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 first quarter 2021
financial results.
Three Months Ended
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
(Dollars in thousands, except per share
data) (Unaudited)
Net Income (Loss) (GAAP)
$
2,845
$
3,079
$
(17,395)
$
2,903
$
773
Excluding Non-Recurring Items (Non-GAAP)
(1)
—
198
19,239
—
—
Adjusted Net Income (Non-GAAP) (1)
$
2,845
$
3,277
$
1,844
$
2,903
$
773
Earnings (Loss) per Common Share - Diluted
(GAAP)
$
0.52
$
0.57
$
(3.22)
$
0.54
$
0.14
Adjusted Earnings per Common Share -
Diluted (Non-GAAP) (1)
$
0.52
$
0.61
$
0.34
$
0.54
$
0.14
(1) Refer to Explanation of Use of Non-GAAP Financial Measures
and reconciliation of net income (loss) and adjusted earnings per
common share - diluted in this Press Release.
2021 First Quarter Financial
Highlights
(Comparisons to three months ended March 31, 2020)
- Net income an increase to $2.8 million compared to
$773,000.
- Earnings per diluted share (EPS) increased to $0.52 from
$0.14.
- Return on average assets of 0.81%, compared to 0.24%.
- Return on average equity of 8.54%, compared to 2.04%.
- Net interest margin decreased to 3.04% from 3.55%.
- Net interest and dividend income was $10.0 million, compared to
$10.5 million.
- Noninterest income increased to $3.2 million from $1.9
million.
(Amounts at March 31, 2021; comparisons to December 31,
2020)
- Total loans including Payroll Protection Program (“PPP) loans
were $1.04 billion, a decrease of $3.1 million.
- Total loans (excluding PPP loans) were $981.3 million, a
decrease of $8.3 million.
- Total deposits were $1.28 billion, an increase of $59.9
million.
- Total assets increased to a record $1.48 billion, compared to
$1.42 billion.
- Book value per share was $24.62, compared to $24.76.
- Tangible book value per share (Non-GAAP) was $21.38, compared
to $21.42.
Branch Optimization and Operational
Efficiency Update
In connection with the previously announced branch
consolidations and the other branch optimization initiatives, CB
anticipates non-recurring pre-tax costs during 2021 in line with
the $6.1 million announced in February. This estimated cost
excludes the impact of any premium from sale of branches, and
assumes no salvage value, lease termination, severance, and other
costs associated with the consolidations or sales; however, the
Company anticipates some recovery of these costs over time. CB
expects an annual reduction in pre-tax operating expenses in 2021
of approximately $1.5 million, along with $3.0 million of ongoing
pre-tax cost savings as a result of the implementation of the
branch optimization initiatives. The Bank also completed a
comprehensive review of its branch network and operating
environment to identify solutions to improve operating performance.
This review prioritized profitability, efficiency, infrastructure
and client experience improvements, automation in operations, and
digital marketing and technology investments.
Dividend Information
The Company’s Board of Directors has declared a $0.24 quarterly
cash dividend per outstanding share of common stock, payable on or
about June 1, 2021, to stockholders of record as of the close of
business on May 21, 2021.
Management Commentary
President and CEO John H. Montgomery stated, “CB reported strong
net income of $2.8 million for the first quarter of 2021, largely
due to higher noninterest income and improvements in asset quality
that included no provisions for loan losses during the period. We
are continuing to focus on improving the franchise value in our
core market area surrounding Southwestern Pennsylvania as CB
remains well positioned for an economic recovery in the region. We
improved our commercial real estate loan growth throughout the past
several periods, while also growing deposits. Over the course of
the year, we intend to invest in our current branch network while
moving forward with a branch optimization strategy that will lead
to continuing efficiency ratio improvements. The investments made
in enhancing our fintech capabilities, including digital and mobile
capabilities, will improve CB’s ability to adapt to changing
customer needs as we emerge from the pandemic conditions of
2020.”
2021 First Quarter Financial
Review
Net Interest and Dividend
Income
Net interest and dividend income decreased $556,000, or 5.3%, to
$10.0 million for the three months ended March 31, 2021 compared to
$10.5 million for the three months ended March 31, 2020.
- Net interest margin (FTE) (Non-GAAP) decreased 52 basis points
(“bps”) to 3.05% for the three months ended March 31, 2021 compared
to 3.57% for the three months ended March 31, 2020. Net interest
margin (GAAP) decreased to 3.04% for the three months ended March
31, 2021 compared to 3.55% for the three months ended March 31,
2020.
- Interest and dividend income decreased $1.3 million, or 10.9%,
to $11.0 million for the three months ended March 31, 2021 compared
to $12.3 million for the three months ended March 31, 2020.
- Interest income on loans decreased $618,000, or 5.7%, to $10.1
million for the three months ended March 31, 2021 compared to $10.8
million for the three months ended March 31, 2020. While average
loans increased $81.2 million compared to the three months ended
March 31, 2020, the average yield decreased 57 bps to 4.00%. PPP
loans decreased loan yield approximately 5 bps but that was offset
by the recognition of $535,000 of net PPP loan origination fees in
the current period. The impact of the accretion of the credit mark
on acquired loan portfolios was $138,000 for the three months ended
March 31, 2021 compared to $76,000 for the three months ended March
31, 2020, or 6 bps in the current period compared to 3 bps in the
prior period.
- Interest income on taxable investment securities decreased
$555,000, or 46.2%, to $646,000 for the three months ended March
31, 2021 compared to $1.2 million for the three months ended March
31, 2020 driven by a $35.8 million decrease in average investment
securities balances and 93 bps decrease in average yield. The
Federal Reserve’s pandemic-driven decision to drop the benchmark
interest rate in 2020 resulted in significant calls of U.S.
government agency securities and paydowns on mortgage-backed
securities in the declining interest rate environment, which were
replaced with lower-yielding securities or maintained in cash.
- Other interest and dividend income, which primarily consists of
interest-bearing cash, decreased $140,000, or 58.8% to $98,000 for
the three months ended March 31, 2021 compared to $238,000 for the
three months ended March 31, 2020. Average other interest-earning
assets increased $97.3 million compared to the three months ended
March 31, 2020 primarily from buildup of cash as a result of
securities activity, PPP loan funds and government stimulus
payments deposited with the Bank, although average yield declined
123 bps due to interest rate cuts on interest-earning cash deposits
held at other financial institutions.
- Interest expense decreased $785,000, or 43.7%, to $1.0 million
for the three months ended March 31, 2021 compared to $1.8 million
for the three months ended March 31, 2020.
- Interest expense on deposits decreased $734,000, or 43.7%, to
$947,000 for the three months ended March 31, 2021 compared to $1.7
million for the three months ended March 31, 2020. While average
interest-earning deposits increased $42.2 million compared to the
three months ended March 31, 2020, interest rate declines for all
products driven by pandemic-related interest rate cuts resulted in
a 37 bp, or 46.0%, decrease in average cost compared to the three
months ended March 31, 2020. In addition, average time deposits and
the related average cost decreased $28.3 million and 41 bps,
respectively.
Provision for Loan Losses
There was no provision for loan losses recorded for the three
months ended March 31, 2021 compared to $2.5 million for the three
months ended March 31, 2020. An $8.3 million decrease in net
reservable loans in the current period, which excludes PPP loans,
and improving economic and industry condition contributed to the
lack of provision in the current period.
Noninterest income
Noninterest income increased $1.3 million, or 69.6%, to $3.2
million for the three months ended March 31, 2021, compared to $1.9
million for the three months ended March 31, 2020. The increase was
largely due to net gains on securities compared to a net loss in
the prior period, as well as an increase in profit-sharing
insurance commissions and a $172,000 recapture of temporary
impairment on mortgage servicing rights.
Noninterest Expense
Noninterest expense increased $392,000, or 4.4%, to $9.4 million
for the three months ended March 31, 2021 compared to $9.0 million
for the three months ended March 31, 2020. The increase is
primarily from contracted services, which includes the engagement
of a third-party workflow optimization expert to assist in
implementing robotic process automations and more effective sales
management designed to improve operational efficiencies in the near
and long-term. In addition, salaries and employee benefits
increased primarily due to the recognition in the prior period of a
$407,000 one-time benefit 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.
Statement of Financial Condition
Review
Assets
Total assets increased $60.1 million, or 4.2%, to $1.48 billion
at March 31, 2021, compared to $1.42 billion at December 31, 2020.
The change is primarily due to an increase in Deposits as further
described below in the Liabilities section.
- Cash and due from banks increased $69.1 million, or 42.9%, to
$230.0 million at March 31, 2021, compared to $160.9 million at
December 31, 2020. The change is primarily due to an increase in
Deposits as further described below in the Liabilities
section.
- Securities decreased $3.2 million, or 2.2%, to $142.2 million
at March 31, 2021, compared to $145.4 million at December 31, 2020.
Current period activity included $11.0 million of paydowns on
mortgage-backed securities, $22.3 million of mortgage-backed
securities and U.S. government agency securities purchases, and
$11.9 million of mortgage-backed securities sales, which resulted
in the recognition of a $225,000 gain on the sale of securities.
The sales recognized gains on higher-interest securities with
faster prepayment speeds. In addition, there was a $3.1 million
decrease in the market value of the debt securities portfolio and a
$222,000 gain in market value in the equity securities portfolio,
which is primarily comprised of bank stocks.
Payroll Protection Program (“PPP”)
Update
- The Small Business Administration reopened the PPP the week of
January 11, 2021 and began accepting applications for both First
Draw and Second Draw PPP Loans. As of March 31, 2021, as part of
this round of PPP, the Bank funded 156 PPP loans totaling $25.0
million with net deferred origination fees of $984,000. Combined
with $19.7 million of loan forgiveness processed in the first
quarter of 2021, total PPP loans increased $5.3 million to $60.4
million at March 31, 2021 compared to $55.1 million at December 31,
2020.
- $1.1 million of net PPP loan origination fees were unearned at
December 31, 2020. Due to activity in the first quarter of 2021,
$1.5 million of net PPP loan origination fees were unearned at
March 31, 2021. $535,000 of net PPP loan origination fees were
earned in the first quarter of 2021 compared to $604,000 for the
three months ended December 31, 2020.
Loans and Credit Quality
- Total loans decreased $3.1 million to $1.04 billion at March
31, 2021. Excluding the impact of PPP loans, organic loan growth
declined $8.3 million.
- The allowance for loan losses was $12.7 million at March 31,
2021 compared to $12.8 million at December 31, 2020. There was no
provision for loan losses in the first quarter. An $8.3 million
decrease in net reservable loans in the current period, which
excludes PPP loans, and improving economic and industry condition
contributed to the lack of provision in the current period. As a
result, the allowance for loan losses to total loans of 1.22% at
March 31, 2021 was comparable to the percentage at December 31,
2020. No allowance was allocated to the PPP loan portfolio. The
allowance for loan losses to total loans, excluding PPP loans, was
1.30% at March 31, 2021 compared to 1.29% at December 31,
2020.
- Net charge-offs for the three months ended March 31, 2021 were
$46,000, or 0.02% of average loans on an annualized basis, . Net
charge-offs for the three months ended March 31, 2020 were $45,000,
or 0.02% of average loans on an annualized basis, . Net charge-offs
were primarily attributable to indirect automobile loans in both
periods.
- Nonperforming loans, which includes nonaccrual loans, accruing
loans past due 90 days or more, and accruing loans that are
considered troubled debt restructurings, were $14.3 million at
March 31, 2021 compared to $14.5 million at December 31, 2020.
Nonperforming loans to total loans ratio was 1.37% at March 31,
2021 compared to 1.39% at December 31, 2020.
- There were 25 loans in forbearance totaling $18.4 million at
March 31, 2021 compared to 31 loans totaling $24.1 million at
December 31, 2020. This includes two commercial real estate loans
totaling $4.6 million and one construction loan totaling $2.0
million that are all secured by hotels, one commercial real estate
loan totaling $5.5 million secured by office space and a business
relationship that rents equipment, supplies and other materials for
events comprised of three commercial real estate loans totaling
$3.3 million, and five commercial and industrial loans totaling
$1.2 million.
Liabilities
Total liabilities increased $60.9 million, or 4.7%, to $1.34
billion at March 31, 2021 compared to $1.28 billion at December 31,
2020.
Deposits
- Deposits increased $59.9 million to $1.28 billion as of March
31, 2021 compared to $1.22 billion at December 31, 2020.
Noninterest bearing demand deposits, NOW accounts and savings
accounts increased $36.6 million, $21.1 million and $11.6 million,
respectively, partially offset by a decrease of $9.3 million in
time deposits. IRS and stimulus-related payments totaled $29.9
million in the current quarter and the impact of the PPP loans that
were originated in the current quarter and the proceeds of which
were initially deposited at the Bank was approximately $23.4
million. Annualized deposit growth rate was 19.6% including PPP
loan deposits and 2.2% without IRS and PPP loan deposits,
representing organic deposit growth. Average total deposits
increased $17.0 million, primarily in noninterest-bearing deposits,
for the three months ended March 31, 2021 compared to the three
months ended December 31, 2020.
Borrowed Funds
- Short-term borrowings increased $4.3 million, or 10.5%, to
$45.4 million at March 31, 2021, compared to $41.1 million at
December 31, 2020. At March 31, 2021 and December 31, 2020,
short-term borrowings were comprised entirely of securities sold
under agreements to repurchase. The increase 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 $2.0 million to
$6.0 million at March 31, 2021 due to a Federal Home Loan Bank
borrowing that matured in the current period.
Stockholders’ Equity
Stockholders’ equity decreased $754,000, or 0.6%, to $133.8
million at March 31, 2021, compared to $134.5 million at December
31, 2020.
Book value per share
Book value per share was $24.62 at March 31, 2021 compared to
$24.76 at December 31, 2020, a decrease of $0.14. Tangible book
value per share (Non-GAAP) decreased $0.04 to $21.38 compared to
$21.42 at December 31, 2020. Refer to “Explanation of Use of
Non-GAAP Financial Measures” at the end of this Press Release.
About CB Financial Services,
Inc.
CB Financial Services, Inc. is the bank holding company for
Community Bank, a Pennsylvania-chartered commercial bank. Community
Bank operates 15 offices in Greene, Allegheny, Washington, Fayette,
and Westmoreland Counties in southwestern Pennsylvania, six 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.
For more information about CB Financial Services, Inc. and
Community Bank, visit our website at www.communitybank.tv.
Statement About Forward-Looking
Statements
Statements contained in this press release that are not
historical facts may constitute forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of
1995 and such forward-looking statements are subject to significant
risks and uncertainties. The Company intends such forward-looking
statements to be covered by the safe harbor provisions contained in
the Act. The Company’s ability to predict results or the actual
effect of future plans or strategies is inherently uncertain.
Factors which could have a material adverse effect on the
operations and future prospects of the Company and its subsidiaries
include, but are not limited to, general and local economic
conditions, the scope and duration of economic contraction as a
result of the COVID-19 pandemic and its effects on the Company’s
business and that of the Company’s customers, changes in market
interest rates, deposit flows, demand for loans, real estate values
and competition, competitive products and pricing, the ability of
our customers to make scheduled loan payments, loan delinquency
rates and trends, our ability to manage the risks involved in our
business, our ability to control costs and expenses, inflation,
market and monetary fluctuations, changes in federal and state
legislation and regulation applicable to our business, actions by
our competitors, and other factors that may be disclosed in the
Company’s periodic reports as filed with the Securities and
Exchange Commission. These risks and uncertainties should be
considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements. The Company
assumes no obligation to update any forward-looking statements
except as may be required by applicable law or regulation.
Given the numerous unknowns and risks that are heavily weighted
to the downside as a result of the COVID-19 pandemic, 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.
CB FINANCIAL SERVICES,
INC.
SELECTED CONSOLIDATED
FINANCIAL INFORMATION
(Dollars in thousands, except share and
per share data) (Unaudited)
Selected Financial Condition
Data
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
Total Assets
$
1,476,821
$
1,416,720
$
1,392,876
$
1,407,152
$
1,313,173
Cash and Due From Banks
230,000
160,911
112,169
131,403
78,099
Securities
142,156
145,400
158,956
148,648
171,411
Loans
Real Estate:
Residential
339,596
344,142
343,955
344,782
346,864
Commercial
370,118
373,555
353,904
350,506
354,374
Construction
77,714
72,600
69,178
58,295
50,017
Commercial and Industrial
128,931
126,813
144,315
149,085
80,721
Consumer
111,650
113,854
117,364
117,145
121,494
Other
13,688
13,789
22,169
22,346
21,180
Total Loans
1,041,697
1,044,753
1,050,885
1,042,159
974,650
Allowance for Loan Losses
(12,725)
(12,771)
(13,780)
(12,648)
(12,322)
Loans, Net
1,028,972
1,031,982
1,037,105
1,029,511
962,328
Premises and Equipment, Net
20,240
20,302
20,439
21,818
22,037
Goodwill
9,732
9,732
9,732
28,425
28,425
Intangible Assets, Net
7,867
8,399
8,931
9,463
9,995
Deposits
Non-Interest Bearing Demand Deposits
377,137
340,569
335,287
341,180
267,369
Interest Bearing Demand Accounts
280,929
259,870
245,850
237,343
229,601
Money Market Accounts
198,975
199,029
188,958
184,726
177,597
Savings Accounts
246,725
235,088
232,691
229,388
220,484
Time Deposits
180,697
190,013
196,250
201,303
211,589
Total Deposits
1,284,463
1,224,569
1,199,036
1,193,940
1,106,640
Short-Term Borrowings
45,352
41,055
42,061
42,349
34,967
Other Borrowings
6,000
8,000
11,000
11,000
11,000
Stockholders’ Equity
133,776
134,530
133,299
152,392
151,525
Three Months Ended
Selected Operating Data
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
Interest and Dividend Income
Loans, Including Fees
$
10,146
$
10,833
$
10,709
$
10,577
$
10,764
Securities:
Taxable
646
725
753
940
1,201
Tax-Exempt
78
78
79
106
106
Dividends
20
20
19
20
20
Other Interest and Dividend Income
98
99
96
84
238
Total Interest and Dividend Income
10,988
11,755
11,656
11,727
12,329
Interest Expense
Deposits
947
1,036
1,150
1,305
1,681
Short-Term Borrowings
23
25
28
39
45
Other Borrowings
41
60
62
62
70
Total Interest Expense
1,011
1,121
1,240
1,406
1,796
Net Interest and Dividend Income
9,977
10,634
10,416
10,321
10,533
Provision for Loan Losses
—
—
1,200
300
2,500
Net Interest and Dividend Income After
Provision for Loan Losses
9,977
10,634
9,216
10,021
8,033
Noninterest Income:
Service Fees
546
560
554
487
605
Insurance Commissions
1,595
1,403
1,079
1,113
1,283
Other Commissions
165
105
76
188
110
Net Gain on Sales of Loans
86
388
435
441
127
Net Gain (Loss) on Securities
447
213
(59)
517
(438)
Net Gain on Purchased Tax Credits
18
16
15
16
15
Net (Loss) Gain on Disposal of Fixed
Assets
—
(13)
(65)
—
17
Income from Bank-Owned Life Insurance
137
140
140
138
139
Other Income (Loss)
180
(34)
(2)
(252)
14
Total Noninterest Income
3,174
2,778
2,173
2,648
1,872
Noninterest Expense:
Salaries and Employee Benefits
4,894
5,126
5,124
4,828
4,731
Occupancy
710
606
759
699
733
Equipment
266
234
220
224
257
Data Processing
518
476
482
460
425
FDIC Assessment
250
344
172
163
158
PA Shares Tax
265
350
355
333
275
Contracted Services
687
577
531
562
378
Legal and Professional Fees
189
185
161
171
235
Advertising
140
178
148
155
183
Other Real Estate Owned (Income)
(38)
(39)
(12)
(1)
(17)
Amortization of Intangible Assets
532
532
532
532
532
Goodwill Impairment
—
—
18,693
—
—
Writedown of Fixed Assets
—
240
884
—
—
Other
982
916
919
945
1,113
Total Noninterest Expense
9,395
9,725
28,968
9,071
9,003
Income (Loss) Before Income Tax Expense
(Benefit)
3,756
3,687
(17,579)
3,598
902
Income Tax Expense (Benefit)
911
608
(184)
695
129
Net Income (Loss)
$
2,845
$
3,079
$
(17,395)
$
2,903
$
773
Three Months Ended
Per Common Share Data
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
Dividends Per Common Share
$
0.24
$
0.24
$
0.24
$
0.24
$
0.24
Earnings (Loss) Per Common Share -
Basic
0.52
0.57
(3.22)
0.54
0.14
Earnings (Loss) Per Common Share -
Diluted
0.52
0.57
(3.22)
0.54
0.14
Adjusted Earnings Per Common Share -
Diluted (Non-GAAP) (1)
0.52
0.61
0.34
0.54
0.14
Weighted Average Common Shares Outstanding
- Basic
5,434,374
5,404,874
5,395,342
5,393,712
5,431,199
Weighted Average Common Shares Outstanding
- Diluted
5,436,881
5,406,068
5,395,342
5,393,770
5,456,867
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
Common Shares Outstanding
5,434,374
5,434,374
5,398,712
5,393,712
5,393,712
Book Value Per Common Share
$
24.62
$
24.76
$
24.69
$
28.25
$
28.09
Tangible Book Value per Common Share
(Non-GAAP) (1)
21.38
21.42
21.23
21.23
20.97
Stockholders’ Equity to Assets
9.1
%
9.5
%
9.6
%
10.8
%
11.5
%
Tangible Common Equity to Tangible Assets
(Non-GAAP) (1)
8.0
8.3
8.3
8.4
8.9
Three Months Ended
Selected Financial Ratios (2)
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
Return on Average Assets
0.81
%
0.87
%
(4.90)
%
0.85
%
0.24
%
Adjusted Return on Average Assets
(Non-GAAP) (1)
0.81
0.92
0.52
0.85
0.24
Return on Average Equity
8.54
9.13
(45.13)
7.65
2.04
Adjusted Return on Average Equity
(Non-GAAP) (1)
8.54
9.72
4.78
7.65
2.04
Average Interest-Earning Assets to Average
Interest-Bearing Liabilities
142.98
141.58
141.98
140.72
135.06
Average Equity to Average Assets
9.48
9.49
10.85
11.08
11.67
Net Interest Rate Spread
2.91
3.07
3.03
3.10
3.34
Net Interest Rate Spread (FTE) (Non-GAAP)
(1)
2.92
3.08
3.05
3.12
3.35
Net Interest Margin
3.04
3.21
3.19
3.28
3.55
Net Interest Margin (FTE) (Non-GAAP)
(1)
3.05
3.22
3.21
3.30
3.57
Net Charge-offs (Recoveries) to Average
Loans
0.02
0.39
0.03
(0.01)
0.02
Efficiency Ratio
71.44
72.51
230.11
69.94
72.58
Adjusted Efficiency Ratio (Non-GAAP)
(1)
70.06
68.06
69.78
68.58
66.18
Asset Quality Ratios
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
Allowance for Loan Losses to Total Loans
(3)
1.22
%
1.22
%
1.31
%
1.21
%
1.26
%
Allowance for Loan Losses to Total Loans,
Excluding PPP Loans
(Non-GAAP) (1) (3)
1.30
1.29
1.41
1.30
1.26
Allowance for Loan Losses to Nonperforming
Loans (3) (4)
89.29
88.15
91.84
226.59
235.51
Allowance for Loan Losses to Noncurrent
Loans (3) (5)
118.08
117.20
114.01
390.73
406.80
Delinquent and Nonaccrual Loans to Total
Loans (5) (6)
1.18
1.50
1.23
0.39
0.89
Nonperforming Loans to Total Loans (4)
1.37
1.39
1.43
0.54
0.54
Noncurrent Loans to Total Loans (5)
1.03
1.04
1.15
0.31
0.31
Nonperforming Assets to Total Assets
(7)
0.98
1.04
1.09
0.41
0.42
Capital Ratios (8)
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
Common Equity Tier 1 Capital (to Risk
Weighted Assets)
11.85
%
11.79
%
11.62
%
11.90
%
11.60
%
Tier 1 Capital (to Risk Weighted
Assets)
11.85
11.79
11.62
11.90
11.60
Total Capital (to Risk Weighted
Assets)
13.10
13.04
12.88
13.16
12.85
Tier 1 Leverage (to Adjusted Total
Assets)
7.87
7.81
7.63
7.90
8.23
(1) Refer to Explanation of Use of Non-GAAP Financial Measures
in this Press Release for the calculation of the measure and
reconciliation to the most comparable GAAP measure. (2) Interim
period ratios are calculated on an annualized basis. (3) 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. (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. (6) Delinquent
loans consist of accruing loans that are 30 days or more past due.
(7) Nonperforming assets consist of nonperforming loans and other
real estate owned. (8) 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
March 31, 2021
December 31, 2020
September 30, 2020
June 30, 2020
March 31, 2020
Average Balance
Interest and Dividends
Yield / Cost
(4)
Average Balance
Interest and Dividends
Yield / Cost
(4)
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
$
1,031,853
$
10,168
4.00
%
$
1,032,942
$
10,860
4.18
%
$
1,035,426
$
10,744
4.13
%
$
1,014,000
$
10,612
4.21
%
$
950,661
$
10,796
4.57
%
Debt Securities
Taxable
122,883
646
2.10
133,026
725
2.18
123,332
753
2.44
137,268
940
2.74
158,655
1,201
3.03
Exempt From Federal Tax
12,943
96
2.97
13,006
96
2.95
13,054
97
2.97
14,106
130
3.69
16,837
127
3.02
Equity Securities
2,632
20
3.04
2,612
20
3.06
2,580
19
2.95
2,579
20
3.10
2,568
20
3.12
Other Interest-Earning Assets
161,871
98
0.25
137,000
99
0.29
123,171
96
0.31
97,033
84
0.35
64,608
238
1.48
Total Interest-Earning Assets
1,332,182
11,028
3.36
1,318,586
11,800
3.56
1,297,563
11,709
3.59
1,264,986
11,786
3.75
1,193,329
12,382
4.17
Noninterest-Earning Assets
92,550
94,262
115,567
113,176
114,056
Total Assets
$
1,424,732
$
1,412,848
$
1,413,130
$
1,378,162
$
1,307,385
Liabilities and Stockholders'
Equity
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits
$
259,065
77
0.12
%
$
252,521
83
0.13
%
$
245,977
99
0.16
$
236,312
141
0.24
$
226,482
267
0.47
%
Savings
239,850
32
0.05
232,647
32
0.05
230,567
32
0.06
227,470
35
0.06
218,328
90
0.17
Money Market
197,395
98
0.20
198,983
131
0.26
185,644
140
0.30
182,656
187
0.41
180,982
249
0.55
Time Deposits
187,114
740
1.60
193,194
790
1.63
198,184
879
1.76
205,847
942
1.84
215,449
1,075
2.01
Total Interest-Bearing Deposits
883,424
947
0.43
877,345
1,036
0.47
860,372
1,150
0.53
852,285
1,305
0.62
841,241
1,681
0.80
Short-Term Borrowings
Securities Sold Under Agreements to
Repurchase
41,094
23
0.23
43,468
25
0.23
42,512
28
0.26
35,642
39
0.44
29,541
45
0.61
Other Borrowings
7,200
41
2.31
10,543
60
2.26
11,000
62
2.24
11,000
62
2.27
12,780
70
2.20
Total Interest-Bearing Liabilities
931,718
1,011
0.44
931,356
1,121
0.48
913,884
1,240
0.54
898,927
1,406
0.63
883,562
1,796
0.82
Noninterest-Bearing Demand Deposits
349,108
338,223
337,441
317,738
261,504
Other Liabilities
8,869
9,176
8,477
8,815
9,797
Total Liabilities
1,289,695
1,278,755
1,259,802
1,225,480
1,154,863
Stockholders' Equity
135,037
134,093
153,328
152,682
152,522
Total Liabilities and Stockholders'
Equity
$
1,424,732
$
1,412,848
$
1,413,130
$
1,378,162
$
1,307,385
Net Interest Income (FTE)
(Non-GAAP) (5)
10,017
10,679
10,469
10,380
10,586
Net Interest-Earning Assets (1)
400,464
387,230
383,679
366,059
309,767
Net Interest Rate Spread (FTE)
(Non-GAAP) (2) (5)
2.92
%
3.08
%
3.05
3.12
3.35
%
Net Interest Margin (FTE)
(Non-GAAP) (3)(5)
3.05
3.22
3.21
3.30
3.57
(1) Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities. (2) 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. (3) Net interest margin represents
net interest income divided by average total interest-earning
assets. (4) Annualized. (5) Refer to Explanation and Use of
Non-GAAP Financial Measures in this Press Release for the
calculation of the measure and reconciliation to the most
comparable GAAP measure.
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.
Non-GAAP adjusted items impacting the Company's financial
performance are identified to assist investors in analyzing the
Company’s operating results on the same basis as that applied by
management. Non-GAAP adjusted items reflect non-cash charges
related to goodwill impairment and a writedown on fixed assets from
the Monessen branch closure.
Three Months Ended
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
(Dollars in thousands, except share and
per share data) (Unaudited)
Net Income (Loss) (GAAP)
$
2,845
$
3,079
$
(17,395)
$
2,903
$
773
Non-Cash Charges:
Goodwill Impairment
—
—
18,693
—
—
Writedown on Fixed Assets
—
240
884
—
—
Tax Effect
—
(42)
(338)
—
—
Adjusted Net Income (Non-GAAP)
$
2,845
$
3,277
$
1,844
$
2,903
$
773
Weighted-Average Diluted Common Shares and
Common Stock Equivalents Outstanding
5,436,881
5,406,068
5,395,342
5,393,770
5,456,867
Earnings (Loss) per Common Share - Diluted
(GAAP)
$
0.52
$
0.57
$
(3.22)
$
0.54
$
0.14
Goodwill Impairment
—
—
3.46
—
—
Writedown on Fixed Assets
—
0.04
0.16
—
—
Tax Effect
—
(0.01)
(0.06)
—
—
Adjusted Earnings per Common Share -
Diluted (Non-GAAP)
$
0.52
$
0.61
$
0.34
$
0.54
$
0.14
Net Income (Loss) (GAAP) (Numerator)
$
2,845
$
3,079
$
(17,395)
$
2,903
$
773
Annualization Factor
4.06
3.98
3.98
4.02
4.02
Average Assets (Denominator)
1,424,732
1,412,848
1,413,130
1,378,162
1,307,385
Return on Average Assets (GAAP)
0.81
%
0.87
%
(4.90)
%
0.85
%
0.24
%
Adjusted Net Income (Non-GAAP)
(Numerator)
$
2,845
$
3,277
$
1,844
$
2,903
$
773
Annualization Factor
4.06
3.98
3.98
4.02
4.02
Average Assets (Denominator)
1,424,732
1,412,848
1,413,130
1,378,162
1,307,385
Adjusted Return on Average Assets
(Non-GAAP)
0.81
%
0.92
%
0.52
%
0.85
%
0.24
%
Three Months Ended
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
(Dollars in thousands) (Unaudited)
Net Income (Loss) (GAAP) (Numerator)
$
2,845
$
3,079
$
(17,395)
$
2,903
$
773
Annualization Factor
4.06
3.98
3.98
4.02
4.02
Average Equity (Denominator)
135,037
134,093
153,328
152,682
152,522
Return on Average Equity (GAAP)
8.54
%
9.13
%
(45.13)
%
7.65
%
2.04
%
Adjusted Net Income (Loss) (GAAP)
(Numerator)
$
2,845
$
3,079
$
(17,395)
$
2,903
$
773
Annualization Factor
4.06
3.98
3.98
4.02
4.02
Average Equity (Denominator)
135,037
134,093
153,328
152,682
152,522
Adjusted Return on Average Equity
(Non-GAAP)
8.54
%
9.72
%
4.78
%
7.65
%
2.04
%
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.
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
(Dollars in thousands, except share and
per share data) (Unaudited)
Assets (GAAP)
$
1,476,821
$
1,416,720
$
1,392,876
$
1,407,152
$
1,313,173
Goodwill and Other Intangible Assets,
Net
(17,599)
(18,131)
(18,663)
(37,888)
(38,420)
Tangible Assets (Non-GAAP) (Numerator)
$
1,459,222
$
1,398,589
$
1,374,213
$
1,369,264
$
1,274,753
Stockholders' Equity (GAAP)
$
133,776
$
134,530
$
133,299
$
152,392
$
151,525
Goodwill and Other Intangible Assets,
Net
(17,599)
(18,131)
(18,663)
(37,888)
(38,420)
Tangible Common Equity or Tangible Book
Value (Non-GAAP) (Denominator)
$
116,177
$
116,399
$
114,636
$
114,504
$
113,105
Stockholders’ Equity to Assets (GAAP)
9.1
%
9.5
%
9.6
%
10.8
%
11.5
%
Tangible Common Equity to Tangible Assets
(Non-GAAP)
8.0
%
8.3
%
8.3
%
8.4
%
8.9
%
Common Shares Outstanding
(Denominator)
5,434,374
5,434,374
5,398,712
5,393,712
5,393,712
Book Value per Common Share (GAAP)
$
24.62
$
24.76
$
24.69
$
28.25
$
28.09
Tangible Book Value per Common Share
(Non-GAAP)
$
21.38
$
21.42
$
21.23
$
21.23
$
20.97
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
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
(Dollars in thousands) (Unaudited)
Interest Income per Consolidated Statement
of Operations (GAAP)
$
10,988
$
11,755
$
11,656
$
11,727
$
12,329
Adjustment to FTE Basis
40
45
53
59
53
Interest Income (FTE) (Non-GAAP)
11,028
11,800
11,709
11,786
12,382
Interest Expense per Consolidated
Statement of Operations (GAAP)
1,011
1,121
1,240
1,406
1,796
Net Interest Income (FTE) (Non-GAAP)
$
10,017
$
10,679
$
10,469
$
10,380
$
10,586
Net Interest Rate Spread (GAAP)
2.91
%
3.07
%
3.03
%
3.10
%
3.34
%
Adjustment to FTE Basis
0.01
0.01
0.02
0.02
0.01
Net Interest Rate Spread (FTE)
(Non-GAAP)
2.92
3.08
3.05
3.12
3.35
Net Interest Margin (GAAP)
3.04
%
3.21
%
3.19
%
3.28
%
3.55
%
Adjustment to FTE Basis
0.01
0.01
0.02
0.02
0.02
Net Interest Margin (FTE) (Non-GAAP)
3.05
3.22
3.21
3.30
3.57
Adjusted efficiency ratio excludes the effect of certain
non-recurring or non-cash items and represents adjusted noninterest
expense divided by adjusted operating revenue. The Company
evaluates its operational efficiency based on its adjusted
efficiency ratio and believes it provides additional perspective on
its ongoing performance as well as peer comparability.
Three Months Ended
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
(Dollars in thousands) (Unaudited)
Noninterest expense (GAAP)
$
9,395
$
9,725
$
28,968
$
9,071
$
9,003
Net Interest and Dividend Income
(GAAP)
9,977
10,634
10,416
10,321
10,533
Noninterest Income (GAAP)
3,174
2,778
2,173
2,648
1,872
Operating Revenue (GAAP)
13,151
13,412
12,589
12,969
12,405
Efficiency Ratio (GAAP)
71.44
%
72.51
%
230.11
%
69.94
%
72.58
%
Noninterest expense (GAAP)
$
9,395
$
9,725
$
28,968
$
9,071
$
9,003
Less:
Other Real Estate Owned (Income)
(38)
(39)
(12)
(1)
(17)
Amortization of Intangible Assets
532
532
532
532
532
Goodwill Impairment
—
—
18,693
—
—
Writedown on Fixed Assets
—
240
884
—
—
Adjusted Noninterest Expense
(Non-GAAP)
$
8,901
$
8,992
$
8,871
$
8,540
$
8,488
Net Interest and Dividend Income
(GAAP)
9,977
10,634
10,416
10,321
10,533
Noninterest Income (GAAP)
3,174
2,778
2,173
2,648
1,872
Less:
Net Gain (Loss) on Securities
447
213
(59)
517
(438)
Net (Loss) Gain on Disposal of Fixed
Assets
—
(13)
(65)
—
17
Adjusted Noninterest Income (Non-GAAP)
2,727
2,578
2,297
2,131
2,293
Adjusted Operating Revenue (Non-GAAP)
12,704
13,212
12,713
12,452
12,826
Adjusted Efficiency Ratio (Non-GAAP)
70.06
%
68.06
%
69.78
%
68.58
%
66.18
%
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.
3/31/21
12/31/20
9/30/20
6/30/20
3/31/20
(Dollars in thousands) (Unaudited)
Allowance for Loan Losses
$
12,725
$
12,771
$
13,780
$
12,648
$
12,322
Total Loans
1,041,697
$
1,044,753
1,050,885
$
1,042,159
$
974,650
PPP Loans
(60,380)
(55,096)
(71,028)
(70,028)
—
Total Loans, Excluding PPP Loans
(Non-GAAP)
$
981,317
$
989,657
$
979,857
$
972,131
$
974,650
Allowance for Loan Losses to Total Loans,
Excluding
PPP Loans (Non-GAAP)
1.30
%
1.29
%
1.41
%
1.30
%
1.26
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210504005732/en/
Company Contact: John H. Montgomery
President and Chief Executive Officer Phone: (724) 225-2400
Investor Relations: Adam Prior,
Senior Vice President The Equity Group Inc. Phone: (212) 836-9606
Email: aprior@equityny.com
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