What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-10 · 202 added, 96 removed, 822 unchanged (27% of the section changed)

1 unchanged sentence

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited) March 31,

(Unaudited) June 30,

2024 December 31,

8 unchanged sentences

Loans Held for Sale 632 —

Loans, Net of Allowance for Credit Losses of $ 9,582 and $ 9,707 at March 31, 2024 and December 31, 2023, Respectively

Loans, Net of Allowance for Credit Losses of $ 9,527 and $ 9,707 at June 30, 2024 and December 31, 2023, Respectively

1,069,167 1,100,689

21 unchanged sentences

Common Stock, $ 0.4167 Par Value;

35,000,000 Shares Authorized, 5,783,788 Shares Issued and 5,142,901 Shares Outstanding at March 31, 2024, with 5,759,378 and 5,118,713 Shares Issued and Outstanding at December 31, 2023.

35,000,000 Shares Authorized, 5,783,588 Shares Issued and 5,141,911 Shares Outstanding at June 30, 2024, with 5,759,378 and 5,118,713 Shares Issued and Outstanding at December 31, 2023.

Capital Surplus

2 unchanged sentences

87,673 83,392

Treasury Stock, at Cost ( 640,887 and 640,665 Shares at March 31, 2024 and December 31, 2023, Respectively)

Treasury Stock, at Cost ( 641,677 and 640,665 Shares at June 30, 2024 and December 31, 2023, Respectively)

( 14,568 ) ( 14,545 )

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

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

13 unchanged sentences

NET INTEREST AND DIVIDEND INCOME 11,470 11,120 23,062 22,704

(Recovery) Provision For Credit Losses - Loans ( 143 ) 80

Provision For Credit Losses - Unfunded Commitments 106 —

Provision (Recovery) For Credit Losses - Loans 12 492 ( 130 ) 572

(Recovery) Provision For Credit Losses - Unfunded Commitments ( 48 ) ( 60 ) 57 ( 60 )

NET INTEREST AND DIVIDEND INCOME AFTER NET (RECOVERY) PROVISION FOR CREDIT LOSSES 11,506 10,688 23,135 22,192

3 unchanged sentences

Other Commissions 22 224 84 368

Net Gain on Sales of Loans 22 2

Net Gain (Loss) on Sales of Loans 9 ( 5 ) 30 ( 3 )

Net Loss on Securities ( 31 ) ( 100 ) ( 197 ) ( 332 )

20 unchanged sentences

Income Before Income Tax Expense

3,210 3,456 8,327 8,742

Income Tax Expense 560 699 1,480 1,827

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(Dollars in thousands)

Net Income $ 2,650 $ 2,757 $ 6,847 $ 6,915

Other Comprehensive (Loss) Income:

Change in Unrealized (Loss) Gain on Investment Securities Available-for-Sale ( 1,628 ) 2,580

Other Comprehensive Loss:

Change in Unrealized Loss on Investment Securities Available-for-Sale ( 344 ) ( 2,704 ) ( 1,972 ) ( 124 )

Income Tax Effect 73 583 368 26

Other Comprehensive (Loss) Income, Net of Income Tax Effect ( 1,333 ) 2,023

Other Comprehensive Loss, Net of Income Tax Effect ( 271 ) ( 2,121 ) ( 1,604 ) ( 98 )

Total Comprehensive Income $ 2,379 $ 636 $ 5,243 $ 6,817

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

Three Months Ended March 31, 2024 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

Three Months Ended June 30, 2024 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, 2024 5,783,788 $ 2,411 $ 85,501 $ 86,308 $ ( 14,550 ) $ ( 18,080 ) $ 141,590

Comprehensive Income:

Net Income — — — 2,650 — — 2,650

Other Comprehensive Loss — — — — — ( 271 ) ( 271 )

Restricted Stock Awards Forfeited ( 200 ) ( 1 ) 19 — ( 18 ) — —

Stock-Based Compensation Expense — — 198 — — — 198

Dividends Paid ($ 0.25 Per Share)

— — — ( 1,285 ) — — ( 1,285 )

June 30, 2024 5,783,588 $ 2,410 $ 85,718 $ 87,673 $ ( 14,568 ) $ ( 18,351 ) $ 142,882

Three Months Ended June 30, 2023 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, 2023 5,730,908 $ 2,388 $ 84,118 $ 68,834 $ ( 13,927 ) $ ( 24,218 ) $ 117,195

Comprehensive Income:

Net Income — — — 2,757 — — 2,757

Other Comprehensive Loss — — — — — ( 2,121 ) ( 2,121 )

Restricted Stock Awards Forfeited — — 21 — ( 21 ) — —

Restricted Stock Awards Granted 2,500 1 ( 1 ) — — — —

Stock-Based Compensation Expense — — 187 — — — 187

Exercise of Stock Options — — — — 45 — 45

Treasury Stock Purchased, at cost ( 8,792 shares)

— — — — ( 197 ) — ( 197 )

Dividends Paid ($ 0.25 Per Share)

— — — ( 1,277 ) — — ( 1,277 )

June 30, 2023 5,733,408 $ 2,389 $ 84,325 $ 70,314 $ ( 14,100 ) $ ( 26,339 ) $ 116,589

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

Six Months Ended June 30, 2024 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, 2023 5,759,378 $ 2,400 $ 85,334 $ 83,392 $ ( 14,545 ) $ ( 16,747 ) $ 139,834

5 unchanged sentences

Stock-Based Compensation Expense — — 376 — — — 376

Exercise of Stock Options — — — — — — —

Treasury stock purchased, at cost ( 222 shares)

2 unchanged sentences

— — — ( 2,566 ) — — ( 2,566 )

March 31, 2024 5,783,788 $ 2,411 $ 85,501 $ 86,308 $ ( 14,550 ) $ ( 18,080 ) $ 141,590

Three Months Ended March 31, 2023 Shares Issued Common Stock Capital Surplus Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stockholders' Equity

June 30, 2024 5,783,588 $ 2,410 $ 85,718 $ 87,673 $ ( 14,568 ) $ ( 18,351 ) $ 142,882

Six Months Ended June 30, 2023 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)

1 unchanged sentence

Adoption of Accounting Standard ASU 2016-13 — — — 2,092 — — 2,092

Balance as of January 1, 2023, adjusted 5,708,433 $ 2,379 $ 83,953 $ 65,953 $ ( 13,797 ) $ ( 26,241 ) $ 112,247

Balance at January 1, 2023, adjusted 5,708,433 2,379 83,953 65,953 ( 13,797 ) ( 26,241 ) 112,247

Comprehensive Income:

Net Income — — — 6,915 — — 6,915

Other Comprehensive Income — — — — — 2,023 2,023

Other Comprehensive Loss — — — — — ( 98 ) ( 98 )

Restricted Stock Awards Forfeited — — 21 — ( 21 ) — —

Restricted Stock Awards Granted 24,975 10 ( 10 ) — — — —

Stock-Based Compensation Expense — — 361 — — — 361

Exercise of Stock Options — — — — 45 — 45

Treasury Stock Purchased, at cost ( 14,478 shares)

2 unchanged sentences

— — — ( 2,554 ) — — ( 2,554 )

March 31, 2023 5,730,908 $ 2,388 $ 84,118 $ 68,834 $ ( 13,927 ) $ ( 24,218 ) $ 117,195

June 30, 2023 5,733,408 $ 2,389 $ 84,325 $ 70,314 $ ( 14,100 ) $ ( 26,339 ) $ 116,589

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

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31, 2024 2023

Six Months Ended June 30, 2024 2023

(Dollars in thousands)

5 unchanged sentences

(Recovery) Provision for Credit Losses - Loans ( 130 ) 572

Provision for Credit Losses - Unfunded Commitments 106 —

Provision (Recovery) for Credit Losses - Unfunded Commitments 57 ( 60 )

Loss on Securities 197 332

4 unchanged sentences

Originations of Mortgage Loans for Sale ( 2,233 ) ( 266 )

Gain on Sale of Loans ( 22 ) ( 2 )

(Gain) Loss on Sale of Loans ( 30 ) 3

Gain on Sale of Other Real Estate Owned and Repossessed Assets 30 —

3 unchanged sentences

Decrease in Deferred Income Tax ( 522 ) —

Increase in Taxes Payable 925 1,129

Decrease in Taxes Payable ( 2,557 ) ( 839 )

Increase in Accrued Interest Payable

10 unchanged sentences

Proceeds From Sale of Other Real Estate Owned 132 —

Decrease in Restricted Equity Securities 177 223

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 8,158 ( 11,059 )

Decrease (Increase) in Restricted Equity Securities 226 ( 503 )

NET CASH USED IN INVESTING ACTIVITIES ( 7,755 ) ( 38,059 )

FINANCING ACTIVITIES

Net (Decrease) Increase in Deposits

( 4,665 ) 13,017

Net Increase (Decrease) in Deposits 82,609 ( 5,188 )

Net Decrease in Short-Term Borrowings — ( 8,060 )

Proceeds From Other Borrowed Funds — 20,000

Cash Dividends Paid ( 2,566 ) ( 2,554 )

Treasury Stock, Purchases at Cost ( 5 ) ( 327 )

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ( 5,950 ) 3,673

Exercise of Stock Options — 45

NET CASH PROVIDED BY FINANCING ACTIVITIES 80,038 3,916

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 74,377 ( 25,607 )

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended March 31, 2024 2023

Six Months Ended June 30, 2024 2023

(Dollars in thousands)

33 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.

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

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.

3 unchanged sentences

Use of Critical Accounting Estimates

The disclosures below supplement the accounting policies previously disclosed in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.

The disclosures below supplement the accounting policies disclosed in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.

Allowance for Credit Losses (ACL)

10 unchanged sentences

The methodology for determining the allowance for credit losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded ACL.

The ACL is reported separately as a contra-asset on the Consolidated Statement of Financial Condition.

The ACL is reported separately as a contra-asset account on the Consolidated Statement of Financial Condition.

The expected credit loss for unfunded loan commitments is reported on the Consolidated Statement of Financial Condition in other liabilities while the provision for credit losses related to unfunded commitments is reported in provision for credit losses - unfunded commitments in the Consolidated Statements of Income.

46 unchanged sentences

The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans and available for sale securities.

Accrued interest receivable on loans is reported as a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 4.1 million at March 31, 2024 and $ 4.3 million at December 31, 2023 and is excluded from the estimate of credit losses.

Accrued interest receivable on available of sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 1.1 million at March 31, 2024 and $ 947,000 at December 31, 2023 and is excluded from the estimate of credit losses.

Accrued interest receivable on loans is reported as a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 4.1 million at June 30, 2024 and $ 4.7 million at December 31, 2023 and is excluded from the estimate of credit losses.

Accrued interest receivable on available of sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $ 1.5 million at June 30, 2024 and $ 947,000 at December 31, 2023 and is excluded from the estimate of credit losses.

Recent Accounting Standards

10 unchanged sentences

For all entities, the amendments in ASU 2022-06 are effective upon issuance.

As of March 31, 2024, the Company does not have any instruments tied to the LIBOR reference rate.

As of June 30, 2024, the Company does not have any instruments tied to the LIBOR reference rate.

The adoption of this guidance is not expected to have a material effect on the Company's consolidated statements of financial condition and results of operations.

4 unchanged sentences

The ASU also requires that all entities disclose (1) income (loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic or foreign and (2) income tax expense (or benefit) from continuing operations disaggregated by federal (national), state and foreign.

This ASU is effective for public entities for annual period beginning after December 15, 2024.

The Company does not expect the adoption of the ASU to have a material effect on the Company's consolidated statements of financial statements and results of operations.

This ASU is effective for public entities for annual periods beginning after December 15, 2024.

The Company does not expect the adoption of the ASU to have a material effect on the Company's consolidated statements of financial condition and results of operations.

Earnings Pe r Share

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

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

3 unchanged sentences

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

10,518 4,147 15,167 7,597

Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding

2 unchanged sentences

$ 0.52 $ 0.54 $ 1.33 $ 1.35

0.51 0.54 1.33 1.35

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

2024 2023 2024 2023

Stock Options 402,297 339,123 300,597 339,123

1 unchanged sentence

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

March 31, 2024

June 30, 2024

(Dollars in thousands)

30 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, 2024

June 30, 2024

Less than 12 months

23 unchanged sentences

2 $ 8,513 $ ( 87 ) 39 $ 103,422 $ ( 21,633 ) 41 $ 111,935 $ ( 21,720 )

For debt securities, the Company does not believe that any individual unrealized loss as of March 31, 2024 or December 31, 2023, represents a credit related impairment.

For debt securities, the Company does not believe that any individual unrealized loss as of June 30, 2024 or December 31, 2023, represents a credit related impairment.

The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate a credit related impairment.

The unrealized losses on securities at March 31, 2024 and December 31, 2023 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities.

The unrealized losses on securities at June 30, 2024 and December 31, 2023 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.

Total securities available to be pledged have a fair value of $ 212.0 million at March 31, 2024 and $ 196.8 million at December 31, 2023 of which securities with a fair value of $ 165.8 million and $ 157.3 million at March 31, 2024 and December 31, 2023, respectively, were pledged to secure uninsured public deposits, borrowings or for other purposes as required or permitted by law.

Total securities available to be pledged have a fair value of $ 249.8 million at June 30, 2024 and $ 196.8 million at December 31, 2023 of which securities with a fair value of $ 171.1 million and $ 157.3 million at June 30, 2024 and December 31, 2023, respectively, were pledged to secure uninsured public deposits, borrowings or for other purposes as required or permitted by law.

The scheduled maturities of securities available-for-sale are summarized as follows.

2 unchanged sentences

however, regular principal payments and prepayments of principal are received on a monthly basis.

March 31, 2024

June 30, 2024

(Dollars in thousands)

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(Dollars in thousands)

26 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(Dollars in thousands)

9 unchanged sentences

$ 1,069,167 $ 1,100,689

Total unamortized net deferred loan fees were $ 897,000 and $ 1.0 million at March 31, 2024 and December 31, 2023, respectively.

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

The first four categories are not considered criticized and are aggregated as “pass” rated.

Total unamortized net deferred loan fees were $ 870,000 and $ 1.0 million at June 30, 2024 and December 31, 2023, respectively.

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

The first five categories are not considered criticized and are aggregated as “pass” rated.

The criticized rating categories used by management generally follow bank regulatory definitions.

5 unchanged sentences

There were no loans in the criticized category of Loss.

Classified Loans by Origination Year (as of March 31, 2024)

Classified Loans by Origination Year (as of June 30, 2024)

(dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Total

80 unchanged sentences

The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated:

March 31, 2024

June 30, 2024

(Dollars in Thousands)

17 unchanged sentences

$ 1,103,523 $ 4,406 $ 227 $ — $ 4,633 $ 2,240 $ 1,110,396

Additional interest income that would have been recorded if the loans that were nonaccrual at March 31, 2024 were current was $ 20,000 for the three months ended March 31, 2024, and $ 33,000 for the three months ended March 31, 2023.

Additional interest income that would have been recorded if the loans that were nonaccrual at June 30, 2024 were current was $ 21,000 and $ 40,000 for the three and six months ended June 30, 2024, respectively, and $ 61,000 and $ 86,000 for the three and six months ended June 30, 2023, respectively.

The following table sets forth the amounts for amortized cost basis of loans on nonaccrual status, loans past due 90 days still accruing, and categories of nonperforming assets at the date indicated.

March 31, 2024

June 30, 2024

Nonaccrual With No ACL Nonaccrual With ACL Loans Past Due 90 Days Still Accruing Total Nonperforming Assets

20 unchanged sentences

Total Nonperforming Assets

No interest income on nonaccrual loans was recognized during the three months ended March 31, 2024 and March 31, 2023.

No interest income on nonaccrual loans was recognized during the three and six months ended June 30, 2024 and June 30, 2023.

All modifications and refinancing, including those with borrowers that are experiencing financial difficulty are subject to the modification guidance in ASC 310-20.

3 unchanged sentences

Additionally, the effective interest rate should be recalculated based on the amortized cost basis of the new loan and a reassessment of contractual cash flow.

For the three months ended March 31, 2024 and March 31, 2023, there were no new loan modifications to borrowers experiencing financial difficulty.

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 $ 1.4 million and $ 907,000 at March 31, 2024 and December 31, 2023, respectively.

For the three and six months ended June 30, 2024 and June 30, 2023, there were no new loan modifications to borrowers experiencing financial difficulty.

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 $ 1.0 million and $ 907,000 at June 30, 2024 and December 31, 2023, respectively.

The activity in the ACL - Loans is summarized below by primary segments for the periods indicated:

(Dollars in thousands)

December 31, 2023 $ 3,129 $ 2,630 $ 639 $ 1,693 $ 1,367 $ 249 $ 9,707

March 31, 2024 $ 2,832 $ 2,948 $ 870 $ 1,587 $ 1,084 $ 261 $ 9,582

— — — — ( 156 ) — ( 156 )

1 unchanged sentence

Provision (Recovery) for Credit Losses - Loans 10 134 ( 126 ) ( 148 ) 162 ( 20 ) 12

March 31, 2024 $ 2,832 $ 2,948 $ 870 $ 1,587 $ 1,084 $ 261 $ 9,582

June 30, 2024 $ 2,844 $ 3,082 $ 744 $ 1,485 $ 1,131 $ 241 $ 9,527

Residential Real

1 unchanged sentence

Construction Commercial

Industrial Consumer Other Unallocated Total

Industrial Consumer Other Total

(Dollars in thousands)

December 31, 2022 $ 2,074 $ 5,810 $ 502 $ 2,313 $ 1,517 $ — $ 603 $ 12,819

Impact of ASC 326 137 ( 3,244 ) 488 ( 1,057 ) 774 120 ( 603 ) ( 3,385 )

March 31, 2023 $ 2,156 $ 3,056 $ 805 $ 1,997 $ 2,098 $ 158 $ 10,270

Charge-offs ( 97 ) — — — ( 51 ) — ( 148 )

1 unchanged sentence

Provision (Recovery) for Credit Losses - Loans 296 137 133 135 ( 219 ) 10 492

March 31, 2023 $ 2,156 $ 3,056 $ 805 $ 1,997 $ 2,098 $ 158 $ — $ 10,270

June 30, 2023 $ 2,356 $ 3,216 $ 938 $ 2,140 $ 1,848 $ 168 $ 10,666

(Dollars in thousands)

December 31, 2023 $ 3,129 $ 2,630 $ 639 $ 1,693 $ 1,367 $ 249 $ 9,707

— — — ( 12 ) ( 206 ) — ( 218 )

11 — — 89 68 — 168

Provision (Recovery) for Credit Losses - Loans ( 296 ) 452 105 ( 285 ) ( 98 ) ( 8 ) ( 130 )

June 30, 2024 $ 2,844 $ 3,082 $ 744 $ 1,485 $ 1,131 $ 241 $ 9,527

(Dollars in thousands)

December 31, 2022 $ 2,074 $ 5,810 $ 502 $ 2,313 $ 1,517 $ — $ 603 $ 12,819

Impact of ASC 326 - Loans 137 ( 3,244 ) 488 ( 1,057 ) 774 120 ( 603 ) ( 3,385 )

( 97 ) — — — ( 104 ) — — ( 201 )

14 23 — 766 58 — — 861

Provision (Recovery) 228 627 ( 52 ) 118 ( 397 ) 48 — 572

June 30, 2023 $ 2,356 $ 3,216 $ 938 $ 2,140 $ 1,848 $ 168 $ — $ 10,666

The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (accrued interest payable and other liabilities on the Consolidated Statement of Financial Condition), with adjustments to the reserve recognized in provision for credit losses - unfunded commitments on the Consolidated Statement of Income.

The Company’s activity in the allowance for credit losses on unfunded commitments for the periods ended was as follows:

The Company’s activity in the allowance for credit losses on unfunded commitments for the periods indicated was as follows:

(in thousands) Allowance for Credit Losses

Balance at March 31, 2024

Recovery for Credit Losses - Unfunded Commitments ( 48 )

Balance at June 30, 2024 $ 557

(in thousands) Allowance for Credit Losses

Balance at March 31, 2023 $ 718

Impact of CECL Adoption —

Recovery for Credit Losses - Unfunded Commitments ( 60 )

Balance at June 30, 2023 $ 658

(in thousands) Allowance for Credit Losses

Balance at December 31, 2023 $ 500

Provision for Credit Losses - Unfunded Commitments 57

Balance at March 31, 2024 $ 606

Balance at June 30, 2024 $ 557

(in thousands) Allowance for Credit Losses

1 unchanged sentence

Impact of CECL Adoption 718

Provision for Credit Losses - Unfunded Commitments —

Balance at March 31, 2023 $ 718

Recovery for Credit Losses - Unfunded Commitments ( 60 )

Balance at June 30, 2023 $ 658

Loans that do not share risk characteristics are evaluated on an individual basis.

For loans that are individually evaluated and collateral dependent, financial loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL - Loans is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date.

During the three months ended March 31, 2024 and March 31, 2023, there were no loans that required a credit loss to be individually assigned.

During the three and six months ended June 30, 2024 and June 30, 2023, there were no loans that required a credit loss to be individually assigned.

Derivatives and Hedging Activities

8 unchanged sentences

These adjustments are included in Accrued Interest Payable and Other Liabilities on the Company's Consolidated Statement of Financial Condition.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(Dollars in Thousands)

25 unchanged sentences

Credit valuation adjustments are incorporated to appropriately reflect nonperformance risk and the respective counterparties' nonperformance risk in calculating fair value measurements.

These instruments are clasified as Level 2.

There were no transfers into or out of Level 3 during the three months ended March 31, 2024 or year ended December 31, 2023.

These instruments are classified as Level 2.

There were no transfers into or out of Level 3 during the six months ended June 30, 2024 or year ended December 31, 2023.

The following table presents the financial assets measured at fair value on a recurring basis and reported on the Consolidated Statements of Financial Condition as of the dates indicated, by level within the fair value hierarchy:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(Dollars in thousands)

34 unchanged sentences

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

At March 31, 2024 and December 31, 2023, the Company did not have any loans that would be required to be remeasured.

At June 30, 2024 and December 31, 2023, the Company did not have any loans that would be required to be remeasured.

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.

At March 31, 2024 and December 31, 2023, the Company did not have any MSRs that would be required to be remeasured.

At June 30, 2024 and December 31, 2023, the Company did not have any MSRs that would be required to be remeasured.

Other real estate owned ("OREO") properties are evaluated at the time of acquisition and recorded at fair value, less estimated selling costs.

1 unchanged sentence

The fair value of an OREO property is determined from a qualified independent appraisal and is classified as Level 3 in the fair value hierarchy.

As of March 31, 2024 the Company did not have any OREO that would be required to be remeasured.

As of June 30, 2024 the Company did not have any OREO that would be required to be remeasured.

At December 31, 2023, OREO measured at fair value less costs to sell had no net carrying value, which consisted of the outstanding balance of $ 37,000 less write-downs of $ 37,000 .

6 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(Dollars in thousands)

39 unchanged sentences

Performance Letters of Credit

Construction Mortgages

Construction Loans

45,887 47,034

18 unchanged sentences

For secured letters of credit, the collateral is typically Company deposit instruments or customer business assets.

The Company recorded no liability associated with standby letters of credit as of March 31, 2024 and December 31, 2023.

The Company recorded no liability associated with standby letters of credit as of June 30, 2024 and December 31, 2023.

The Company evaluates all contracts at commencement to determine if a lease is present.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(Dollars in thousands)

24 unchanged sentences

The Bank recorded an operating lease ROU asset and corresponding lease liability of $ 1.0 million.

There were no new lease agreements which commenced during the three months ended March 31, 2023.

On April 8, 2024, the Bank entered into a lease agreement under which the Bank will lease retail property located in Uniontown, Pennsylvania.

The lease agreement is for an initial term of five years with specified renewal options.

The lease agreement includes a 2.5 % annual rent escalation during the initial term and renewal terms, if exercised.

The Bank recorded an operating lease ROU asset and corresponding lease liability of $ 410,000 .

There were no new lease agreements which commenced during the six months ended June 30, 2023.

Segment and Related Information

At March 31, 2024, the Company’s business activities were comprised of one operating segment, which is community banking.

At June 30, 2024, the Company’s business activities were comprised of one operating segment, which is community banking.

In prior reporting periods, the Company's business activities were comprised of two operating segments, 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.

Exchange Underwriters had an independent board of directors from the Company and was managed separately from the banking and related financial services that the Company offers.

Exchange Underwriters was an independent insurance agency that offered property, casualty, commercial liability, surety and other insurance products.

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

EU had an independent board of directors from the Company and was managed separately from the banking and related financial services that the Company offers.

EU was an independent insurance agency that offered property, casualty, commercial liability, surety and other insurance products.

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 March 31, 2024 and 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.

Assets remaining in the EU subsidiary at June 30, 2024 and December 31, 2023 consisted primarily of cash received from the sale of assets.

The EU subsidiary is expected to be merged into the Bank, with the remaining assets and liabilities being transferred to the Bank during 2024.

The following is a table of selected financial data for the Company’s subsidiaries and consolidated results at the dates and for the periods indicated:

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(Dollars in thousands)

March 31, 2024

June 30, 2024

Assets $ 1,558,458 $ 26,233 $ 157,615 $ ( 182,047 ) $ 1,560,259

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Stockholders' Equity 137,359 21,259 139,834 ( 158,618 ) 139,834

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Interest and Dividend Income $ 18,919 $ — $ 1,306 $ ( 1,286 ) $ 18,939

1 unchanged sentence

Net Interest and Dividend Income 11,605 — 1,151 ( 1,286 ) 11,470

Provision for Credit Losses - Loans 12 — — — 12

Recovery for Credit Losses - Unfunded Commitments ( 48 ) — — — ( 48 )

Net Interest and Dividend Income After Net Recovery for Credit Losses 11,641 — 1,151 ( 1,286 ) 11,506

Noninterest Income (Loss) 714 — ( 26 ) — 688

Noninterest Expense 8,978 — 6 — 8,984

Undistributed Net Income of Subsidiary — — 1,500 ( 1,500 ) —

Income Before Income Tax Expense (Benefit) 3,377 — 2,619 ( 2,786 ) 3,210

Income Tax Expense (Benefit) 591 — ( 31 ) — 560

Net Income $ 2,786 $ — $ 2,650 $ ( 2,786 ) $ 2,650

Six Months Ended June 30, 2024

Interest and Dividend Income $ 36,884 $ — $ 2,608 $ ( 2,566 ) $ 36,926

Interest Expense 13,554 — 310 — 13,864

Net Interest and Dividend Income 23,330 — 2,298 ( 2,566 ) 23,062

Recovery for Credit Losses - Loans ( 130 ) — — — ( 130 )

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Net Income $ 7,216 $ — $ 6,847 $ ( 7,216 ) $ 6,847

Three Months Ended March 31, 2023

Community Bank Exchange Underwriters, Inc.

CB Financial Services, Inc.

Net Eliminations Consolidated

(Dollars in thousands)

Three Months Ended June 30, 2023

Interest and Dividend Income $ 15,182 $ 2 $ 1,297 $ ( 1,278 ) $ 15,203

1 unchanged sentence

Net Interest and Dividend Income 11,256 2 1,140 ( 1,278 ) 11,120

Provision for Credit Losses 80 — — — 80

Net Interest and Dividend Income After Provision for Credit Losses 11,637 2 1,139 ( 1,275 ) 11,503

Provision for Credit Losses - Loans 492 — — — 492

Recovery for Credit Losses - Unfunded Commitments ( 60 ) — — — ( 60 )

Net Interest and Dividend Income After Net Provision for Credit Losses 10,824 2 1,140 ( 1,278 ) 10,688

Noninterest Income (Loss) 810 1,545 ( 86 ) — 2,269

1 unchanged sentence

Undistributed Net Income of Subsidiary 357 — 1,656 ( 2,013 ) —

Income Before Income Tax (Benefit) Expense 5,421 859 4,075 ( 5,070 ) 5,285

Income Tax (Benefit) Expense 959 251 ( 81 ) — 1,129

Income Before Income Tax Expense (Benefit) 3,534 503 2,710 ( 3,291 ) 3,456

Income Tax Expense (Benefit) 600 146 ( 47 ) — 699

Net Income $ 2,934 $ 357 $ 2,757 $ ( 3,291 ) $ 2,757

Six Months Ended June 30, 2023

Interest and Dividend Income $ 29,405 $ 3 $ 2,593 $ ( 2,553 ) $ 29,448

Interest Expense 6,433 — 311 — 6,744

Net Interest and Dividend Income 22,972 3 2,282 ( 2,553 ) 22,704

Provision for Credit Losses - Loans 572 — — — 572

Recovery for Credit Losses - Unfunded Commitments ( 60 ) — — — ( 60 )

Net Interest and Dividend Income After Net Provision for Credit Losses 22,460 3 2,282 ( 2,553 ) 22,192

Noninterest Income (Loss) 1,911 3,501 ( 332 ) — 5,080

Noninterest Expense 16,382 2,143 5 — 18,530

Undistributed Net Income of Subsidiary 965 — 4,842 ( 5,807 ) —

Income Before Income Tax Expense (Benefit) 8,954 1,361 6,787 ( 8,360 ) 8,742

Income Tax Expense (Benefit) 1,559 396 ( 128 ) — 1,827

Net Income $ 7,395 $ 965 $ 6,915 $ ( 8,360 ) $ 6,915

Stock Based Compensation

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Forfeited ( 20,097 ) 24.96

Outstanding Options at March 31, 2024 428,266 $ 23.67 5.6

Exercisable Options at March 31, 2024 233,957 $ 24.32 3.3

Outstanding Options at June 30, 2024 411,297 $ 23.61 6.0

Exercisable Options at June 30, 2024 217,323 $ 24.32 3.5

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

Nonvested Options at March 31, 2024 194,309 $ 22.90 8.3

Nonvested Options at June 30, 2024 193,974 $ 22.82 8.8

Summary of Significant Assumptions for Newly Issued Stock Options

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Forfeited ( 1,990 ) 22.63

Nonvested Restricted Stock at March 31, 2024 84,824 $ 22.78 3.2

Nonvested Restricted Stock at June 30, 2024 84,164 $ 22.78 3.3

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 $ 178,000 and $ 174,000 for the three months ended March 31, 2024 and 2023.

As of March 31, 2024 and December 31, 2023, total unrecognized compensation expense was $ 905,000 and $ 505,000 , respectively, related to stock options, and $ 1.8 million and $ 1.4 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at March 31, 2024 and December 31, 2023 exceeds the exercise price of the stock options.

The intrinsic value of stock options was $ 27,000 and $ 335,000 at March 31, 2024 and December 31, 2023, respectively.

At March 31, 2024 and December 31, 2023, respectively, there were 6,489 and 161,464 shares available under the Plan to be issued in connection with the exercise of stock options, and 2,596 and 64,586 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.

Stock-based compensation expense related to restricted stock awards and stock options was $ 198,000 and $ 187,000 for the three months ended June 30, 2024 and 2023.

Stock-based compensation expense was $ 376,000 and $ 361,000 for the six months ended June 30, 2024 and 2023.

As of June 30, 2024 and December 31, 2023, total unrecognized compensation expense was $ 799,000 and $ 505,000 , respectively, related to stock options, and $ 1.6 million and $ 1.4 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at June 30, 2024 and December 31, 2023 exceeds the exercise price of the stock options.

The intrinsic value of stock options was $ 165,000 and $ 335,000 at June 30, 2024 and December 31, 2023, respectively.

At June 30, 2024 there were 287,500 shares of common stock available and reserved under the 2024 Plan to be issued as restricted stock awards or units based on the terms of the Plan.

At June 30, 2024, no shares have been granted under the 2024 Plan.

Under the 2021 Plan, there were 161,464 shares available at December 31, 2023 to be issued in connection with the exercise of stock

options, and 64,586 shares to be issued as restricted stock awards or units.

The 2021 Plan shall remain in effect as long as any awards are outstanding, but as a result of the approval of the 2024 Plan, no more awards can be granted under the 2021 Plan.

Subsequent Events

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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