What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-11 · 198 added, 100 removed, 769 unchanged (28% of the section changed)

1 unchanged sentence

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited) March 31,

(Unaudited) June 30,

2022 December 31,

7 unchanged sentences

Total Securities 213,505 224,974

Loans, Net of Allowance for Loan Losses of $ 11,595 and $ 11,582 at March 31, 2022 and December 31, 2021, Respectively

Loans, Net of Allowance for Loan Losses of $ 12,833 and $ 11,582 at June 30, 2022 and December 31, 2021, Respectively

1,015,136 1,009,214

23 unchanged sentences

Common Stock, $ 0.4167 Par Value;

35,000,000 Shares Authorized, 5,701,758 Shares Issued and 5,156,897 and 5,260,672 Shares Outstanding at March 31, 2022 and December 31, 2021, Respectively

35,000,000 Shares Authorized, 5,702,433 Shares Issued and 5,128,333 and 5,260,672 Shares Outstanding at June 30, 2022 and December 31, 2021, Respectively

Capital Surplus

2 unchanged sentences

58,225 57,534

Treasury Stock, at Cost ( 544,861 and 420,321 Shares at March 31, 2022 and December 31, 2021, Respectively)

Treasury Stock, at Cost ( 574,100 and 420,321 Shares at June 30, 2022 and December 31, 2021, Respectively)

( 13,015 ) ( 9,144 )

5 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

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

13 unchanged sentences

NET INTEREST AND DIVIDEND INCOME 10,163 9,934 20,056 19,911

Provision For Loan Losses — —

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,893 9,977

Provision (Recovery) For Loan Losses 3,784 ( 1,200 ) 3,784 ( 1,200 )

NET INTEREST INCOME AFTER PROVISION (RECOVERY) FOR LOAN LOSSES 6,379 11,134 16,272 21,111

NONINTEREST INCOME

21 unchanged sentences

Amortization of Intangible Assets 446 503 891 1,035

Intangible Assets Impairment — 1,178 — 1,178

Writedown of Fixed Assets — 2,268 — 2,268

Other Expense 838 945 1,837 1,927

TOTAL NONINTEREST EXPENSE 8,410 13,722 17,066 23,117

Income Before Income Tax Expense 3,850 3,756

Income Tax Expense 803 911

NET INCOME $ 3,047 $ 2,845

EARNINGS PER SHARE

Income Before Income Tax (Benefit) Expense 74 ( 369 ) 3,924 3,387

Income Tax (Benefit) Expense ( 44 ) ( 146 ) 759 765

NET INCOME (LOSS) $ 118 $ ( 223 ) $ 3,165 $ 2,622

EARNINGS (LOSS) PER SHARE

Basic $ 0.02 $ ( 0.04 ) $ 0.61 $ 0.48

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(Dollars in thousands)

Net Income $ 3,047 $ 2,845

Net Income (Loss) $ 118 $ ( 223 ) $ 3,165 $ 2,622

Other Comprehensive (Loss) Income:

Change in Unrealized (Loss) on Investment Securities Available-for-Sale ( 12,351 ) ( 2,851 )

Change in Unrealized (Loss) Income on Investment Securities Available-for-Sale ( 8,680 ) 922 ( 21,032 ) ( 1,929 )

Income Tax Effect 1,870 ( 199 ) 4,531 413

Reclassification Adjustment for Gain on Sale of Debt Securities Included in Net Income (1)

— — — ( 225 )

Income Tax Effect (2)

Other Comprehensive (Loss), Net of Income Tax Effect ( 9,691 ) ( 2,416 )

Other Comprehensive (Loss) Income, Net of Income Tax Effect ( 6,810 ) 723 ( 16,501 ) ( 1,693 )

Total Comprehensive (Loss) Income $ ( 6,692 ) $ 500 $ ( 13,336 ) $ 929

(1) Reported in Net (Loss) Gain on Securities on the Consolidated Statements of Income.

(2) Reported in Income Tax Expense on the Consolidated Statements of Income.

(2) Reported in Income Tax (Benefit) Expense on the Consolidated Statements of Income.

The accompanying notes are an integral part of these consolidated financial statements

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

Three Months Ended March 31, 2022 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

Three Months Ended June 30, 2022 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

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

December 31, 2021 5,680,993 $ 2,367 $ 83,294 $ 57,534 $ ( 9,144 ) $ ( 927 ) $ 133,124

March 31, 2022 5,701,758 $ 2,376 $ 83,422 $ 59,343 $ ( 12,367 ) $ ( 10,618 ) $ 122,156

Comprehensive Loss:

9 unchanged sentences

— — — ( 1,236 ) — — ( 1,236 )

June 30, 2022 5,702,433 $ 2,376 $ 83,614 $ 58,225 $ ( 13,015 ) $ ( 17,428 ) $ 113,772

Three Months Ended June 30, 2021 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Income Total Stockholders' Equity

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

March 31, 2021 5,680,993 $ 2,367 $ 82,844 $ 52,673 $ ( 5,094 ) $ 986 $ 133,776

Three Months Ended March 31, 2021 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Income Total Stockholders' Equity

Comprehensive Income:

Net Loss — — — ( 223 ) — — ( 223 )

Other Comprehensive Income — — — — — 723 723

Stock-Based Compensation Expense — — 125 — — — 125

Treasury Stock Purchased, at cost ( 25,297 shares)

— — — — ( 561 ) — ( 561 )

Dividends Paid ($ 0.24 Per Share)

— — — ( 1,304 ) — — ( 1,304 )

June 30, 2021 5,680,993 $ 2,367 $ 82,969 $ 51,146 $ ( 5,655 ) $ 1,709 $ 132,536

The accompanying notes are an integral part of these consolidated financial statements

Six Months Ended June 30, 2022 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

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

December 31, 2021 5,680,993 $ 2,367 $ 83,294 $ 57,534 $ ( 9,144 ) $ ( 927 ) $ 133,124

Comprehensive Loss:

Net Income — — — 3,165 — — 3,165

Other Comprehensive Loss — — — — — ( 16,501 ) ( 16,501 )

Restricted Stock Awards Granted 21,765 9 ( 9 ) — — — —

Restricted Stock Awards Forfeited ( 325 ) — 47 — ( 47 ) — —

Stock-Based Compensation Expense — — 279 — — — 279

Exercise of Stock Options — — 3 — 164 — 167

Treasury stock purchased, at cost ( 159,279 shares)

— — — — ( 3,988 ) — ( 3,988 )

Dividends Paid ($ 0.48 Per Share)

— — — ( 2,474 ) — — ( 2,474 )

June 30, 2022 5,702,433 $ 2,376 $ 83,614 $ 58,225 $ ( 13,015 ) $ ( 17,428 ) $ 113,772

Six Months Ended June 30, 2021 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Income Total Stockholders' Equity

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

December 31, 2020 5,680,993 $ 2,367 $ 82,723 $ 51,132 $ ( 5,094 ) $ 3,402 $ 134,530

Comprehensive Income:

1 unchanged sentence

Other Comprehensive Loss — — — — — ( 1,693 ) ( 1,693 )

Restricted Stock Awards Forfeited — — — — — — —

Restricted Stock Awards Granted — — — — — — —

Stock-Based Compensation Expense — — 246 — — — 246

Exercise of Stock Options — — — — — — —

Treasury Stock Purchased, at cost ( 25,297 shares)

— — — — ( 561 ) — ( 561 )

Dividends Paid ($ 0.48 Per Share)

— — — ( 2,608 ) — — ( 2,608 )

March 31, 2021 5,680,993 $ 2,367 $ 82,844 $ 52,673 $ ( 5,094 ) $ 986 $ 133,776

June 30, 2021 5,680,993 $ 2,367 $ 82,969 $ 51,146 $ ( 5,655 ) $ 1,709 $ 132,536

The accompanying notes are an integral part of these consolidated financial statements

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31, 2022 2021

Six Months Ended June 30, 2022 2021

(Dollars in thousands)

4 unchanged sentences

Depreciation and Amortization 1,282 1,256

Provision (Recovery) for Loan Losses 3,784 ( 1,200 )

Intangible Asset Impairment — 1,178

Writedown on Fixed Assets — 2,268

Lease Impairment — 227

Loss (Gain) on Securities 206 ( 458 )

8 unchanged sentences

Net Loss on Disposal of Fixed Assets 8 3

Increase in Taxes Payable 956 893

Decrease (Increase) in Taxes Payable ( 2,462 ) 247

Payments on Operating Leases — ( 170 )

Decrease in Accrued Interest Payable ( 42 ) ( 146 )

Refund of Federal and State Income Taxes — 1,311

Other, Net ( 725 ) ( 11 )

5 unchanged sentences

Proceeds from Sale of Securities — 11,930

Net Decrease in Loans 223 3,148

Net (Increase) Decrease in Loans ( 9,576 ) 31,497

Purchase of Premises and Equipment ( 262 ) ( 2,240 )

Proceeds From Sale of Other Real Estate Owned 37 —

(Increase) Decrease in Restricted Equity Securities ( 26 ) 200

NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES ( 18,450 ) 3,733

Decrease in Restricted Equity Securities 599 243

NET CASH USED IN INVESTING ACTIVITIES ( 19,007 ) ( 35,300 )

FINANCING ACTIVITIES

Net Increase in Deposits 23,700 59,894

Net (Decrease) Increase in Deposits ( 11,423 ) 41,489

Net (Decrease) Increase in Short-Term Borrowings ( 7,088 ) 8,051

3 unchanged sentences

Exercise of Stock Options 167 —

NET CASH PROVIDED BY FINANCING ACTIVITIES 19,199 60,887

INCREASE IN CASH AND CASH EQUIVALENTS 3,914 69,089

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ( 24,806 ) 44,371

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 38,553 ) 11,099

CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 119,674 160,911

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31, 2022 2022 2021

Six Months Ended June 30, 2022 2022 2021

(Dollars in thousands)

3 unchanged sentences

$ 1,560 $ 2,044

Income Taxes 2,832 1,160

SUPPLEMENTAL NONCASH DISCLOSURE:

Transfer of Loans to Loans Held for Sale — 11,409

Transfer of Premises and Equipment to Premises and Equipment Held for Sale and Other Assets — 1,075

Transfer of Deposits to Deposits Held for Sale — 102,557

Right of Use Asset Recognized 1,284 —

23 unchanged sentences

The Bank is a community-oriented institution offering residential and commercial real estate loans, commercial and industrial loans, and consumer loans as well as a variety of deposit products for individuals and businesses in its market area.

After the consolidation of six branches and the sale of two branches in 2021 and the consolidation of two branches in 2020, the Bank operates 11 branches in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania, and three branches in Marshall and Ohio Counties in West Virginia.

After the consolidation of six branches and the sale of two branches in 2021, the Bank operates 11 branches in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania, and three branches in Marshall and Ohio Counties in West Virginia.

Property and casualty, commercial liability, surety and other insurance products are offered through Exchange Underwriters, a full-service, independent insurance agency.

1 unchanged sentence

Use of Critical Accounting Estimates

There were no material changes in our critical accounting policies during the three months ended March 31, 2022.

There were no material changes in our critical accounting policies during the six months ended June 30, 2022.

See Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, for additional information regarding our critical accounting policies.

17 unchanged sentences

The Company expects to recognize a one-time adjustment to the allowance for loan losses upon adoption, but cannot yet determine the magnitude of the one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial condition or results of operation.

Earnings Pe r Share

Earnings (Loss) Pe r Share

There are no convertible securities which would affect the numerator in calculating basic and diluted earnings per share;

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

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

Net Income $ 3,047 $ 2,845

Net Income (Loss) $ 118 $ ( 223 ) $ 3,165 $ 2,622

Weighted-Average Basic Common Shares Outstanding

1 unchanged sentence

Dilutive Effect of Common Stock Equivalents (Stock Options and Restricted Stock)

9,129 — 16,263 5,103

Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding

5,156,975 5,432,234 5,189,144 5,438,401

Earnings Per Share:

Earnings (Loss) Per Share:

$ 0.02 $ ( 0.04 ) $ 0.61 $ 0.48

0.02 ( 0.04 ) 0.61 0.48

The dilutive effect on weighted average diluted common shares outstanding is the result of outstanding stock options and nonvested restricted stock.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Stock Options 156,118 216,662 156,118 201,662

1 unchanged sentence

The following table presents the amortized cost and fair value of securities available-for-sale at the dates indicated:

March 31, 2022

June 30, 2022

(Dollars in thousands)

28 unchanged sentences

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at the dates indicated:

March 31, 2022

June 30, 2022

Less than 12 months

23 unchanged sentences

25 $ 131,511 $ ( 2,656 ) 7 $ 31,830 $ ( 1,164 ) 32 $ 163,341 $ ( 3,820 )

For debt securities, the Company does not believe that any individual unrealized loss as of March 31, 2022 or December 31, 2021, represents an other-than-temporary impairment.

For debt securities, the Company does not believe that any individual unrealized loss as of June 30, 2022 or December 31, 2021, represents an other-than-temporary impairment.

The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate an other-than-temporary impairment.

The Company’s management considers the length of time and the extent to which the fair value has been less than cost, and the financial condition of the issuer.

securities that are temporarily impaired at March 31, 2022 and December 31, 2021 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities.

securities that are temporarily impaired at June 30, 2022 and December 31, 2021 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities.

The Company does not intend to sell, and it is not more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.

Securities available-for-sale with a fair value of $ 147.4 million and $ 121.0 million at March 31, 2022 and December 31, 2021, respectively, are pledged to secure public deposits, short-term borrowings and for other purposes as required or permitted by law.

Securities available-for-sale with a fair value of $ 195.3 million and $ 121.0 million at June 30, 2022 and December 31, 2021, respectively, are pledged to secure public deposits, short-term borrowings and for other purposes as required or permitted by law.

The following table presents the scheduled maturities of debt securities as of the date indicated:

March 31, 2022

June 30, 2022

(Dollars in thousands)

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(Dollars in thousands)

8 unchanged sentences

Net (Loss) Gain on Securities $ ( 199 ) $ 11 $ ( 206 ) $ 458

As of March 31, 2022 and December 31, 2021, securities available to be pledged have a fair value of $ 219.0 million and $ 214.7 million, respectively,and are inclusive of collateral currently pledged for public funds and sweep deposits.

As of June 30, 2022 and December 31, 2021, securities available to be pledged have a fair value of $ 202.0 million and $ 214.7 million, respectively, and are inclusive of collateral currently pledged for public funds and sweep deposits.

Loans and Allowance for Loan Losses

20 unchanged sentences

The following table presents the classifications of loans as of the dates indicated.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(Dollars in thousands)

10 unchanged sentences

$ 1,015,136 $ 1,009,214

The Small Business Administration reopened the Payroll Protection Program ("PPP") the week of January 11, 2021 accepting applications for both First Draw and Second Draw PPP Loans.

PPP loans decreased $ 16.3 million to $ 8.2 million at March 31, 2022 compared to $ 24.5 million at December 31, 2021.

Net unamortized PPP loan origination fees as of March 31, 2022 and December 31, 2021 were $ 274,000 and $ 678,000 , respectively.

Net PPP loan origination fees earned were $ 404,000 and $ 535,000 for the three months ended March 31, 2022 and March 31, 2021, respectively.

Payroll Protection Program ("PPP") loans decreased $ 20.7 million to $ 3.9 million at June 30, 2022 compared to $ 24.5 million at December 31, 2021.

Net unamortized PPP loan origination fees as of June 30, 2022 and December 31, 2021 were $ 144,000 and $ 678,000 , respectively.

$ 130,000 and $ 534,000 of net PPP loan origination fees were earned for the three and six months ended June 30, 2022, respectively, compared to $ 489,000 and $ 1.0 million for the three and six months ended June 30, 2021, respectively.

All PPP loans are classified as commercial and industrial loans held for investment.

No allowance for loan loss was allocated to the PPP loan portfolio due to the Bank complying with the lender obligations that ensure SBA guarantee.

Total unamortized net deferred loan fees were $ 1.6 million and $ 1.9 million at March 31, 2022 and December 31, 2021, respectively.

Total unamortized net deferred loan fees were $ 1.4 million and $ 1.9 million at June 30, 2022 and December 31, 2021, respectively.

The Company uses an eight-point internal risk rating system to monitor the credit quality of the overall loan portfolio.

6 unchanged sentences

The following table presents loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated.

At March 31, 2022 and December 31, 2021, there were no loans in the criticized category of Loss within the internal risk rating system.

March 31, 2022

At June 30, 2022 and December 31, 2021, there were no loans in the criticized category of Loss within the internal risk rating system.

June 30, 2022

(Dollars in Thousands)

18 unchanged sentences

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated.

March 31, 2022

June 30, 2022

(Dollars in Thousands)

17 unchanged sentences

$ 1,012,860 $ 2,875 $ 98 $ — $ 2,973 $ 4,963 $ 1,020,796

Additional interest income that would have been recorded if the loans that were nonaccrual at March 31, 2022 were current was $ 79,000 for the three months ended March 31, 2022, and $ 61,000 for the three months ended March 31, 2021.

Additional interest income that would have been recorded if the loans that were nonaccrual at June 30, 2022 were current was $ 43,000 and $ 94,000 for the three and six months ended June 30, 2022, respectively, and $ 135,000 and $ 196,000 for the three and six months ended June 30, 2021, respectively.

The following table sets forth the amounts and categories of nonperforming assets at the dates indicated.

23 unchanged sentences

Nonperforming Assets to Total Assets

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $ 945,000 and $ 571,000 at March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022 , the Company had one TDR loan in forbearance that totaled $ 128,000 .

There were no modifications to troubled debt restructurings during the three months ended March 31, 2022.

As of December 31, 2021, there were no loans in forbearance.

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $ 728,000 and $ 571,000 at June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022, the Company had no TDR loans in forbearance.

There were no modifications to troubled debt restructurings during the three months ended June 30, 2022.

As of December 31, 2021, there was one TDR loan in forbearance.

The following table presents a summary of the loans considered to be impaired as of the dates indicated.

March 31, 2022

June 30, 2022

Quarter Ended Year to Date

(Dollars in thousands)

10 unchanged sentences

1,662 86 1,662 1,676 11 2,817 11

— — — — — — —

Commercial and Industrial

36 unchanged sentences

$ 15,664 $ 299 $ 16,029 $ 34,388 $ 1,111

The recorded investment of loans evaluated for impairment decreased $ 493,000 at March 31, 2022 compared to December 31, 2021 and was primarily related to commercial real estate loans.

The recorded investment of loans evaluated for impairment decreased $ 527,000 at June 30, 2022 compared to December 31, 2021 and was primarily related to commercial real estate loans.

The following tables present the activity in the allowance for loan losses summarized by primary segments and segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for potential impairment at the dates and for the periods indicated.

(Dollars in thousands)

March 31, 2022 $ 1,472 $ 6,326 $ 704 $ 1,130 $ 1,292 $ — $ 671 $ 11,595

( 15 ) ( 2,712 ) ( 20 ) ( 2,747 )

126 57 18 201

Provision (Recovery) 71 ( 303 ) ( 233 ) 3,874 212 163 3,784

June 30, 2022 $ 1,654 $ 6,023 $ 471 $ 2,349 $ 1,502 $ — $ 834 $ 12,833

(Dollars in thousands)

December 31, 2021 $ 1,420 $ 5,960 $ 1,249 $ 1,151 $ 1,050 $ — $ 752 $ 11,582

2 unchanged sentences

Provision (Recovery) 138 63 ( 778 ) 3,842 437 82 3,784

March 31, 2022 $ 1,385 $ 511 $ 801 $ 4,568 $ 1,988 $ — $ 2,342 $ 11,595

March 31, 2022

June 30, 2022 $ 1,654 $ 6,023 $ 471 $ 2,349 $ 1,502 $ — $ 834 $ 12,833

June 30, 2022

(Dollars in thousands)

10 unchanged sentences

(Dollars in thousands)

March 31, 2021 $ 1,975 $ 5,917 $ 939 $ 1,543 $ 1,103 $ — $ 1,248 $ 12,725

— — — — ( 25 ) — — ( 25 )

4 — — 10 30 — — 44

Provision (Recovery) ( 391 ) ( 335 ) 197 ( 401 ) ( 167 ) — ( 103 ) ( 1,200 )

June 30, 2021 $ 1,588 $ 5,582 $ 1,136 $ 1,152 $ 941 $ — $ 1,145 $ 11,544

(Dollars in thousands)

December 31, 2020 $ 2,249 $ 6,010 $ 889 $ 1,423 $ 1,283 $ — $ 917 $ 12,771

2 unchanged sentences

Provision (Recovery) ( 674 ) ( 428 ) 247 ( 293 ) ( 280 ) — 228 ( 1,200 )

March 31, 2021 $ 1,975 $ 5,917 $ 939 $ 1,543 $ 1,103 $ — $ 1,248 $ 12,725

March 31, 2021

June 30, 2021 $ 1,588 $ 5,582 $ 1,136 $ 1,152 $ 941 $ — $ 1,145 $ 11,544

June 30, 2021

(Dollars in thousands)

4 unchanged sentences

The following table presents the major classifications of loans summarized by individually evaluated for impairment and collectively evaluated for potential impairment as of the dates indicated.

At March 31, 2022 and December 31, 2021, commercial and industrial loans include $ 8.2 million and $ 24.5 million, respectively, of PPP loans collectively evaluated for potential

At June 30, 2022 and December 31, 2021, commercial and industrial loans include $ 3.9 million and $ 24.5 million, respectively, of PPP loans collectively evaluated for potential impairment.

No allowance for loan loss was allocated to the PPP loan portfolio due to the Bank complying with the lender obligations that ensure SBA guarantee.

March 31, 2022

June 30, 2022

(Dollars in thousands)

16 unchanged sentences

Accretable Yield

March 31, 2022 $ 670

June 30, 2022 $ 596

Short-Term Borrowings

3 unchanged sentences

The following table sets forth the components of short-term borrowings as of the dates indicated.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amount Weighted

25 unchanged sentences

The standard inputs that are normally used include benchmark yields of like securities, reportable trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.

There were no transfers into or out of Level 3 during the three months ended March 31, 2022 or year ended December 31, 2021.

There were no transfers into or out of Level 3 during the six months ended June 30, 2022 or year ended December 31, 2021.

2022 December 31

18 unchanged sentences

The table also presents the significant unobservable inputs used in the fair value measurements.

Financial Asset Fair Value Hierarchy March 31,

Financial Asset Fair Value Hierarchy June 30,

2022 Valuation

4 unchanged sentences

0 % to 50 % 16.5 %

Mortgage Servicing Rights Level 3 178 Discounted Cash Flow Discount Rate 9 % to 11 % 10.3 %

Prepayment Speed 9 % to 16 % 10.8 %

Financial Asset Fair Value Hierarchy December 31,

16 unchanged sentences

Fair value is measured based on the value of the collateral securing these loans and is classified as Level 3 in the fair value hierarchy.

At March 31, 2022 and December 31, 2021, the fair value of impaired loans consists of the loan balances of $ 2.1 and $ 2.3 million, respectively, less their specific valuation allowances of $ 180,000 and $ 299,000 , respectively.

The fair value of mortgage servicing rights ("MSRs") is determined by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic

factors, which are determined based on current market conditions.

At June 30, 2022 and December 31, 2021, the fair value of impaired loans consists of the loan balances of $ 2.1 million and $ 2.3 million, respectively, less their specific valuation allowances of $ 330,000 and $ 299,000 , respectively.

The expected rate of mortgage loan prepayments is the most significant factor driving the value of MSRs.

1 unchanged sentence

Since the valuation model includes significant unobservable inputs as listed above, MSRs are classified as Level 3.

MSRs are reported in Other Assets in the Consolidated Statements of Financial Condition and are amortized into mortgage servicing income in Other Income in the Consolidated Statements of Income.

MSRs are reported in Other Assets in the Consolidated Statements of Financial Condition and are amortized into mortgage servicing income in Other Income in the Consolidated Statements of Income (Loss).

OREO properties are evaluated at the time of acquisition and recorded at fair value, less estimated selling costs.

8 unchanged sentences

The following table presents the estimated fair values of the Company’s financial instruments at the dates indicated.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

(Dollars in thousands)

27 unchanged sentences

The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and performance letters of credit written is represented by the contractual amount of

those instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

34 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(Dollars in thousands)

20 unchanged sentences

Lease Liabilities $ 1,995

During the three months ended March 31, 2022, the Company entered into a new lease agreement for the McMurray, PA branch, for a 10-year term ending March 31, 2032.

During the six months ended June 30, 2022, the Company entered into a new lease agreement for the McMurray, PA branch, for a 10-year term ending March 31, 2032, as well as a new lease agreement for the Waynesburg branch, for a 5-year term ending July 31, 2027.

The increase to the operating Right of Use Asset and corresponding lease liability is approximately $ 1.3 million.

Other Noninterest Expense

The details of other noninterest expense for the Company’s Consolidated Statements of (Loss) Income for the periods indicated are as follows:

The details of other noninterest expense for the Company’s Consolidated Statements of Income (Loss) for the periods indicated are as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

(Dollars in thousands)

7 unchanged sentences

Meals and Entertainment 38 26 68 60

Travel 34 28 73 50

Training 13 7 31 24

4 unchanged sentences

Segment and Related Information

At March 31, 2022, the Company’s business activities were comprised of two operating segments, which are community banking and insurance brokerage services.

At June 30, 2022, the Company’s business activities were comprised of two operating segments, which are community banking and insurance brokerage services.

CB Financial is the parent company of the Bank and Exchange Underwriters, a wholly owned subsidiary of the Bank.

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(Dollars in thousands)

March 31, 2022

June 30, 2022

Assets $ 1,385,888 $ 4,782 $ 128,432 $ ( 132,641 ) $ 1,386,461

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Stockholders' Equity 126,263 3,379 133,124 ( 129,642 ) 133,124

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Interest and Dividend Income $ 10,940 $ 2 $ 1,255 $ ( 1,239 ) $ 10,958

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Net Interest and Dividend Income After Provision for Loan Losses 6,516 2 1,100 ( 1,239 ) 6,379

Noninterest Income 777 1,797 39 — 2,613

Noninterest Income (Loss) 903 1,369 ( 167 ) — 2,105

Noninterest Expense 7,420 985 5 — 8,410

Undistributed Net Income of Subsidiary 561 — 1,852 ( 2,413 ) —

Undistributed Net Income (Loss) of Subsidiary 273 — ( 897 ) 624 —

Income Before Income Tax Expense (Benefit) 272 386 31 ( 615 ) 74

Income Tax Expense (Benefit) ( 70 ) 113 ( 87 ) — ( 44 )

Net Income $ 3,112 $ 561 $ 3,047 $ ( 3,673 ) $ 3,047

Three Months Ended March 31, 2021

Net Income (Loss) $ 342 $ 273 $ 118 $ ( 615 ) $ 118

Six Months Ended June 30, 2022

Interest and Dividend Income $ 21,535 $ 3 $ 2,534 $ ( 2,498 ) $ 21,574

3 unchanged sentences

Net Interest and Dividend Income After Provision for Loan Losses 16,543 3 2,224 ( 2,498 ) 16,272

Noninterest Income 1,343 1,591 240 — 3,174

Noninterest Income (Loss) 1,680 3,166 ( 128 ) — 4,718

Noninterest Expense 15,065 1,992 9 — 17,066

Undistributed Net Income of Subsidiary 834 — 955 ( 1,789 ) —

Income Before Income Tax Expense (Benefit) 3,992 1,177 3,042 ( 4,287 ) 3,924

Income Tax Expense (Benefit) 540 343 ( 124 ) — 759

Net Income (Loss) $ 3,452 $ 834 $ 3,166 $ ( 4,287 ) $ 3,165

Community Bank Exchange Underwriters, Inc.

CB Financial Services, Inc.

Net Eliminations Consolidated

(Dollars in thousands)

Three Months Ended June 30, 2021

Interest and Dividend Income $ 10,798 $ 1 $ 5,825 $ ( 5,804 ) $ 10,820

Interest Expense 886 — — — 886

Net Interest and Dividend Income 9,912 1 5,825 ( 5,804 ) 9,934

(Recovery) Provision for Loan Losses ( 1,200 ) — — — ( 1,200 )

Net Interest and Dividend Income After (Recovery) Provision for Loan Losses 11,112 1 5,825 ( 5,804 ) 11,134

Noninterest Income 1,002 1,209 8 — 2,219

Noninterest Expense 12,757 962 3 — 13,722

Undistributed Net Income (Loss) of Subsidiary 177 — ( 6,050 ) 5,873 —

(Loss) Income Before Income Tax Expense (Benefit) ( 466 ) 248 ( 220 ) 69 ( 369 )

Income Tax (Benefit) Expense ( 220 ) 71 3 — ( 146 )

Net (Loss) Income $ ( 246 ) $ 177 $ ( 223 ) $ 69 $ ( 223 )

Six Months Ended June 30, 2021

Interest and Dividend Income $ 21,768 $ 3 $ 7,145 $ ( 7,108 ) $ 21,808

Interest Expense 1,897 — — — 1,897

Net Interest and Dividend Income 19,871 3 7,145 ( 7,108 ) 19,911

(Recovery) Provision for Loan Losses ( 1,200 ) — — — ( 1,200 )

Net Interest and Dividend Income After (Recovery) Provision for Loan Losses 21,071 3 7,145 ( 7,108 ) 21,111

Noninterest Income 2,345 2,800 248 — 5,393

Noninterest Expense 21,147 1,964 6 — 23,117

Undistributed Net Income (Loss) of Subsidiary 585 — ( 4,750 ) 4,165 —

Income Before Income Tax Expense 2,854 839 2,637 ( 2,943 ) 3,387

Income Tax Expense 496 254 15 — 765

Net Income $ 2,605 $ 407 $ 2,845 $ ( 3,012 ) $ 2,845

Net Income (Loss) $ 2,358 $ 585 $ 2,622 $ ( 2,943 ) $ 2,622

Stock Based Compensation

The following table presents stock option information for the periods indicated.

The following table presents stock option information for the period indicated.

Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual

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Forfeited ( 3,088 ) 26.87

Outstanding Options at March 31, 2022 285,538 $ 24.64 6.1

Exercisable Options at March 31, 2022 179,515 $ 24.25 4.2

Outstanding Options at June 30, 2022 286,518 $ 24.58 5.4

Exercisable Options at June 30, 2022 188,353 $ 24.33 3.6

Number of Shares Weighted Average Exercise Price Weighted Average Remaining Service Period in Years

Nonvested Options March 31, 2022 106,023 $ 25.30 9.4

Nonvested Options at June 30, 2022 98,165 $ 25.07 9.0

Summary of Significant Assumptions for Newly Issued Stock Options

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Weighted Average Grant Date Fair Value (per share) $ 4.86

The following table presents restricted stock award information for the periods indicated

The following table presents restricted stock award information for the period indicated

Number of Shares Weighted Average Grant Date Fair Value Price Weighted Average Remaining Service Period in Years

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Granted 21,765 26.07

Vested ( 120 ) 23.60

Forfeited ( 2,325 ) 23.80

Nonvested Restricted Stock at March 31, 2022 76,705 $ 24.55 5.0

Nonvested Restricted Stock at June 30, 2022 75,460 $ 24.53 4.2

The Company recognizes expense over a five-year vesting period for the restricted stock awards and stock options.

Stock-based compensation expense related to restricted stock awards and stock options was $ 130,000 and $ 121,000 for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022 and December 31, 2021, total unrecognized compensation expense was $ 456,000 and $ 65,000 , respectively, related to stock options, and $ 1.7 million and $ 1.3 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at March 31, 2022 and December 31, 2021 exceeds the exercise price of the stock options.

The intrinsic value of stock options was $ 273,000 and $ 296,000 at March 31, 2022 and December 31, 2021, respectively.

At March 31, 2022 and December 31, 2021, respectively, there were 362,622 and 500,000 shares available under the Plan to be issued in connection with the exercise of stock options, and 145,049 and 200,000 shares that may be issued as restricted stock awards or units.

Stock-based compensation expense related to restricted stock awards and stock options was $ 149,000 and $ 125,000 for the three months ended June 30, 2022 and 2021, and $ 279,000 and $ 246,000 for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, total unrecognized compensation expense was $ 436,718 and $ 65,000 , respectively, related to stock options, and $ 1.6 million and $ 1.3 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at June 30, 2022 and December 31, 2021 exceeds the exercise price of the stock options.

The intrinsic value of stock options was $ 190,016 and $ 296,000 at June 30, 2022 and December 31, 2021, respectively.

At June 30, 2022 and December 31, 2021, respectively, there were 358,235 and 500,000 shares available under the Plan to be issued in connection with the exercise of stock options, and 143,294 and 200,000 shares that may be issued as restricted stock awards or units.

Restricted stock awards or units may be issued above this amount provided that the number of shares reserved for stock options is reduced by two and one-half shares for each restricted stock award or unit share granted.

Subsequent Events

Stock Repurchase Program

On April 21, 2022, the Company announced a program to repurchase up to $ 10 million of the Company’s outstanding shares of common stock.

Based on the Company’s closing stock price on April 19, 2022, the repurchase program, if fully completed, would encompass 433,463 shares, or approximately 8.4 % the shares currently outstanding.

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the SEC and incorporated into the consolidated financial statements the effect of all material known events determined by Accounting Standards Codification ("ASC") 855, Subsequent Events , to be recognizable events .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements