What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 141 added, 123 removed, 844 unchanged (24% of the section changed)

1 unchanged sentence

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited) June 30,

(Unaudited) September 30,

2022 December 31,

7 unchanged sentences

Total Securities 193,846 224,974

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

Loans, Net of Allowance for Loan Losses of $ 12,854 and $ 11,582 at September 30, 2022 and December 31, 2021, Respectively

1,030,088 1,009,214

23 unchanged sentences

Common Stock, $ 0.4167 Par Value;

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

35,000,000 Shares Authorized, 5,702,433 Shares Issued and 5,096,672 Shares Outstanding at September 30, 2022, with 5,680,993 and 5,260,672 Shares Issued and Outstanding at December 31, 2021.

Capital Surplus

2 unchanged sentences

60,930 57,534

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

Treasury Stock, at Cost ( 605,761 and 420,321 Shares at September 30, 2022 and December 31, 2021, Respectively)

( 13,745 ) ( 9,144 )

5 unchanged sentences

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

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

23 unchanged sentences

Net Gain on Purchased Tax Credits 14 18 43 53

Net Loss on Disposal of Fixed Assets — ( 3 ) ( 8 ) ( 3 )

Net Gain (Loss) on Disposal of Fixed Assets 439 — 431 ( 3 )

Income from Bank-Owned Life Insurance 140 138 418 411

17 unchanged sentences

TOTAL NONINTEREST EXPENSE 8,827 9,773 25,893 32,890

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

Income Before Income Tax Expense

4,927 2,435 8,851 5,822

Income Tax Expense 998 452 1,757 1,217

NET INCOME $ 3,929 $ 1,983 $ 7,094 $ 4,605

EARNINGS PER SHARE

Basic $ 0.77 $ 0.37 $ 1.38 $ 0.85

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

(Dollars in thousands)

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

Net Income $ 3,929 $ 1,983 $ 7,094 $ 4,605

Other Comprehensive (Loss) Income:

4 unchanged sentences

Income Tax Effect (2)

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

Other Comprehensive (Loss), Net of Income Tax Effect ( 9,220 ) ( 575 ) ( 25,721 ) ( 2,268 )

Total Comprehensive (Loss) Income $ ( 5,291 ) $ 1,408 $ ( 18,627 ) $ 2,337

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

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

(2) Reported in Income Tax 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 June 30, 2022 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

Three Months Ended September 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)

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

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

Comprehensive Loss:

9 unchanged sentences

— — — ( 1,224 ) — — ( 1,224 )

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

September 30, 2022 5,702,433 $ 2,376 $ 83,793 $ 60,930 $ ( 13,745 ) $ ( 26,648 ) $ 106,706

Three Months Ended September 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

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

Comprehensive Income:

Net Loss — — — ( 223 ) — — ( 223 )

Other Comprehensive Income — — — — — 723 723

Net Income — — — 1,983 — — 1,983

Other Comprehensive Loss — — — — — ( 575 ) ( 575 )

Stock-Based Compensation Expense — — 169 — — — 169

Exercise of Stock Options — — ( 8 ) — 62 — 54

Treasury Stock Purchased, at cost ( 81,676 shares)

2 unchanged sentences

— — — ( 1,290 ) — — ( 1,290 )

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

September 30, 2021 5,680,993 $ 2,367 $ 83,130 $ 51,839 $ ( 7,483 ) $ 1,134 $ 130,987

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

Nine Months Ended September 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)

11 unchanged sentences

— — — ( 3,698 ) — — ( 3,698 )

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

September 30, 2022 5,702,433 $ 2,376 $ 83,793 $ 60,930 $ ( 13,745 ) $ ( 26,648 ) $ 106,706

Nine Months Ended September 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)

3 unchanged sentences

Other Comprehensive Loss — — — — — ( 2,268 ) ( 2,268 )

Restricted Stock Awards Forfeited — — — — — — —

Restricted Stock Awards Granted — — — — — — —

Stock-Based Compensation Expense — — 415 — — — 415

4 unchanged sentences

— — — ( 3,898 ) — — ( 3,898 )

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

September 30, 2021 5,680,993 $ 2,367 $ 83,130 $ 51,839 $ ( 7,483 ) $ 1,134 $ 130,987

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30, 2022 2021

Nine Months Ended September 30, 2022 2021

(Dollars in thousands)

16 unchanged sentences

Noncash Expense for Stock-Based Compensation 424 415

Decrease in Accrued Interest Receivable 36 266

Net Loss on Disposal of Fixed Assets 8 3

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

Payments on Operating Leases — ( 170 )

Decrease in Accrued Interest Payable ( 42 ) ( 146 )

(Increase) Decrease in Accrued Interest Receivable ( 59 ) 517

Net (Gain) Loss on Disposal of Fixed Assets ( 431 ) 3

(Increase) Decrease in Taxes Payable ( 947 ) 295

Increase (Decrease) in Accrued Interest Payable 29 ( 277 )

Refund of Federal and State Income Taxes — 1,311

8 unchanged sentences

Purchase of Premises and Equipment ( 470 ) ( 2,275 )

Proceeds from Disposal of Premises and Equipment 480 —

Proceeds From Sale of Other Real Estate Owned 37 285

2 unchanged sentences

FINANCING ACTIVITIES

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

Net Increase in Deposits 49,221 52,542

Net (Decrease) Increase in Short-Term Borrowings ( 21,158 ) 12,260

3 unchanged sentences

Exercise of Stock Options 165 54

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

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

NET CASH PROVIDED BY FINANCING ACTIVITIES 19,848 56,507

INCREASE IN CASH AND CASH EQUIVALENTS 3,127 12,612

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended June 30, 2022 2022 2021

Nine Months Ended September 30, 2022 2022 2021

(Dollars in thousands)

8 unchanged sentences

Transfer of Deposits to Deposits Held for Sale — 102,647

Other Real Estate Acquired in Settlement of Loans — 37

Right of Use Asset Recognized 1,284 —

27 unchanged sentences

Use of Critical Accounting Estimates

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

There were no material changes in our critical accounting policies during the nine months ended September 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 (Loss) Pe r Share

The FASB issued ASU 2022-22, Financial Instruments – Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures .

This ASU eliminates the TDR recognition and measurement guidance, and instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether a modification represents a new loan or a continuation of an existing loan.

In addition, this ASU enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

For public business entities, this ASU requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20.

Gross write-off information must be included in the vintage disclosures required for public business entities in accordance with paragraph 326-20-50-6, which requires that en entity disclose the amortized cost basis for financing receivables by credit quality indicator and class of financing receivable by year of origination.

For entities that have adopted the amendments in updated 2016-13, the amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

For entities that have not yet adopted the amendments in update 2016-13, the effective dates for the amendments in this update are the same as the effective dates in Update 2016-13.

The Company has not yet adopted the accounting standard as ASU 2016-13 has not been adopted.

Management continues to evaluate the impact of its future adoption of this guidance on the Company's consolidated financial statements.

Earnings 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

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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

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

Net Income $ 3,929 $ 1,983 $ 7,094 $ 4,605

Weighted-Average Basic Common Shares Outstanding

4 unchanged sentences

5,118,627 5,390,128 5,165,376 5,420,792

Earnings (Loss) Per Share:

Earnings Per Share:

$ 0.77 $ 0.37 $ 1.38 $ 0.85

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

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

June 30, 2022

September 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:

June 30, 2022

September 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 June 30, 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 September 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 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 $ 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 securities that are temporarily impaired at September 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 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 $ 179.6 million and $ 121.0 million at September 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.

Total securities available to be pledged have a fair value of $ 182.8 million at September 30, 2022 and $ 214.7 million at December 31, 2021.

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

June 30, 2022

September 30, 2022

(Dollars in thousands)

Due in One Year or Less

$ 1,095 $ 1,099

Due after One Year through Five Years

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

9 unchanged sentences

Net (Loss) Gain on Securities $ ( 46 ) $ 24 $ ( 252 ) $ 482

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

8 unchanged sentences

Commercial real estate loans generally present a higher level of credit risk than loans secured by residences.

This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general

economic conditions on income-producing properties, and the increased difficulty in evaluating and monitoring these types of loans.

This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income-producing properties, and the increased difficulty in evaluating and monitoring these types of loans.

Furthermore, the repayment of commercial real estate loans is typically dependent upon the successful operation of the related real estate project.

8 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(Dollars in thousands)

10 unchanged sentences

$ 1,030,088 $ 1,009,214

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.

Payroll Protection Program ("PPP") loans decreased $ 23.8 million to $ 768,000 at September 30, 2022 compared to $ 24.5 million at December 31, 2021.

Net unamortized PPP loan origination fees as of September 30, 2022 and December 31, 2021 were $ 27,000 and $ 678,000 , respectively.

Additionally, $ 117,000 and $ 651,000 of net PPP loan origination fees were earned for the three and nine months ended September 30, 2022, respectively, compared to $ 380,000 and $ 1.4 million for the three and nine months ended September 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 $ 1.4 million and $ 1.9 million at June 30, 2022 and December 31, 2021, respectively.

Total unamortized net deferred loan fees were $ 1.3 million and $ 1.9 million at September 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 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

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

September 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.

June 30, 2022

September 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 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.

Additional interest income that would have been recorded if the loans that were nonaccrual at September 30, 2022 were current was $ 56,000 and $ 142,000 for the three and nine months ended September 30, 2022, respectively, and $ 33,000 and $ 136,000 for the three and nine months ended September 30, 2021, respectively.

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

1 unchanged sentence

Nonaccrual TDRs are included in their specific loan category in the nonaccrual loans section.

Nonperforming loans do not include loans modified under Section 4013 of the CARES Act and interagency guidance as further explained below.

September 30,

2022 December 31,

2 unchanged sentences

$ 1,622 $ 1,393

Construction — —

Commercial and Industrial

14 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 $ 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 recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $ 944,456 and $ 571,000 at September 30, 2022 and December 31, 2021, respectively.

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

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

As of December 31, 2021, there was no TDR loan in forbearance.

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

June 30, 2022

September 30, 2022

Quarter Ended Year to Date

50 unchanged sentences

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

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 recorded investment of loans evaluated for impairment decreased $ 964,000 at September 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

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

— — — — ( 46 ) — — ( 46 )

1 unchanged sentence

Provision (Recovery) 148 ( 24 ) 94 ( 211 ) 89 — ( 96 ) —

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

September 30, 2022 $ 1,818 $ 5,999 $ 565 $ 2,176 $ 1,558 $ — $ 738 $ 12,854

(Dollars in thousands)

3 unchanged sentences

Provision (Recovery) 288 39 ( 684 ) 3,631 524 — ( 14 ) 3,784

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

June 30, 2022

September 30, 2022 $ 1,818 $ 5,999 $ 565 $ 2,176 $ 1,558 $ — $ 738 $ 12,854

September 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

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

— — — — ( 19 ) — — ( 19 )

2 — — 11 43 — — 56

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

(Recovery) Provision ( 98 ) 347 ( 71 ) ( 21 ) ( 12 ) — ( 145 ) —

September 30, 2021 $ 1,492 $ 5,929 $ 1,065 $ 1,142 $ 953 $ — $ 1,000 $ 11,581

(Dollars in thousands)

2 unchanged sentences

15 — — 33 101 — — 149

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

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

June 30, 2021

(Recovery) Provision ( 772 ) ( 81 ) 176 ( 314 ) ( 292 ) — 83 ( 1,200 )

September 30, 2021 $ 1,492 $ 5,929 $ 1,065 $ 1,142 $ 953 $ — $ 1,000 $ 11,581

September 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 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.

At September 30, 2022 and December 31, 2021, commercial and industrial loans include $ 768,000 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.

June 30, 2022

September 30, 2022

(Dollars in thousands)

16 unchanged sentences

Accretable Yield

June 30, 2022 $ 596

September 30, 2022 $ 548

Short-Term Borrowings

3 unchanged sentences

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

June 30, 2022 December 31, 2021

September 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 six months ended June 30, 2022 or year ended December 31, 2021.

There were no transfers into or out of Level 3 during the nine months ended September 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 June 30,

Financial Asset Fair Value Hierarchy September 30,

2022 Valuation

22 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 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.

At September 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 $ 214,000 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.

2 unchanged sentences

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 (Loss).

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.

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.

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

(Dollars in thousands)

33 unchanged sentences

The following table presents the unused and available credit balances of financial instruments whose contracts represent credit risk at the dates indicated.

September 30,

2022 December 31,

29 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Total Lease Expense $ 96 $ 90 $ 282 $ 306

September 30,

2022 December 31,

4 unchanged sentences

Weighted Average Discount Rate 2.58 % 2.51 %

September 30,

(Dollars in thousands)

9 unchanged sentences

Lease Liabilities $ 1,905

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.

During the nine months ended September 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 Income (Loss) for the periods indicated are as follows:

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

15 unchanged sentences

Segment and Related Information

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

At September 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.

6 unchanged sentences

(Dollars in thousands)

June 30, 2022

September 30, 2022

Assets $ 1,425,905 $ 5,173 $ 121,522 $ ( 126,680 ) $ 1,425,920

5 unchanged sentences

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

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Interest and Dividend Income $ 12,267 $ 1 $ 1,246 $ ( 1,227 ) $ 12,287

8 unchanged sentences

Income Tax Expense (Benefit) 948 95 ( 45 ) — 998

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

Six Months Ended June 30, 2022

Net Income $ 4,034 $ 230 $ 3,929 $ ( 4,264 ) $ 3,929

Nine Months Ended September 30, 2022

Interest and Dividend Income $ 33,802 $ 4 $ 3,779 $ ( 3,724 ) $ 33,861

8 unchanged sentences

Income Tax Expense (Benefit) 1,488 438 ( 169 ) — 1,757

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

Net Income $ 7,486 $ 1,064 $ 7,094 $ ( 8,550 ) $ 7,094

Community Bank Exchange Underwriters, Inc.

2 unchanged sentences

(Dollars in thousands)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Interest and Dividend Income $ 10,768 $ 1 $ 1,311 $ ( 1,294 ) $ 10,786

1 unchanged sentence

Net Interest and Dividend Income 9,992 1 1,311 ( 1,294 ) 10,010

(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

Provision for Loan Losses — — — — —

Net Interest and Dividend Income After Provision for Loan Losses 9,992 1 1,311 ( 1,294 ) 10,010

Noninterest Income 975 1,195 28 — 2,198

Noninterest Expense 8,750 1,020 3 — 9,773

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

Undistributed Net Income of Subsidiary 124 — 654 ( 778 ) —

Income Before Income Tax Expense 2,341 176 1,990 ( 2,072 ) 2,435

Income Tax Expense 393 52 7 — 452

Net Income $ 1,948 $ 124 $ 1,983 $ ( 2,072 ) $ 1,983

Nine Months Ended September 30, 2021

Interest and Dividend Income $ 32,536 $ 4 $ 8,456 $ ( 8,402 ) $ 32,594

1 unchanged sentence

Net Interest and Dividend Income 29,863 4 8,456 ( 8,402 ) 29,921

(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

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

Net Interest and Dividend Income After (Recovery) for Loan Losses 31,063 4 8,456 ( 8,402 ) 31,121

Noninterest Income 3,319 3,995 277 — 7,591

3 unchanged sentences

Income Tax Expense 888 306 23 — 1,217

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

Net Income $ 4,306 $ 710 $ 4,605 $ ( 5,016 ) $ 4,605

Stock Based Compensation

6 unchanged sentences

Forfeited ( 12,858 ) 26.43

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

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

Outstanding Options at September 30, 2022 271,748 $ 24.56 5.4

Exercisable Options at September 30, 2022 177,683 $ 24.32 3.6

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

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

Nonvested Options at September 30, 2022 94,065 $ 25.02 9.0

Summary of Significant Assumptions for Newly Issued Stock Options

10 unchanged sentences

Forfeited ( 3,715 ) 24.01

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

Nonvested Restricted Stock at September 30, 2022 73,070 $ 24.61 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 $ 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.

Stock-based compensation expense related to restricted stock awards and stock options was $ 145,000 and $ 169,000 for the three months ended September 30, 2022 and 2021, and $ 424,000 and $ 415,000 for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022 and December 31, 2021, total unrecognized compensation expense was $ 386,945 and $ 65,000 , respectively, related to stock options, and $ 1.4 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 September 30, 2022 and December 31, 2021 exceeds the exercise price of the stock options.

The intrinsic value of stock options was $ 32,280 and $ 296,000 at September 30, 2022 and December 31, 2021, respectively.

At September 30, 2022 and December 31, 2021, respectively, there were 362,175 and 500,000 shares available under the Plan to be issued in connection with the exercise of stock options, and 144,870 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.

2 unchanged sentences

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