CB Financial Services, Inc. (“CB” or the “Company”) (NASDAQGM:
CBFV), the holding company of Community Bank (the “Bank”) and
Exchange Underwriters, Inc., a wholly-owned insurance subsidiary of
the Bank, today announced its third quarter and year-to-date 2019
financial results.
Third Quarter 2019 Highlights
- Net income for the three months ended September 30, 2019 was
$3.7 million, compared to $2.3 million for the three months ended
September 30, 2018, an increase of $1.5 million, or 63.4%. Diluted
earnings per share (“EPS”) for the three months ended September 30,
2019 was $0.69 compared to $0.42 for the three months ended
September 30, 2018.
- Return on Average Assets (annualized) for the three months
ended September 30, 2019, was 1.11%, an increase of 38 basis
points, as compared to 0.73% (annualized) for the three months
ended September 30, 2018. Return on Average Equity (annualized) for
the three months ended September 30, 2019, was 9.99%, an increase
of 322 basis points, as compared to 6.77% (annualized) for the
three months ended September 30, 2018.
- Net interest income for the three months ended September 30,
2019, increased $926,000, to $11.1 million as compared to $10.2
million for the three months ended September 30, 2018. This is
primarily due to a $45.5 million increase in average loans period
over period.
- Noninterest income increased $111,000 for the three months
ended September 30, 2019, as compared to the three months ended
September 30, 2018. This was mainly attributed to increased
insurance commissions due to the Exchange Underwriters, Inc.
acquisition of the customer list of Beynon Insurance (“Beynon”) as
of August 1, 2018.
- The pace of loan growth slowed in the third quarter due to more
conservative auto lending underwriting and unexpected commercial
real estate loan payoffs. Net loans grew $19.1 million since
December 31, 2018, or 2.1%. This was primarily due to net loan
originations of $12.4 million in residential mortgage loans, $9.5
million in construction loans, and $7.1 million in commercial real
estate loans, partially offset by a decrease of $10.1 million in
consumer loans, primarily in automobile loans.
FWVB Merger
The year-to-date results were largely impacted by the First West
Virginia Bancorp and Progressive Bank, National Association merger
(“FWVB merger”) on April 30, 2018. The merger brought approximately
$281.6 million in low-cost deposits, $95.5 million in loans and
eight branch locations in the Upper Ohio Valley and Buckhannon, WV
regions. In addition, we have added branch and back office
personnel to accommodate the increased customer traffic and
transaction volumes due to the FWVB merger.
Net income for the nine months ended September 30, 2019 was $9.7
million compared to $4.6 million for the nine months ended
September 30, 2018, an increase of $5.0 million. Diluted earnings
per share (“EPS”) for the nine months ended September 30, 2019 was
$1.77 compared to $0.95 for the nine months ended September 30,
2018.
Prior quarter and year-to-date financial results were impacted
by pre-tax merger-related expenses of $61,000 and $854,000,
respectively, and by pre-tax lease termination costs of $294,000
related to the former FWVB corporate headquarters and former
Washington Business Center. The Bank moved into the Barron P. “Pat”
McCune Jr. Corporate Center (“BPMCC”) in the third quarter of 2018.
In addition, prior year-to-date results were impacted by proceeds
of $421,000 from a bank-owned life insurance policy. Net income
excluding merger-related expenses and these one-time items would
have been approximately $2.6 million and $5.1 million for the three
and nine months ended September 30, 2018. The diluted earnings per
share impact of the removal of these items would have been $0.47
and $1.04 per share for the three and nine months ended September
30, 2018, which would have been increases of $0.05 and $0.09 per
share, for the aforementioned time periods, respectively.
“The third quarter financial performance was one of our
best quarters in history, which contributed to our strong
year-to-date results,” said Patrick G. O’Brien, President and Chief
Executive Officer. “The third quarter was our first complete
quarter to quarter comparison since the FWVB merger and we are
seeing the impact from the synergies we anticipated. Although we
recognize the challenges we face in a competitive economic
environment, we are continuing to build our brand and will expand
our presence through our product offerings in the markets we serve.
I always need to recognize that our success to date and promise for
the future are made possible through our hard working, dedicated
and talented staff.”
STATEMENT OF INCOME REVIEW
Third Quarter Results
Overview. Net income increased $1.5
million to $3.7 million for the three months ended September 30,
2019, compared to $2.3 million for the three months ended September
30, 2018. The quarterly results were mainly impacted by average
period over period loan growth, which produced increased net
interest income, and decreases in various noninterest expenses.
Net Interest Income. Net interest income
increased $926,000, or 9.1%, to $11.1 million for the three months
ended September 30, 2019, compared to $10.2 million for the three
months ended September 30, 2018.
Interest and dividend income increased $1.3 million, or 11.3%,
to $13.1 million for the three months ended September 30, 2019
compared to $11.8 million for the three months ended September 30,
2018.
- Interest income on loans increased $940,000 for the three
months ended September 30, 2019, compared to the three months ended
September 30, 2018. Average net loans increased by $45.5 million
for the three months ended September 30, 2019, compared to the
three months ended September 30, 2018 primarily due to organic
commercial and residential real estate loan growth which increased
$35.7 million and $19.8 million respectively, and also contributed
to an increase of 18 basis points in loan yield.
- Interest income on taxable securities increased $303,000,
mainly due to an increase of $18.1 million in the average balance
and 37 basis points in yield in the current period. A portion of
the portfolio was restructured in the current year to increase net
yields.
- Interest income on federal funds sold increased $103,000 and
other interest and dividend income increased $102,000 due to an
increase of $22.4 million in the average balance of other
interest-earning assets primarily from increased deposits at
correspondent banks. The Company is maintaining cash to support
expected future loan demand.
- Interest income on tax-exempt securities decreased $114,000 in
the current period. This was due to lower yielding security calls
and sales, which attributed to an average balance decrease of $19.0
million.
Interest expense increased $408,000, or 25.6%, to $2.0 million
for the three months ended September 30, 2019, compared to $1.6
million for the three months ended September 30, 2018.
- Interest expense on deposits increased $466,000 due to an
increase in average interest-bearing deposits of $67.6 million
combined with a 16 basis point increase in average cost. Average
interest-bearing demand deposits increased $37.7 million driven by
higher-cost municipal deposits, which increased average cost by 17
basis points. In addition, average time deposits increase $16.6
million primarily from time deposits with balances greater than
$100,000 from specials, which increased average cost by 47 basis
points.
- Interest expense on other borrowed funds decreased $37,000
primarily due to a FHLB long-term borrowing that matured in the
current period and was retired.
Provision for Loan Losses. The provision
for loan losses was $175,000 for the three months ended September
30, 2019, compared to $25,000, for the three months ended September
30, 2018. Net charge-offs for the three months ended September 30,
2019 were $116,000, which included net-charge-offs of $113,000 on
automobile loans, compared to $111,000 of net charge-offs for the
three months ended September 30, 2018, which included $63,000 of
net charge-offs on automobile loans. Management analyzes the loan
portfolio on a quarterly basis to determine the adequacy of the
allowance for loan losses and the need for additional provisions
for loan losses. While several unexpected commercial loan payoffs
offset loan production in the current quarterly period and net
charge-offs were comparable to the prior period, declining economic
indicators triggered an adjustment to the qualitative factors,
which was the primary driver of the current period provision. In
addition, updated impairment analyses on two commercial real estate
loans indicated improved market value of collateral and financial
information resulting in a decrease in specific reserves. The
minimal quarterly provision in the prior period was primarily due
to loan payoffs mainly offsetting loan growth.
Noninterest Income.
Noninterest income increased $111,000, or 5.3%, to $2.2 million for
the three months ended September 30, 2019, compared to $2.1 million
for the three months ended September 30, 2018.
- In the prior period, the Company recognized a $74,000 net loss
on the disposal of fixed assets due to the write-off of the
leasehold improvements of the former Washington Business Center
that was vacated on September 30, 2018.
- Insurance commissions increased $65,000 due to increased direct
bill personal lines and property and casualty commission and fee
income as a result of the Beynon customer list acquisition
partially offset by a decrease in contingency fees received.
Contingency fees are commissions that are contingent upon several
factors including, but not limited to, eligible written premiums,
earned premiums, incurred losses, policy cancellations and stop
loss charges.
- Other noninterest income increased $51,000 primarily due to
decreased amortization of mortgage servicing rights on sold
mortgages.
- The change in fair value of equity securities portfolio
resulted in a $60,000 decrease in income in the current
period.
- Service fees on deposit accounts decreased $55,000 due to
decreased volume in ATM and Mastercard debit card fees and
nonsufficient funds and overdraft fees in the current quarter.
Noninterest Expense. Noninterest expense
decreased $875,000, or 9.3%, to $8.5 million for the three months
ended September 30, 2019, compared to $9.4 million for the three
months ended September 30, 2018.
- Merger-related expense decreased $61,000 due to recognition of
final merger costs in the prior period from the FWVB merger.
- Occupancy decreased $258,000 primarily due to the lease
termination of the former FWVB corporate center and former
Washington Business Center as the Bank moved into the BPMCC in the
prior period.
- Equipment expense decreased $150,000 primarily due to fully
depreciated items and a decrease in data processing and maintenance
expenses.
- Salaries and employee benefits decreased $80,000, primarily
related to a decrease in commissions for producers of the insurance
subsidiary.
- The Federal Deposit Insurance Corporation (“FDIC”) assessment
expense decreased $62,000 due to deposit insurance fund credits
approved for banks with less than $10 billion in assets.
- Other noninterest expense decreased $318,000 primarily due to
other losses that were written off as a result of the FWVB merger
as well as decreases in printing and office supplies and
director-related restricted stock compensation expenses.
Income Tax Expense. Income taxes
increased $308,000 to $884,000 for the three months ended September
30, 2019, compared to $576,000, for the three months ended
September 30, 2018. The effective tax rate for the three months
ended September 30, 2019 was 19.1%, compared to 20.1%, for the
three months ended September 30, 2018. The increase in income taxes
was due to an increase of $1.8 million in pre-tax income.
Year-to-Date Results
Overview. Net income increased $5.0 million, to
$9.7 million for the nine months ended September 30, 2019 compared
to $4.6 million for the nine months ended September 30, 2018.
Results for the nine months ended September 30, 2019 were largely
impacted by the full period effect of the FWVB merger that was
completed on April 30, 2018.
Net Interest Income. Net interest income
increased $5.3 million, or 19.6%, to $32.2 million for the nine
months ended September 30, 2019, compared to $27.0 million for the
nine months ended September 30, 2018.
Interest and dividend income increased $6.9 million, or 22.1%,
to $38.1 million for the nine months ended September 30, 2019,
compared to $31.2 million for the nine months ended September 30,
2018.
- Interest income on loans increased $4.8 million due to an
increase in average loans outstanding of $82.4 million, primarily
commercial and residential real estate, and an increase of 31 basis
points in loan yield.
- Interest income on taxable securities increased $1.5 million in
the current period. The average balance for taxable securities
increased $55.1 million combined with an increase of 34 basis
points in yield. A portion of the portfolio was restructured in the
current year to increase net yields.
- Other interest and dividend income increased $367,000 and
interest income on federal funds sold increased $322,000 as a
result of an increase of $32.0 million in deposits with
correspondent banks in the current period.
- Interest income on tax-exempt securities decreased $140,000 due
to a decrease of $11.1 million in the average balance on securities
exempt from federal tax. Despite the average balance decrease,
there was an increase of 34 basis points in yield as a result of
calls and sales of securities with lower prevailing yields. A
portion of the portfolio was restructured in the current year to
increase net yields and to alleviate call risk.
Interest expense increased $1.6 million, or 38.4%, to $5.8
million for the nine months ended September 30, 2019, compared to
$4.2 million for the nine months ended September 30, 2018.
- Interest expense on deposits increased $2.0 million due to an
increase in average interest-bearing deposits of $145.5 million.
The average cost of interest-bearing deposits increased 22 basis
points in the current period driven by higher cost municipal and
time deposits. Although recent interest rate cuts have occurred,
higher cost certificates of deposit will continue to impact
interest expense until maturity.
- Interest expense on short-term borrowings decreased $330,000 in
the current period primarily due to retired FHLB overnight
borrowings that had an average balance of $26.4 million.
- Interest expense on other borrowed funds decreased $86,000
primarily due to maturity of a FHLB long-term borrowing that was
retired.
Provision for Loan Losses. The provision
for loan losses decreased $1.6 million, to $550,000, for the nine
months ended September 30, 2019, compared to $2.1 million of
provision for loan losses for the nine months ended September 30,
2018. Net charge-offs for the nine months ended September 30, 2019
were $358,000, which included $293,000 of net charge-offs on
automobile loans, compared to net charge-offs of $1.6 million for
the nine months ended September 30, 2018. The decrease in net
charge-offs for the current period was due to charge-offs of $1.2
million for three commercial and industrial relationships in the
first quarter of 2018. The provision for loan losses was impacted
in the prior period due to the above-mentioned loan charge-offs and
to appropriately reflect risk associated within the portfolio as of
the nine months ended September 30, 2018. Additionally, updated
appraisals on two commercial real estate loans indicated improved
market value of collateral and improved borrower’s financial
information resulting in a decrease in specific reserves.
Management analyzes the loan portfolio on a quarterly basis to
determine the adequacy of the allowance for loan losses with the
possible need for additional provisions for loan losses.
Noninterest Income.
Noninterest income increased $614,000, or 9.7%, to $6.9 million for
the nine months ended September 30, 2019 compared to $6.3 million
for the nine months ended September 30, 2018.
- Insurance commissions increased $488,000 from Exchange
Underwriters mainly due to the Beynon customer list acquisition in
the prior year, which also increased contingency fees.
- Service fees on deposit accounts increased $186,000 primarily
due to volume-based increase in ATM and check card fees.
- Net gains on sales of residential mortgage loans increased
$84,000 primarily due to an increase in the number of loans
originated and subsequently sold to the FHLB as part of the
Mortgage Partnership Finance® (“MPF®”) program and a stabilization
in mortgage rates. The MPF® program enables member financial
institutions to offer competitive interest rates for fixed-rate
mortgage loans without assuming any of the interest rate risk
associated with a long-term asset.
- In the prior period, the Company recognized a $74,000 net loss
on the disposal of fixed assets due to the write-off of the
leasehold improvements of the former Washington Business Center
that was vacated on September 30, 2018.
- The change in fair value of equity securities portfolio
resulted in a $50,000 increase in income.in the current
period.
- Other noninterest income increased $123,000 due to decreased
amortization of mortgage servicing rights on sold mortgages and
reduced student loan origination fees as a result of the student
loan insurance company insolvency, and the discontinuing of student
loan originations in the prior year.
- Other commissions income decreased $375,000, due to prior
period items including receipt of insurance proceeds from a claim
on a bank-owned life insurance policy, recognition of an Assumable
Rate Conversion loan referral fee, and liquidation of a partnership
interest in the West Virginia Bankers Title Company, a legacy item
from the FWVB merger.
Noninterest Expense. Noninterest expense
increased $1.1 million, or 4.2%, to $26.6 million for the nine
months ended September 30, 2019, compared to $25.5 million for the
nine months ended September 30, 2018.
- Salaries and employee benefits increased $1.0 million,
primarily due to additional employees, salary increases, and
employee group health insurance as a direct result of the FWVB
merger.
- Amortization of core deposit intangible increased $468,000 due
to the core deposit intangible recorded for the FWVB merger.
- Contracted services increased $362,000, due to the additional
branch locations acquired in the FWVB merger.
- Bankcard processing expense increased $204,000, due to an
increase in volume of ATM and debit card transactions as a result
of the FWVB merger.
- PA shares tax expense increased $150,000 due to the increase in
equity based on the FWVB merger.
- OREO expense decreased $118,000, primarily due to recognized
income for the leasing of mineral rights partially offset by
expenses related to properties placed in OREO in the current
period.
- Equipment expense increased $89,000, primarily due to equipment
purchases and new maintenance contracts related to the FWVB
merger.
- Advertising increased $64,000 related to the Bank’s expanded
marketing initiatives in various media outlets and promotional
items to promote the FWVB merger.
- Although deposits increased $39.3 million in the current
period, FDIC assessment expense only increased $7,000 due to
deposit insurance fund credits approved for banks with less than
$10 billion in assets.
- Merger-related expenses decreased $854,000 due to the prior
year merger.
- Occupancy decreased $194,000 primarily due to the lease
termination of the former FWVB corporate center and former
Washington Business Center as the Bank moved into the BPMCC in the
prior period. This partially offset by an increase in general
occupancy expenses from addition of branches.
- Other noninterest expense decreased $107,000, primarily due to
charged-off of losses from fraudulent phishing transactions on
customer accounts in the prior period, as well as a decrease in
office supplies and dues and subscriptions partially offset by an
increase in amortization related to the Exchange Underwriters
acquisition of the Beynon customer list and increased telephone
cost due to merger.
Income Tax Expense. Income taxes
increased $1.4 million to $2.3 million for the nine months ended
September 30, 2019, compared to $977,000 for the nine months ended
September 30, 2018. The effective tax rate for the nine months
ended September 30, 2019 was 19.6% compared to 17.4% for the nine
months ended September 30, 2018. The increase in income taxes was
related to an increase of $6.4 million in pre-tax income. The
increase in the current period effective tax rate was due to the
prior period recognition of the one-time income on a bank-owned
life insurance claim of approximately $421,000, which was a
discrete tax item for the first quarter of 2018. In addition, there
was a decrease in income on securities exempt from federal income
tax.
STATEMENT OF FINANCIAL CONDITION REVIEW
Assets. Total assets increased $46.6
million, or 3.6%, to over $1.3 billion at September 30, 2019, from
just under $1.3 billion at December 31, 2018.
- Cash and due from banks increased $35.1 million, or 65.7%, to
$88.4 million at September 30, 2019, compared to $53.4 million at
December 31, 2018. This is primarily the result of an increase in
deposits as well as investment security activity that was not fully
repurposed through loan production due to unexpected payoffs.
- Investment securities classified as available-for-sale
decreased $7.9 million, or 3.5%, to $217.5 million at September 30,
2019, compared to $225.4 million at December 31, 2018. This was
primarily the result of $64.0 million of security sales, repayments
and calls partially offset by $50.2 million of purchases and an
increase in market value of the portfolio. A portion of the
portfolio was restructured in the current year to mitigate
deteriorating investments-credit risk and to reinvest in higher
yielding, longer-term investments as well as to mitigate call risk
in a declining interest rate environment.
- Net loans increased $19.1 million, or 2.1%, to $922.4 million
at September 30, 2019, compared to $903.3 million at December 31,
2018. This was primarily due to net loan originations of $12.4
million in residential mortgage loans, $9.5 million in construction
loans, and $7.1 million in commercial real estate loans partially
offset by a decrease of $10.1 million in consumer loans.
Nonperforming loans, which includes nonaccrual loans, accruing
loans past due 90 days or more and troubled debt restructurings,
increased $1.5 million to $7.8 million at September 30, 2019
primarily due to a $2.9 million commercial real estate loan that
was placed on nonaccrual due to alleged fraudulent activity. The
Bank is expected to receive a full payoff in the fourth quarter of
2019. This was partially offset by an $851,000 residential TDR
payoff. As a result, nonperforming loans to total loans ratio
increased 15 basis points to 0.84% at September 30, 2019, compared
to 0.69% at December 31, 2018.
Liabilities. Total liabilities increased
$36.1 million, or 3.2%, to $1.2 billion at September 30, 2019
compared to $1.1 billion at December 31, 2018.
- Total deposits increased $39.3 million, or 3.6%, to over $1.1
billion at September 30, 2019, from just under $1.1 billion at
December 31, 2018. There were increases of $12.2 million in NOW
accounts, $10.9 million in demand deposits, $10.0 million in time
deposits, $4.9 million in savings accounts, and $4.7 million in
brokered deposits, partially offset by a decrease of $3.5 million
in money market accounts. This increase is largely the result of
cyclical tax deposits received on municipal demand deposit and NOW
account as well as an increase in time deposits greater than
$100,000. The Bank has been selective on offering promotional
interest rates and continues to evaluate its rate structure in
light of recent rate decreases by the Federal Reserve.
- Short-term borrowings decreased $1.9 million, or 6.0%, to $29.1
million at September 30, 2019, compared to $31.0 million at
December 31, 2018. At September 30, 2019 and December 31, 2018,
short-term borrowings were comprised entirely of securities sold
under agreements to repurchase. The decrease is 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.
- Other borrowed funds decreased $3.0 million, due to a FHLB
borrowing that matured in the current period.
Stockholders’ Equity. Stockholders’
equity increased $10.5 million, or 7.6%, to $148.1 million at
September 30, 2019, compared to $137.6 million at December 31,
2018. Net income was $9.7 million for the nine months ended
September 30, 2019. Book value per share was $27.26, an increase of
$1.93, or 7.1%, at September 30, 2019, compared to $25.33 for
December 31, 2018. The Company paid $3.9 million in dividends to
stockholders and accumulated other comprehensive income increased
$4.5 million primarily due to improved market interest rate
conditions in the current period on the Bank’s available-for-sale
debt securities.
About CB Financial Services, Inc
CB Financial Services, Inc. is the bank holding company for
Community Bank, a Pennsylvania-chartered commercial bank
headquartered in Washington, Pennsylvania. Community Bank operates
twenty offices in Greene, Allegheny, Washington, Fayette, and
Westmoreland Counties in southwestern Pennsylvania, seven offices
in Brooke, Marshall, Ohio, Upshur and Wetzel Counties in West
Virginia, and one office in Belmont County in Ohio. 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. Consolidated financial highlights of the Company are
attached.
For more information about CB and Community Bank, visit our
website at www.communitybank.tv.
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,
changes in market interest rates, general economic conditions,
changes in federal and state regulation, actions by our
competitors, loan delinquency rates, our ability to control costs
and expenses, and other factors that may be described 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.
Contact: Patrick G. O’BrienPresident and Chief Executive
OfficerPhone: (724) 225-2400Fax: (724) 225-4903
|
SELECTED
CONSOLIDATED FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
(Dollars in
thousands, except share and per share data) |
|
September
30, |
|
December
31, |
|
|
|
|
|
Selected
Financial Condition Data: |
|
2019 |
|
2018 |
|
|
|
|
|
Total
Assets |
|
$
1,327,856 |
|
$
1,281,301 |
|
|
|
|
|
Cash and
Cash Equivalents |
|
88,413 |
|
53,353 |
|
|
|
|
|
Securities
Available-for-Sale |
|
217,545 |
|
225,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
|
|
|
|
|
|
|
|
Real Estate: |
|
|
|
|
|
|
|
|
|
Residential |
|
339,122 |
|
326,769 |
|
|
|
|
|
Commercial |
|
314,177 |
|
307,064 |
|
|
|
|
|
Construction |
|
58,324 |
|
48,824 |
|
|
|
|
|
Commercial and Industrial |
|
92,134 |
|
91,463 |
|
|
|
|
|
Consumer |
|
112,188 |
|
122,241 |
|
|
|
|
|
Other |
|
16,253 |
|
16,511 |
|
|
|
|
|
Total Loans |
|
932,198 |
|
912,872 |
|
|
|
|
|
Allowance for Loan Losses |
|
9,750 |
|
9,558 |
|
|
|
|
|
Loans, Net |
|
922,448 |
|
903,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premises and
Equipment, Net |
|
22,566 |
|
23,448 |
|
|
|
|
|
Goodwill and
Core Deposit Intangible |
|
37,905 |
|
39,359 |
|
|
|
|
|
Deposits |
|
1,125,908 |
|
1,086,658 |
|
|
|
|
|
Borrowings |
|
46,118 |
|
50,979 |
|
|
|
|
|
Stockholders' Equity |
|
148,098 |
|
137,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
September
30, |
|
Selected
Operations Data: |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Interest and
Dividend Income |
|
$
13,098 |
|
$
11,764 |
|
$
38,063 |
|
$
31,161 |
|
Interest
Expense |
|
2,002 |
|
1,594 |
|
5,828 |
|
4,210 |
|
Net Interest
Income |
|
11,096 |
|
10,170 |
|
32,235 |
|
26,951 |
|
Provision
for Loan Losses |
|
175 |
|
25 |
|
550 |
|
2,125 |
|
Net Interest
Income After Provision for Loan Losses |
|
10,921 |
|
10,145 |
|
31,685 |
|
24,826 |
|
Noninterest
Income: |
|
|
|
|
|
|
|
|
|
Service Fees on Deposit Accounts |
|
811 |
|
866 |
|
2,362 |
|
2,176 |
|
Insurance Commissions |
|
985 |
|
920 |
|
3,219 |
|
2,731 |
|
Other Commissions |
|
159 |
|
127 |
|
448 |
|
823 |
|
Net Gain on Sales of Loans |
|
48 |
|
52 |
|
190 |
|
106 |
|
Net (Loss) Gain on Sales of Investments |
|
3 |
|
- |
|
(50) |
|
- |
|
Fair Value of Marketable Equity Securities |
|
(25) |
|
35 |
|
104 |
|
54 |
|
Net Gain on Purchased Tax Credits |
|
9 |
|
11 |
|
27 |
|
33 |
|
Net (Loss) Gain on Disposal of Fixed Assets |
|
- |
|
(74) |
|
2 |
|
(74) |
|
Income from Bank-Owned Life Insurance |
|
142 |
|
135 |
|
408 |
|
370 |
|
Other |
|
67 |
|
16 |
|
203 |
|
80 |
|
Total noninterest income |
|
2,199 |
|
2,088 |
|
6,913 |
|
6,299 |
|
|
|
|
|
|
|
|
|
|
|
Noninterest
Expense: |
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits |
|
4,628 |
|
4,708 |
|
14,271 |
|
13,268 |
|
Occupancy |
|
597 |
|
855 |
|
2,019 |
|
2,213 |
|
Equipment |
|
636 |
|
786 |
|
2,005 |
|
1,916 |
|
FDIC Assessment |
|
5 |
|
67 |
|
368 |
|
361 |
|
PA Shares Tax |
|
226 |
|
197 |
|
743 |
|
593 |
|
Contracted Services |
|
312 |
|
273 |
|
945 |
|
583 |
|
Legal and Professional Fees |
|
117 |
|
171 |
|
458 |
|
456 |
|
Advertising |
|
244 |
|
245 |
|
651 |
|
587 |
|
Bankcard Processing Expense |
|
225 |
|
180 |
|
652 |
|
448 |
|
Other Real Estate Owned (Income) |
|
13 |
|
49 |
|
(81) |
|
37 |
|
Amortization of Core Deposit Intangible |
|
484 |
|
452 |
|
1,454 |
|
986 |
|
Merger-Related |
|
- |
|
61 |
|
- |
|
854 |
|
Other |
|
1,003 |
|
1,321 |
|
3,117 |
|
3,224 |
|
Total noninterest expense |
|
8,490 |
|
9,365 |
|
26,602 |
|
25,526 |
|
Income
Before Income Taxes |
|
4,630 |
|
2,868 |
|
11,996 |
|
5,599 |
|
Income
Taxes |
|
884 |
|
576 |
|
2,346 |
|
977 |
|
Net
Income |
|
$ 3,746 |
|
$ 2,292 |
|
$ 9,650 |
|
$ 4,622 |
|
|
|
|
|
|
|
|
|
|
|
Dividends
Per Share |
|
$ 0.24 |
|
$ 0.22 |
|
$ 0.72 |
|
$ 0.66 |
|
Earnings Per
Share - Basic |
|
0.69 |
|
0.42 |
|
1.78 |
|
0.96 |
|
Earnings Per
Share - Diluted |
|
0.69 |
|
0.42 |
|
1.77 |
|
0.95 |
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Shares Outstanding - Basic |
|
5,433,289 |
|
5,414,299 |
|
5,433,296 |
|
4,834,948 |
|
Weighted
Average Shares Outstanding - Diluted |
|
5,458,723 |
|
5,476,792 |
|
5,451,705 |
|
4,889,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
September
30, |
|
Selected
Financial Ratios(1): |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Return on
Average Assets |
|
1.11 |
% |
0.73 |
% |
0.99 |
% |
0.56 |
% |
Return on
Average Equity |
|
9.99 |
|
6.77 |
|
9.00 |
|
5.42 |
|
Average
Interest-Earning Assets to Average Interest-Bearing
Liabilities |
|
132.89 |
|
133.56 |
|
133.95 |
|
133.59 |
|
Average
Equity to Average Assets |
|
11.16 |
|
10.83 |
|
11.00 |
|
10.27 |
|
Net Interest
Rate Spread |
|
3.49 |
|
3.42 |
|
3.45 |
|
3.38 |
|
Net Interest
Margin |
|
3.70 |
|
3.61 |
|
3.67 |
|
3.56 |
|
Net
Charge-Offs to Average Loans |
|
0.05 |
|
0.05 |
|
0.05 |
|
0.26 |
|
Efficiency
Ratio |
|
63.86 |
|
76.40 |
|
67.95 |
|
76.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
September
30, |
|
December
31, |
|
|
|
|
|
|
|
2019 |
|
2018 |
|
|
|
|
|
Allowance
For Loan Losses to Total Loans (2) |
|
1.05 |
% |
1.05 |
% |
|
|
|
|
Allowance
For Loan Losses to Nonperforming Loans (2) (4) |
|
124.92 |
|
151.40 |
|
|
|
|
|
Allowance
For Loan Losses to Noncurrent Loans (2) (5) |
|
164.86 |
|
264.91 |
|
|
|
|
|
Nonperforming Loans to Total Loans (4) |
|
0.84 |
|
0.69 |
|
|
|
|
|
Noncurrent
Loans to Total Loans (5) |
|
0.63 |
|
0.40 |
|
|
|
|
|
Nonperforming Assets to Total Assets |
|
0.60 |
|
0.56 |
|
|
|
|
|
Common
Equity Tier 1 Capital (to Risk Weighted Assets) (3) |
|
11.97 |
|
11.44 |
|
|
|
|
|
Tier 1
Capital (to Risk Weighted Assets) (3) |
|
11.97 |
|
11.44 |
|
|
|
|
|
Total
Capital (to Risk Weighted Assets) (3) |
|
13.09 |
|
12.57 |
|
|
|
|
|
Tier 1
Leverage (to Adjusted Total Assets) (3) |
|
8.09 |
|
7.82 |
|
|
|
|
|
Book Value
Per Share |
|
$
27.26 |
|
$
25.33 |
|
|
|
|
|
Outstanding
Shares |
|
5,433,489 |
|
5,432,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Interim
period ratios are calculated on an annualized basis. |
|
|
|
|
|
|
|
|
|
(2) Loans acquired in connection with the mergers with FedFirst
Financial Corporation and First West Virginia Bancorp were recorded
at their estimated fair value at the acquisition date and did not
include a carryover of the pre-merger allowance for loan
losses. |
|
(3) Capital
ratios are for Community Bank only. |
|
|
|
|
|
|
|
|
|
(4) Nonperforming loans consist of nonaccrual loans, accruing loans
that are 90 days or more past due, and troubled debt restructured
loans. |
|
|
(5) Noncurrent loans consist of nonaccrual loans and accruing loans
that are 90 days or more past due. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
|
|
|
|
|
|
|
|
Certain items previously reported may have been reclassified to
conform with the current reporting period’s format. |
|
|
|
|
|
AVERAGE BALANCES AND YIELDS
The following tables present information regarding
average balances of assets and liabilities, the total dollar
amounts of interest income and dividends from average
interest-earning assets, the total dollar amounts of interest
expense on average interest-bearing liabilities, and the resulting
average yields and costs. Average balances are derived from daily
balances over the periods indicated. The yields set forth below
include the effect of deferred fees, discounts, and premiums that
are amortized or accreted to interest income or interest expense.
Tax-equivalent yield adjustments have been made for tax exempt loan
and securities income utilizing a marginal federal income tax rate
of 21%. As such, amounts do not agree to income as reported in the
consolidated financial statements. Average balances for loans are
net of the allowance for loan losses, and include nonaccrual loans
with a zero yield. The yields and costs for the periods indicated
are derived by dividing annualized income or expense by the average
balances of assets or liabilities, respectively, for the periods
presented.
|
|
|
|
|
(Dollars in
thousands) (Unaudited) |
|
|
|
|
Three Months Ended
September 30, |
|
|
|
|
2019 |
|
2018 |
|
|
|
|
Average |
|
Interestand |
|
Yield/ |
|
Average |
|
Interestand |
|
Yield/ |
|
|
|
|
Balance |
|
Dividends |
|
Cost (4) |
|
Balance |
|
Dividends |
|
Cost (4) |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, Net |
$ |
930,140 |
|
$ |
11,015 |
|
4.70 |
% |
|
$ |
884,623 |
|
$ |
10,080 |
|
4.52 |
% |
|
Investment Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
196,375 |
|
|
1,505 |
|
3.07 |
|
|
|
178,284 |
|
|
1,202 |
|
2.70 |
|
|
|
Exempt From Federal Tax |
|
27,895 |
|
|
246 |
|
3.53 |
|
|
|
46,901 |
|
|
394 |
|
3.36 |
|
|
Other Interest-Earning Assets |
|
42,323 |
|
|
405 |
|
3.80 |
|
|
|
19,894 |
|
|
200 |
|
3.99 |
|
|
|
Total Interest-Earning Assets |
|
1,196,733 |
|
|
13,171 |
|
4.37 |
|
|
|
1,129,702 |
|
|
11,876 |
|
4.17 |
|
Noninterest-Earning Assets |
|
136,658 |
|
|
|
|
|
|
|
110,513 |
|
|
|
|
|
|
|
Total Assets |
$ |
1,333,391 |
|
|
|
|
|
|
$ |
1,240,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Demand Deposits |
$ |
228,287 |
|
|
303 |
|
0.53 |
% |
|
$ |
190,582 |
|
|
171 |
|
0.36 |
% |
|
Savings |
|
219,307 |
|
|
118 |
|
0.21 |
|
|
|
206,513 |
|
|
143 |
|
0.27 |
|
|
Money Market |
|
180,446 |
|
|
241 |
|
0.53 |
|
|
|
179,998 |
|
|
221 |
|
0.49 |
|
|
Time Deposits |
|
226,948 |
|
|
1,202 |
|
2.10 |
|
|
|
210,302 |
|
|
863 |
|
1.63 |
|
|
|
Total Interest-Bearing Deposits |
|
854,988 |
|
|
1,864 |
|
0.86 |
|
|
|
787,395 |
|
|
1,398 |
|
0.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
45,561 |
|
|
138 |
|
1.20 |
|
|
|
58,454 |
|
|
196 |
|
1.33 |
|
|
|
Total Interest-Bearing Liabilities |
|
900,549 |
|
|
2,002 |
|
0.88 |
|
|
|
845,849 |
|
|
1,594 |
|
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-Bearing Demand Deposits |
|
273,991 |
|
|
|
|
|
|
|
254,727 |
|
|
|
|
|
Other Liabilities |
|
10,062 |
|
|
|
|
|
|
|
5,333 |
|
|
|
|
|
|
|
Total Liabilities |
|
1,184,602 |
|
|
|
|
|
|
|
1,105,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
148,789 |
|
|
|
|
|
|
|
134,306 |
|
|
|
|
|
|
|
Total Liabilities and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
$ |
1,333,391 |
|
|
|
|
|
|
$ |
1,240,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income |
|
|
$ |
11,169 |
|
|
|
|
|
|
$ |
10,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Rate Spread (1) |
|
|
|
|
3.49 |
% |
|
|
|
|
|
3.42 |
% |
Net Interest-Earning Assets (2) |
$ |
296,184 |
|
|
|
|
|
|
$ |
283,853 |
|
|
|
|
|
Net Interest Margin (3) |
|
|
|
|
3.70 |
|
|
|
|
|
|
3.61 |
|
Return on Average Assets |
|
|
|
|
1.11 |
|
|
|
|
|
|
0.73 |
|
Return on Average Equity |
|
|
|
|
9.99 |
|
|
|
|
|
|
6.77 |
|
Average Equity to Average Assets |
|
|
|
|
11.16 |
|
|
|
|
|
|
10.83 |
|
Average Interest-Earning Assets to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Bearing Liabilities |
|
|
|
|
132.89 |
|
|
|
|
|
|
133.56 |
|
(1) 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. |
(2) Net
interest-earning assets represent total interest-earning assets
less total interest-bearing liabilities. |
|
(3) Net interest
margin represents annualized net interest income divided by average
total interest-earning assets. |
|
(4)
Annualized. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in
thousands) (Unaudited) |
|
|
|
|
Nine Months Ended
September 30, |
|
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
Average |
|
Interestand |
|
Yield/ |
|
Average |
|
Interestand |
|
Yield/ |
|
|
|
|
Balance |
|
Dividends |
|
Cost (4) |
|
Balance |
|
Dividends |
|
Cost (4) |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, Net |
$ |
908,198 |
|
$ |
32,189 |
|
4.74 |
% |
|
$ |
825,781 |
|
$ |
27,374 |
|
4.43 |
% |
|
Investment Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
194,533 |
|
|
4,159 |
|
2.85 |
|
|
|
139,456 |
|
|
2,624 |
|
2.51 |
|
|
|
Exempt From Federal Tax |
|
33,023 |
|
|
875 |
|
3.53 |
|
|
|
44,097 |
|
|
1,054 |
|
3.19 |
|
|
Other Interest-Earning Assets |
|
47,004 |
|
|
1,097 |
|
3.12 |
|
|
|
14,980 |
|
|
408 |
|
3.64 |
|
|
|
Total Interest-Earning Assets |
|
1,182,758 |
|
|
38,320 |
|
4.33 |
|
|
|
1,024,314 |
|
|
31,460 |
|
4.11 |
|
Noninterest-Earning Assets |
|
120,291 |
|
|
|
|
|
|
|
86,168 |
|
|
|
|
|
|
|
Total Assets |
$ |
1,303,049 |
|
|
|
|
|
|
$ |
1,110,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Demand Deposits |
$ |
217,762 |
|
|
872 |
|
0.54 |
% |
|
$ |
162,210 |
|
|
412 |
|
0.34 |
% |
|
Savings |
|
215,835 |
|
|
413 |
|
0.26 |
|
|
|
176,742 |
|
|
329 |
|
0.25 |
|
|
Money Market |
|
180,494 |
|
|
778 |
|
0.58 |
|
|
|
159,225 |
|
|
541 |
|
0.45 |
|
|
Time Deposits |
|
220,993 |
|
|
3,344 |
|
2.02 |
|
|
|
191,372 |
|
|
2,090 |
|
1.46 |
|
|
|
Total Interest-Bearing Deposits |
|
835,084 |
|
|
5,407 |
|
0.87 |
|
|
|
689,549 |
|
|
3,372 |
|
0.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
|
47,887 |
|
|
421 |
|
1.18 |
|
|
|
77,236 |
|
|
838 |
|
1.45 |
|
|
|
Total Interest-Bearing Liabilities |
|
882,971 |
|
|
5,828 |
|
0.88 |
|
|
|
766,785 |
|
|
4,210 |
|
0.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-Bearing Demand Deposits |
|
267,155 |
|
|
|
|
|
|
|
224,883 |
|
|
|
|
|
Other Liabilities |
|
9,601 |
|
|
|
|
|
|
|
4,764 |
|
|
|
|
|
|
|
Total Liabilities |
|
1,159,727 |
|
|
|
|
|
|
|
996,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
143,322 |
|
|
|
|
|
|
|
114,050 |
|
|
|
|
|
|
|
Total Liabilities and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
$ |
1,303,049 |
|
|
|
|
|
|
$ |
1,110,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income |
|
|
$ |
32,492 |
|
|
|
|
|
|
$ |
27,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Rate Spread (1) |
|
|
|
|
3.45 |
% |
|
|
|
|
|
3.38 |
% |
Net Interest-Earning Assets (2) |
$ |
299,787 |
|
|
|
|
|
|
$ |
257,529 |
|
|
|
|
|
Net Interest Margin (3) |
|
|
|
|
3.67 |
|
|
|
|
|
|
3.56 |
|
Return on Average Assets |
|
|
|
|
0.99 |
|
|
|
|
|
|
0.56 |
|
Return on Average Equity |
|
|
|
|
9.00 |
|
|
|
|
|
|
5.42 |
|
Average Equity to Average Assets |
|
|
|
|
11.00 |
|
|
|
|
|
|
10.27 |
|
Average Interest-Earning Assets to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Bearing Liabilities |
|
|
|
|
133.95 |
|
|
|
|
|
|
133.59 |
|
(1) 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. |
(2) Net
interest-earning assets represent total interest-earning assets
less total interest-bearing liabilities. |
|
(3) Net interest
margin represents net interest income divided by average total
interest-earning assets. |
|
(4)
Annualized. |
|
CB Financial Services (NASDAQ:CBFV)
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CB Financial Services (NASDAQ:CBFV)
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From Jul 2023 to Jul 2024