense.
- Income before income tax expense was $3.2 million compared to
$4.9 million.
- Pre-provision net revenue (PPNR) (non-GAAP) was $3.5 million
compared to $4.9 million.
- Earnings per diluted common share (EPS) decreased to $0.52 from
$0.77.
- Return on average assets (annualized) was 0.75%, compared to
1.12%.
- Return on average equity (annualized) was 9.03%, compared to
13.60%.
- NIM declined to 3.13% from 3.29%.
- Net interest and dividend income was $10.7 million, compared to
$11.0 million.
- Noninterest income decreased to $2.4 million, compared to $2.7
million. Prior period noninterest income included a $439,000 gain
recognized as a result of the sale of assets of two closed branch
locations.
- Noninterest expense increased to $9.5 million, compared to $8.8
million, primarily due to increases in compensation and benefits,
equipment and data processing costs.
(Amounts at September 30, 2023; comparisons to December 31,
2022, unless otherwise noted)
- Total assets decreased to $1.40 billion from $1.41
billion.
- Total loans increased $52.6 million, or 5.0%, to $1.10 billion
compared to $1.05 billion, and included increases of $30.8 million,
or 44.0%, in commercial and industrial loans, $30.1 million, or
6.9%, in commercial real estate loans, and $15.8 million, or 4.8%,
in residential mortgage loans, partially offset by a decrease of
$24.4 million, or 16.6%, in consumer loans, which is primarily
comprised of indirect automobile loans.
- Nonperforming loans to total loans was 0.30%, a decrease of 25
basis points (“bps”), compared to 0.55%.
- Total deposits were $1.24 billion, a decrease of $32.2 million,
compared to $1.27 billion.
- Book value per share was $22.43, compared to $22.81 as of June
30, 2023 and $21.60 as of December 31, 2022.
- Tangible book value per share (Non-GAAP) was $20.10, compared
to $20.39 as of June 30, 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 $9.6
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 $3.8 million.
Management Commentary
President and CEO John H. Montgomery stated, “Our third quarter
results, while impacted by pressures on funding costs, continue to
support our model of investing in our franchise and focusing on
delivering an exceptional client experience.
As we have noted for several quarters, the net interest margin
compression continues as our customers respond to the overall
increase in market interest rates, while being partially offset by
the gradual and increasing shift in our asset base from consumer
loans into higher yielding commercial and industrial loans and
commercial real estate loans. We continued to make investments in
our team, resulting in substantial loan growth and onboarding of
new relationships. We firmly believe that the challenges of the
economic environment provide an opportunity for quality
relationship growth, increasing our long term franchise value and
benefiting all of our stakeholders. In addition to our loan growth,
our asset quality remains strong with nonperforming assets to total
assets decreasing from the previous quarter.
During the quarter, significant progress was made on a number of
strategic initiatives, including investing in technology and
refreshing our branch network, creating the physical environment
for technology and our team members to work cohesively in serving
our customers. Additionally, we also declared and paid a $0.25 cash
dividend during the quarter, continuing our commitment to our
shareholders.”
Mr. Montgomery concluded, “As I have noted previously, we remain
focused on maintaining solid capital and liquidity positions as we
continue to navigate the challenging economic environment and
position ourselves for the future.”
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
November 30, 2023, to stockholders of record as of the close of
business on November 15, 2023.
2023 Third Quarter Financial
Review
Net Interest and Dividend
Income
Net interest and dividend income decreased $298,000, or 2.7%, to
$10.7 million for the three months ended September 30, 2023
compared to $11.0 million for the three months ended September 30,
2022.
- Net interest margin (GAAP) decreased to 3.13% for the three
months ended September 30, 2023 compared to 3.29% for the three
months ended September 30, 2022. Fully tax equivalent (FTE) net
interest margin (Non-GAAP) decreased 16 bps to 3.14% for the three
months ended September 30, 2023 compared to 3.30% for the three
months ended September 30, 2022.
- Interest and dividend income increased $3.6 million, or 29.2%,
to $15.9 million for the three months ended September 30, 2023
compared to $12.3 million for the three months ended September 30,
2022.
- Interest income on loans increased $3.2 million, or 29.9%, to
$14.0 million for the three months ended September 30, 2023
compared to $10.8 million for the three months ended September 30,
2022. The average balance of loans increased $64.3 million to $1.09
billion from $1.02 billion, generating $729,000 of additional
interest income on loans. The average yield increased 93 bps to
5.13% compared to 4.20% resulting in a $2.5 million increase in
interest income on loans.
- Interest income on interest-earning deposits at other banks
increased $372,000, to $750,000 for the three months ended
September 30, 2023 compared to $378,000 for the three months ended
September 30, 2022 as the average yield increased 347 bps,
partially offset by a $15.2 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 $3.9 million, or 305.4%, to $5.2
million for the three months ended September 30, 2023 compared to
$1.3 million for the three months ended September 30, 2022.
- Interest expense on deposits increased $3.7 million, or 340.2%,
to $4.8 million for the three months ended September 30, 2023
compared to $1.1 million for the three months ended September 30,
2022. Rising market interest rates led to the repricing of
interest-bearing demand and money market deposits and a shift in
deposits from noninterest-bearing to interest-bearing demand and
time deposits resulted in a 150 bps, or 295.2%, increase in the
average cost of interest-bearing deposits compared to the three
months ended September 30, 2022. This accounted for a $3.5 million
increase in interest expense. Additionally, interest-bearing
deposit balances increased $95.4 million, or 11.3%, to $937.8
million as of September 30, 2023 compared to $842.4 million as of
September 30, 2022, accounting for a $138,000 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
September 30, 2023 was $406,000 and was required primarily due to
changes in qualitative factors coupled with a modeled slowdown in
loan prepayment speeds. This compared to no provision for credit
losses recorded for the three months ended September 30, 2022.
Noninterest Income
Noninterest income decreased $327,000, or 11.9%, to $2.4 million
for the three months ended September 30, 2023, compared to $2.7
million for the three months ended September 30, 2022. This
decrease was primarily related to a $439,000 decrease in net gain
on disposal of fixed assets as the prior period included a $439,000
gain resulting from the sale of assets of two closed branch
locations.
Noninterest Expense
Noninterest expense increased $660,000, or 7.5%, to $9.5 million
for the three months ended September 30, 2023 compared to $8.8
million for the three months ended September 30, 2022. Salaries and
benefits increased $630,000, or 13.3%, to $5.4 million primarily
due to merit increases and revenue producing staff additions. Data
processing expense increased $174,000, or 32.2%, to $714,000, due
to increased ongoing costs related to the fourth quarter 2022 core
conversion and equipment expense increased $95,000 or 55.9%, to
$265,000, due to costs associated with the implementation and
operation of new interactive teller machines.
Statement of Financial Condition
Review
Assets
Total assets decreased $9.4 million, or 0.7%, to $1.40 billion
at September 30, 2023, compared to $1.41 billion at December 31,
2022.
- Cash and due from banks decreased $51.1 million, or 49.3%, to
$52.6 million at September 30, 2023, compared to $103.7 million at
December 31, 2022, due to significant loan growth.
- Securities decreased $17.2 million, or 9.0%, to $172.9 million
at September 30, 2023, compared to $190.1 million at December 31,
2022. The securities balance was primarily impacted by $12.4
million of repayments on mortgage-backed and collateralized
mortgage obligation securities and a $369,000 decrease in the
market value in the equity securities portfolio, which is primarily
comprised of bank stocks.
Loans and Credit Quality
- Total loans increased $52.6 million, or 5.0%, to $1.10 billion
at September 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 $30.8 million, $30.1 million, and $15.8 million,
respectively, partially offset by a decrease in consumer loans of
$24.4 million. The decrease in consumer loans resulted from a
reduction in indirect automobile loan production due to rising
market interest rates and the discontinuation of this product
offering as of June 30, 2023. This portfolio is expected to
continue to decline as resources are allocated and production
efforts are focused on more profitable commercial products.
- The allowance for credit losses (ACL) was $10.8 million at
September 30, 2023 and $12.8 million at December 31, 2022. As a
result, the ACL to total loans was 0.98% at September 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 CECL activity
using a forecast approach.
- Net charge-offs for the three months ended September 30, 2023
were $109,000, or 0.04% of average loans on an annualized basis.
Net recoveries for the three months ended September 30, 2022 were
$21,000, or 0.01% of average loans on an annualized basis. Net
recoveries for the nine months ended September 30, 2023 were
$551,000 primarily due to recoveries totaling $750,000 related to
the prior year $2.7 million charged-off commercial and industrial
loan. Net charge-offs for the nine months ended September 30, 2022
were $2.5 million.
- Nonperforming loans, which includes nonaccrual loans and
accruing loans past due 90 days or more, were $3.3 million at
September 30, 2023 compared to $5.8 million at December 31, 2022.
The decrease of $2.5 million was due to ten loans totaling $1.7
million transferred from nonaccrual to accrual status during the
current period and the repayment of a $1.6 million commercial real
estate loan that was previously on nonaccrual status. Partially
offsetting these favorable movements, a $757,000 commercial real
estate loan moved to nonaccrual status during the period.
Nonperforming loans to total loans ratio was 0.30% at September 30,
2023 compared to 0.55% at December 31, 2022.
Other
- Intangible assets decreased $1.3 million, or 37.0%, to $2.2
million at September 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 $5.5 million or
26.0%, to $26.7 million at September 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 September 30,
2023, and increases in prepaid expenses and accrued interest
receivable of $1.2 million and $600,000.
Total liabilities decreased $14.1 million, or 1.1%, to $1.28
billion at September 30, 2023 compared to $1.30 billion at December
31, 2022.
Deposits
- Total deposits decreased $32.2 million to $1.24 billion as of
September 30, 2023 compared to $1.27 billion at December 31, 2022.
Interest-bearing demand deposits increased $45.6 million and time
deposits increased $68.3 million, while non interest-bearing demand
deposits decreased $85.3 million, savings deposits decreased $40.9
million, and money market deposits decreased $19.9 million. The
increase in interest-bearing demand deposits was 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 60.5%
of total deposits while an additional 16.9% of deposits were
collateralized with investment securities.
Borrowed Funds
- Long-term borrowings increased $20.0 million, or 136.6%, to
$34.7 million at September 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 September 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 $6.1
million, or 80.5%, to $13.7 million at September 30, 2023, compared
to $7.6 million at December 31, 2022 primarily due to the purchase
of $3.9 million of syndicated loans which were unfunded at the end
of the period and a $1.1 million increase in accrued interest
payable on certificate accounts.
Stockholders’ Equity
Stockholders’ equity increased $4.7 million, or 4.3%, to $114.8
million at September 30, 2023, compared to $110.2 million at
December 31, 2022. Key factors positively impacting stockholders’
equity included $9.6 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 $3.8 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
program. In total, the Company repurchased $274,000 of common stock
since December 31, 2022. The program expired on May 1, 2023.
Book value per share
Book value per common share was $22.43 at September 30, 2023
compared to $21.60 at December 31, 2022, an increase of $0.83.
Tangible book value per common share (Non-GAAP) was $20.10 at
September 30, 2023, compared to $19.00 at December 31, 2022, an
increase of $1.10.
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
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
Assets
Cash and Due From Banks
$
52,597
$
78,093
$
103,545
$
103,700
$
122,801
Securities
172,904
181,427
189,025
190,058
193,846
Loans
Real Estate:
Residential
346,485
338,493
332,840
330,725
328,248
Commercial
466,910
458,614
452,770
436,805
432,516
Construction
41,874
44,523
39,522
44,923
49,502
Commercial and Industrial:
Commercial and Industrial
100,852
102,232
79,436
69,918
61,428
PPP
21
34
65
126
768
Consumer
122,516
134,788
146,081
146,927
150,615
Other
23,856
22,470
21,151
20,449
19,865
Total Loans
1,102,514
1,101,154
1,071,865
1,049,873
1,042,942
Allowance for Credit Losses
(10,848
)
(10,666
)
(10,270
)
(12,819
)
(12,854
)
Loans, Net
1,091,666
1,090,488
1,061,595
1,037,054
1,030,088
Premises and Equipment, Net
18,524
18,582
17,732
17,844
18,064
Bank-Owned Life Insurance
25,227
25,082
24,943
25,893
25,750
Goodwill
9,732
9,732
9,732
9,732
9,732
Intangible Assets, Net
2,177
2,622
3,068
3,513
3,959
Accrued Interest Receivable and Other
Assets
26,665
26,707
21,068
21,144
21,680
Total Assets
$
1,399,492
$
1,432,733
$
1,430,708
$
1,408,938
$
1,425,920
Liabilities
Deposits
Noninterest-Bearing Demand Accounts
$
305,145
$
316,098
$
350,911
$
390,405
$
407,107
Interest-Bearing Demand Accounts
357,381
374,654
359,051
311,825
298,755
Money Market Accounts
189,187
185,814
206,174
209,125
198,715
Savings Accounts
207,148
217,267
234,935
248,022
250,378
Time Deposits
177,428
169,482
130,449
109,126
120,879
Total Deposits
1,236,289
1,263,315
1,281,520
1,268,503
1,275,834
Short-Term Borrowings
—
—
121
8,060
18,108
Other Borrowings
34,668
34,658
14,648
14,638
17,627
Accrued Interest Payable and Other
Liabilities
13,689
18,171
17,224
7,582
7,645
Total Liabilities
1,284,646
1,316,144
1,313,513
1,298,783
1,319,214
Stockholders’ Equity
114,846
116,589
117,195
110,155
106,706
Total Liabilities and Stockholders’
Equity
$
1,399,492
$
1,432,733
$
1,430,708
$
1,408,938
$
1,425,920
(Dollars in thousands, except share and
per share data) (Unaudited)
Three Months Ended
Nine Months Ended
Selected Operating Data
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
9/30/23
9/30/22
Interest and Dividend Income:
Loans, Including Fees
$
14,049
$
13,426
$
12,371
$
11,835
$
10,815
$
39,846
$
30,098
Securities:
Taxable
940
950
964
974
985
2,853
2,878
Tax-Exempt
41
42
41
40
49
124
172
Dividends
25
25
24
28
21
74
64
Other Interest and Dividend Income
819
760
844
978
417
2,424
649
Total Interest and Dividend Income
15,874
15,203
14,244
13,855
12,287
45,321
33,861
Interest Expense:
Deposits
4,750
3,842
2,504
1,811
1,079
11,097
2,214
Short-Term Borrowings
—
3
2
7
19
5
56
Other Borrowings
407
238
155
171
174
800
522
Total Interest Expense
5,157
4,083
2,661
1,989
1,272
11,902
2,792
Net Interest and Dividend Income
10,717
11,120
11,583
11,866
11,015
33,419
31,069
Provision for Credit Losses - Loans
291
492
80
—
—
863
3,784
Provision (Recovery) for Credit Losses -
Unfunded Commitments
115
(60
)
—
—
—
54
—
Net Interest and Dividend Income After
Provision for Credit Losses
10,311
10,688
11,503
11,866
11,015
32,502
27,285
Noninterest Income:
Service Fees
466
448
445
530
544
1,359
1,629
Insurance Commissions
1,436
1,511
1,922
1,399
1,368
4,870
4,535
Other Commissions
94
224
144
157
244
462
512
Net (Loss) Gain on Sales of Loans
—
(5
)
2
—
—
(3
)
—
Net (Loss) Gain on Securities
(37
)
(100
)
(232
)
83
(46
)
(369
)
(252
)
Net Gain on Purchased Tax Credits
7
7
7
14
14
22
43
Net Gain on Disposal of Fixed Assets
—
—
11
—
439
11
431
Income from Bank-Owned Life Insurance
145
139
140
143
140
425
418
Net Gain on Bank-Owned Life Insurance
Claims
—
1
302
—
—
303
—
Other Income
301
44
69
34
36
413
143
Total Noninterest Income
2,412
2,269
2,810
2,360
2,739
7,493
7,459
Noninterest Expense:
Salaries and Employee Benefits
5,369
5,231
5,079
4,625
4,739
15,679
13,843
Occupancy
698
789
701
817
768
2,188
2,230
Equipment
265
283
218
178
170
766
561
Data Processing
714
718
857
681
540
2,289
1,471
FDIC Assessment
189
224
152
154
147
565
484
PA Shares Tax
217
195
260
258
240
672
721
Contracted Services
286
434
147
405
288
868
1,223
Legal and Professional Fees
320
246
182
362
334
748
876
Advertising
114
75
79
165
131
268
362
Other Real Estate Owned (Income)
(8
)
(35
)
(37
)
(38
)
(38
)
(80
)
(113
)
Amortization of Intangible Assets
445
446
445
446
445
1,336
1,336
Other
878
895
945
945
1,063
2,718
2,899
Total Noninterest Expense
9,487
9,501
9,028
8,998
8,827
28,017
25,893
Income Before Income Tax Expense
3,236
3,456
5,285
5,228
4,927
11,978
8,851
Income Tax Expense
564
699
1,129
1,076
998
2,392
1,757
Net Income
$
2,672
$
2,757
$
4,156
$
4,152
$
3,929
$
9,586
$
7,094
Three Months Ended
Nine Months Ended
Per Common Share Data
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
9/30/23
9/30/22
Dividends Per Common Share
$
0.25
$
0.25
$
0.25
$
0.24
$
0.24
$
0.75
$
0.72
Earnings Per Common Share - Basic
0.52
0.54
0.81
0.81
0.77
1.88
1.38
Earnings Per Common Share - Diluted
0.52
0.54
0.81
0.81
0.77
1.87
1.37
Weighted Average Common Shares Outstanding
- Basic
5,115,026
5,111,987
5,109,597
5,095,237
5,106,861
5,112,223
5,150,632
Weighted Average Common Shares Outstanding
- Diluted
5,126,546
5,116,134
5,115,705
5,104,254
5,118,627
5,118,279
5,165,376
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
Common Shares Outstanding
5,120,678
5,111,678
5,116,830
5,100,189
5,096,672
Book Value Per Common Share
$
22.43
$
22.81
$
22.90
$
21.60
$
20.94
Tangible Book Value per Common Share
(1)
20.10
20.39
20.40
19.00
18.25
Stockholders’ Equity to Assets
8.2
%
8.1
%
8.2
%
7.8
%
7.5
%
Tangible Common Equity to Tangible Assets
(1)
7.4
7.3
7.4
6.9
6.6
Three Months Ended
Nine Months Ended
Selected Financial Ratios (2)
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
9/30/23
9/30/22
Return on Average Assets
0.75
%
0.79
%
1.21
%
1.16
%
1.12
%
0.91
%
0.68
%
Return on Average Equity
9.03
9.38
14.69
15.26
13.60
10.98
7.85
Average Interest-Earning Assets to Average
Interest-Bearing Liabilities
139.67
142.37
147.53
149.04
149.41
143.07
147.64
Average Equity to Average Assets
8.32
8.38
8.27
7.63
8.20
8.33
8.61
Net Interest Rate Spread
2.54
2.78
3.12
3.17
3.10
2.80
3.03
Net Interest Rate Spread (FTE) (1)
2.55
2.79
3.13
3.18
3.11
2.81
3.04
Net Interest Margin
3.13
3.29
3.51
3.45
3.29
3.31
3.17
Net Interest Margin (FTE) (1)
3.14
3.30
3.52
3.46
3.30
3.32
3.18
Net Charge-Offs (Recoveries) to Average
Loans
0.04
0.04
(0.29
)
0.01
(0.01
)
(0.07
)
0.33
Efficiency Ratio
72.26
70.96
62.72
63.25
64.18
68.48
67.21
Asset Quality Ratios
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
Allowance for Credit Losses to Total
Loans
0.98
%
0.97
%
0.96
%
1.22
%
1.23
%
Allowance for Credit Losses to
Nonperforming Loans (3)
330.13
260.46
189.73
221.06
218.61
Allowance for Credit Losses to Noncurrent
Loans (4)
330.13
260.46
189.73
320.64
318.96
Delinquent and Nonaccrual Loans to Total
Loans (4) (5)
0.73
0.68
1.02
0.81
0.46
Nonperforming Loans to Total Loans (3)
0.30
0.37
0.51
0.55
0.56
Noncurrent Loans to Total Loans (4)
0.30
0.37
0.51
0.38
0.39
Nonperforming Assets to Total Assets
(6)
0.23
0.30
0.40
0.41
0.41
Capital Ratios (7)
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
Common Equity Tier 1 Capital (to Risk
Weighted Assets)
12.77
%
12.54
%
12.60
%
12.33
%
12.02
%
Tier 1 Capital (to Risk Weighted
Assets)
12.77
12.54
12.60
12.33
12.02
Total Capital (to Risk Weighted
Assets)
13.90
13.64
13.69
13.58
13.27
Tier 1 Leverage (to Adjusted Total
Assets)
9.37
9.26
9.24
8.66
8.51
(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
September 30, 2023
June 30, 2023
March 31, 2023
December 31, 2022
September 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)
$
1,088,691
$
14,081
5.13
%
$
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
%
Debt Securities
Taxable
204,848
940
1.84
209,292
950
1.82
213,158
964
1.81
216,915
974
1.80
222,110
985
1.77
Exempt From Federal Tax
6,013
52
3.46
6,180
53
3.43
6,270
52
3.32
6,277
51
3.25
7,998
62
3.10
Equity Securities
2,693
25
3.71
2,693
25
3.71
2,693
24
3.56
2,693
28
4.16
2,693
21
3.12
Interest-Earning Deposits at Banks
52,642
750
5.70
54,466
721
5.30
74,555
805
4.32
99,108
939
3.79
67,870
378
2.23
Other Interest-Earning Assets
3,292
69
8.32
2,783
39
5.62
2,633
39
6.01
2,875
39
5.38
2,784
39
5.56
Total Interest-Earning Assets
1,358,179
15,917
4.65
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
Noninterest-Earning Assets
52,709
51,928
48,369
51,718
68,796
Total Assets
$
1,410,888
$
1,406,741
$
1,388,248
$
1,414,300
$
1,396,614
Liabilities and Stockholders'
Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Accounts
$
363,997
$
2,003
2.18
%
$
354,497
$
1,582
1.79
%
$
335,327
$
1,191
1.44
%
$
315,352
$
810
1.02
%
$
278,412
$
393
0.56
%
Savings Accounts
212,909
54
0.10
225,175
53
0.09
242,298
37
0.06
249,948
29
0.05
251,148
20
0.03
Money Market Accounts
187,012
1,141
2.42
194,565
1,033
2.13
213,443
939
1.78
206,192
604
1.16
189,371
269
0.56
Time Deposits
173,832
1,552
3.54
155,867
1,174
3.02
101,147
337
1.35
116,172
368
1.26
123,438
397
1.28
Total Interest-Bearing Deposits
937,750
4,750
2.01
930,104
3,842
1.66
892,215
2,504
1.14
887,664
1,811
0.81
842,369
1,079
0.51
Short-Term Borrowings
—
—
—
480
3
2.51
1,344
2
0.60
8,985
7
0.31
28,738
19
0.26
Other Borrowings
34,662
407
4.66
21,026
238
4.54
14,641
155
4.29
17,598
171
3.86
17,621
174
3.92
Total Interest-Bearing Liabilities
972,412
5,157
2.10
951,610
4,083
1.72
908,200
2,661
1.19
914,247
1,989
0.86
888,728
1,272
0.57
Noninterest-Bearing Demand Deposits
312,016
326,262
362,343
391,300
390,658
Other Liabilities
9,025
10,920
2,953
788
2,636
Total Liabilities
1,293,453
1,288,792
1,273,496
1,306,335
1,282,022
Stockholders' Equity
117,435
117,949
114,752
107,965
114,592
Total Liabilities and Stockholders'
Equity
$
1,410,888
$
1,406,741
$
1,388,248
$
1,414,300
$
1,396,614
Net Interest Income (FTE)
(Non-GAAP) (3)
$
10,760
$
11,155
$
11,614
$
11,895
$
11,046
Net Interest-Earning Assets (4)
385,767
403,203
431,679
448,335
439,090
Net Interest Rate Spread (FTE)
(Non-GAAP) (3) (5)
2.55
%
2.79
%
3.13
%
3.18
%
3.11
%
Net Interest Margin (FTE)
(Non-GAAP) (3)(6)
3.14
3.30
3.52
3.46
3.30
PPP Loans
24
1
16.53
38
1
10.56
100
3
12.17
216
22
40.41
2,424
123
20.13
(1)
Annualized based on three months ended
results.
(2)
Net of the allowance for credit losses and
includes nonaccrual loans with a zero yield.
(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
Nine Months Ended
September 30, 2023
September 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)
$
1,069,729
$
39,924
4.99
%
$
1,013,871
$
30,157
3.98
%
Debt Securities
Taxable
209,069
2,853
1.82
222,132
2,878
1.73
Exempt From Federal Tax
6,154
157
3.40
9,093
218
3.20
Marketable Equity Securities
2,693
74
3.66
2,693
64
3.17
Interest-Earning Deposits at Banks
60,474
2,276
5.02
61,213
534
1.16
Other Interest-Earning Assets
2,905
148
6.81
3,165
115
4.86
Total Interest-Earning Assets
1,351,024
45,432
4.50
1,312,167
33,966
3.46
Noninterest-Earning Assets
51,018
91,607
Total Assets
$
1,402,042
$
1,403,774
Liabilities and Stockholders'
Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Accounts
$
351,379
$
4,776
1.82
%
$
271,897
$
554
0.27
%
Savings Accounts
226,686
145
0.09
247,790
58
0.03
Money Market Accounts
198,243
3,113
2.10
190,189
371
0.26
Time Deposits
143,881
3,063
2.85
127,732
1,231
1.29
Total Interest-Bearing Deposits
920,189
11,097
1.61
837,608
2,214
0.35
Short-Term Borrowings
604
5
1.11
33,553
56
0.22
Other Borrowings
23,516
800
4.55
17,612
522
3.96
Total Interest-Bearing Liabilities
944,309
11,902
1.69
888,773
2,792
0.42
Noninterest-Bearing Demand Deposits
333,356
388,964
Other Liabilities
7,655
5,177
Total Liabilities
1,285,320
1,282,914
Stockholders' Equity
116,722
120,860
Total Liabilities and Stockholders'
Equity
$
1,402,042
$
1,403,774
Net Interest Income (FTE) (Non-GAAP)
(3)
33,530
31,174
Net Interest-Earning Assets (4)
406,715
423,394
Net Interest Rate Spread (FTE) (Non-GAAP)
(3)(5)
2.81
%
3.04
%
Net Interest Margin (FTE) (Non-GAAP)
(3)(6)
3.32
3.18
PPP Loans
54
5
12.38
7,503
712
12.69
(1)
Annualized based on nine months ended
results.
(2)
Net of the allowance for credit losses and
includes nonaccrual loans with a zero yield.
(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.
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
(Dollars in thousands, except share and
per share data) (Unaudited)
Assets (GAAP)
$
1,399,492
$
1,432,733
$
1,430,708
$
1,408,938
$
1,425,920
Goodwill and Intangible Assets, Net
(11,909
)
(12,354
)
(12,800
)
(13,245
)
(13,691
)
Tangible Assets (Non-GAAP) (Numerator)
$
1,387,583
$
1,420,379
$
1,417,908
$
1,395,693
$
1,412,229
Stockholders' Equity (GAAP)
$
114,846
$
116,589
$
117,195
$
110,155
$
106,706
Goodwill and Intangible Assets, Net
(11,909
)
(12,354
)
(12,800
)
(13,245
)
(13,691
)
Tangible Common Equity or Tangible Book
Value (Non-GAAP) (Denominator)
$
102,937
$
104,235
$
104,395
$
96,910
$
93,015
Stockholders’ Equity to Assets (GAAP)
8.2
%
8.1
%
8.2
%
7.8
%
7.5
%
Tangible Common Equity to Tangible Assets
(Non-GAAP)
7.4
%
7.3
%
7.4
%
6.9
%
6.6
%
Common Shares Outstanding
(Denominator)
5,120,678
5,111,678
5,116,830
5,100,189
5,096,672
Book Value per Common Share (GAAP)
$
22.43
$
22.81
$
22.90
$
21.60
$
20.94
Tangible Book Value per Common Share
(Non-GAAP)
$
20.10
$
20.39
$
20.40
$
19.00
$
18.25
Three Months Ended
Nine Months Ended
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
9/30/23
9/30/22
(Dollars in thousands) (Unaudited)
Net Income (GAAP)
$
2,672
$
2,757
$
4,156
$
4,152
$
3,929
$
9,586
$
7,094
Amortization of Intangible Assets, Net
445
446
445
446
445
1,336
1,336
Adjusted Net Income (Non-GAAP)
(Numerator)
$
3,117
$
3,203
$
4,601
$
4,598
$
4,374
$
10,922
$
8,430
Annualization Factor
3.97
4.01
4.06
3.97
3.97
1.34
1.34
Average Stockholders' Equity (GAAP)
$
117,435
$
117,949
$
114,752
$
107,965
$
114,592
$
116,722
$
120,860
Average Goodwill and Intangible Assets,
Net
(12,185
)
(12,626
)
(13,080
)
(13,534
)
(13,968
)
(12,627
)
(14,414
)
Average Tangible Common Equity (Non-GAAP)
(Denominator)
$
105,250
$
105,323
$
101,672
$
94,431
$
100,624
$
104,095
$
106,446
Return on Average Equity (GAAP)
9.03
%
9.38
%
14.69
%
15.26
%
13.60
%
10.98
%
7.85
%
Return on Average Tangible Common Equity
(Non-GAAP)
11.75
%
12.20
%
18.35
%
19.32
%
17.25
%
14.03
%
10.59
%
Three Months Ended
Nine Months Ended
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
9/30/23
9/30/22
(Dollars in thousands) (Unaudited)
Interest Income (GAAP)
$
15,874
$
15,203
$
14,244
$
13,855
$
12,287
$
45,321
$
33,861
Adjustment to FTE Basis
43
35
31
29
31
111
105
Interest Income (FTE) (Non-GAAP)
15,917
15,238
14,275
13,884
12,318
45,432
33,966
Interest Expense (GAAP)
5,157
4,083
2,661
1,989
1,272
11,902
2,792
Net Interest Income (FTE) (Non-GAAP)
$
10,760
$
11,155
$
11,614
$
11,895
$
11,046
$
33,530
$
31,174
Net Interest Rate Spread (GAAP)
2.54
%
2.78
%
3.12
%
3.17
%
3.10
%
2.80
%
3.03
%
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)
2.55
%
2.79
%
3.13
%
3.18
%
3.11
%
2.81
%
3.04
%
Net Interest Margin (GAAP)
3.13
%
3.29
%
3.51
%
3.45
%
3.29
%
3.31
%
3.17
%
Adjustment to FTE Basis
0.01
0.01
0.01
0.01
0.01
0.01
0.01
Net Interest Margin (FTE) (Non-GAAP)
3.14
%
3.30
%
3.52
%
3.46
%
3.30
%
3.32
%
3.18
%
Three Months Ended
Nine Months Ended
9/30/23
6/30/23
3/31/23
12/31/22
9/30/22
9/30/23
9/30/22
(Dollars in thousands) (Unaudited)
Net Income Before Income Tax Expense
(GAAP)
$
3,236
$
3,456
$
5,285
$
5,228
$
4,927
$
11,978
$
8,851
Provision for Credit Losses
291
492
80
—
—
863
3,784
PPNR (Non-GAAP) (Numerator)
$
3,527
$
3,948
$
5,365
$
5,228
$
4,927
$
12,841
$
12,635
Annualization Factor
3.97
4.01
4.06
3.97
3.97
1.34
1.34
Average Assets (Denominator)
$
1,410,888
$
1,406,741
$
1,388,248
$
1,414,300
$
1,396,614
$
1,402,042
$
1,403,774
PPNR Return on Average Assets
(Non-GAAP)
0.99
%
1.13
%
1.57
%
1.47
%
1.40
%
1.22
%
1.20
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231027260976/en/
John H. Montgomery President and Chief Executive Officer Phone:
(724) 225-2400
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