What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-13 compared with 2023-03-10 · 45 added, 64 removed, 522 unchanged (17% of the section changed)

4 unchanged sentences

At December 31, 2023, the Company, on a consolidated basis, had total assets of $1.46 billion, total liabilities of $1.32 billion and stockholders’ equity of $139.8 million.

Copies of the Company's reports, proxy and information statements, and other information filed electronically with the Securities and Exchange Commission (the “SEC”) are available free of charge through the SEC’s website address at https://www.sec.gov and through the Bank’s website address at https://www.communitybank.tv .

Community Bank

Community Bank is a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania.

After the consolidation of one branch in 2022 and the consolidation and sale of eight branches in 2021, the Bank reduced the total number of branches to 13 and operates from 10 offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania and three offices in Marshall and Ohio Counties in West Virginia.

The Bank also has one loan production office in Allegheny County, a corporate center in Washington County and an operations center in Greene County in Pennsylvania.

The Bank operates 10 offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania and three offices in Marshall and Ohio Counties in West Virginia.

The Bank also has a loan production office in Allegheny County, a loan production office and a corporate center in Washington County and an operations center in Greene County, Pennsylvania.

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.

The Bank is the sole shareholder of Exchange Underwriters, Inc.

("Exchange Underwriters" or “EU”), a wholly-owned subsidiary located in Washington County that is a full-service, independent insurance agency that offers property and casualty, commercial liability, surety and other insurance products.

Exchange Underwriters' independent insurance agents shop from over 50 of the nation’s leading insurance providers to find the policy that fits their client's needs.

("Exchange Underwriters" or “EU”), a wholly-owned subsidiary located in Washington County that was a full-service, independent insurance agency that offered property and casualty, commercial liability, surety and other insurance products.

On December 1, 2023, the Company announced that the Bank and EU entered into an Asset Purchase Agreement with World Insurance Associates, LLC ("World") pursuant to which EU sold substantially all of its assets to World for a purchase price of $30.5 million cash plus possible additional earn-out payments.

The sale of assets was completed on December 8, 2023 and resulted in a pre-tax gain of $24.6 million.

Assets remaining in the EU subsidiary at December 31, 2023 consisted primarily of cash received from the sale of assets.

The EU subsidiary will be dissolved with the remaining assets and liabilities being transferred to the Bank during 2024.

The Bank was originally chartered in 1901 as The First National Bank of Carmichaels.

2 unchanged sentences

The Bank is a member of the Federal Home Loan Bank (“FHLB”) System.

Our deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”).

Our principal executive office is located at 100 North Market Street, Carmichaels, Pennsylvania, and our telephone number at that address is (724) 966-5041.

Our website address is https://www.communitybank.tv .

Its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”).

The principal executive office is located at 100 North Market Street, Carmichaels, Pennsylvania, and the telephone number at that address is (724) 966-5041.

The website address is https://www.cb.bank .

Information on this website is not and should not be considered to be a part of this Report.

Branch Optimization and Operational Efficiency Initiative

In 2021, the Company announced the implementation of branch optimization and operational efficiency strategic initiatives to improve the Bank’s financial performance and operations in order to position the Bank for continued profitable growth through the optimization of its branch network while expanding technology and infrastructure investments in its remaining locations.

The decision was the result of a comprehensive internal study that measured branch performance by comparing financial and non-financial indicators to growth opportunities, while evolving changes in consumer preferences, largely driven by the global pandemic, led to an acceleration of branch optimization efforts.

The Bank also completed a comprehensive review of its branch network and operating environment to identify solutions to improve operating performance.

This review prioritized profitability, efficiency, infrastructure and client experience improvements, automation in operations, and digital marketing and technology investments and the Bank is in process of implementing operational efficiencies related to individualized processes within its branch network and operating environment.

The Bank has substantially completed these initiatives through the consolidation of six branches that was completed on June 30, 2021.

In addition, CB Financial, Community Bank, and Citizens Bank of West Virginia, Inc.

(“Citizens Bank”) executed a Purchase and Assumption Agreement (the “Agreement”) pursuant to which Citizens Bank agreed to purchase certain loans and other assets, and assume certain deposits and other liabilities, of the branch offices of Community Bank located in Buckhannon, West Virginia, and New Martinsville, West Virginia.

The divestiture of two branches in December 2021 resulted in the sale of $102.8 million of deposits, $6.1 million of loans and $795,000 of premises and equipment and the recognition of a $5.2 million pre-tax gain on sale from a 5.0% premium paid by Citizens Bank on the assumed deposits.

The branch optimization initiative reduced the Bank's branch network to 14 branches.

Effective October 31, 2014, the Company completed a merger with FedFirst Financial Corporation (“FedFirst”), the holding company for First Federal Savings Bank (“FFSB”), a federally chartered stock savings bank.

As part of the merger, the

Company also acquired FFSB's subsidiary, Exchange Underwriters.

The merger expanded the Company’s reach into Fayette and Westmoreland counties in southwestern Pennsylvania.

Effective April 30, 2018, the Company completed its merger with First West Virginia Bancorp (“FWVB”), the holding company for Progressive Bank, N.A.

(“PB”), a national association.

The FWVB merger enhanced the Bank’s exposure into the core of the Tri-State region with the addition of branches in West Virginia and Eastern Ohio.

Effective August 1, 2018, Exchange Underwriters merged with Beynon Insurance Agency to become one of the largest insurance agencies in the Pittsburgh region.

The merger brought together two long-standing, locally owned and operated Southwestern Pennsylvania independent insurance agencies both built upon the same values and culture of serving their customers.

Business Strategy

20 unchanged sentences

Although we intend to continue our efforts to originate commercial real estate and commercial and industrial loans, we intend to continue our philosophy of managing loan exposures through our conservative, yet reasonable, approach to lending.

• Increase fee and other non-interest income, primarily through our insurance operations, as well as mortgage banking and small business lending.

Fee income earned through our insurance agency, Exchange Underwriters, supplements our income from banking operations.

We intend to pursue opportunities to grow this line of business, including hiring insurance producers with established books of business and through acquisitions.

Human Capital

26 unchanged sentences

The safety, health and wellness of our employees is a top priority.

The COVID-19 pandemic continued to present a unique challenge with regard to maintaining employee safety while continuing successful operations.

While management transitioned the majority of our staff back to our locations in early July 2021, some flexible work arrangements continue.

Our staff continues to follow the safety protocol developed by management.

We further promote the health and wellness of our employees by strongly encouraging work-life balance, offering flexible work schedules, keeping the employee portion of health care premiums to a minimum and sponsoring various wellness programs.

We promote the health and wellness of our employees by strongly encouraging work-life balance, offering flexible work schedules, keeping the employee portion of health care premiums to a minimum and sponsoring various wellness programs.

The Company’s southwestern Pennsylvania market area consists of Allegheny, Fayette, Greene, Washington and Westmoreland Counties.

1 unchanged sentence

Our offices located in Allegheny, Washington, Fayette, and Westmoreland Counties are in the southern suburban area of metropolitan Pittsburgh.

Our branches from the FWVB merger extend the Company’s market area into West Virginia with three offices in Marshall and Ohio Counties.

Our market area extends into West Virginia with three offices in Marshall and Ohio Counties.

The following table sets forth certain economic statistics for our market area.

37 unchanged sentences

Our principal lending activity has been the origination in our local market area of residential one- to four-family, commercial real estate, construction, commercial and industrial, and consumer loans.

At December 31, 2022, our total loans receivable, which excludes the allowance for loan losses, increased $29.1 million, or 2.8%, to $1.05 billion compared to $1.02 billion at December 31, 2021.

At December 31, 2023, our total loans receivable, which excludes the allowance for credit losses, increased $60.5 million, or 5.8%, to $1.11 billion compared to $1.05 billion at December 31, 2022.

Residential Real Estate Loans .

1 unchanged sentence

Included in residential real estate loans are traditional one- to four-family mortgage loans, home equity installment loans, and home equity lines of credit.

We generate loans through our marketing efforts, existing customers and referrals, real estate brokers, builders and local businesses.

We generate loans through our marketing efforts, existing customers and

referrals, real estate brokers, builders and local businesses.

At December 31, 2023, $347.8 million, or 31.3%, of our total loan portfolio was invested in residential loans.

15 unchanged sentences

Fixed-rate one- to four-family residential mortgage loans with terms of 15 years or more are originated for resale to the secondary market.

During the years ended December 31, 2022 and 2021, we originated none and $12.6 million of fixed-rate residential mortgage loans, respectively, which were subsequently sold in the secondary mortgage market.

During the year ended December 31, 2023, we originated $2.4 million of fixed-rate residential mortgage loans, respectively, which were subsequently sold in the secondary mortgage market.

The origination of fixed-rate mortgage loans versus adjustable-rate mortgage loans is monitored on an ongoing basis and is affected significantly by the level of market interest rates, customer preference, our interest rate risk position and our competitors’ loan products.

36 unchanged sentences

In evaluating the property securing the loan, the factors considered include the net operating income of the mortgaged property before debt service and depreciation, and the ratio of the loan amount to the appraised value of the property.

We generally will not lend to high

volatility commercial real estate projects.

We generally will not lend to high volatility commercial real estate projects.

All commercial real estate loans are appraised by outside independent state certified general appraisers.

21 unchanged sentences

We originate commercial and industrial loans and lines of credit to borrowers located in our market area that are generally secured by collateral other than real estate, such as equipment, accounts receivable, inventory, and other business assets.

At December 31, 2022, $70.0 million, or 6.7% of our total loan portfolio, consisted of commercial and industrial loans, of which $126,000 are SBA guaranteed Payroll Protection Program ("PPP") loans.

Exclusive of PPP loans, commercial and industrial loans generally have terms of maturity from five to seven years with adjustable interest rates tied to the prime rate, LIBOR, SOFR or the weekly average of the FHLB of Pittsburgh three- to ten-year fixed rates.

At December 31, 2023, $111.3 million, or 10.0% of our total loan portfolio, consisted of commercial and industrial loans.

Commercial and industrial loans generally have terms of maturity from five to seven years with adjustable interest rates tied to the prime rate, SOFR or the weekly average of the FHLB of Pittsburgh three- to ten-year fixed rates.

We generally obtain personal guarantees from the borrower or a third party as a condition to originating the loan.

28 unchanged sentences

The Bank is responsible for pursuing repossession if the borrower defaults on payments.

The Bank discontinued this product offering as of June 30, 2023.

Consumer loans entail greater risks than one- to four-family residential mortgage loans, particularly consumer loans secured by rapidly depreciating assets, such as automobiles, or loans that are unsecured.

13 unchanged sentences

Loan approval authorities vary based on loan size in the aggregate.

Individual officer loan approval authority generally applies to loans of up to $1.0 million.

Individual officer loan approval authority generally applies to loans of up to $1.0

Loans above that amount and up to 65% of the Bank’s legal lending limit may be approved by the Loan Committee.

18 unchanged sentences

Our current investment policy permits us to invest in U.S.

treasuries, U.S government agency securities, mortgage-backed securities, investment grade corporate bonds, obligations of states and political subdivisions, short-term instruments, and other securities.

treasuries, U.S government agency securities, mortgage-backed securities (MBS's), collateralized mortgage obligations (CMO's), investment grade corporate bonds, obligations of states and political subdivisions, short-term instruments, collateralized loan obligations (CLO's) and other securities.

The investment policy also permits investments in certificates of deposit, securities purchased under an agreement to resell, banker’s acceptances, commercial paper and federal funds.

5 unchanged sentences

The debt securities portfolio consists primarily of U.S.

government agency securities, obligations of states and political subdivisions, and mortgage-backed securities and collateralized mortgage obligations of government sponsored enterprises.

government agency securities, obligations of states and political subdivisions, mortgage-backed securities and collateralized mortgage obligations of government sponsored enterprises, collateralized loan obligations and corporate bonds.

We expect the composition of our debt securities portfolio to continue to change based on liquidity needs associated with loan origination activities.

During the year ended December 31, 2022, we had no debt securities that were deemed to be other than temporarily impaired.

During the year ended December 31, 2023, we had no debt securities that were deemed to be impaired.

We also invest in equity securities, which consist primarily of mutual funds and a portfolio of bank stocks.

12 unchanged sentences

The majority of our municipal bonds are general obligation bonds, which are backed by the full faith and credit of the municipality, paid off with funds from taxes and other fees, and have ratings (when available) of A or above.

We also invest in a limited amount of special revenue municipal bonds, which are used to fund projects that will eventually create revenue directly, such as a toll road or lease payments for a new building.

also invest in a limited amount of special revenue municipal bonds, which are used to fund projects that will eventually create revenue directly, such as a toll road or lease payments for a new building.

Mortgage-Backed Securities.

We invest in mortgage-backed (“MBS”) and collateralized mortgage obligation (“CMO”) securities insured or guaranteed by the United States government or government-sponsored enterprises.

These securities, which consist of MBS’s issued by Ginnie Mae, Fannie Mae and Freddie Mac, had an amortized cost of $143.3 million and $143.9 million at December 31, 2022 and 2021, respectively.

The fair value of our MBS portfolio was $121.1 million and $143.1 million at December 31, 2022 and 2021, respectively.

These securities, which consist of MBS’s issued by Ginnie Mae, Fannie Mae and Freddie Mac, had an amortized cost of $178.0 million and $143.3 million at December 31, 2023 and 2022, respectively, and a fair value of $159.7 million and $121.1 million at December 31, 2023 and 2022, respectively.

At December 31, 2023, all MBS’s had fixed rates of interest.

12 unchanged sentences

Investments in MBS’s involve a risk that actual payments will be greater or less than the prepayment rate estimated at the time of purchase, which may result in adjustments to the amortization of any premium or acceleration of any discount relating to such interests, thereby affecting the net yield on our securities.

Collateralized Loan Obligation Securities.

We invest in collateralized loan obligation (“CLO”) securities issued by specialized financial institutions or investment banks.

These floating-rate securities are backed by pools of high-quality commercial and industrial and commercial real estate loans, typically first-lien bank loans to corporations.

Our CLO portfolio had an amortized cost of $29.9 million and a fair value of $29.8 million at December 31, 2023.

The Bank held no CLO's as of December 31, 2022.

Corporate Debt.

28 unchanged sentences

At December 31, 2023, we had a maximum borrowing capacity with the FHLB of up to $478.9 million and available borrowing capacity of $438.3 million.

At December 31, 2022, we had no FHLB advances outstanding.

At December 31, 2023, we had $20.0 million FHLB advances outstanding.

As an alternative to pledging securities, the facility is also used for standby letters of credit to collateralize public deposits in excess of the level insured by the FDIC.

8 unchanged sentences

The 2031 Note is an unsecured subordinated obligation of the Company and may be repaid in whole or in part, without penalty, on any interest payment date on or after December 15, 2026 and at any time upon the occurrence of certain events.

The 2031 Note initially bears a fixed interest rate of 3.875% per year to,

but excluding, December 15, 2026 and thereafter at a floating rate equal to the then-current three-month term SOFR plus 280 basis points.

The 2031 Note initially bears a fixed interest rate of 3.875% per year to, but excluding, December 15, 2026 and thereafter at a floating rate equal to the then-current three-month term SOFR plus 280 basis points.

The 2031 Note qualifies as Tier 2 capital under regulatory guidelines.

2 unchanged sentences

Community Bank is the only subsidiary of the Company.

The Bank wholly-owns Exchange Underwriters, Inc., a full-service, independent insurance agency.

The Bank wholly-owns Exchange Underwriters, Inc., a former full-service, independent insurance agency.

REGULATION AND SUPERVISION

28 unchanged sentences

The legislation also directs the Federal Reserve to promulgate rules prohibiting excessive compensation paid to bank holding company executives, regardless of whether the company is publicly traded or not.

Further, the legislation requires that originators of securitized loans retain a percentage of the risk for transferred loans, directs the

Federal Reserve to regulate pricing of certain debit card interchange fees and contains a number of reforms related to mortgage origination.

Further, the legislation requires that originators of securitized loans retain a percentage of the risk for transferred loans, directs the Federal Reserve to regulate pricing of certain debit card interchange fees and contains a number of reforms related to mortgage origination.

The Dodd Frank Act has resulted in an increased regulatory burden and compliance, operating and interest expense for the Company and the Bank.

12 unchanged sentences

Additionally, an institution that retains credit risk in connection with an asset sale is required to maintain additional regulatory capital because of the purchaser’s recourse against the institution.

In assessing an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary.

an institution’s capital adequacy, the FDIC takes into consideration not only these numeric factors, but qualitative factors as well and has the authority to establish higher capital requirements for individual associations where necessary.

At December 31, 2023, the Bank’s capital exceeded all applicable requirements.

15 unchanged sentences

Community Reinvestment Act and Fair Lending Laws.

All insured institutions have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-

income borrowers.

All insured institutions have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income borrowers.

The FDIC is required to assess the Bank’s record of compliance with the Community Reinvestment Act.

86 unchanged sentences

• The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.

Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.

Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s

privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.

Holding Company Regulation

13 unchanged sentences

Under the Change in Bank Control Act, a federal statute, a notice must be submitted to the Federal Reserve if any person (including a company), or group acting in concert, seeks to acquire direct or indirect “control” of a bank holding company.

Under certain circumstances, a change of control may occur, and prior notice is required, upon the acquisition of 10%

or more of the company’s outstanding voting stock, unless the Federal Reserve has found that the acquisition will not result in control of the company.

Under certain circumstances, a change of control may occur, and prior notice is required, upon the acquisition of 10% or more of the company’s outstanding voting stock, unless the Federal Reserve has found that the acquisition will not result in control of the company.

A change in control definitively occurs upon the acquisition of 25% or more of the company’s outstanding voting stock.

13 unchanged sentences

The Company may exclude from income 100% of dividends received from the Bank as members of the same affiliated group of corporations.

For federal income tax purposes, corporations may carryforward net operating losses indefinitely, but the deduction is limited to 80% of taxable income.

For federal income tax purposes, corporations may carryforward net operating losses

indefinitely, but the deduction is limited to 80% of taxable income.

For its 2023 and 2022 fiscal year, the Company’s maximum federal income tax rate was 21%.

2 unchanged sentences

The tax is imposed on the Bank’s adjusted equity.

The Company and Exchange Underwriters are subject to the Pennsylvania Corporate Net Income Tax, otherwise known as “CNI tax.” The CNI tax rate in 2022 and 2021 was 9.99%.

The Company and Exchange Underwriters are subject to the Pennsylvania Corporate Net Income Tax, otherwise known as “CNI tax.” The CNI tax rate in 2023 was 8.99% and in 2022 was 9.99%.

The tax is imposed on income or loss from the federal income tax return on a separate-company basis for the Company and Exchange Underwriters.

The federal return income or loss is adjusted for various items treated differently by the Pennsylvania Department of Revenue.

The FWVB merger has exposed the Company to additional state tax filing requirements in West Virginia and Ohio.

The Company is subject to additional state tax filing requirements in West Virginia and Ohio.

The West Virginia Corporation Net Income Tax imposes a state income tax at the rate 6.5% based on the Company's consolidated taxable federal net income or loss on the Company's federal tax return, adjusted for various items treated differently by the West Virginia State Tax Department.

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-K

Item 1. Business