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 2020 financial results. Net income was $2.9 million,
or $0.54 diluted earnings per share, for the three months ended
June 30, 2020, compared to $3.0 million, or $0.55 diluted
earnings per share, for the three months ended June 30, 2019.
Net income was $3.7 million, or $0.68 diluted
earnings per share, for the six months ended June 30, 2020
compared to $5.9 million, or $1.08 diluted earnings per share, for
the six months ended June 30, 2019.
COVID-19 Update
While signs of macroeconomic recovery have
occurred during the second quarter after the phased-in reopening of
the economy beginning in May 2020, the far-reaching impact of the
COVID-19 pandemic remains uncertain. The unemployment rate declined
after peaking in April, but remains at a very high level. Beginning
in March 2020, definitive federal government action occurred
through the enactment of the Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”), Paycheck Protection Program and
Health Care Enhancement Act (the “PPP Enhancement Act”) and other
programs to aid businesses and consumers from the COVID-19
impact.
The Company remains committed to its employees
and customers during the COVID-19 crisis. For employees, the
Company:
- Instituted “Community Bank Cares” premium pay program, which
began in March and ended in June, offering our essential employees:
- 10% premium pay.
- One extra day of paid time off for each month worked.
- “Lunch on Us” provided once weekly using local restaurants to
support business.
- Maintained all employee benefits, including 401k match and
discretionary contributions.
- Leveraged technological resources quickly and efficiently to
support remote working arrangements that ensured sustained
performance.
- Established a COVID-19 Preparedness Committee comprised of a
cross-functional team of Senior Management and Human Resources
focused on employee and customer safety and thorough and frequent
communication regarding COVID-19 updates.
- Instituted social distancing and other protective measures
throughout the bank, including installation of Plexiglas shields
and floor decals and availability of masks and disinfectant.
- Supported the call center, which saw a large increase in volume
of calls, with resources from branch staff who were available due
to lobby restrictions.
For its customers, the Company:
- Increased ATM debit MasterCard® spending and withdrawal limits
as well as mobile deposit limits in light of branch lobby
restrictions.
- Lifted ATM foreign use fees allowing customers to freely use
any bank’s ATM with no charge from the Bank.
- Monitored overdraft fees carefully and worked closely with
customers negatively impacted by job loss.
- Facilitated government stimulus through participation in the
Payroll Protection Program (“PPP”) administered by the Small
Business Administration (“SBA”). At June 30, 2020, the Bank’s PPP
loan portfolio was comprised of 628 loans totaling $70.0 million
with a median loan of $35,000. The loans impact over 8,300 small
business employees. Among the largest sectors impacted were $15.3
million in loans for health care and social assistance, $12.4
million for construction and specialty-trade contractors, $6.1
million for professional and technical services, $5.9 million for
retail trade, $5.1 million for wholesale trade, $4.6 million for
manufacturing and $3.4 million for restaurant and food services.
Net SBA origination fees as of June 30, 2020 were $2.1 million, of
which $191,000 was recognized in the current quarter. We expect to
recognize the majority of unearned net origination fees in the
third and fourth quarter upon processing requests for loan
forgiveness. All PPP loans are classified as commercial and
industrial loans held for investment.
- Provided borrower support and relief through short-term loan
forbearance options by primarily allowing: (a) deferral of three
months of payments; or (b) for consumer loans not secured by a real
estate mortgage, three months of interest-only payments that also
extends the maturity date of the loan by three months. During the
forbearance period, the borrower is not considered delinquent for
credit bureau reporting purposes.
Refer to the Credit Quality section for further
information on loans in forbearance and commercial industry
exposures.
The Company also continues to manage the
disruption through a position of strength and soundness with strong
capital and substantial liquidity levels to ensure it is
well-positioned to support its customers. The Company has $399.3
million in available borrowing capacity with the Federal Home Loan
Bank, a $90.4 million borrower-in-custody of collateral line of
credit with the Federal Reserve Bank, and $60.0 million from
multiple line of credit arrangements, as well as $131.4 million in
cash and cash equivalents and $10.0 million in unpledged
securities.
“The Company is very pleased to report net
income of $2.9 million for the current quarter despite the
extraordinary impact from the pandemic and the significant
disruption that occurred to our regular operations,” said
Barron P. “Pat” McCune, Jr., President and Chief Executive Officer.
“While there is optimism in the macroeconomic data, there is also
continued uncertainty of how the pandemic will ultimately impact
the Bank. Asset quality remains solid with a 0.39% delinquent and
noncurrent loans to total loans ratio, and the buildup of the
allowance for loan losses to 227% of nonperforming loans better
positions us for the unknowns that exist as the payment deferral
period ends for many of our borrowers. Initial indications are the
majority of them will resume payments and we will monitor this
situation closely for those requesting additional time. We have
ample liquidity and strong capital to fall back on. The pandemic
provided us an opportunity to further assess our branch network and
make a decision to consolidate redundant locations in light of
declining traffic and accelerated adoption of digital technology.
We are steadfast in our vow to serve our communities and help our
market recover. This was never more evident than in the past
quarter with well over 600 payment deferrals and 600 PPP loans
processed, government stimulus payments, and solid mortgage and
insurance activity, all done while working remotely. I marvel at
the phenomenal effort by our employees who tirelessly worked and
united like never before for the collective good.”
Quarterly Highlights
Net income for the three months ended June 30,
2020 was $2.9 million compared to $3.0 million for the three months
ended June 30, 2019. This was an increase of $2.1 million, or
275.6%, compared to the three months ended March 31, 2020.
Diluted earnings per share for the three months ended June 30, 2020
was $0.54 compared to $0.55 for the three months ended June 30,
2019 and $0.14 for the three months ended March 31, 2020.
- Net interest income decreased $384,000, or 3.6%, to $10.3
million for the three months ended June 30, 2020 compared to $10.7
million for the three months ended June 30, 2019. This was also a
decrease of $212,000, or 2.0%, compared to the three months ended
March 31, 2020.
- Interest and dividend income decreased $942,000, or 7.4%, to
$11.7 million for the three months ended June 30, 2020 compared to
$12.7 million the three months ended June 30, 2019. This was also a
decrease of $602,000 or 4.9% compared to the three months ended
March 31, 2020.
- Although average loans increased $108.0 million compared to the
three months ended June 30, 2019, the average yield decreased 53
basis points (“bps”) to 4.21%. This was also a 36 bp decline
compared to the quarter ended March 31, 2020. The current quarter
loan yield was impacted by the declines in interest rate indices in
March 2020 at the onset of the pandemic, which resulted in an
immediate decrease in interest rates on adjustable rate loans. In
addition, PPP loans decreased the loan yield 6 bps in the current
quarter. The Bank continued to accrue and recognize interest income
on loans in forbearance due to expectation that borrowers will
resume payment at the end of forbearance and collectibility of the
interest income is not in question. With the majority of loans
scheduled to exit forbearance in the third quarter, the Bank will
evaluate whether continuing to accrue interest is prudent on a
loan-by-loan or industry basis.
- Other interest and dividend income, which primarily consists of
interest-bearing cash, decreased $290,000, or 77.5% to $84,000 for
the quarter ended June 30, 2020 compared to $374,000 for the
quarter ended June 30, 2019. Average other interest-earning assets
increased $43.6 million compared to the three months ended June 30,
2019 primarily from buildup of cash as a result of calls of U.S.
government agency and municipal securities and government stimulus
payments, but average yield declined 246 bps due to interest rate
cuts on interest-earning cash deposits held at other financial
institutions. Similarly, compared to the three months ended March
31, 2020, other interest and dividend income decreased $154,000
from $238,000.
- Interest income on taxable investment securities decreased
$502,000, or 34.8% to $940,000 for the three months ended June 30,
2020 compared to $1.4 million for the three months ended June 30,
2019 driven by a $71.9 million decrease in average investment
security balance. The Federal Reserve’s decision to drop the
benchmark interest rate resulted in the call of $52.5 million in
U.S. government agency and municipal securities in the current
year. In addition, there were $19.8 million of paydowns on
mortgage-backed securities in the current year. The funds were
partially maintained in cash or reinvested in lower rate
securities.
- Interest expense on deposits decreased $519,000, or 28.5%, to
$1.3 million for the three months ended June 30, 2020 compared $1.8
million for the three months ended June 30, 2019. While average
interest-earning deposits increased $19.0 million, interest rate
declines for all products driven by pandemic-related interest rate
cuts and efforts to control pricing resulted in a 26 bp decrease in
average cost compared to the quarter ended June 30, 2019.
Similarly, compared to the three months ended March 31, 2020,
interest expense on deposits decreased $376,000 from $1.7 million,
with an 18 bp decrease in average cost.
- The provision for loan losses was $300,000 for the three months
ended June 30, 2020 compared to $2.5 million for the three months
ended March 31, 2020 and $350,000 for the three months ended June
30, 2019. The pandemic, which led to state-wide shelter in place
orders and mandatory closures of all but essential business, has
resulted in a dramatic increase in unemployment and recessionary
economic conditions. The qualitative factors used in the allowance
for loan loss analysis related to economic trends and industry
conditions, specifically because of vulnerable industries such as
hospitality, oil and gas, retail and restaurants, were
significantly adjusted for these circumstances for the quarter
ended March 31, 2020 and resulted in a $2.5 million provision.
While recessionary economic conditions still exist, there has been
an improvement to certain macroeconomic conditions, including
unemployment, for the quarter ended June 30, 2020 compared to March
31, 2020, and resulted in a decrease in provision to $300,000.
- Noninterest income increased $483,000, or 22.3%, to $2.6
million for the three months ended June 30, 2020, compared to $2.2
million for the three months ended June 30, 2019. This was
primarily due to a $489,000 net gain on sales of investment
securities in the current period to harvest gains on
higher-interest mortgage-backed securities that were paying down
quicker than expected. In addition, there was a $441,000 gain on
sales of loans in the current quarter compared to $50,000 for the
three months ended June 30, 2019 and $127,000 for the three months
ended March 31, 2020, primarily due to increased mortgage loan
production from refinances, which were sold to reduce interest rate
risk on lower yielding, long-term assets.This increase was
partially offset by a decline in other (loss) income which included
a $51,000 increase in amortization on mortgage servicing rights
combined with a $269,000 temporary impairment on mortgage servicing
rights recognized in the current period due to a decline in the
interest rate environment that has caused increased prepayment
speeds and resulted in a decrease in fair value of the serviced
mortgage portfolio. In addition, service fees decreased $130,000 to
$487,000 in the current quarter, compared to $617,000 for the three
months ended June 30, 2019 due to waiver of fees and decrease in
customer usage from the pandemic. Service fees decreased $118,000
compared to the three months ended March 31, 2020.Compared to the
quarter ended March 31, 2020, noninterest income increased $776,000
from $1.9 million. In addition to the increase in net gain on sales
of loans in the current quarter, the fair value of the Company’s
marketable equity securities, which are primarily comprised of bank
stocks, increased $28,000 in the current quarter compared to a
$438,000 decrease in the prior quarter from the impact of COVID-19
on the stock market. Also, insurance commissions decreased $170,000
in the current quarter compared to the quarter ended March 31, 2020
primarily due to a decrease in contingency fees.
- Noninterest expense increased $274,000, or 3.1% to $9.1 million
for the three months ended June 30, 2020 compared to $8.8 million
for the three months ended June 30, 2019 and was relatively flat
compared to the three months ended March 31, 2020.
- Salaries and employee benefits increased $120,000 to $4.8
million for the three months ended June 30, 2020 compared to $4.7
million for the three months ended June 30, 2019. The increase was
primarily due to the Community Bank Cares premium pay during the
pandemic in addition to merit and promotional increases, which were
more than offset by deferred employee-related loan origination
costs associated with PPP loans. Salaries and employee benefits
also increased $97,000 compared to the three months ended March 31,
2020 primarily from Community Bank Cares premium pay. The quarter
ended March 31, 2020 was impacted by a $407,000 one-time payment
that offset employee benefits from health insurance claims
exceeding our stop-loss limit for the 2019 plan year and change
from a self-funded to a fully insured plan. Final calculation of
the stop loss payment was completed 90 days after the end of the
plan year. This was partially offset by approximately $70,000 of
one-time payments related to the CEO transition in the first
quarter of 2020.
- Contracted services increased $201,000 to $562,000 in the
current quarter compared to $361,000 for the quarter ended June 30,
2019 primarily due to temporary employees hired to assist with PPP
loan processing and consultants used to assist in infrastructure
improvements. For the quarter ended March 31, 2020, contracted
services were impacted by $116,000 in consulting fees associated
with the search for a new CEO.
- Data processing increased $80,000 to $460,000 for the three
months ended June 30, 2020 compared to $380,000 for the three
months ended June 30, 2019 primarily due to technology
investments.
- Legal fees and professional fees increased $11,000 to $171,000
for the three months ended June 30, 2020 compared to the three
months ended June 30, 2019, compared to a decrease of $64,000 to
$235,000 for the three months ended March 31, 2020, due to fees
associated with the CEO transition in the first quarter.
- Other noninterest expense decreased $150,000 to $945,000 in the
current quarter compared to $1.1 million for the three months ended
June 30, 2019 primarily due to decreases in travel-related and
telephone costs from employee work-at home arrangements during the
pandemic as well as fraud losses incurred in the prior period.
- Advertising decreased $65,000 to $155,000 in the current
quarter compared to $220,000 for the three months ended June 30,
2019 due to less emphasis on marketing initiatives during the
pandemic.
Year-to-Date Highlights
- Loan growth during the first half of the year was primarily due
to funding of $70.0 million in PPP loans as of June 30, 2020.
Total loans increased $89.7 million to over $1.0 billion at June
30, 2020 and represented a 18.8% annualized growth rate compared to
a 9.3% annualized growth rate in the first quarter of 2020.
Excluding the impact of the PPP loan funding, organic loan growth
was $19.6 million and represented an annualized growth rate of 4.1%
as of June 30, 2020.
- Deposits also benefited from the PPP loan funding and increased
$75.6 million as of June 30, 2020. The impact of the PPP loans that
were originated and subsequently deposited at the Bank was
approximately $54.8 million. Annualized deposit growth rates were
13.5% including PPP loan deposits and 3.7% without PPP loan
deposits, representing organic deposit growth.
Credit Quality
- The allowance for loan losses was $12.6 million at June 30,
2020 compared to $9.9 million at December 31, 2019. This reflects a
$2.8 million provision for loan loss due to an increase in
qualitative factors to account for the adverse economic impact of
COVID-19. As a result, the allowance for loan losses to total loans
increased from 1.04% at December 31, 2019 to 1.21% at June 30,
2020. No allowance was allocated to the PPP loan portfolio due to
the Bank complying with the lender obligations that ensure SBA
guarantee. The allowance for loan losses to total loans, excluding
PPP loans, was 1.30% at June 30, 2020.
- Net charge-offs were $19,000, or 0.01% net charge-offs to
average loans on an annualized basis for the six months ended June
30, 2020, with net recoveries of $26,000 for the three months ended
June 30, 2020. Net charge-offs were $71,000 and $242,000, or 0.03%
and 0.05% net charge-offs to average loans on an annualized basis,
for the three and six months ended June 30, 2019,
respectively. The increase in the prior year was driven by
higher automobile loan charge-offs.
- Nonperforming loans increased to $5.6 million from $5.2 million
at March 31, 2020 compared to $5.4 million at December 31, 2019
and, coupled with loan growth noted previously, resulted in the
nonperforming loans to total loans ratio decreasing 3 bps to 0.54%
at June 30, 2020 compared to 0.57% at December 31, 2019. The
Company elected the practical expedients available in the CARES Act
and interagency guidance and does not consider any of the loans
that were modified through forbearance agreements as nonperforming
loans.
- The following table provides details of loans in forbearance
and the forbearance end date as of June 30, 2020.
|
|
Number of
Loans |
Amount |
% of Portfolio |
|
(Dollars in thousands) |
|
|
|
| Real Estate: |
|
|
|
|
Residential |
|
|
|
|
July 2020 |
108 |
|
$ |
15,333 |
|
|
|
August 2020 |
41 |
|
5,912 |
|
|
|
September 2020 |
12 |
|
2,272 |
|
|
|
October 2020 |
2 |
|
136 |
|
|
|
Total Residential |
163 |
|
23,653 |
|
6.9 |
% |
| |
|
|
|
|
Commercial |
|
|
|
|
July 2020 |
70 |
|
64,039 |
|
|
|
August 2020 |
31 |
|
25,497 |
|
|
|
September 2020 |
7 |
|
8,714 |
|
|
|
October 2020 |
2 |
|
2,378 |
|
|
|
November 2020 |
1 |
|
4,489 |
|
|
|
Total Commercial |
111 |
|
105,117 |
|
30.0 |
% |
| |
|
|
|
|
Construction |
|
|
|
|
July 2020 |
3 |
|
10,494 |
|
|
|
August 2020 |
2 |
|
4,726 |
|
|
|
September 2020 |
1 |
|
298 |
|
|
|
Total Construction |
6 |
|
15,518 |
|
26.6 |
% |
| |
|
|
|
| Commercial and Industrial |
|
|
|
|
July 2020 |
42 |
|
10,300 |
|
|
|
August 2020 |
32 |
|
5,180 |
|
|
|
September 2020 |
2 |
|
217 |
|
|
|
Total Commercial and Industrial |
76 |
|
15,697 |
|
10.5 |
% |
| |
|
|
|
| Consumer |
|
|
|
|
July 2020 |
124 |
|
2,493 |
|
|
|
August 2020 |
39 |
|
857 |
|
|
|
September 2020 |
7 |
|
97 |
|
|
|
Total Consumer |
170 |
|
3,447 |
|
2.9 |
% |
| |
|
|
|
| Other |
|
|
|
|
July 2020 |
1 |
|
2,504 |
|
11.2 |
% |
|
Total Loans in Forbearance |
527 |
|
$ |
165,936 |
|
15.9 |
% |
- The following table sets forth
details at June 30, 2020 of industries considered at higher risk to
be negatively impacted by the COVID-19 pandemic:
| |
Industry |
|
Forbearance |
| |
WeightedAverageRiskRating
(1) |
Industry Amount |
As a Percent of
Total Risk Based
Capital |
As a Percent of
Loan Class |
|
Number of
Loans |
WeightedAverageRiskRating
(1) |
Forbearance Amount |
As a Percent of
Industry |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Commercial Real Estate - Owner
Occupied: |
|
|
|
|
|
|
|
|
|
|
Retail |
3.6 |
$ |
27,829 |
|
23.8 |
% |
7.9 |
% |
|
11 |
3.4 |
$ |
2,516 |
|
9.0 |
% |
|
Office Space |
3.7 |
10,646 |
|
9.1 |
|
3.0 |
|
|
6 |
4.0 |
2,801 |
|
26.3 |
|
|
Oil and Gas |
3.2 |
3,160 |
|
2.7 |
|
0.9 |
|
|
1 |
3.0 |
622 |
|
19.7 |
|
|
Restaurants |
3.4 |
1,034 |
|
0.9 |
|
0.3 |
|
|
4 |
3.4 |
404 |
|
39.1 |
|
| |
|
|
|
|
|
|
|
|
|
| Commercial Real Estate -
Nonowner Occupied: |
|
|
|
|
|
|
|
|
|
|
Retail |
3.7 |
54,489 |
|
46.5 |
|
15.5 |
|
|
12 |
4.0 |
20,227 |
|
37.1 |
|
|
Multifamily |
3.8 |
58,585 |
|
50.0 |
|
16.7 |
|
|
12 |
3.8 |
17,474 |
|
29.8 |
|
|
Office Space |
4.0 |
43,102 |
|
36.8 |
|
12.3 |
|
|
7 |
4.8 |
12,998 |
|
30.2 |
|
|
Hotels |
4.9 |
25,085 |
|
21.4 |
|
7.2 |
|
|
10 |
5.0 |
20,558 |
|
82.0 |
|
|
Senior Housing |
3.7 |
8,212 |
|
7.0 |
|
2.3 |
|
|
1 |
4.0 |
4,008 |
|
48.8 |
|
|
Oil and Gas |
3.7 |
7,871 |
|
6.7 |
|
2.2 |
|
|
— |
— |
— |
|
— |
|
|
Restaurants |
3.5 |
4,785 |
|
4.1 |
|
1.4 |
|
|
5 |
3.0 |
1,520 |
|
31.8 |
|
| |
|
|
|
|
|
|
|
|
|
| Construction - Commercial Real
Estate: |
|
|
|
|
|
|
|
|
|
|
Retail |
4.0 |
7,789 |
|
6.7 |
|
13.4 |
|
|
1 |
4.0 |
7,109 |
|
91.3 |
|
|
Multifamily |
4.0 |
3,080 |
|
2.6 |
|
5.3 |
|
|
— |
— |
— |
|
— |
|
|
Office Space |
4.0 |
9,011 |
|
7.7 |
|
15.5 |
|
|
— |
— |
— |
|
— |
|
|
Hotels |
4.4 |
4,760 |
|
4.1 |
|
8.2 |
|
|
1 |
5.0 |
1,788 |
|
37.6 |
|
|
Senior Housing |
4.0 |
7,321 |
|
6.3 |
|
12.6 |
|
|
— |
— |
— |
|
— |
|
|
Oil and Gas |
4.0 |
1,572 |
|
1.3 |
|
2.7 |
|
|
— |
— |
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
| Commercial and
Industrial: |
|
|
|
|
|
|
|
|
|
|
Senior Housing |
3.0 |
4,552 |
|
3.9 |
|
3.1 |
|
|
— |
— |
— |
|
— |
|
|
Oil and Gas |
3.6 |
6,259 |
|
5.3 |
|
4.2 |
|
|
11 |
3.6 |
3,175 |
|
50.7 |
|
| |
|
|
|
|
|
|
|
|
|
| Total: |
|
|
|
|
|
|
|
|
|
|
Retail |
3.7 |
90,107 |
|
77.0 |
|
|
|
24 |
3.9 |
29,852 |
|
|
|
Multifamily |
3.8 |
61,665 |
|
52.7 |
|
|
|
12 |
3.8 |
17,474 |
|
|
|
Office Space |
3.9 |
62,759 |
|
53.6 |
|
|
|
13 |
4.7 |
15,799 |
|
|
|
Hotels |
4.8 |
29,845 |
|
25.5 |
|
|
|
11 |
5.0 |
22,346 |
|
|
|
Senior Housing |
3.7 |
20,085 |
|
17.2 |
|
|
|
1 |
4.0 |
4,008 |
|
|
|
Oil and Gas |
3.6 |
18,862 |
|
16.1 |
|
|
|
12 |
3.5 |
3,797 |
|
|
|
Restaurants |
3.5 |
5,819 |
|
5.0 |
|
|
|
9 |
3.1 |
1,924 |
|
|
|
Total High Risk Industries |
3.9 |
$ |
289,142 |
|
247.0 |
|
|
|
82 |
4.3 |
$ |
95,200 |
|
|
(1) Loan risk rating of 1-4 is considered a
pass-rated credit, 5 is special mention, 6 is substandard, 7 is
doubtful and 8 is loss.
- At June 30, 2020, out of approximately 128 loans totaling $22.7
million with a forbearance period ending on or prior to June 30,
2020, six loans totaling $5.9 million requested an additional one-
to three-month forbearance. These loans were comprised of three
residential loans, two commercial real estate loans, which were
both hotels, and one consumer loan totaling $493,000, $5.3 million
and $12,000, respectively.
- As of July 22, 2020, out of the 348 loans totaling $105.2
million with a forbearance period ending in July 2020, five loans
totaling $510,000 requested additional forbearance - one
residential, one commercial real estate, one commercial and
industrial and two consumer loans totaling $280,000, $79,000,
$123,000 and $28,000, respectively.
Net income for the six months ended June
30, 2020 was $3.7 million compared to $5.9 million for the six
months ended June 30, 2019. This was a decrease of $2.2
million, or 37.7%. Diluted earnings per share for the six
months ended June 30, 2020 was $0.68 compared to $1.08 for the six
months ended June 30, 2019.
- Net interest income decreased $285,000, or 1.3% to $20.9
million for the six months ended June 30, 2020 compared to $21.1
million for the six months ended June 30, 2019.
- Interest and dividend income decreased $909,000, or 3.6%, to
$24.1 million for the six months ended June 30, 2020 compared to
$25.0 million the six months ended June 30, 2019. Although average
loans increased $80.1 million, the loan yield for the six months
ended June 30, 2020 decreased 35 bps compared to the six months
ended June 30, 2019. The current period loan yield was
significantly impacted by the 150 bp decline in the Wall Street
Journal Prime Rate in March 2020, which resulted in immediate
decrease in interest rates on adjustable rate loans linked to that
index. In addition, PPP loans decreased the loan yield 4 bps in the
current period. The Bank continued to accrue and recognize interest
income on loans in forbearance due to expectation that borrowers
will resume payment at the end of forbearance and collectibility of
the interest income is not in question. With the majority of loans
exiting forbearance in the third quarter, the Bank will evaluate
whether continuing to accrue interest is prudent on a loan-by-loan
or industry basis. Approximately $105.2 million, or 63.4% of loans
in forbearance are scheduled to end forbearance as of July 2020 and
return to their normal payment schedule.
- Interest income on taxable investment securities decreased
$618,000, or 22.4% to $2.1 million for the six months ended June
30, 2020 compared to $2.8 million for the six months ended June 30,
2019 driven by a $51.9 million decrease in average investment
security balance primarily from significant calls of U.S.
government agency securities in a declining interest rate
environment.
- Interest from other interest-earning assets, which primarily
consist of interest-earning cash, decreased $370,000, or 53.5% for
the six months ended June 30, 2020 compared to the six months ended
June 30, 2019 even though average balances increased $31.2 million
primarily related to funds received from calls of U.S. government
agency securities. The impact on interest income was primarily due
to declines on interest rates earned on deposits at other financial
institutions as noted by the 201 bp difference for respective
periods.
- Interest expense on deposits decreased $557,000, or 15.7%, to
$3.0 million for the six months ended June 30, 2020 compared to
$3.5 million for the six months ended June 30, 2019. While average
interest-bearing deposits increased $16.0 million, interest rate
declines for all products driven by pandemic-related interest rate
cuts and efforts to control pricing resulted in a 15 bp decrease in
average cost compared to the six months ended June 30,
2019.
- The pandemic, which led to state-wide shelter in place orders
and mandatory closures of all but essential business has resulted
in a dramatic increase in unemployment and recessionary economic
conditions in the current year. Based on evaluation of the current
macroeconomic conditions, the qualitative factors used in the
allowance for loan loss analysis related to economic trends and
industry conditions, specifically because of vulnerable industries
such as hospitality, oil and gas, retail and restaurants, were
adjusted for these circumstances and resulted in a $2.8 million
provision for loan losses for the six months ended June 30, 2020,
compared to $375,000 for the six months ended June 30, 2019.
- Noninterest income increased $241,000, or 5.6%, to $4.5 million
for the six months ended June 30, 2020, compared to $4.3 million
for the six months ended June 30, 2019. This was primarily due to a
$489,000 net gain on sales of investment securities in the current
period to harvest gains on higher-interest mortgage-backed
securities that were paying down quicker than expected compared to
a net loss of $53,000 in the prior period. In addition, there were
$568,000 of gains on sales of loans in the current period compared
to $142,000 in the prior period, primarily due to increased
mortgage loan production from refinances, which were sold to reduce
interest rate risk on lower yielding, long-term assets. Insurance
commissions increased $162,000 in the current period compared to
the prior period due an increase in both commercial and personal
line polices.This was partially offset by a $374,000 decrease in
other (loss) income as a result of an increase in amortization on
mortgage servicing rights combined with a $269,000 temporary
impairment on mortgage servicing rights recognized in the current
period due to a decline in the interest rate environment that has
caused increased prepayment speeds and resulted in a decrease in
fair value of the serviced mortgage portfolio. In addition, service
fees decreased $118,000 to $1.1 million in the current period,
compared to $1.2 million in the prior period due to waiver of fees
and decrease in customer usage from the pandemic. Additionally, the
Company’s marketable equity securities, which are primarily
comprised of bank stocks, reflected a decline of $410,000 for the
current period primarily from the impact of COVID-19 on the stock
market.
- Noninterest expense increased $397,000, or 2.2% to $18.1
million for the six months ended June 30, 2020 compared to $17.7
million for the six months ended June 30, 2019.
- Salaries and employee benefits decreased $86,000 for the six
months ended June 30, 2020 compared to the six months ended June
30, 2019. The current period was impacted by a first quarter 2020,
$407,000 one-time payment that offset employee benefits from health
insurance claims exceeding our stop-loss limit for the 2019 plan
year and change from a self-funded to a fully insured plan. Final
calculation of the stop loss payment was completed 90 days after
the end of the plan year. Also the Company benefited from deferred
employee-related loan origination costs associated with PPP loans,
which were partially offset by the Community Bank Cares premium pay
during the pandemic. Additionally, the Company recognized
approximately $236,000 of one-time payments related to the CEO
transition in the six months ended June 30, 2020.
- Contracted services increased $307,000 to $940,000 for the
current period compared to $633,000 for the prior period ended June
30, 2019, primarily due to temporary employees hired to assist with
PPP loan processing and consultants used to assist in
infrastructure improvements. In the first quarter of 2020,
contracted services were impacted by $116,000 in consulting fees
associated with the search for a new CEO.
- Equipment expense decreased $100,000 to $481,000 for the six
months ended June 30, 2020 compared to $581,000 for the six months
ended June 30, 2019 as the result of decrease in depreciation and
repairs and maintenance.
- Data processing increased $97,000 to $885,000 for the six
months ended June 30, 2020 compared to $788,000 for the six months
ended June 30, 2019 primarily due to technology investments.
- Legal fees and professional fees increased $65,000 to $406,000
for the six months ended June 30, 2020 compared to $341,000 for the
six month ended June 30, 2019 due to fees associated with the CEO
transition in the first quarter.
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.
Although we believe that these non-GAAP financial measures enhance
the understanding of our business and performance, they should not
be considered an alternative to GAAP or considered to be more
important than financial results determined in accordance with
GAAP, nor are they necessarily comparable with non-GAAP measures
which may be presented by other companies. Where non-GAAP financial
measures are used, the comparable GAAP financial measure, as well
as the reconciliation to the comparable GAAP financial measure, can
be found herein.
The interest income on interest-earning assets,
net interest rate spread and net interest margin are presented on a
fully tax-equivalent (“FTE”) basis. The FTE basis adjusts for the
tax benefit of income on certain tax-exempt loans and securities
using the federal statutory income tax rate of 21 percent. We
believe the presentation of net interest income on a FTE basis
ensures comparability of net interest income arising from both
taxable and tax-exempt sources and is consistent with industry
practice.
The following table reconciles net interest
income, net interest spread and net interest margin on a FTE basis
for the periods indicated:
|
|
Three Months Ended |
| |
June 30, 2020 |
March 31, 2020 |
June 30, 2019 |
|
(Dollars in thousands) |
|
|
|
| |
|
|
|
| Interest Income per
Consolidated Statement of Income (GAAP) |
$ |
11,727 |
|
$ |
12,329 |
|
$ |
12,669 |
|
| Adjustment to FTE Basis |
59 |
|
53 |
|
69 |
|
|
Interest Income (FTE) (Non-GAAP) |
11,786 |
|
12,382 |
|
12,738 |
|
| Interest Expense per
Consolidated Statement of Income |
1,406 |
|
1,796 |
|
1,964 |
|
|
Net Interest Income (FTE) (Non-GAAP) |
$ |
10,380 |
|
$ |
10,586 |
|
$ |
10,774 |
|
|
|
|
|
|
| Net Interest Rate Spread
(GAAP) |
3.00 |
% |
3.34 |
% |
3.36 |
% |
| Adjustment to FTE Basis |
0.12 |
|
0.01 |
|
0.03 |
|
|
Net Interest Rate Spread (FTE) (Non-GAAP) |
3.12 |
|
3.35 |
|
3.39 |
|
|
|
|
|
|
| Net Interest Margin
(GAAP) |
3.18 |
% |
3.55 |
% |
3.59 |
% |
| Adjustment to FTE Basis |
0.12 |
|
0.02 |
|
0.03 |
|
|
Net Interest Margin (FTE) (Non-GAAP) |
3.30 |
|
3.57 |
|
3.62 |
|
Tangible book value per common share is a
non-GAAP measure and is calculated based on tangible common equity
divided by period-end common shares outstanding. Tangible common
equity to tangible assets is a non-GAAP measure and is calculated
based on tangible common equity divided by tangible assets. We
believe these non-GAAP measures serve as useful tools to help
evaluate the strength and discipline of the Company's capital
management strategies and as an additional, conservative measure of
the Company’s total value.
| |
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
|
(Dollars in thousands, except share and per share data) |
|
|
|
|
|
| |
|
|
|
|
|
| Assets (GAAP) |
$ |
1,407,152 |
|
|
$ |
1,313,173 |
|
|
$ |
1,321,537 |
|
| Goodwill and Other Intangible
Assets, Net |
(37,888 |
) |
|
(38,420 |
) |
|
(38,952 |
) |
|
Tangible Assets |
$ |
1,369,264 |
|
|
$ |
1,274,753 |
|
|
$ |
1,282,585 |
|
|
|
|
|
|
|
|
| Stockholders' Equity
(GAAP) |
$ |
152,392 |
|
|
$ |
151,525 |
|
|
$ |
151,097 |
|
| Goodwill and Other Intangible
Assets, Net |
(37,888 |
) |
|
(38,420 |
) |
|
(38,952 |
) |
|
Tangible Common Equity or Tangible Book Value |
$ |
114,504 |
|
|
$ |
113,105 |
|
|
$ |
112,145 |
|
|
|
|
|
|
|
|
| Tangible Common Equity to
Tangible Assets (Non-GAAP) |
8.4 |
% |
|
8.9 |
% |
|
8.7 |
% |
|
|
|
|
|
|
|
| Common Shares Outstanding |
5,393,712 |
|
|
5,393,712 |
|
|
5,463,828 |
|
| |
|
|
|
|
|
|
Tangible Book Value per Common Share (Non-GAAP) |
$ |
21.23 |
|
|
$ |
20.97 |
|
|
$ |
20.52 |
|
Allowance for loan losses to total loans,
excluding PPP loans is a non-GAAP measure that serves as a useful
measurement to evaluate the allowance for loan losses without the
impact of SBA guaranteed loans.
| |
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
|
(Dollars in thousands) |
|
|
|
|
|
| |
|
|
|
|
|
| Allowance for Loan Losses |
$ |
12,648 |
|
|
$ |
12,322 |
|
|
$ |
9,867 |
|
| |
|
|
|
|
|
| Total Loans |
1,042,159 |
|
|
$ |
974,650 |
|
|
$ |
952,496 |
|
| PPP Loans |
(70,028 |
) |
|
— |
|
|
— |
|
|
Total Loans, Excluding PPP Loans |
$ |
972,131 |
|
|
$ |
974,650 |
|
|
$ |
952,496 |
|
|
|
|
|
|
|
|
|
Allowance for Loan Losses to Total Loans, Excluding PPP Loans |
1.30 |
% |
|
1.26 |
% |
|
1.04 |
% |
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 16 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,
general and local economic conditions, the scope and duration of
economic contraction as a result of the COVID-19 pandemic and its
effects on the Company’s business and that of the Company’s
customers, changes in market interest rates, deposit flows, demand
for loans, real estate values and competition, competitive products
and pricing, the ability of our customers to make scheduled loan
payments, loan delinquency rates and trends, our ability to manage
the risks involved in our business, our ability to control costs
and expenses, inflation, market and monetary fluctuations, changes
in federal and state legislation and regulation applicable to our
business, actions by our competitors, and other factors that may be
disclosed in the Company’s periodic reports as filed with the
Securities and Exchange Commission. These risks and uncertainties
should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements. The Company
assumes no obligation to update any forward-looking statements
except as may be required by applicable law or regulation.
Given the numerous unknowns and risks that are
heavily weighted to the downside, our forward-looking statements
are subject to the risk that conditions will be substantially
different than we are currently expecting. If efforts to contain
COVID-19 are unsuccessful and shelter-in-place orders last longer
than expected, the recession would be much longer and much more
severe and damaging. Ineffective fiscal stimulus, or an extended
delay in implementing it, are also major risks. The deeper the
recession and the longer it lasts, the more it will damage consumer
fundamentals and sentiment. This could both prolong the recession
and make any recovery weaker. Similarly, the recession could damage
business fundamentals. As a result, the outbreak and its
consequences, including responsive measures to manage it, have had
and are likely to continue to have an adverse effect, possibly
materially, on our business and financial performance by adversely
affecting, possibly materially, the demand and profitability of our
products and services, the valuation of assets and our ability to
meet the needs of our customers.
Contact:Barron P. McCune, Jr.President and Chief
Executive OfficerPhone: (724) 225-2400Fax: (724) 225-4903
|
SELECTED CONSOLIDATED FINANCIAL INFORMATION |
|
| (Dollars in
thousands, except share and per share data) |
|
|
|
|
|
|
| |
(Unaudited) |
|
|
|
| Selected
Financial Condition Data |
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
|
|
Assets |
$ |
1,407,152 |
|
|
$ |
1,313,173 |
|
|
|
$ |
1,321,537 |
|
|
| Cash and Cash
Equivalents |
131,403 |
|
|
78,099 |
|
|
|
80,217 |
|
|
| Securities
Available-for-Sale |
148,648 |
|
|
171,411 |
|
|
|
197,385 |
|
|
| Loans |
|
|
|
|
|
|
|
Real Estate: |
|
|
|
|
|
|
|
Residential |
344,782 |
|
|
346,864 |
|
|
|
347,766 |
|
|
|
Commercial |
350,506 |
|
|
354,374 |
|
|
|
351,360 |
|
|
|
Construction |
58,295 |
|
|
50,017 |
|
|
|
35,605 |
|
|
|
Commercial and Industrial |
149,085 |
|
|
80,721 |
|
|
|
85,586 |
|
|
|
Consumer |
117,145 |
|
|
121,494 |
|
|
|
113,637 |
|
|
|
Other |
22,346 |
|
|
21,180 |
|
|
|
18,542 |
|
|
|
Total Loans |
1,042,159 |
|
|
974,650 |
|
|
|
952,496 |
|
|
|
Allowance for Loan Losses |
(12,648 |
) |
|
(12,322 |
) |
|
|
(9,867 |
) |
|
|
Loans, Net |
1,029,511 |
|
|
962,328 |
|
|
|
942,629 |
|
|
| Premises
and Equipment, Net |
21,818 |
|
|
22,037 |
|
|
|
22,282 |
|
|
| Goodwill |
28,425 |
|
|
28,425 |
|
|
|
28,425 |
|
|
| Intangible
Assets, Net |
9,463 |
|
|
9,995 |
|
|
|
10,527 |
|
|
| |
|
|
|
|
|
|
| Deposits |
|
|
|
|
|
|
|
Non-Interest Bearing Demand Deposits |
341,180 |
|
|
267,369 |
|
|
|
267,152 |
|
|
|
NOW Accounts |
237,343 |
|
|
229,601 |
|
|
|
232,099 |
|
|
|
Money Market Accounts |
184,726 |
|
|
177,597 |
|
|
|
182,428 |
|
|
|
Savings Accounts |
229,388 |
|
|
220,484 |
|
|
|
216,924 |
|
|
|
Time Deposits |
201,303 |
|
|
211,589 |
|
|
|
219,756 |
|
|
|
Total Deposits |
1,193,940 |
|
|
1,106,640 |
|
|
|
1,118,359 |
|
|
|
|
|
|
|
|
|
|
| Short-Term
Borrowings |
42,349 |
|
|
34,967 |
|
|
|
30,571 |
|
|
| Other
Borrowings |
11,000 |
|
|
11,000 |
|
|
|
14,000 |
|
|
| |
|
|
|
|
|
|
| Stockholders’
Equity |
152,392 |
|
|
151,525 |
|
|
|
151,097 |
|
|
|
|
(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
| Selected
Operating Data |
June 30, 2020 |
|
March 31, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
|
| Interest
and Dividend Income |
$ |
11,727 |
|
|
$ |
12,329 |
|
|
$ |
12,669 |
|
|
$ |
24,056 |
|
|
$ |
24,965 |
|
|
| Interest
Expense |
1,406 |
|
|
1,796 |
|
|
1,964 |
|
|
3,202 |
|
|
3,826 |
|
|
| Net
Interest Income |
10,321 |
|
|
10,533 |
|
|
10,705 |
|
|
20,854 |
|
|
21,139 |
|
|
| Provision for Loan
Losses |
300 |
|
|
2,500 |
|
|
350 |
|
|
2,800 |
|
|
375 |
|
|
| Net
Interest Income After Provision for Loan Losses |
10,021 |
|
|
8,033 |
|
|
10,355 |
|
|
18,054 |
|
|
20,764 |
|
|
| Noninterest
Income: |
|
|
|
|
|
|
|
|
|
|
|
Service Fees |
487 |
|
|
605 |
|
|
617 |
|
|
1,092 |
|
|
1,210 |
|
|
|
Insurance Commissions |
1,113 |
|
|
1,283 |
|
|
1,083 |
|
|
2,396 |
|
|
2,234 |
|
|
|
Other Commissions |
188 |
|
|
110 |
|
|
78 |
|
|
298 |
|
|
195 |
|
|
|
Net Gain on Sales of Loans |
441 |
|
|
127 |
|
|
50 |
|
|
568 |
|
|
142 |
|
|
|
Net Gain (Loss) on Sales of Investment Securities |
489 |
|
|
— |
|
|
7 |
|
|
489 |
|
|
(53 |
) |
|
|
Change in Fair Value of Marketable Equity Securities |
28 |
|
|
(438 |
) |
|
109 |
|
|
(410 |
) |
|
129 |
|
|
|
Net Gain on Purchased Tax Credits |
16 |
|
|
15 |
|
|
9 |
|
|
31 |
|
|
18 |
|
|
|
Net Gain on Disposal of Fixed Assets |
— |
|
|
17 |
|
|
8 |
|
|
17 |
|
|
2 |
|
|
|
Income from Bank-Owned Life Insurance |
138 |
|
|
139 |
|
|
134 |
|
|
277 |
|
|
266 |
|
|
|
Other (Loss) Income |
(252 |
) |
|
14 |
|
|
70 |
|
|
(238 |
) |
|
136 |
|
|
|
Total Noninterest Income |
2,648 |
|
|
1,872 |
|
|
2,165 |
|
|
4,520 |
|
|
4,279 |
|
|
| Noninterest
Expense: |
|
|
|
|
|
|
|
|
|
|
|
Salaries and Employee Benefits |
4,828 |
|
|
4,731 |
|
|
4,708 |
|
|
9,559 |
|
|
9,645 |
|
|
|
Occupancy |
699 |
|
|
733 |
|
|
663 |
|
|
1,432 |
|
|
1,422 |
|
|
|
Equipment |
224 |
|
|
257 |
|
|
285 |
|
|
481 |
|
|
581 |
|
|
|
Data Processing |
460 |
|
|
425 |
|
|
380 |
|
|
885 |
|
|
788 |
|
|
|
FDIC Assessment |
163 |
|
|
158 |
|
|
175 |
|
|
321 |
|
|
363 |
|
|
|
PA Shares Tax |
333 |
|
|
275 |
|
|
249 |
|
|
608 |
|
|
517 |
|
|
|
Contracted Services |
562 |
|
|
378 |
|
|
361 |
|
|
940 |
|
|
633 |
|
|
|
Legal and Professional Fees |
171 |
|
|
235 |
|
|
160 |
|
|
406 |
|
|
341 |
|
|
|
Advertising |
155 |
|
|
183 |
|
|
220 |
|
|
338 |
|
|
337 |
|
|
|
Other Real Estate Owned (Income) |
(1 |
) |
|
(17 |
) |
|
(31 |
) |
|
(18 |
) |
|
(94 |
) |
|
|
Amortization of Intangible Assets |
532 |
|
|
532 |
|
|
532 |
|
|
1,064 |
|
|
1,064 |
|
|
|
Other |
945 |
|
|
1,113 |
|
|
1,095 |
|
|
2,058 |
|
|
2,080 |
|
|
|
Total Noninterest Expense |
9,071 |
|
|
9,003 |
|
|
8,797 |
|
|
18,074 |
|
|
17,677 |
|
|
| Income
Before Income Tax Expense |
3,598 |
|
|
902 |
|
|
3,723 |
|
|
4,500 |
|
|
7,366 |
|
|
| Income Tax
Expense |
695 |
|
|
129 |
|
|
744 |
|
|
824 |
|
|
1,462 |
|
|
|
Net Income |
$ |
2,903 |
|
|
$ |
773 |
|
|
$ |
2,979 |
|
|
$ |
3,676 |
|
|
$ |
5,904 |
|
|
| |
(Unaudited) |
| |
Three Months Ended |
|
Six Months Ended |
| Per Common
Share Data |
June 30, 2020 |
|
March 31, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
| Dividends
Per Common Share |
$ |
0.24 |
|
|
$ |
0.24 |
|
|
$ |
0.24 |
|
|
$ |
0.48 |
|
|
$ |
0.48 |
|
| Earnings Per
Common Share - Basic |
0.54 |
|
|
0.14 |
|
|
0.55 |
|
|
0.68 |
|
|
1.09 |
|
| Earnings Per
Common Share - Diluted |
0.54 |
|
|
0.14 |
|
|
0.55 |
|
|
0.68 |
|
|
1.08 |
|
| |
|
|
|
|
|
|
|
|
|
| Weighted Average
Common Shares Outstanding - Basic |
5,393,712 |
|
|
5,431,199 |
|
|
5,433.537 |
|
|
5,412,456 |
|
|
5,433,198 |
|
| Weighted Average
Common Shares Outstanding - Diluted |
5,393,770 |
|
|
5,456,867 |
|
|
5,444.824 |
|
|
5,423,770 |
|
|
5,448,040 |
|
| |
(Unaudited) |
|
|
| |
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
| Common
Shares Outstanding |
5,393,712 |
|
|
5,393,712 |
|
|
5,463,828 |
|
| Book Value Per
Common Share |
$ |
28.25 |
|
|
$ |
28.09 |
|
|
$ |
27.65 |
|
| Tangible Book
Value per Common Share (1) |
21.23 |
|
|
20.97 |
|
|
20.52 |
|
| Tangible Common
Equity to Tangible Assets (1) |
8.4 |
% |
|
8.9 |
% |
|
8.7 |
% |
| |
(Unaudited) |
| |
Three Months Ended |
|
Six Months Ended |
| Selected Financial
Ratios (2) |
June 30, 2020 |
|
March 31, 2020 |
|
June 30, 2019 |
|
June 30, 2020 |
|
June 30, 2019 |
|
Return on Average Assets |
0.85 |
% |
|
0.24 |
% |
|
0.91 |
% |
|
0.55 |
% |
|
0.92 |
% |
| Return on Average Equity |
7.65 |
|
|
2.04 |
|
|
8.32 |
|
|
4.84 |
|
|
8.42 |
|
| Average Interest-Earning
Assets to Average Interest-Bearing Liabilities |
140.72 |
|
|
135.06 |
|
|
135.62 |
|
|
137.91 |
|
|
134.34 |
|
| Average Equity to Average
Assets |
11.08 |
|
|
11.67 |
|
|
10.98 |
|
|
11.36 |
|
|
10.92 |
|
| Net Interest Rate Spread
(3) |
3.12 |
|
|
3.35 |
|
|
3.39 |
|
|
3.23 |
|
|
3.40 |
|
| Net Interest Margin (3) |
3.30 |
|
|
3.57 |
|
|
3.62 |
|
|
3.43 |
|
|
3.63 |
|
| Net (Recoveries) Charge-Offs
to Average Loans |
(0.01 |
) |
|
0.02 |
|
|
0.03 |
|
|
— |
|
|
0.05 |
|
| Efficiency Ratio |
69.94 |
|
|
72.58 |
|
|
68.35 |
|
|
71.23 |
|
|
69.55 |
|
| |
(Unaudited) |
|
|
| Asset
Quality Ratios |
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
| Allowance
for Loan Losses to Total Loans (4) |
1.21 |
% |
|
1.26 |
% |
|
1.04 |
% |
| Allowance for Loan
Losses to Total Loans, Excluding PPP Loans (1) |
1.30 |
|
|
1.26 |
|
|
1.04 |
|
| Allowance for Loan
Losses to Nonperforming Loans (4) (5) |
226.59 |
|
|
235.51 |
|
|
183.33 |
|
| Allowance for Loan
Losses to Noncurrent Loans (4) (6) |
390.73 |
|
|
406.80 |
|
|
315.95 |
|
| Delinquent and
Nonaccrual Loans to Total Loans (6) (7) |
0.39 |
|
|
0.89 |
|
|
0.89 |
|
| Nonperforming
Loans to Total Loans (5) |
0.54 |
% |
|
0.54 |
|
|
0.57 |
% |
| Noncurrent Loans
to Total Loans (6) |
0.31 |
|
|
0.31 |
|
|
0.33 |
|
| Nonperforming
Assets to Total Assets (8) |
0.41 |
|
|
0.42 |
|
|
0.42 |
|
| Capital
Ratios (9) |
June 30, 2020 |
|
March 31, 2020 |
|
December 31, 2019 |
| Common
Equity Tier 1 Capital (to Risk Weighted Assets) |
11.90 |
% |
|
11.60 |
% |
|
11.43 |
% |
| Tier 1 Capital (to
Risk Weighted Assets) |
11.90 |
|
|
11.60 |
|
|
11.43 |
|
| Total Capital (to
Risk Weighted Assets) |
13.16 |
|
|
12.85 |
|
|
12.54 |
|
| Tier 1
Leverage (to Adjusted Total Assets) |
7.90 |
|
|
8.23 |
|
|
7.85 |
|
| (1) |
|
Refer to Explanation of Use of
Non-GAAP Financial Measures in this Press Release. |
| (2) |
|
Interim period ratios are
calculated on an annualized basis. |
| (3) |
|
Fully taxable-equivalent (FTE)
yield adjustments have been made for tax exempt loan and securities
income utilizing a marginal federal tax rate of 21%. Refer to
Explanation of Use of Non-GAAP Financial Measures in this Press
Release. |
| (4) |
|
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. |
| (5) |
|
Nonperforming loans consist of
nonaccrual loans, accruing loans that are 90 days or more past due,
and troubled debt restructured loans. |
| (6) |
|
Noncurrent loans consist of
nonaccrual loans and accruing loans that are 90 days or more past
due. |
| (7) |
|
Delinquent loans consist of
accruing loans that are 30 days or more past due. |
| (8) |
|
Nonperforming assets consist of
nonperforming loans and other real estate owned. |
| (9) |
|
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, 2020 |
|
March 31, 2020 |
|
June 30, 2019 |
|
|
Average Balance |
Interest and Dividends |
Yield / Cost (4) |
|
Average Balance |
Interest and Dividends |
Yield / Cost (4) |
|
Average Balance |
Interest and Dividends |
Yield / Cost (4) |
|
(Dollars in thousands) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
| Interest-Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans, Net |
$ |
1,014,000 |
|
$ |
10,612 |
|
4.21 |
% |
|
$ |
950,661 |
|
$ |
10,796 |
|
4.57 |
% |
|
$ |
906,038 |
|
$ |
10,707 |
|
4.74 |
% |
|
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
137,268 |
|
940 |
|
2.74 |
|
|
158,655 |
|
1,201 |
|
3.03 |
|
|
209,164 |
|
1,442 |
|
2.76 |
|
|
Exempt From Federal Tax |
14,106 |
|
130 |
|
3.69 |
|
|
16,837 |
|
127 |
|
3.02 |
|
|
23,450 |
|
195 |
|
3.33 |
|
|
Marketable Equity Securities |
2,579 |
|
20 |
|
3.10 |
|
|
2,568 |
|
20 |
|
3.12 |
|
|
2,526 |
|
20 |
|
3.17 |
|
|
Other Interest-Earning Assets |
97,033 |
|
84 |
|
0.35 |
|
|
64,608 |
|
238 |
|
1.48 |
|
|
53,479 |
|
374 |
|
2.81 |
|
|
Total Interest-Earning Assets |
1,264,986 |
|
11,786 |
|
3.75 |
|
|
1,193,329 |
|
12,382 |
|
4.17 |
|
|
1,194,657 |
|
12,738 |
|
4.28 |
|
| Noninterest-Earning
Assets |
113,176 |
|
|
|
|
114,056 |
|
|
|
|
113,447 |
|
|
|
|
Total Assets |
$ |
1,378,162 |
|
|
|
|
$ |
1,307,385 |
|
|
|
|
$ |
1,308,104 |
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
| Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Demand Deposits |
$ |
236,312 |
|
141 |
|
0.24 |
% |
|
$ |
226,482 |
|
267 |
|
0.47 |
% |
|
$ |
216,190 |
|
295 |
|
0.55 |
% |
|
Savings |
227,470 |
|
35 |
|
0.06 |
|
|
218,328 |
|
90 |
|
0.17 |
|
|
217,426 |
|
149 |
|
0.27 |
|
|
Money Market |
182,656 |
|
187 |
|
0.41 |
|
|
180,982 |
|
249 |
|
0.55 |
|
|
178,561 |
|
263 |
|
0.59 |
|
|
Time Deposits |
205,847 |
|
942 |
|
1.84 |
|
|
215,449 |
|
1,075 |
|
2.01 |
|
|
221,126 |
|
1,117 |
|
2.03 |
|
|
Total Interest-Bearing Deposits |
852,285 |
|
1,305 |
|
0.62 |
|
|
841,241 |
|
1,681 |
|
0.80 |
|
|
833,303 |
|
1,824 |
|
0.88 |
|
|
Borrowings |
46,642 |
|
101 |
|
0.87 |
|
|
42,321 |
|
115 |
|
1.09 |
|
|
47,560 |
|
140 |
|
1.18 |
|
|
Total Interest-Bearing Liabilities |
898,927 |
|
1,406 |
|
0.63 |
|
|
883,562 |
|
1,796 |
|
0.82 |
|
|
880,863 |
|
1,964 |
|
0.89 |
|
| Noninterest-Bearing Demand
Deposits |
317,738 |
|
|
|
|
261,504 |
|
|
|
|
273,753 |
|
|
|
| Other Liabilities |
8,815 |
|
|
|
|
9,797 |
|
|
|
|
9,872 |
|
|
|
|
Total Liabilities |
1,225,480 |
|
|
|
|
1,154,863 |
|
|
|
|
1,164,488 |
|
|
|
| Stockholders' Equity |
152,682 |
|
|
|
|
152,522 |
|
|
|
|
143,616 |
|
|
|
|
Total Liabilities and Stockholders' Equity |
$ |
1,378,162 |
|
|
|
|
$ |
1,307,385 |
|
|
|
|
$ |
1,308,104 |
|
|
|
|
Net Interest Income (FTE) (Non-GAAP) |
|
10,380 |
|
|
|
|
10,586 |
|
|
|
|
10,774 |
|
|
|
Net Interest Rate Spread (FTE)(Non-GAAP) (1) |
|
|
3.12 |
% |
|
|
|
3.35 |
% |
|
|
|
3.39 |
% |
| Net Interest-Earning Assets
(2) |
366,059 |
|
|
|
|
309,767 |
|
|
|
|
313,794 |
|
|
|
|
Net Interest Margin (FTE) (Non-GAAP) (3) |
|
|
3.30 |
|
|
|
|
3.57 |
|
|
|
|
3.62 |
|
| Return on Average Assets |
|
|
0.85 |
|
|
|
|
0.24 |
|
|
|
|
0.91 |
|
| Return on Average Equity |
|
|
7.65 |
|
|
|
|
2.04 |
|
|
|
|
8.32 |
|
| Average Equity to Average
Assets |
|
|
11.08 |
|
|
|
|
11.67 |
|
|
|
|
10.98 |
|
| Average
Interest-Earning Assets to Average Interest-Bearing
Liabilities |
|
|
140.72 |
|
|
|
|
135.06 |
|
|
|
|
135.62 |
|
| (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. |
|
AVERAGE BALANCES AND YIELDS |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
Six Months Ended |
| |
June 30, 2020 |
|
June 30, 2019 |
|
|
Average Balance |
|
Interest and Dividends |
|
Yield / Cost (4) |
|
Average Balance |
|
Interest and Dividends |
|
Yield / Cost (4) |
|
(Dollars in thousands) (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
| Assets: |
|
|
|
|
|
|
|
|
|
|
|
| Interest-Earning Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans, Net |
$ |
982,331 |
|
|
$ |
21,408 |
|
|
4.38 |
% |
|
$ |
902,183 |
|
|
$ |
21,174 |
|
|
4.73 |
% |
|
Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
147,962 |
|
|
2,141 |
|
|
2.89 |
|
|
199,843 |
|
|
2,759 |
|
|
2.76 |
|
|
Exempt From Federal Tax |
15,471 |
|
|
258 |
|
|
3.34 |
|
|
28,106 |
|
|
447 |
|
|
3.18 |
|
|
Marketable Equity Securities |
2,573 |
|
|
40 |
|
|
3.11 |
|
|
2,517 |
|
|
40 |
|
|
3.18 |
|
|
Other Interest-Earning Assets |
80,821 |
|
|
322 |
|
|
0.80 |
|
|
49,617 |
|
|
692 |
|
|
2.81 |
|
|
Total Interest-Earning Assets |
1,229,158 |
|
|
24,169 |
|
|
3.95 |
|
|
1,182,266 |
|
|
25,112 |
|
|
4.28 |
|
| Noninterest-Earning
Assets |
113,616 |
|
|
|
|
|
|
112,727 |
|
|
|
|
|
|
Total Assets |
$ |
1,342,774 |
|
|
|
|
|
|
$ |
1,294,993 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
| Interest-Bearing
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Demand Deposits |
$ |
231,397 |
|
|
408 |
|
|
0.35 |
% |
|
$ |
214,708 |
|
|
570 |
|
|
0.54 |
% |
|
Savings |
222,899 |
|
|
124 |
|
|
0.11 |
|
|
215,283 |
|
|
294 |
|
|
0.28 |
|
|
Money Market |
181,819 |
|
|
436 |
|
|
0.48 |
|
|
181,515 |
|
|
536 |
|
|
0.60 |
|
|
Time Deposits |
210,648 |
|
|
2,018 |
|
|
1.93 |
|
|
219,220 |
|
|
2,143 |
|
|
1.97 |
|
|
Total Interest-Bearing Deposits |
846,763 |
|
|
2,986 |
|
|
0.71 |
|
|
830,726 |
|
|
3,543 |
|
|
0.86 |
|
|
Borrowings |
44,482 |
|
|
216 |
|
|
0.98 |
|
|
49,322 |
|
|
283 |
|
|
1.16 |
|
|
Total Interest-Bearing Liabilities |
891,245 |
|
|
3,202 |
|
|
0.72 |
|
|
880,048 |
|
|
3,826 |
|
|
0.88 |
|
| Noninterest-Bearing Demand
Deposits |
289,621 |
|
|
|
|
|
|
264,160 |
|
|
|
|
|
| Other Liabilities |
9,306 |
|
|
|
|
|
|
9,420 |
|
|
|
|
|
|
Total Liabilities |
1,190,172 |
|
|
|
|
|
|
1,153,628 |
|
|
|
|
|
| Stockholders' Equity |
152,602 |
|
|
|
|
|
|
141,365 |
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
$ |
1,342,774 |
|
|
|
|
|
|
$ |
1,294,993 |
|
|
|
|
|
|
Net Interest Income (FTE) (Non-GAAP) |
|
|
20,967 |
|
|
|
|
|
|
21,286 |
|
|
|
|
Net Interest Rate Spread (FTE) (Non-GAAP) (1) |
|
|
|
|
3.23 |
% |
|
|
|
|
|
3.40 |
% |
| Net Interest-Earning Assets
(2) |
337,913 |
|
|
|
|
|
|
302,218 |
|
|
|
|
|
|
Net Interest Margin (FTE) (Non-GAAP) (3) |
|
|
|
|
3.43 |
|
|
|
|
|
|
3.63 |
|
| Return on Average Assets |
|
|
|
|
0.55 |
|
|
|
|
|
|
0.92 |
|
| Return on Average Equity |
|
|
|
|
4.84 |
|
|
|
|
|
|
8.42 |
|
| Average Equity to Average
Assets |
|
|
|
|
11.36 |
|
|
|
|
|
|
10.92 |
|
| Average
Interest-Earning Assets to Average Interest-Bearing
Liabilities |
|
|
|
|
137.91 |
|
|
|
|
|
|
134.34 |
|
| (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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From Jun 2024 to Jul 2024
CB Financial Services (NASDAQ:CBFV)
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From Jul 2023 to Jul 2024
