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CB Financial Services, Inc. Announces Fourth Quarter and Full Year 2022 Financial Results and Declares Quarterly Cash Dividend

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 fourth quarter and 2022 financial results.

 

Three Months Ended

Year Ended

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP)

$

4,152

 

$

3,929

 

$

118

$

3,047

$

6,965

 

$

11,247

 

$

11,570

 

Non-Recurring Items

 

(66

)

 

(310

)

 

157

 

12

 

(4,122

)

 

(208

)

 

(1,053

)

Adjusted Net Income (Non-GAAP) (1)

$

4,086

 

$

3,619

 

$

275

$

3,059

$

2,843

 

$

11,039

 

$

10,517

 

 

 

 

 

 

 

 

 

Earnings per Common Share - Diluted (GAAP)

$

0.81

 

$

0.77

 

$

0.02

$

0.58

$

1.31

 

$

2.18

 

$

2.15

 

Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1)

$

0.80

 

$

0.71

 

$

0.05

$

0.59

$

0.53

 

$

2.14

 

$

1.95

 

(1) Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of adjusted net income and adjusted earnings per common share - diluted in this Press Release.

2022 Fourth Quarter Financial Highlights

(Comparisons to three months ended December 31, 2021 unless otherwise noted)

  • Net income was $4.2 million, compared to net income of $7.0 million. Current period results were driven by net interest margin expansion coupled with a reduction of noninterest expense of $974,000 for the three months ended December 31, 2022 compared to the three months ended December 31, 2021, which benefited from a gain on sale of $5.2 million resulting from the sale of branch locations.
    • Adjusted net income (Non-GAAP) was $4.1 million, compared to $2.8 million.
  • Earnings per diluted common share (EPS) decreased to $0.81 from $1.31.
    • Adjusted earnings per common share - diluted (Non-GAAP) was $0.80, compared to $0.53.
  • Return on average assets (annualized) of 1.16%, compared to 1.87%.
    • Adjusted return on average assets (annualized) (Non-GAAP) of 1.15%, compared to 0.76%.
  • Return on average equity (annualized) of 15.26%, compared to 20.95% (annualized).
    • Adjusted return on average equity (annualized) (Non-GAAP) of 15.01%, compared to 8.55%.
  • Net interest margin (NIM) improved to 3.45% from 2.95%.
  • Net interest and dividend income was $11.9 million, compared to $10.2 million.
  • Noninterest income decreased to $2.4 million, compared to $8.7 million. The prior year period benefited from the recognition of $5.2 million in gain on sales of branches of two branch locations as part of branch optimization initiatives while the current year period included a decrease of income from net gain on sale of loans of $977,000 primarily the result of the sale of a nonperforming commercial real estate loan in the hotel portfolio. In addition, a decrease of $219,000 in insurance commissions was primarily driven by contingency income which resulted from the timing of lock-in amounts recorded and was partially offset by an increase in core business for commercial insurance lines.

(Amounts at December 31, 2022; comparisons to December 31, 2021, unless otherwise noted)

  • Total loans, including Payroll Protection Program (“PPP”) loans, were $1.05 billion, an increase of $29.1 million from $1.02 billion.
    • Total loans held for investment, excluding PPP loans, increased $53.5 million, or 5.4%, to $1.05 billion compared to $996.3 million, and included increases of $24.8 million, or 27.1%, in consumer loans, and $44.7 million, or 15.2%, growth in commercial real estate loans, partially offset by decreases of $40.1 million in construction real estate and $19.0 million in commercial and industrial loans. Total loans held for investment, excluding PPP loans, as of December 31, 2022, increased $7.6 million, or 0.7%, as compared to September 30, 2022. This included increases of $8.5 million, or 13.8%, in commercial and industrial loans, $4.3 million, or 1.0%, in commercial real estate loans, and $2.5 million, or 0.8%, in residential loans, partially offset by decreases of $4.6 million, or 9.2%, in construction loans, and $3.7 million, or 2.4%, in consumer loans.
  • Nonperforming loans to total loans was 0.55%, a decrease of 16 basis points (“bps”), compared to 0.71%.
  • Total deposits were $1.27 billion, an increase of $41.9 million, compared to $1.23 billion.
  • Total assets remained level at $1.43 billion.
  • Book value per share was $21.60, compared to $20.94 as of September 30, 2022 and $25.31 as of December 31, 2021.
    • Tangible book value per share (Non-GAAP) was $19.00, compared to $18.25 as of September 30, 2022 and $22.45 as of December 31, 2021, reflecting impact to Accumulated Other Comprehensive Income from unrealized losses on securities portfolios.

Management Commentary

President and CEO John H. Montgomery stated, “In closing out what was a successful 2022, our fourth quarter results continued to benefit from margin expansion on top of consistent loan growth. Two years ago we undertook a long term strategy that consisted of first driving down our expenses in a durable manner by rationalizing our physical branch footprint while also working to make sure our operations were optimized and efficient. This effort set the stage for the reduced the non-interest expenses we enjoyed throughout 2022. With our branch optimization largely completed, in 2022 we turned our attention to driving growth through smart additions of key leadership on both the retail and commercial sides of our business. Those investments helped drive growth in our loan portfolio through 2022 which coupled with rising interest rates to yield growth in our net interest income.”

Mr. Montgomery continued, “We remain watchful with respect to the overall economic climate as the Federal Reserve continues to work to rein in inflation while not tipping the country into a recession. As I have noted in the past, our credit team possesses a wealth of experience, including demonstrated success during the Great Financial Crisis just over a dozen years ago. With that experience, we are confident in our ability to navigate whatever macroeconomic headwinds we face.”

Mr. Montgomery concluded, “Continuing our commitment to CB shareholders, we increased our regular quarterly dividend to $0.25 per share. In addition, we repurchased 4,620 shares during the fourth quarter under the current $10.0 million share repurchase program announced earlier in 2022. We remain well-capitalized with the ability to support growth along with these shareholder-friendly actions.”

Dividend Information

The Company’s Board of Directors has approved a 4.2% increase in the regular quarterly cash dividend by declaring a $0.25 quarterly cash dividend per outstanding share of common stock, payable on or about February 28, 2023, to stockholders of record as of the close of business on February 15, 2023.

Stock Repurchase Program

On April 21, 2022, CB announced a program to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. Based on the Company’s closing stock price at January 23, 2023, the repurchase program, if fully completed, would encompass 430,906 shares, or approximately 8.4% of the shares currently outstanding.

2022 Fourth Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income increased $1.6 million, or 16.0%, to $11.9 million for the three months ended December 31, 2022 compared to $10.2 million for the three months ended December 31, 2021.

  • Net interest margin (GAAP) increased to 3.45% for the three months ended December 31, 2022 compared to 2.95% for the three months ended December 31, 2021. Fully Tax Equivalent (“FTE”) Net interest margin (Non-GAAP) increased 50 bps to 3.46% for the three months ended December 31, 2022 compared to 2.96% for the three months ended December 31, 2021.
  • Interest and dividend income increased $2.9 million, or 26.4%, to $13.9 million for the three months ended December 31, 2022 compared to $11.0 million for the three months ended December 31, 2021.
    • Interest income on loans increased $1.9 million, or 19.5%, to $11.8 million for the three months ended December 31, 2022 compared to $9.9 million for the three months ended December 31, 2021. The average balance of loans increased $29.9 million to $1.03 billion from $1.00 billion and the average yield increased 62 bps to 4.54% compared to 3.92%. Interest and fee income on PPP loans was $22,000 for the three months ended December 31, 2022 and didn’t impact loan yield, compared to $391,000 for the three months ended December 31, 2021, which contributed 4 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $61,000 for the three months ended December 31, 2022 compared to $83,000 for the three months ended December 31, 2021, or 2 bps in the current period compared to 3 bps in the prior period.
    • Interest income on taxable investment securities increased $108,000, or 12.5%, to $974,000 for the three months ended December 31, 2022 compared to $866,000 for the three months ended December 31, 2021 driven by a $11.6 million increase in average balance partially coupled with a 11 bps increase in average yield.
  • Interest expense increased $1.3 million, or 171.7%, to $2.0 million for the three months ended December 31, 2022 compared to $732,000 for the three months ended December 31, 2021.
    • Interest expense on deposits increased $1.2 million, or 184.7%, to $1.8 million for the three months ended December 31, 2022 compared to $636,000 for the three months ended December 31, 2021. While average interest-earning deposit balances decreased $7.2 million, or 0.8%, to $887.7 million as of December 31, 2022 compared to $894.8 million as of December 31, 2021, rising interest rates led to the repricing of higher-cost demand and money market deposits and resulted in a 53 bps, or 188.0%, increase in average cost compared to the three months ended December 31, 2021. In addition, the average balance of time deposits and the related average cost decreased $38.2 million and 5 bps, respectively. These decreases are partially offset by an increase in average other borrowings of $8.1 million or 85.8% to $17.6 million as of December 31, 2022 compared to $9.5 million as of December 31, 2021, which was driven by the issuance of subordinate debt of $15.0 million in late December of 2021, and outstanding for the entire quarter ended December 31, 2022.

Provision for Loan Losses

There was no provision for loan losses for the three months ended December 31, 2022 or for the three months ended December 31, 2021.

Noninterest income

Noninterest income decreased $6.3 million, or 72.8%, to $2.4 million for the three months ended December 31, 2022, compared to $8.7 million for the three months ended December 31, 2021. The decrease was primarily related to non-recurring prior period recognition of $5.2 million gain on sale of branches as a result of branch optimization initiatives and $897,000 due to the sale of a nonperforming commercial real estate loan in the hotel portfolio. During the quarter, there was a $219,000 decrease in insurance commissions. The decrease in insurance commissions was primarily driven by contingency income which resulted from the timing of lock-in amounts received and core business including commercial and personal insurance lines.

Noninterest Expense

Noninterest expense decreased $974,000, or 9.8%, to $9.0 million for the three months ended December 31, 2022 compared to $10.0 million for the three months ended December 31, 2021. Salaries and benefits decreased $556,000 to $4.6 million and contracted services decreased $728,000 to $405,000 for the three months ended December 31, 2022 compared to $1.1 million for the three months ended December 31, 2021. This was a result of branch optimization initiatives completed in the prior year. These decreases were partially offset by an increase in occupancy expenses of $198,000.

Statement of Financial Condition Review

Assets

Total assets decreased $16.5 million, or 1.16%, to $1.41 billion at both December 31, 2022, and December 31, 2021.

  • Cash and due from banks decreased $16.0 million, or 13.3%, to $103.7 million at December 31, 2022, compared to $119.7 million at December 31, 2021.
  • Securities decreased $34.9 million, or 15.5%, to $190.1 million at December 31, 2022, compared to $225.0 million at December 31, 2021. The Securities balance was primarily impacted by a $32.3 million decrease in the market value of the debt securities portfolio, primarily due to the increase in market interest rates. The current year included $26.8 million of purchases, and $29.2 million of pay downs. The purchases were made to earn a higher yield on excess cash. In addition, there was $168,000 decrease in the market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program Update

  • PPP loans decreased $24.4 million to $126,000 at December 31, 2022 compared to $24.5 million at December 31, 2021.
  • $5,000 of net PPP loan origination fees were unearned at December 31, 2022 compared to $678,000 at December 31, 2021. $22,000 of net PPP loan origination fees were earned in the three months ended December 31, 2022 compared to $117,000 for the three months ended September 30, 2022.

Loans and Credit Quality

  • Total loans held for investment increased $29.1 million, or 2.85%, to $1.05 billion at December 31, 2022 compared to $1.02 billion at December 31, 2021. Excluding the net decline of $24.4 million in PPP loans in the current period, loans increased $53.5 million or 5.4%.
  • The allowance for loan losses was $12.8 million at December 31, 2022 and $11.6 million at December 31, 2021. As a result, the allowance for loan losses to total loans was 1.22% at December 31, 2022 compared to 1.13% at December 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.22% at December 31, 2022 compared to 1.16% at December 31, 2021. The change in the allowance for loan losses was primarily due to adjustments to historical loss factors and changes in qualitative factors in particular economic and industry conditions since December 31, 2021.
  • Net charge-offs for the three months ended December 31, 2022 were $35,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the three months ended December 31, 2021 were $74,000, or 0.03% of average loans on an annualized basis. Net charge-offs for the year ended December 31, 2022 were $2.5 million, or 0.25% of average loans on an annualized basis. Net charge-offs for the year ended December 31, 2021 were $64,000, and had an immaterial and one hundredth effect on ratios for the period.
  • Nonperforming loans, which includes nonaccrual loans, accruing loans past due 90 days or more, and accruing loans that are considered troubled debt restructurings, were $5.8 million at December 31, 2022 compared to $7.3 million at December 31, 2021. Current nonperforming loans to total loans ratio was 0.55% compared to 0.71% at December 31, 2021.

Other

  • Intangible assets decreased $1.8 million, or 34.0%, to $3.5 million at December 31, 2022 compared to $5.3 million at December 31, 2021 due to amortization expense recognized during the period.
  • Accrued interest receivable and other assets increased $8.3 million, or 64.5% to $21.1 million at December 31, 2022, compared to $12.9 million at December 31, 2021. This change was primarily driven by the increase in market interest rate conditions and an increase in deferred tax assets of $7.5 million.

Liabilities

Total liabilities increased $6.4 million, or 0.5%, to $1.30 billion at December 31, 2022 compared to $1.29 billion at December 31, 2021.

Deposits

  • Total deposits increased $41.9 million to $1.27 billion as of December 31, 2022 compared to $1.23 billion at December 31, 2021, an increase of 3.4%. Interest-bearing and non interest-bearing demand deposits increased $39.3 million and $4.6 million, respectively, partially offset by a decrease in time deposits of $27.6 million. Average total deposits increased $45.9 million, primarily in both interest-bearing and non interest-bearing demand deposits for the three months ended December 31, 2022. The increase in interest-bearing demand deposits is primarily the result of the transition of customer deposits from securities sold under agreements to repurchase product, which are 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.

Borrowed Funds

  • Short-term borrowings decreased $31.2 million, or 79.5%, to $8.1 million at December 31, 2022, compared to $39.3 million at December 31, 2021. At December 31, 2022 and December 31, 2021, short-term borrowings were comprised entirely of securities sold under agreements to repurchase as noted in the above-mentioned deposit section. A portion of this decrease is due to accounts that were transitioned into other deposit products and account for most of the interest-bearing demand deposit increase.

Stockholders’ Equity

Stockholders’ equity decreased $23.0 million, or 17.3%, to $110.2 million at December 31, 2022, compared to $133.1 million at December 31, 2021. Key factors impacting stockholders’ equity included accumulated other comprehensive loss, which increased $25.3 million primarily due to the effect of rising market interest rates on the Company’s investment securities; the payment of $4.9 million in dividends since December 31, 2021; and activity under share repurchase programs, offset by the positive impact of $11.2 million of net income. On February 15, 2022, the Company completed its stock repurchase program that was implemented on June 10, 2021. On April 21, 2022, a new $10 million repurchase program was authorized, with the Company repurchasing 62,178 shares at an average price of $22.47 per share since the inception of the plan. In total, the Company has repurchased $4.8 million since December 31, 2021.

Book value per share

Book value per common share was $21.60 at December 31, 2022 compared to $25.31 at December 31, 2021, a decrease of $3.71.

Tangible book value per common share (Non-GAAP) was $19.00 at December 31, 2022, compared to $22.45 at December 31, 2021, a decrease of $3.45.

Refer to “Explanation of Use of Non-GAAP Financial Measures” at the end of this Press Release.

About CB Financial Services, Inc.

CB Financial Services, Inc. is the bank holding company for Community Bank, a Pennsylvania-chartered commercial bank. Community Bank operates its branch network in southwestern Pennsylvania and West Virginia. Community Bank offers a broad array of retail and commercial lending and deposit services and provides commercial and personal insurance brokerage services through Exchange Underwriters, Inc., its wholly owned subsidiary.

For more information about CB Financial Services, Inc. and Community Bank, visit our website at www.communitybank.tv.

Statement About Forward-Looking Statements

Statements contained in this press release that are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and such forward-looking statements are subject to significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Act. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, general and local economic conditions, 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.

CB FINANCIAL SERVICES, INC.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

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

 

 

 

 

 

 

 

 

 

 

Selected Financial Condition Data

12/31/22

 

9/30/22

 

6/30/22

 

3/31/22

 

12/31/21

Assets

 

 

 

 

 

 

 

 

 

Cash and Due From Banks

$

103,700

 

 

$

122,801

 

 

$

81,121

 

 

$

123,588

 

 

$

119,674

 

Securities

 

190,058

 

 

 

193,846

 

 

 

213,505

 

 

 

231,097

 

 

 

224,974

 

Loans

 

 

 

 

 

 

 

 

 

Real Estate:

 

 

 

 

 

 

 

 

 

Residential

 

330,725

 

 

 

328,248

 

 

 

325,138

 

 

 

317,254

 

 

 

320,798

 

Commercial

 

436,805

 

 

 

432,516

 

 

 

426,105

 

 

 

427,227

 

 

 

392,124

 

Construction

 

44,923

 

 

 

49,502

 

 

 

41,277

 

 

 

54,227

 

 

 

85,028

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

69,918

 

 

 

61,428

 

 

 

62,054

 

 

 

59,601

 

 

 

64,487

 

PPP

 

126

 

 

 

768

 

 

 

3,853

 

 

 

8,242

 

 

 

24,523

 

Consumer

 

146,927

 

 

 

150,615

 

 

 

148,921

 

 

 

143,422

 

 

 

122,152

 

Other

 

20,449

 

 

 

19,865

 

 

 

20,621

 

 

 

10,669

 

 

 

11,684

 

Total Loans

 

1,049,873

 

 

 

1,042,942

 

 

 

1,027,969

 

 

 

1,020,642

 

 

 

1,020,796

 

Allowance for Loan Losses

 

(12,819

)

 

 

(12,854

)

 

 

(12,833

)

 

 

(11,595

)

 

 

(11,582

)

Loans, Net

 

1,037,054

 

 

 

1,030,088

 

 

 

1,015,136

 

 

 

1,009,047

 

 

 

1,009,214

 

Premises and Equipment, Net

 

17,844

 

 

 

18,064

 

 

 

18,196

 

 

 

18,349

 

 

 

18,399

 

Bank-Owned Life Insurance

 

25,893

 

 

 

25,750

 

 

 

25,610

 

 

 

25,468

 

 

 

25,332

 

Goodwill

 

9,732

 

 

 

9,732

 

 

 

9,732

 

 

 

9,732

 

 

 

9,732

 

Intangible Assets, Net

 

3,513

 

 

 

3,959

 

 

 

4,404

 

 

 

4,850

 

 

 

5,295

 

Accrued Interest and Other Assets

 

21,144

 

 

 

21,680

 

 

 

18,757

 

 

 

16,539

 

 

 

12,859

 

Total Assets

$

1,408,938

 

 

$

1,425,920

 

 

$

1,386,461

 

 

$

1,438,670

 

 

$

1,425,479

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

Non-Interest Bearing Demand Deposits

$

390,405

 

 

$

407,107

 

 

$

389,127

 

 

$

400,105

 

 

$

385,775

 

Interest Bearing Demand Accounts

 

311,825

 

 

 

298,755

 

 

 

265,347

 

 

 

280,455

 

 

 

272,518

 

Money Market Accounts

 

209,125

 

 

 

198,715

 

 

 

185,308

 

 

 

192,929

 

 

 

192,125

 

Savings Accounts

 

248,022

 

 

 

250,378

 

 

 

250,226

 

 

 

247,589

 

 

 

239,482

 

Time Deposits

 

109,126

 

 

 

120,879

 

 

 

125,182

 

 

 

129,235

 

 

 

136,713

 

Total Deposits

 

1,268,503

 

 

 

1,275,834

 

 

 

1,215,190

 

 

 

1,250,313

 

 

 

1,226,613

 

 

 

 

 

 

 

 

 

 

 

Short-Term Borrowings

 

8,060

 

 

 

18,108

 

 

 

32,178

 

 

 

39,219

 

 

 

39,266

 

Other Borrowings

 

14,638

 

 

 

17,627

 

 

 

17,618

 

 

 

17,607

 

 

 

17,601

 

Accrued Interest Payable and Other Liabilities

 

7,582

 

 

 

7,645

 

 

 

7,703

 

 

 

9,375

 

 

 

8,875

 

Total Liabilities

 

1,298,783

 

 

 

1,319,214

 

 

 

1,272,689

 

 

 

1,316,514

 

 

 

1,292,355

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

$

110,155

 

 

$

106,706

 

 

$

113,772

 

 

$

122,156

 

 

$

133,124

 

Total Liabilities and Stockholders’ Equity

$

1,408,938

 

 

$

1,425,920

 

 

$

1,386,461

 

 

$

1,438,670

 

 

$

1,425,479

 

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

 

 

 

 

 

 

 

 

 

Three Months Ended

Year Ended

Selected Operating Data

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

Interest and Dividend Income

 

 

 

 

 

 

 

Loans, Including Fees

$

11,835

 

$

10,815

 

$

9,733

 

$

9,551

 

$

9,904

 

$

41,933

 

$

39,704

 

Securities:

 

 

 

 

 

 

 

Taxable

 

974

 

 

985

 

 

988

 

 

905

 

 

866

 

 

3,852

 

 

2,990

 

Tax-Exempt

 

40

 

 

49

 

 

57

 

 

66

 

 

66

 

 

213

 

 

289

 

Dividends

 

28

 

 

21

 

 

20

 

 

22

 

 

21

 

 

91

 

 

84

 

Other Interest and Dividend Income

 

978

 

 

417

 

 

160

 

 

72

 

 

106

 

 

1,627

 

 

490

 

Total Interest and Dividend Income

 

13,855

 

 

12,287

 

 

10,958

 

 

10,616

 

 

10,963

 

 

47,716

 

 

43,557

 

Interest Expense

 

 

 

 

 

 

 

Deposits

 

1,811

 

 

1,079

 

 

604

 

 

530

 

 

636

 

 

4,025

 

 

3,125

 

Short-Term Borrowings

 

7

 

 

19

 

 

18

 

 

19

 

 

26

 

 

63

 

 

98

 

Other Borrowings

 

171

 

 

174

 

 

173

 

 

174

 

 

70

 

 

693

 

 

182

 

Total Interest Expense

 

1,989

 

 

1,272

 

 

795

 

 

723

 

 

732

 

 

4,781

 

 

3,405

 

Net Interest and Dividend Income

 

11,866

 

 

11,015

 

 

10,163

 

 

9,893

 

 

10,231

 

 

42,935

 

 

40,152

 

Provision (Recovery) for Loan Losses

 

 

 

 

 

3,784

 

 

 

 

75

 

 

3,784

 

 

(1,125

)

Net Interest and Dividend Income After Provision (Recovery) for Loan Losses

 

11,866

 

 

11,015

 

 

6,379

 

 

9,893

 

 

10,156

 

 

39,151

 

 

41,277

 

Noninterest Income:

 

 

 

 

 

 

 

Service Fees

 

530

 

 

544

 

 

559

 

 

526

 

 

569

 

 

2,160

 

 

2,331

 

Insurance Commissions

 

1,399

 

 

1,368

 

 

1,369

 

 

1,798

 

 

1,618

 

 

5,934

 

 

5,616

 

Other Commissions

 

157

 

 

244

 

 

179

 

 

89

 

 

90

 

 

669

 

 

521

 

Net Gain on Sales of Loans

 

 

 

 

 

 

 

 

 

977

 

 

 

 

1,143

 

Net Gain (Loss) on Securities

 

83

 

 

(46

)

 

(199

)

 

(7

)

 

44

 

 

(168

)

 

526

 

Net Gain on Purchased Tax Credits

 

14

 

 

14

 

 

14

 

 

14

 

 

17

 

 

57

 

 

70

 

Gain on Sale of Branches

 

 

 

 

 

 

��

 

 

5,203

 

 

 

 

5,203

 

Net Gain (Loss) on Disposal of Fixed Assets

 

 

 

439

 

 

 

 

(8

)

 

 

 

431

 

 

(3

)

Income from Bank-Owned Life Insurance

 

143

 

 

140

 

 

142

 

 

136

 

 

142

 

 

561

 

 

553

 

Other Income

 

34

 

 

36

 

 

41

 

 

65

 

 

29

 

 

176

 

 

320

 

Total Noninterest Income

 

2,360

 

 

2,739

 

 

2,105

 

 

2,613

 

 

8,689

 

 

9,820

 

 

16,280

 

Noninterest Expense:

 

 

 

 

 

 

 

Salaries and Employee Benefits

 

4,625

 

 

4,739

 

 

4,539

 

 

4,565

 

 

5,181

 

 

18,469

 

 

19,938

 

Occupancy

 

817

 

 

768

 

 

776

 

 

686

 

 

619

 

 

3,047

 

 

2,968

 

Equipment

 

178

 

 

170

 

 

182

 

 

210

 

 

252

 

 

739

 

 

1,034

 

Data Processing

 

681

 

 

540

 

 

446

 

 

485

 

 

488

 

 

2,152

 

 

2,154

 

FDIC Assessment

 

154

 

 

147

 

 

128

 

 

209

 

 

222

 

 

638

 

 

1,014

 

PA Shares Tax

 

258

 

 

240

 

 

240

 

 

240

 

 

173

 

 

979

 

 

887

 

Contracted Services

 

405

 

 

288

 

 

348

 

 

587

 

 

1,133

 

 

1,628

 

 

4,011

 

Legal and Professional Fees

 

362

 

 

334

 

 

389

 

 

152

 

 

206

 

 

1,237

 

 

994

 

Advertising

 

165

 

 

131

 

 

115

 

 

116

 

 

191

 

 

527

 

 

749

 

Other Real Estate Owned (Income)

 

(38

)

 

(38

)

 

(37

)

 

(38

)

 

(30

)

 

(151

)

 

(183

)

Amortization of Intangible Assets

 

446

 

 

445

 

 

446

 

 

445

 

 

445

 

 

1,782

 

 

1,926

 

Intangible Assets and Goodwill Impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

1,178

 

Writedown of Fixed Assets

 

 

 

 

 

 

 

 

 

23

 

 

 

 

2,293

 

Other

 

945

 

 

1,063

 

 

838

 

 

999

 

 

1,069

 

 

3,844

 

 

3,899

 

Total Noninterest Expense

 

8,998

 

 

8,827

 

 

8,410

 

 

8,656

 

 

9,972

 

 

34,891

 

 

42,862

 

Income Before Income Tax Expense (Benefit)

 

5,228

 

 

4,927

 

 

74

 

 

3,850

 

 

8,873

 

 

14,080

 

 

14,695

 

Income Tax Expense (Benefit)

 

1,076

 

 

998

 

 

(44

)

 

803

 

 

1,908

 

 

2,833

 

 

3,125

 

Net Income

$

4,152

 

$

3,929

 

$

118

 

$

3,047

 

$

6,965

 

$

11,247

 

$

11,570

 

 

Three Months Ended

Year Ended

Per Common Share Data

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

Dividends Per Common Share

$

0.24

$

0.24

$

0.24

$

0.24

$

0.24

$

0.96

$

0.96

Earnings Per Common Share - Basic

 

0.81

 

0.77

 

0.02

 

0.59

 

1.32

 

2.19

 

2.15

Earnings Per Common Share - Diluted

 

0.81

 

0.77

 

0.02

 

0.58

 

1.31

 

2.18

 

2.15

Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1)

 

0.80

 

0.71

 

0.05

 

0.59

 

0.53

 

2.14

 

1.95

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding - Basic

 

5,095,237

 

5,106,861

 

5,147,846

 

5,198,194

 

5,291,795

 

5,136,670

 

5,382,441

Weighted Average Common Shares Outstanding - Diluted

 

5,104,254

 

5,118,627

 

5,156,975

 

5,220,887

 

5,314,537

 

5,149,312

 

5,392,729

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

Common Shares Outstanding

 

5,100,189

 

 

5,096,672

 

 

5,128,333

 

 

5,156,897

 

 

5,260,672

 

Book Value Per Common Share

$

21.60

 

$

20.94

 

$

22.18

 

$

23.69

 

$

25.31

 

Tangible Book Value per Common Share (1)

 

19.00

 

 

18.25

 

 

19.43

 

 

20.86

 

 

22.45

 

Stockholders’ Equity to Assets

 

7.8

%

 

7.5

%

 

8.2

%

 

8.5

%

 

9.3

%

Tangible Common Equity to Tangible Assets (1)

 

6.9

 

 

6.6

 

 

7.3

 

 

7.6

 

 

8.4

 

 

Three Months Ended

Year Ended

Selected Financial Ratios (2)

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

Return on Average Assets

1.16

%

1.12

%

0.03

%

0.87

%

1.87

%

0.80

%

0.79

%

Adjusted Return on Average Assets (1)

1.15

 

1.03

 

0.08

 

0.87

 

0.76

 

0.78

 

0.72

 

Return on Average Equity

15.26

 

13.60

 

0.40

 

9.50

 

20.95

 

9.56

 

8.66

 

Adjusted Return on Average Equity (1)

15.01

 

12.53

 

0.93

 

9.54

 

8.55

 

9.39

 

7.87

 

Average Interest-Earning Assets to Average Interest-Bearing Liabilities

149.04

 

149.41

 

149.03

 

144.48

 

145.09

 

148.00

 

145.44

 

Average Equity to Average Assets

7.63

 

8.20

 

8.49

 

9.14

 

8.93

 

8.36

 

9.12

 

Net Interest Rate Spread

3.17

 

3.10

 

3.00

 

2.98

 

2.85

 

3.07

 

2.81

 

Net Interest Rate Spread (FTE) (1)

3.18

 

3.11

 

3.01

 

2.99

 

2.86

 

3.08

 

2.82

 

Net Interest Margin

3.45

 

3.29

 

3.12

 

3.08

 

2.95

 

3.24

 

2.92

 

Net Interest Margin (FTE) (1)

3.46

 

3.30

 

3.13

 

3.10

 

2.96

 

3.25

 

2.94

 

Net Charge-offs and (Recoveries) to Average Loans

0.01

��

(0.01

)

1.01

 

(0.01

)

0.03

 

0.25

 

0.01

 

Efficiency Ratio

63.25

 

64.18

 

68.55

 

69.21

 

52.71

 

66.14

 

75.95

 

Adjusted Efficiency Ratio (1)

60.74

 

63.02

 

64.18

 

65.88

 

69.73

 

63.36

 

74.25

 

Asset Quality Ratios

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

Allowance for Loan Losses to Total Loans

1.22

%

1.23

%

1.25

%

1.14

%

1.13

%

Allowance for Loan Losses to Total Loans, Excluding PPP Loans(1)

1.22

 

1.23

 

1.25

 

1.15

 

1.16

 

Allowance for Loan Losses to Nonperforming Loans (3)

221.06

 

218.61

 

219.89

 

158.88

 

159.40

 

Allowance for Loan Losses to Noncurrent Loans (4)

320.64

 

318.96

 

329.47

 

218.28

 

233.37

 

Delinquent and Nonaccrual Loans to Total Loans (4) (5)

0.81

 

0.46

 

0.45

 

0.79

 

0.78

 

Nonperforming Loans to Total Loans (3)

0.55

 

0.56

 

0.57

 

0.72

 

0.71

 

Noncurrent Loans to Total Loans (4)

0.38

 

0.39

 

0.38

 

0.52

 

0.49

 

Nonperforming Assets to Total Assets (6)

0.41

 

0.41

 

0.42

 

0.51

 

0.51

 

Capital Ratios (7)

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

Common Equity Tier 1 Capital (to Risk Weighted Assets)

12.33

%

12.02

%

11.83

%

11.99

%

11.95

%

Tier 1 Capital (to Risk Weighted Assets)

12.33

 

12.02

 

11.83

 

11.99

 

11.95

 

Total Capital (to Risk Weighted Assets)

13.58

 

13.27

 

13.08

 

13.20

 

13.18

 

Tier 1 Leverage (to Adjusted Total Assets)

8.66

 

8.51

 

8.33

 

8.19

 

7.76

 

(1)

 

Refer to Explanation of Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(2)

 

Interim period ratios are calculated on an annualized basis.

(3)

 

Nonperforming loans consist of nonaccrual loans, accruing loans that are 90 days or more past due, and troubled debt restructured loans.

(4)

 

Noncurrent loans consist of nonaccrual loans and accruing loans that are 90 days or more past due.

(5)

 

Delinquent loans consist of accruing loans that are 30 days or more past due.

(6)

 

Nonperforming assets consist of nonperforming loans and other real estate owned.

(7)

 

Capital ratios are for Community Bank only.

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

AVERAGE BALANCES AND YIELDS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31, 2022

 

September 30, 2022

 

June 30, 2022

 

March 31, 2022

 

December 31, 2021

 

Average

Balance

Interest

and

Dividends

Yield/

Cost (1)

 

Average

Balance

Interest

and

Dividends

Yield/

Cost (1)

 

Average

Balance

Interest

and

Dividends

Yield/

Cost (1)

 

Average

Balance

Interest

and

Dividends

Yield/

Cost (1)

 

Average

Balance

Interest

and

Dividends

Yield/

Cost (1)

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, Net (2)

$

1,034,714

$

11,853

4.54

%

 

$

1,024,363

$

10,833

4.20

%

 

$

1,007,874

$

9,751

3.88

%

 

$

1,009,210

$

9,573

3.85

%

 

$

1,004,827

$

9,927

3.92

%

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

216,915

 

974

1.80

 

 

 

222,110

 

985

1.77

 

 

 

228,315

 

988

1.73

 

 

 

215,906

 

905

1.68

 

 

 

205,328

 

866

1.69

 

Exempt From Federal Tax

 

6,277

 

51

3.25

 

 

 

7,998

 

62

3.10

 

 

 

9,109

 

73

3.21

 

 

 

10,195

 

84

3.30

 

 

 

10,477

 

84

3.21

 

Equity Securities

 

2,693

 

28

4.16

 

 

 

2,693

 

21

3.12

 

 

 

2,693

 

20

2.97

 

 

 

2,693

 

22

3.27

 

 

 

2,693

 

21

3.12

 

Interest Bearing Deposits at Banks

 

99,108

 

939

3.79

 

 

 

67,870

 

378

2.23

 

 

 

56,379

 

122

0.87

 

 

 

59,296

 

33

0.22

 

 

 

150,102

 

61

0.16

 

Other Interest-Earning Assets

 

2,875

 

39

5.38

 

 

 

2,784

 

39

5.56

 

 

 

3,235

 

38

4.71

 

 

 

3,483

 

39

4.54

 

 

 

3,475

 

45

5.14

 

Total Interest-Earning Assets

 

1,362,582

 

13,884

4.04

 

 

 

1,327,818

 

12,318

3.68

 

 

 

1,307,605

 

10,992

3.37

 

 

 

1,300,783

 

10,656

3.32

 

 

 

1,376,902

 

11,004

3.17

 

Noninterest-Earning Assets

 

51,718

 

 

 

 

68,796

 

 

 

 

84,323

 

 

 

 

122,288

 

 

 

 

100,607

 

 

Total Assets

$

1,414,300

 

 

 

$

1,396,614

 

 

 

$

1,391,928

 

 

 

$

1,423,071

 

 

 

$

1,477,509

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Demand Deposits (3)

$

315,352

$

810

1.02

%

 

$

278,412

$

393

0.56

%

 

$

260,655

$

111

0.17

 

 

$

276,603

$

48

0.07

 

 

$

278,546

$

51

0.07

%

Savings (3)

 

249,948

 

29

0.05

 

 

 

251,148

 

20

0.03

 

 

 

248,356

 

20

0.03

 

 

 

243,786

 

19

0.03

 

 

 

252,387

 

20

0.03

 

Money Market (3)

 

206,192

 

604

1.16

 

 

 

189,371

 

269

0.56

 

 

 

188,804

 

61

0.13

 

 

 

192,425

 

41

0.09

 

 

 

209,572

 

57

0.11

 

Time Deposits (3)

 

116,172

 

368

1.26

 

 

 

123,438

 

397

1.28

 

 

 

127,832

 

412

1.29

 

 

 

132,015

 

422

1.30

 

 

 

154,342

 

508

1.31

 

Total Interest-Bearing Deposits (3)

 

887,664

 

1,811

0.81

 

 

 

842,369

 

1,079

0.51

 

 

 

825,647

 

604

0.29

 

 

 

844,829

 

530

0.25

 

 

 

894,847

 

636

0.28

 

Short-Term Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities Sold Under Agreements to Repurchase

 

8,985

 

7

0.31

 

 

 

28,738

 

19

0.26

 

 

 

34,135

 

18

0.21

 

 

 

37,884

 

19

0.20

 

 

 

44,709

 

26

0.23

 

Other Borrowings

 

17,598

 

171

3.86

 

 

 

17,621

 

174

3.92

 

 

 

17,611

 

173

3.94

 

 

 

17,604

 

174

4.01

 

 

 

9,474

 

70

2.93

 

Total Interest-Bearing Liabilities

 

914,247

 

1,989

0.86

 

 

 

888,728

 

1,272

0.57

 

 

 

877,393

 

795

0.36

 

 

 

900,317

 

723

0.33

 

 

 

949,030

 

732

0.31

 

Noninterest-Bearing Demand Deposits

 

391,300

 

 

 

 

390,658

 

 

 

 

391,975

 

 

 

 

384,188

 

 

 

 

388,787

 

 

Other Liabilities

 

788

 

 

 

 

2,636

 

 

 

 

4,415

 

 

 

 

8,554

 

 

 

 

7,800

 

 

Total Liabilities

 

1,306,335

 

 

 

 

1,282,022

 

 

 

 

1,273,783

 

 

 

 

1,293,059

 

 

 

 

1,345,617

 

 

Stockholders' Equity

 

107,965

 

 

 

 

114,592

 

 

 

 

118,145

 

 

 

 

130,012

 

 

 

 

131,892

 

 

Total Liabilities and Stockholders' Equity

$

1,414,300

 

 

 

$

1,396,614

 

 

 

$

1,391,928

 

 

 

$

1,423,071

 

 

 

$

1,477,509

 

 

Net Interest Income (FTE)

(Non-GAAP) (4)

 

$

11,895

 

 

 

$

11,046

 

 

 

$

10,197

 

 

 

$

9,933

 

 

 

$

10,272

 

Net Interest-Earning Assets (5)

 

448,335

 

 

 

 

439,090

 

 

 

 

430,212

 

 

 

 

400,466

 

 

 

 

427,872

 

 

Net Interest Rate Spread (FTE)

(Non-GAAP) (4) (6)

 

 

3.18

%

 

 

 

3.11

%

 

 

 

3.01

%

 

 

 

2.99

%

 

 

 

2.86

%

Net Interest Margin (FTE)

(Non-GAAP) (4)(7)

 

 

3.46

 

 

 

 

3.30

 

 

 

 

3.13

 

 

 

 

3.10

 

 

 

 

2.96

 

PPP Loans

 

216

 

22

40.41

 

 

 

2,424

 

123

20.13

 

 

 

5,546

 

144

10.41

 

 

 

14,673

 

445

12.30

 

 

 

29,067

 

391

5.34

 

(1)

Annualized based on three months ended results.

(2)

Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.

(3)

Includes Deposits Held for Sale that were sold in December 2021.

(4)

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.

(5)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(6)

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.

(7)

Net interest margin represents annualized net interest income divided by average total interest-earning assets.

AVERAGE BALANCES AND YIELDS

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

December 31, 2022

 

December 31, 2021

 

Average

Balance

 

Interest

and

Dividends

 

Yield

/Cost

 

Average

Balance

 

Interest

and

Dividends

 

Yield

/Cost

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Interest-Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

Loans, Net (1)

$

1,019,124

 

$

42,010

 

4.12

%

 

$

1,014,405

 

$

39,799

 

3.92

%

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

220,818

 

 

3,852

 

1.74

 

 

 

162,987

 

 

2,990

 

1.83

 

Exempt From Federal Tax

 

8,383

 

 

270

 

3.22

 

 

 

11,829

 

 

366

 

3.09

 

Marketable Equity Securities

 

2,693

 

 

91

 

3.38

 

 

 

2,657

 

 

84

 

3.16

 

Interest Bearing Deposits at Banks

 

70,765

 

 

1,473

 

2.08

 

 

 

177,768

 

 

304

 

0.17

 

Other Interest-Earning Assets

 

3,092

 

 

154

 

4.98

 

 

 

3,733

 

 

186

 

4.98

 

Total Interest-Earning Assets

 

1,324,875

 

 

47,850

 

3.61

 

 

 

1,373,379

 

 

43,729

 

3.18

 

Noninterest-Earning Assets

 

81,553

 

 

 

 

 

 

91,075

 

 

 

 

Total Assets

$

1,406,428

 

 

 

 

 

$

1,464,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Demand Deposits (2)

$

282,850

 

$

1,362

 

0.48

%

 

$

272,256

 

$

232

 

0.09

%

Savings (2)

 

248,334

 

 

88

 

0.04

 

 

 

247,864

 

 

98

 

0.04

 

Money Market (2)

 

194,223

 

 

976

 

0.50

 

 

 

201,222

 

 

281

 

0.14

 

Time Deposits (2)

 

124,817

 

 

1,599

 

1.28

 

 

 

171,805

 

 

2,514

 

1.46

 

Total Interest-Bearing Deposits (2)

 

850,224

 

 

4,025

 

0.47

 

 

 

893,147

 

 

3,125

 

0.35

 

Short-Term Borrowings

 

 

 

 

 

 

 

 

 

 

 

Securities Sold Under Agreements to Repurchase

 

27,360

 

 

63

 

0.23

 

 

 

43,988

 

 

98

 

0.22

 

Other Borrowings

 

17,609

 

 

693

 

3.94

 

 

 

7,172

 

 

182

 

2.54

 

Total Interest-Bearing Liabilities

 

895,193

 

 

4,781

 

0.53

 

 

 

944,307

 

 

3,405

 

0.36

 

Noninterest-Bearing Demand Deposits

 

389,553

 

 

 

 

 

 

378,374

 

 

 

 

Other Liabilities

 

4,072

 

 

 

 

 

 

8,168

 

 

 

 

Total Liabilities

 

1,288,818

 

 

 

 

 

 

1,330,849

 

 

 

 

Stockholders' Equity

 

117,610

 

 

 

 

 

 

133,605

 

 

 

 

Total Liabilities and Stockholders' Equity

$

1,406,428

 

 

 

 

 

$

1,464,454

 

 

 

 

Net Interest Income (FTE) (Non-GAAP) (3)

 

 

 

43,069

 

 

 

 

 

 

40,324

 

 

Net Interest-Earning Assets (4)

 

429,682

 

 

 

 

 

 

429,072

 

 

 

 

Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)

 

 

 

 

3.08

%

 

 

 

 

 

2.82

%

Net Interest Margin (FTE) (Non-GAAP) (3)(6)

 

 

 

 

3.25

 

 

 

 

 

 

2.94

 

PPP Loans

 

5,666

 

 

734

 

12.95

 

 

 

45,905

 

 

2,189

 

4.77

 

(1)

 

Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.

(2)

 

Includes Deposits Held for Sale that were sold in December 2021.

(3)

 

Refer to Explanation and Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(4)

 

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5)

 

Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(6)

 

Net interest margin represents annualized net interest income divided by average total interest-earning assets.

Explanation of Use of Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), we use, and this Press Release contains or references, certain Non-GAAP financial measures. We believe these Non-GAAP financial measures provide useful information in understanding our underlying results of operations or financial position and our business and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Non-GAAP adjusted items impacting the Company's financial performance are identified to assist investors in providing a complete understanding of factors and trends affecting the Company’s business and in analyzing the Company’s operating results on the same basis as that applied by management. Although we believe that these Non-GAAP financial measures enhance the understanding of our business and performance, they should not be considered an alternative to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with 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.

 

Three Months Ended

Year Ended

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP)

$

4,152

 

$

3,929

 

$

118

 

$

3,047

 

$

6,965

 

$

11,247

 

$

11,570

 

 

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

 

 

(Gain) Loss on Securities

 

(83

)

 

46

 

 

199

 

 

7

 

 

(44

)

 

168

 

 

(526

)

Gain on Sale of Branches

 

 

 

 

 

 

 

 

 

(5,203

)

 

 

 

(5,203

)

(Gain) Loss on Disposal of Fixed Assets

 

 

 

(439

)

 

 

 

8

 

 

 

 

(431

)

 

3

 

Tax effect

 

17

 

 

83

 

 

(42

)

 

(3

)

 

1,102

 

 

55

 

 

1,202

 

 

 

 

 

 

 

 

 

Non-Cash Charges:

 

 

 

 

 

 

 

Intangible Assets and Goodwill Impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

1,178

 

Writedown on Fixed Assets

 

 

 

 

 

 

 

 

 

23

 

 

 

 

2,293

 

Tax Effect

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income (Non-GAAP)

$

4,086

 

$

3,619

 

$

275

 

$

3,059

 

$

2,843

 

$

11,039

 

$

10,517

 

 

 

 

 

 

 

 

 

Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding

 

5,104,254

 

 

5,118,627

 

 

5,156,975

 

 

5,220,887

 

 

5,314,537

 

 

5,149,312

 

 

5,392,729

 

 

 

 

 

 

 

 

 

Earnings per Common Share - Diluted (GAAP)

$

0.81

 

$

0.77

 

$

0.02

 

$

0.58

 

$

1.31

 

$

2.18

 

$

2.15

 

 

 

 

 

 

 

 

 

Adjusted Earnings per Common Share - Diluted (Non-GAAP)

$

0.80

 

$

0.71

 

$

0.05

 

$

0.59

 

$

0.53

 

$

2.15

 

$

1.95

 

 

 

 

 

 

 

 

 

Net Income (GAAP) (Numerator)

$

4,152

 

$

3,929

 

$

118

 

$

3,047

 

$

6,965

 

$

11,247

 

$

11,570

 

 

 

 

 

 

 

 

 

Annualization Factor

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

3.97

 

 

1.00

 

 

1.00

 

 

 

 

 

 

 

 

 

Average Assets (Denominator)

 

1,414,300

 

 

1,396,614

 

 

1,391,928

 

 

1,423,071

 

 

1,477,509

 

 

1,406,428

 

 

1,464,454

 

 

 

 

 

 

 

 

 

Return on Average Assets (GAAP)

 

1.16

%

 

1.12

%

 

0.03

%

 

0.87

%

 

1.87

%

 

0.80

%

 

0.79

%

 

 

 

 

 

 

 

 

Adjusted Net Income (Non-GAAP) (Numerator)

$

4,086

 

$

3,619

 

$

275

 

$

3,059

 

$

2,843

 

$

11,039

 

$

10,517

 

 

 

 

 

 

 

 

 

Annualization Factor

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

3.97

 

 

1.00

 

 

1.00

 

 

 

 

 

 

 

 

 

Average Assets (Denominator)

 

1,414,300

 

 

1,396,614

 

 

1,391,928

 

 

1,423,071

 

 

1,477,509

 

 

1,407,413

 

 

1,455,368

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Assets (Non-GAAP)

 

1.15

%

 

1.03

%

 

0.08

%

 

0.87

%

 

0.76

%

 

0.78

%

 

0.72

%

 

Three Months Ended

Year Ended

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (GAAP) (Numerator)

$

4,152

 

$

3,929

 

$

118

 

$

3,047

 

$

6,965

 

$

11,247

 

$

11,570

 

 

 

 

 

 

 

 

 

Annualization Factor

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

3.97

 

 

1.00

 

 

1.00

 

 

 

 

 

 

 

 

 

Average Equity (GAAP) (Denominator)

 

107,965

 

 

114,592

 

 

118,145

 

 

130,012

 

 

131,892

 

 

117,610

 

 

133,605

 

 

 

 

 

 

 

 

 

Return on Average Equity (GAAP)

 

15.26

%

 

13.60

%

 

0.40

%

 

9.50

%

 

20.95

%

 

9.56

%

 

8.66

%

 

 

 

 

 

 

 

 

Adjusted Net Income (Non-GAAP) (Numerator)

$

4,086

 

$

3,619

 

$

275

 

$

3,059

 

$

2,843

 

$

11,039

 

$

10,517

 

 

 

 

 

 

 

 

 

Annualization Factor

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

3.97

 

 

1.00

 

 

1.00

 

 

 

 

 

 

 

 

 

Average Equity (GAAP) (Denominator)

 

107,965

 

 

114,592

 

 

118,145

 

 

130,012

 

 

131,892

 

 

117,610

 

 

133,605

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Equity (Non-GAAP)

 

15.01

%

 

12.53

%

 

0.93

%

 

9.54

%

 

8.55

%

 

9.39

%

 

7.87

%

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.

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

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

 

 

 

 

 

 

 

 

 

 

 

Assets (GAAP)

$

1,408,938

 

$

1,425,920

 

$

1,386,461

 

$

1,438,670

 

$

1,425,479

 

Goodwill and Intangible Assets, Net

 

(13,245

)

 

(13,691

)

 

(14,136

)

 

(14,582

)

 

(15,027

)

Tangible Assets (Non-GAAP) (Numerator)

$

1,395,693

 

$

1,412,229

 

$

1,372,325

 

$

1,424,088

 

$

1,410,452

 

 

 

 

 

 

 

Stockholders' Equity (GAAP)

$

110,155

 

$

106,706

 

$

113,772

 

$

122,156

 

$

133,124

 

Goodwill and Intangible Assets, Net

 

(13,245

)

 

(13,691

)

 

(14,136

)

 

(14,582

)

 

(15,027

)

Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator)

$

96,910

 

$

93,015

 

$

99,636

 

$

107,574

 

$

118,097

 

 

 

 

 

 

 

Stockholders’ Equity to Assets (GAAP)

 

7.8

%

 

7.5

%

 

8.2

%

 

8.5

%

 

9.3

%

Tangible Common Equity to Tangible Assets (Non-GAAP)

 

6.9

%

 

6.6

%

 

7.3

%

 

7.6

%

 

8.4

%

 

 

 

 

 

 

Common Shares Outstanding (Denominator)

 

5,100,189

 

 

5,096,672

 

 

5,128,333

 

 

5,156,897

 

 

5,260,672

 

 

 

 

 

 

 

Book Value per Common Share (GAAP)

$

21.60

 

$

20.94

 

$

22.18

 

$

23.69

 

$

25.31

 

Tangible Book Value per Common Share (Non-GAAP)

$

19.00

 

$

18.25

 

$

19.43

 

$

20.86

 

$

22.45

 

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

Year Ended

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Income (GAAP)

$

13,855

 

$

12,287

 

$

10,958

 

$

10,616

 

$

10,963

 

$

47,716

 

$

43,557

 

Adjustment to FTE Basis

 

29

 

 

31

 

 

34

 

 

40

 

 

41

 

 

134

 

 

172

 

Interest Income (FTE) (Non-GAAP)

 

13,884

 

 

12,318

 

 

10,992

 

 

10,656

 

 

11,004

 

 

47,850

 

 

43,729

 

Interest Expense (GAAP)

 

1,989

 

 

1,272

 

 

795

 

 

723

 

 

732

 

 

4,781

 

 

3,405

 

Net Interest Income (FTE) (Non-GAAP)

$

11,895

 

$

11,046

 

$

10,197

 

$

9,933

 

$

10,272

 

$

43,069

 

$

40,324

 

 

 

 

 

 

 

 

 

Net Interest Rate Spread (GAAP)

 

3.17

%

 

3.10

%

 

3.00

%

 

2.98

%

 

2.85

%

 

3.07

%

 

2.81

%

Adjustment to FTE Basis

 

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

Net Interest Rate Spread (FTE) (Non-GAAP)

 

3.18

 

 

3.11

 

 

3.01

 

 

2.99

 

 

2.86

 

 

3.08

 

 

2.82

 

 

 

 

 

 

 

 

 

Net Interest Margin (GAAP)

 

3.45

%

 

3.29

%

 

3.12

%

 

3.08

%

 

2.95

%

 

3.24

%

 

2.92

%

Adjustment to FTE Basis

 

0.01

 

 

0.01

 

 

0.01

 

 

0.02

 

 

0.01

 

 

0.01

 

 

0.02

 

Net Interest Margin (FTE) (Non-GAAP)

 

3.46

 

 

3.30

 

 

3.13

 

 

3.10

 

 

2.96

 

 

3.25

 

 

2.94

 

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

Year Ended

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense (GAAP) (Numerator)

$

8,998

 

$

8,827

 

$

8,410

 

$

8,656

 

$

9,972

 

$

34,891

 

$

42,862

 

 

 

 

 

 

 

 

 

Net Interest and Dividend Income (GAAP)

$

11,866

 

$

11,015

 

$

10,163

 

$

9,893

 

$

10,231

 

$

42,935

 

$

40,152

 

 

 

 

 

 

 

 

 

Noninterest Income (GAAP)

 

2,360

 

 

2,739

 

 

2,105

 

 

2,613

 

 

8,689

 

 

9,820

 

 

16,280

 

Operating Revenue (GAAP) (Denominator)

$

14,226

 

$

13,754

 

$

12,268

 

$

12,506

 

$

18,920

 

$

52,755

 

$

56,432

 

Efficiency Ratio (GAAP)

 

63.25

%

 

64.18

%

 

68.55

%

 

69.21

%

 

52.71

%

 

66.14

%

 

75.95

%

 

 

 

 

 

 

 

 

Noninterest Expense (GAAP)

$

8,998

 

$

8,827

 

$

8,410

 

$

8,656

 

$

9,972

 

$

34,891

 

$

42,862

 

Less:

 

 

 

 

 

 

 

Other Real Estate Owned (Income)

 

(38

)

 

(38

)

 

(37

)

 

(38

)

 

(30

)

 

(151

)

 

(183

)

Amortization of Intangible Assets

 

446

 

 

445

 

 

446

 

 

445

 

 

445

 

 

1,782

 

 

1,926

 

Intangible Assets and Goodwill Impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

1,178

 

Writedown on Fixed Assets

 

 

 

 

 

 

 

 

 

23

 

 

 

 

2,293

 

Adjusted Noninterest Expense (Non-GAAP) (Numerator)

$

8,590

 

$

8,420

 

$

8,001

 

$

8,249

 

$

9,534

 

$

33,260

 

$

37,648

 

 

 

 

 

 

 

 

 

Net Interest and Dividend Income (GAAP)

$

11,866

 

$

11,015

 

$

10,163

 

$

9,893

 

$

10,231

 

$

42,935

 

$

40,152

 

Noninterest Income (GAAP)

 

2,360

 

 

2,739

 

 

2,105

 

 

2,613

 

 

8,689

 

 

9,820

 

 

16,280

 

Less:

 

 

 

 

 

 

 

Net Gain (Loss) on Securities

 

83

 

 

(46

)

 

(199

)

 

(7

)

 

44

 

 

(168

)

 

526

 

Gain on Sale of Branches

 

 

 

 

 

 

 

 

 

5,203

 

 

 

 

5,203

 

Net Gain (Loss) on Disposal of Fixed Assets

 

 

 

439

 

 

 

 

(8

)

 

 

 

431

 

 

(3

)

Adjusted Noninterest Income (Non-GAAP)

$

2,277

 

$

2,346

 

$

2,304

 

$

2,628

 

$

3,442

 

$

9,557

 

$

10,554

 

Adjusted Operating Revenue (Non-GAAP) (Denominator)

$

14,143

 

$

13,361

 

$

12,467

 

$

12,521

 

$

13,673

 

$

52,492

 

$

50,706

 

Adjusted Efficiency Ratio (Non-GAAP)

 

60.74

%

 

63.02

%

 

64.18

%

 

65.88

%

 

69.73

%

 

63.36

%

 

74.25

%

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.

 

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan Losses (Numerator)

$

12,819

 

$

12,854

 

$

12,833

 

$

11,595

 

$

11,582

 

 

 

 

 

 

 

Total Loans

 

1,049,873

 

$

1,042,942

 

 

1,027,969

 

$

1,020,642

 

$

1,020,796

 

PPP Loans

 

(126

)

 

(768

)

 

(3,853

)

 

(8,242

)

 

(24,523

)

Total Loans, Excluding PPP Loans (Non-GAAP) (Denominator)

$

1,049,747

 

$

1,042,174

 

$

1,024,116

 

$

1,012,400

 

$

996,273

 

 

 

 

 

 

 

Allowance for Loan Losses to Total Loans, Excluding

PPP Loans (Non-GAAP)

 

1.22

%

 

1.23

%

 

1.25

%

 

1.15

%

 

1.16

%

 

Contacts

Company Contact:

John H. Montgomery

President and Chief Executive Officer

Phone: (724) 225-2400

Investor Relations:

Jeremy Hellman, Vice President

The Equity Group Inc.

Phone: (212) 836-9626

Email: jhellman@equityny.com

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