What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-19 compared with 2024-03-13 · 358 added, 351 removed, 1389 unchanged (34% of the section changed)

21 unchanged sentences

Information required by this item is incorporated by reference in the Proxy Statement for the 2025 Annual Meeting.

The Company has adopted a policy regarding Insider Trading governing the purchase, sale and/or other dispositions of the Company's securities by its directors, officers and employees and by the Company itself.

A copy of the policy is filed as an exhibit to the Annual Report on Form 10-K.

EXECUTIVE COMPENSATION

13 unchanged sentences

(D) Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023 and 2022;

(D) Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024 and 2023;

(E) Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2024 and 2023;

11 unchanged sentences

10.2 Executive Consultant Agreement by and between Community Bank and Ralph Burchianti (5)

10.3 Employment Agreement by and between Community Bank and Jamie L.

10.4 Employment Agreement by and among Community Bank, Exchange Underwriters, Inc., and Richard B.

Boyer dated April 14, 2014 (1)

10.3 Separation and Release Agreement by and between Community Bank and Jamie L.

10.8 Split Dollar Life Insurance Agreement by and between Community Bank and John H.

6 unchanged sentences

10.15 CB Financial Services, Inc., 2021 Equity Incentive Plan (12)

10.16 CB Financial Services, Inc., 2024 Equity Incentive Plan (16)

10.17 Subordinated Note Purchase Agreement (13)

10.18 Employment Agreement by and between Community Bank and Jennifer L.

A sset Purchase Agreement among World Insurance Associates, LLC, Ex c hange Underwriters, Inc.

Asset Purchase Agreement among World Insurance Associates, LLC, Exchange Underwriters, Inc.

and Community Bank (15)

21 Subsidiaries

23.1 Consent of F ORVIS , LLP

23.1 Consent of Forvis Mazars , LLP

31.1 Certification required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

1 unchanged sentence

32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

CB Financ ial Services, Inc., C lawback Policy

CB Financial Services, Inc., Clawback Policy

101.0 The following materials for the year ended December 31, 2024, formatted in XBRL (Extensible Business Reporting Language):

6 unchanged sentences

(5) Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K , filed on February 21, 2023.

(6) Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on May 24, 2020.

(6) Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on February 5, 2025.

(7) Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 6, 2020.

8 unchanged sentences

(15) Incorporated herein by reference to Exhibit 2 to the Company's Current Report on Form 8-K, filed on December 1, 2023.

(16) Incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement, filed on April 5, 2024.

FORM 10-K SUMMARY

7 unchanged sentences

Montgomery By:

Montgomery Jamie L.

President and Chief Executive Officer and Executive Vice President and Chief Financial Officer

/s/ Amanda L.

Montgomery Amanda L.

President and Chief Executive Officer and Senior Vice President and Chief Financial Officer

Director (Principal Financial Officer)

9 unchanged sentences

Bedway Ralph Burchianti

Director Senior Executive Vice President and

March 13, 2024 Chief Credit Officer and Director

Director Executive Consultant and Director

March 19, 2025 Date:

March 19, 2025

12 unchanged sentences

Consolidated Statements of Income for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2024 and 2023

7 unchanged sentences

We have audited the accompanying consolidated statement of financial condition of CB Financial Services, Inc.

(Company) as of December 31, 2023 and 2022, and the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

(the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 1 and Note 4 to the consolidated financial statements, in 2023, the entity changed its method of accounting for credit losses on financial instruments due to the adoption of Accounting Standards Codification Topic 326:

As discussed in Note 1 and Note 4 to the consolidated financial statements, in 2023, the Company changed its method of accounting for credit losses on financial instruments due to the adoption of Accounting Standards Codification Topic 326:

Financial Instruments – Credit Losses .

5 unchanged sentences

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

11 unchanged sentences

The Company utilized a discounted cash-flow model derived from historical data to construct a loss rate for each identified loan segment.

Due to the Company's loss history not being sufficient and relevant

enough to predict future losses, the Company also utilized peer data from a peer group.

The loss rates are then adjusted, for reasonable and supportable forecasts of relevant economic indicators as well as other environmental factors based on the risks present for each portfolio segment.

Due to the Company's loss history not being sufficient and relevant enough to predict future losses, the Company also utilized peer data from a peer group.

The loss rates are then adjusted, for

reasonable and supportable forecasts of relevant economic indicators as well as other environmental factors based on the risks present for each portfolio segment.

The environmental factors (“qualitative adjustments”) include consideration of economic conditions and portfolio trends.

8 unchanged sentences

We have served as the Company’s auditor since 2021.

Forvis Mazars, LLP

Pittsburgh, Pennsylvania

10 unchanged sentences

Total Securities 262,153 207,095

Loans Held for Sale 900 —

Loans (Net of Allowance for Credit Losses of $ 9,805 and $ 9,707 at December 31, 2024 and 2023, Respectively)

12 unchanged sentences

Total Deposits 1,283,517 1,267,159

Short-Term Borrowings — 8,060

Other Borrowed Funds 34,718 34,678

2 unchanged sentences

STOCKHOLDERS' EQUITY

Preferred Stock, No Par Value;

5,000,000 Shares Authorized

Common Stock, $ 0.4167 Par Value;

24 unchanged sentences

NET INTEREST AND DIVIDEND INCOME 46,068 44,553

(Recovery) Provision For Credit Losses - Loans ( 284 ) 3,784

Recovery For Credit Losses - Unfunded Commitments ( 218 ) —

NET INTEREST AND DIVIDEND INCOME AFTER (RECOVERY) PROVISION FOR CREDIT LOSSES 45,055 39,151

Provision (Recovery) For Credit Losses - Loans 379 ( 284 )

Provision (Recovery) For Credit Losses - Unfunded Commitments 191 ( 218 )

NET INTEREST AND DIVIDEND INCOME AFTER NET PROVISION (RECOVERY) FOR CREDIT LOSSES 45,498 45,055

NONINTEREST INCOME

2 unchanged sentences

Other Commissions 251 521

Net Loss on Securities ( 10,199 ) ( 168 )

Net Gain on Sales of Loans 52 —

Net Gain (Loss) on Securities 51 ( 10,199 )

Net Gain on Purchased Tax Credits 49 29

29 unchanged sentences

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31, 2024 2023

1 unchanged sentence

Net Income $ 12,594 $ 22,550

Other Comprehensive Income (Loss):

Change in Unrealized Gain (Loss) on Available-for-Sale Debt Securities 2,012 ( 32,266 )

Other Comprehensive (Loss) Income:

Change in Unrealized (Loss) Gain on Available-for-Sale Debt Securities ( 555 ) 2,012

Income Tax Effect 67 ( 433 )

1 unchanged sentence

Income Tax Effect (2)

Other Comprehensive Income (Loss), Net of Income Tax Effect 9,494 ( 25,314 )

Total Comprehensive Income (Loss) $ 32,044 $ ( 14,067 )

(1) Reported in Net Loss on Securities on the Consolidated Statements of Incom e.

Other Comprehensive (Loss) Income, Net of Income Tax Effect ( 488 ) 9,494

Total Comprehensive Income $ 12,106 $ 32,044

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

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

11 unchanged sentences

December 31, 2022 5,708,433 $ 2,379 $ 83,953 $ 63,861 $ ( 13,797 ) $ ( 26,241 ) $ 110,155

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

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

Net Income — — — 22,550 — — 22,550

Other Comprehensive Loss — — — — — ( 25,314 ) ( 25,314 )

Other Comprehensive Income — — — — — 9,494 9,494

Restricted Stock Awards Forfeited ( 780 ) ( 1 ) 51 — ( 50 ) — —

7 unchanged sentences

December 31, 2023 5,759,378 $ 2,400 $ 85,334 $ 83,392 $ ( 14,545 ) $ ( 16,747 ) $ 139,834

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

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

Net Income — — — 12,594 — — 12,594

Other Comprehensive Income — — — — — 9,494 9,494

Other Comprehensive Loss — — — — — ( 488 ) ( 488 )

Restricted Stock Awards Forfeited ( 6,450 ) ( 3 ) 21 — ( 18 ) — —

16 unchanged sentences

Depreciation and Amortization 2,425 2,737

(Recovery) Provision for Credit Losses - Loans ( 284 ) 3,784

Recovery for Credit Losses - Unfunded Commitments ( 218 ) —

Loss on Securities 10,199 168

Provision (Recovery) for Credit Losses - Loans 379 ( 284 )

Provision (Recovery)\ for Credit Losses - Unfunded Commitments 191 ( 218 )

(Gain) Loss on Securities ( 51 ) 10,199

Gain on Sale of Subsidiary ( 138 ) ( 24,578 )

1 unchanged sentence

Income from Bank-Owned Life Insurance ( 594 ) ( 576 )

Gain on BOLI Death Benefit Claims ( 915 ) —

Proceeds From Mortgage Loans Sold 4,980 2,365

Originations of Mortgage Loans for Sale ( 5,828 ) ( 2,365 )

Gain on Sales of Other Real Estate Owned ( 13 ) ( 1 )

Gain on Sales of Loans ( 52 ) —

Loss (Gain) on Sales of Other Real Estate Owned 54 ( 13 )

Noncash Expense for Stock-Based Compensation 812 1,125

3 unchanged sentences

Increase in Deferred Income Tax 191 382

Increase (Decrease) in Taxes Payable 3,985 ( 5 )

Decrease (Increase) in Accrued Interest Payable 1,459 ( 131 )

(Decrease) Increase in Taxes Payable ( 3,903 ) 3,985

Decrease in Accrued Interest Payable 682 1,459

Other, Net ( 2,560 ) ( 1,538 )

5 unchanged sentences

Proceeds from Sales of Securities — 69,285

Net Increase in Loans ( 63,517 ) ( 31,385 )

Net Decrease (Increase) in Loans 17,583 ( 63,517 )

Purchase of Premises and Equipment ( 3,315 ) ( 3,293 )

3 unchanged sentences

Proceeds From Sales of Other Real Estate Owned 258 142

(Increase) Decrease in Restricted Equity Securities ( 596 ) 654

Decrease (Increase) in Restricted Equity Securities 291 ( 596 )

NET CASH USED IN INVESTING ACTIVITIES ( 36,385 ) ( 54,727 )

FINANCING ACTIVITIES

Net (Decrease) Increase in Deposits ( 1,344 ) 41,890

Net Increase (Decrease) in Deposits 16,358 ( 1,344 )

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

Principal Payments on Other Borrowed Funds — ( 3,000 )

Proceeds from Other Borrowed Funds — 20,000

2 unchanged sentences

Exercise of Stock Options 721 372

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 5,014 ( 1,818 )

NET CASH PROVIDED BY FINANCING ACTIVITIES 10,984 5,014

DECREASE IN CASH AND DUE FROM BANKS ( 18,651 ) ( 35,477 )

12 unchanged sentences

Right of Use ("ROU") Asset Recognized 1,419 —

Lease Liability Recognized — 1,556

Unfunded Commitment in Low Income Housing Tax Credit 4,995 —

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

10 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 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 operates from 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.

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

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

This transaction did not meet the criteria for discontinued operations reporting.

During 2024, the Company recognized an additional gain of $ 138,000 following the final settlement of all liabilities and an earn-out payment of $ 708,000 .

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of December 31, 2024 through the date the consolidated financial statements are being issued for items that should potentially be recognized or disclosed in these consolidated financial statements.

18 unchanged sentences

Overdraft fees are recognized as the overdrafts on customer’s accounts are incurred.

The services fees are automatically withdrawn from the customer’s account balance per their account agreement with the Company.

In addition, the Company earns interchange fees from debit/credit cardholder transactions conducted through the applicable payment

The services fees are

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

automatically withdrawn from the customer’s account balance per their account agreement with the Company.

In addition, the Company earns interchange fees from debit/credit cardholder transactions conducted through the applicable payment networks.

Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

25 unchanged sentences

An operating segment is defined as a component of an enterprise that engages in business activities which generate revenue and incur expense, and the operating results of which are reviewed by management.

At December 31, 2023, the Company’s business activities are comprised of two operating segments, which are community banking and insurance brokerage services.

The Company has evaluated the provisions of ASC Topic 280, Segment Reporting, and determined that segment reporting information related to EU (Insurance Brokerage Services segment) is required to be presented because the segment had adopted a board of directors that conducted board meetings independent from the Company.

In addition, the segment comprised a significant amount to total noninterest income, even though the segment is less than 10% of the combined assets of the Company.

The Company has evaluated the provisions of ASC Topic 280, Segment Reporting, and determined that at December 31, 2024, the Company had one reportable segment, community banking services.

Prior to 2024, the Company had two reportable segments, consisting of community banking services and insurance brokerage services.

Prior to 2024, segment reporting information related to EU (Insurance Brokerage Services segment) was required to be presented because the segment had adopted a board of directors that conducted board meetings independent from the Company.

In addition, the segment comprised a significant amount to total noninterest income, even though the segment's revenue was less than 10% of the combined revenues of all operating segments, the segment's profit was less than 10% of the reported profit of all operating segments and the segment's assets were less than 10% of the combined assets of the Company.

Following the sale of EU on December 8, 2023, the Company determined that the insurance brokerage services segment was no longer reportable.

See Note 21 – Segment Reporting and Related Information for more information.

5 unchanged sentences

However, as announced on March 15, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent, effective March 26, 2020, in light of the shift to an ample reserves regime.

This action eliminates the need to maintain balances in accounts at the Federal Reserve Bank to satisfy reserve requirements, thereby freeing up liquidity in the banking system to support lending.

This action eliminates the need to maintain balances in accounts at the Federal Reserve Bank to satisfy reserve

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

requirements, thereby freeing up liquidity in the banking system to support lending.

Therefore, at December 31, 2024, and 2023, there were no reserve requirements with the Federal Reserve Bank.

Securities are classified at the time of purchase, based on management’s intentions and ability, as securities held to maturity or securities available-for-sale.

Debt securities acquired with the intent and the ability to hold to maturity are stated at cost adjusted for amortization of premium and accretion of discount, which are computed using a level yield method and recognized

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

as adjustments to interest income.

Unrealized holding gains and losses for available-for-sale debt securities are reported as a separate component of stockholders’ equity, net of tax, until realized.

34 unchanged sentences

Under certain economic conditions, housing values may decline, which may increase the risk that the collateral values are not sufficient.

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

Commercial real estate loans generally present a higher level of risk than loans

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired.

Construction loans are originated to individuals to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

finance the construction of residential dwellings and are also originated for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses.

Construction loans are originated to individuals to finance the construction of residential dwellings and are also originated for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses.

Construction loans generally provide for the payment of interest only during the construction phase, which is usually 12 to 18 months.

8 unchanged sentences

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current, and current and future payments are reasonably assured.

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.

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.

22 unchanged sentences

The measurement of expected credit losses is applicable to loans receivable and securities measured at amortized cost.

It also applies to off-balance sheet credit exposures such as loan commitments and unused lines of credit.

It also applies to off-balance sheet credit exposures such as loan commitments and unused lines of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The allowance is established through a provision for credit losses that is charged against income.

1 unchanged sentence

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

The expected credit loss for unfunded loan commitments is reported on

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

ACL on Loans Receivable

30 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Loan Losses

Prior to the adoption of ASU 2016-13, the Company calculated the allowance for loan losses ("allowance"), using an incurred loan loss methodology.

The following policy related to the allowance in prior periods.

The allowance for loan losses (“allowance”) is maintained at a level considered adequate to provide for losses that can be reasonably anticipated.

Management performs a quarterly evaluation of the adequacy of the allowance based on potential losses in the current loan portfolio, which includes an assessment of economic conditions, changes in the nature and volume of the loan portfolio, loan loss experience, volume and severity of past due, classified and nonaccrual loans as well as other loan modifications, quality of the Company’s loan review system, the degree of oversight by the Company’s Board, existence and effect of any concentrations of credit and changes in the level of such concentrations, effect of external factors, such as competition and legal and regulatory requirements, and other relevant factors.

While management uses the best information available to make such evaluations, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making evaluations.

Additions are made to the allowance through periodic provisions charged to income and recovery of principal and interest on loans previously charged-off.

Losses of principal are charged directly to the allowance when a loss occurs or when a determination is made that the specific loss is probable.

This evaluation is inherently subjective as it requires estimates that are susceptible to significant revisions as more information becomes available.

The allowance consists of specific and general components.

The specific component relates to loans that are classified as impaired.

A loan is considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due for principal and interest according to the original contractual terms of the loan agreement.

Generally, management considers all substandard, doubtful, and loss-rated loans, nonaccrual loans, and TDRs for impairment.

Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The maximum period without payment that typically can occur before a loan is considered for impairment is 90 days.

Impairment is measured based on the present value of expected future cash flows discounted at a loan’s effective interest rate, or as a practical expedient, the observable market price, or, if the loan is collateral dependent, the fair value of the underlying collateral.

When the measurement of an impaired loan is less than the recorded investment in the loan, the impairment is recorded in a specific valuation allowance.

This specific valuation allowance is periodically adjusted for significant changes in the amount or timing of expected future cash flows, observable market price or fair value of the collateral.

The specific valuation allowance, or allowance for impaired loans, is part of the total allowance for loan losses.

Cash payments received on impaired loans that are considered nonaccrual are recorded as a direct reduction of the recorded investment in the loan.

When the recorded investment has been fully collected, receipts are recorded as recoveries to the allowance for loan losses until the previously charged-off principal is fully recovered.

Subsequent amounts collected are recognized as interest income.

If no charge-off exists, then once the recorded investment has been fully collected, any future amounts collected would be recognized as interest income.

Impaired loans are not returned to accrual status until all amounts due, both principal and interest, are current and a sustained payment history has been demonstrated.

The general allowance component covers pools of homogeneous loans by loan class.

Management determines historical loss experience for each segment of loans using the five-year rolling average of the net charge-off data within each segment.

Qualitative and environmental factors are also considered that are likely to cause estimated credit losses associated with the Bank’s existing portfolio to differ from historical loss experience, and include levels and trends in delinquency and impaired loans;

levels and trends in net charge-offs, trends in volume and terms of loans;

change in underwriting, policies, procedures, practices and key personnel;

national and local economic trends;

industry conditions, and effects of changes in high-risk credit circumstances.

The qualitative and environmental factors are reviewed on a quarterly basis to ensure they are reflective of current conditions in the portfolio and economy.

An unallocated component, which is a part of the general allowance component, is maintained to cover uncertainties that could affect the Company’s estimate of probable losses.

Our allowance is sensitive to a number of inputs, most notably the qualitative factors and historical loss experience by loan segment.

Given the dynamic relationship between the inputs, it is difficult to estimate the impact of a change in any one individual variable on the allowance.

Although management believes that it uses the best information available to establish the allowance, future adjustments to the allowance may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.

Because future events affecting borrowers and collateral value cannot be predicted with certainty, there can be no assurance that the existing allowance is adequate or that increases will not be necessary should the quality of assets deteriorate as a result of the factors discussed previously.

Any increase in the allowance may adversely affect our financial condition and results of operations.

Changes in factors underlying the assessment could have a material impact on the amount of the allowance that is necessary and the amount of provision to be charged against earnings.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Premises and Equipment

13 unchanged sentences

Direct costs incurred in the foreclosure process and subsequent holding costs incurred on such properties are recorded as expenses of current operations.

Real estate owned was $ 162,000 and $ 0 at December 31, 2023 and 2022, respectively.

The Company had no real estate owned at December 31, 2024 and $ 162,000 at December 31, 2023.

The Company accounts for income taxes in accordance with income tax accounting guidance in ASC Topic 740, Income Taxes .

14 unchanged sentences

Deemed to have an indefinite life and not subject to amortization, goodwill is instead tested for impairment at the reporting unit level at least annually on October 31 or more frequently if triggering events occur or impairment indicators exist.

The Company operates two reporting units – Community Banking segment and Insurance Brokerage Services segment.

The Company operates two segments – Community Banking segment and Insurance Brokerage Services segment.

The Company has assigned 100 % of the goodwill to the Community Banking reporting unit.

4 unchanged sentences

If the estimated fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired, and no impairment loss is recognized.

However, if the carrying

However, if the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized based on the excess of the a reporting unit's carrying value over its fair value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

amount of the reporting unit exceeds its fair value, an impairment loss is recognized based on the excess of the a reporting unit's carrying value over its fair value.

The Company did no t record any goodwill impairment for the years ended December 31, 2024 and 2023.

39 unchanged sentences

OCI is comprised of unrealized holding gains or losses and reclassification adjustment for gains or losses on sale of available-for-sale debt securities, net of tax.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

1 unchanged sentence

Basic earnings per share is calculated utilizing the reported net income as the numerator and weighted average shares outstanding as the denominator.

The computation of diluted earnings per share differs in that the denominator is adjusted for the dilutive effects of any options and convertible securities.

The computation of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

diluted earnings per share differs in that the denominator is adjusted for the dilutive effects of any options and convertible securities.

Treasury shares are not deemed outstanding for earnings per share calculations.

6 unchanged sentences

however, no awards may be granted under the 2024 Plan on or after the day immediately prior to the ten-year anniversary of the effective date of the 2024 Plan.

Awards may be granted under the 2021 Plan as incentive and non-statutory stock options, restricted stock awards, restricted stock units or any combination thereof, The maximum number of shares of Company common stock that may be delivered to participants under the 2021 Plan is equal to 500,000 shares of Company common stock (the “Share Limit”).

Shares of Company common stock subject to the Share Limit may be issued pursuant to grants of stock options, restricted stock awards or restricted stock units, provided, however that the Share Limit is reduced, on a one-for-one basis, for each share of common stock subject to a stock option grant, and on a two and one-half-for-one basis for each share of common stock issued pursuant to restricted stock awards or restricted stock unit awards.

If any award granted under the 2021 Plan expires, terminates, is canceled or is forfeited without being settled or exercised or is settled without the issuance of shares of common stock, shares of Company common stock subject to such award will be made available for future grant under the 2021 Plan.

If any shares are surrendered or tendered to pay the exercise price of a stock option, such shares will not again be available for grant under the 2021 Plan.

In addition, shares of common stock withheld in payment for purposes of satisfying tax withholding obligations with respect to an award do not become available for re-issuance under the 2021 Plan.

Employees and directors of the Company or its subsidiaries are eligible to receive awards under the 2021 Equity Incentive Plan, except that non-employees may not be granted incentive stock options.

Awards may be granted under the 2024 Plan as restricted stock awards or restricted stock units.

The maximum number of shares of Company common stock that may be delivered to participants under the 2024 Plan is equal to 287,500 shares of Company common stock (the “Share Limit”).

If any award granted under the 2024 Plan is forfeited or canceled without being settled, shares of Company common stock subject to such award will be made available for future grant under the 2024 Plan.

If any shares are withheld in payment for purposes of satisfying tax withholding obligations with respect to an award, those shares do not become available for re-issuance under the 2024 Plan.

In 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”).

The effective date of the 2021 Plan was May 19, 2021, which was the date the 2021 Plan satisfied the applicable stockholder approval requirement.

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

Awards could be granted under the 2021 Plan as incentive and non-statutory stock options, restricted stock awards, restricted stock units or any combination thereof.

The maximum number of shares of Company common stock that could be delivered to participants under the 2021 Plan was equal to 500,000 shares of Company common stock (the “Share Limit”).

Shares of Company common stock subject to the Share Limit could be issued pursuant to grants of stock options, restricted stock awards or restricted stock units, provided, however that the Share Limit was reduced, on a one-for-one basis, for each share of common stock subject to a stock option grant, and on a two and one-half-for-one basis for each share of common stock issued pursuant to restricted stock awards or restricted stock unit awards.

If any award granted under the 2021 Plan expired, terminated, was canceled or was forfeited without being settled or exercised or was settled without the issuance of shares of common stock, shares of Company common stock subject to such award was made available for future grant under the 2021 Plan.

If any shares were surrendered or tendered to pay the exercise price of a stock option, such shares were not again be available for grant under the 2021 Plan.

In addition, shares of common stock withheld in payment for purposes of satisfying tax withholding obligations with respect to an award did not become available for re-issuance under the 2021 Plan.

Employees and directors of the Company or its subsidiaries were eligible to receive awards under the 2021 Equity Incentive Plan, except that non-employees could not be granted incentive stock options.

In 2015, the Company’s stockholders approved the 2015 Equity Incentive Plan (the “2015 Plan”), which has similar characteristics to the 2021 Plan.

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The contractual life of stock options is typically 10 years from the date of grant.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Advertising Costs

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If estimated recoverable amounts are lower than carrying values, assets are considered impaired and reduced to fair value with the recognized impairment charges recorded in noninterest expense in the Consolidated Statements of Income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-lived assets are tested for impairment individually or as part of an asset group.

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In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 that extends the period of time preparers can utilize the reference rate reform relief guidance.

Deferral of the Sunset Date of Topic 848 that extended the period of time preparers could utilize the reference rate reform relief guidance.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, as amended.

This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform.

The new guidance provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

This ASU provided temporary optional guidance to ease the potential burden in accounting for reference rate reform.

The new guidance provided optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued.

The elective guidance in the ASU applies to modifications of contract terms that will directly replace, or have the potential to replace, an affected rate with another interest rate index, as well as certain contemporaneous modifications of other contract terms related to the replacement of an affected rate.

The ASU notes that changes in contract terms that are made to effect the reference rate reform transition are considered related to the replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition.

The optional expedient allows companies to account for the modification as if it was not substantial (i.e., do not treat as an extinguishment of debt).

To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

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

As of December 31, 2023, 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 statements and results of operations.

The ASU notes that changes in contract terms that are made to effect the reference rate reform transition are considered related to the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition.

The optional expedient allowed companies to account for the modification as if it was not substantial (i.e., do not treat as an extinguishment of debt).

To ensure the relief in Topic 848 covered the period of time during which a significant number of modifications may have taken place, ASU 2022-06 deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities would no longer be permitted to apply the relief in Topic 848.

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

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

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

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.

This ASU expanded the use of the proportional amortization method of accounting - previously allowed only for investments in low-income housing tax credit structures - to equity investments in other tax credit structures that meet certain criteria.

Common tax credit programs that investors access via tax equity structures and that may now be eligible for application of the proportional amortization method include:

new markets tax credits, historic rehabilitation tax credit programs and renewable energy tax credit programs.

This ASU took effect in reporting periods beginning after December 15, 2023, with early adoption permitted.

The adoption of this ASU on January 1, 2024, did not have a material impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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The amendments (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of profit or loss, (2) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition, (3) require that a public entity provide all annual disclosures about a reportable segment's profit or loss currently required by GAAP in interim period as well, (4) clarify that if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, an entity may report one or more of those additional measures of segment profit, (5) require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure of segment profit or loss in assessing segment performance and deciding how to allocate resources and (6) require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the ASU and all existing segment disclosures.

This ASU is effective for public entities for fiscal years beginning after December 31, 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 fiscal years beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024.

The adoption of the ASU for the annual period of 2024 did not have a material effect on the Company's consolidated statements of financial statements and results of operations.

Refer to Note 21 - Segment Reporting and Related Information for disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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This ASU requires that public entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold.

The ASU requires all entities to disclose on an annual basis (1) the amount of income taxes paid, disaggregated by federal, state and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal or greater than five percent of total income taxes paid.

The ASU requires all entities to disclose on an annual basis (1) the amount of income taxes paid, disaggregated by federal, state and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid.

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.

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therefore, net income as presented on the Consolidated Statements of Income is used as the numerator.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

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Restricted Stock — 49,447

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3— SECURITIES

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Total Securities $ 262,153

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair

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Total Securities $ 207,095

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

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Total 16 $ 95,072 $ ( 958 ) 37 $ 93,227 $ ( 21,040 ) 53 $ 188,299 $ ( 21,998 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Less than 12 months 12 Months or Greater Total

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Collateralized Mortgage Obligations - Government-Sponsored Enterprises 1 5,603 ( 29 ) 21 71,796 ( 15,723 ) 22 77,399 ( 15,752 )

Collateralized Loan Obligations 1 2,910 ( 58 ) — — — 1 2,910 ( 58 )

Corporate Debt — — — 3 7,719 ( 1,765 ) 3 7,719 ( 1,765 )

8 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, Amortized

(Dollars in Thousands)

Due in One Year or Less $ — $ —

Due after One Year through Five Years $ 714 $ 698

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Total $ 281,416 $ 259,514

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the gross realized gain and loss on sales of debt securities, as well as gain and loss on equity securities from both sales and market adjustments for the periods indicated.

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Debt Securities

Gross Realized Gain $ — $ —

Gross Realized Loss $ — $ ( 10,089 )

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Equity Securities

Net Unrealized Loss Recognized on Securities Held $ ( 110 ) $ ( 168 )

Net Realized Gain Recognized on Securities Sold — —

Net Loss on Equity Securities $ ( 110 ) $ ( 168 )

Net Loss on Securities $ ( 10,199 ) $ ( 168 )

Net Unrealized Gain (Loss) Recognized on Securities Held $ 51 $ ( 110 )

Net Gain (Loss) on Equity Securities $ 51 $ ( 110 )

Net Gain (Loss) on Securities $ 51 $ ( 10,199 )

In 2024, there were no gross realized losses on the sale of debt securities.

In 2023, there were $ 10.1 million gross realized losses on the sale of debt securities as a result of the Company implementing a balance sheet repositioning strategy of its portfolio of available-for-sale securities.

The Company sold $ 69.3 million in market value of its lower-yielding U.S government agency, mortgage-backed and municipal securities with an average yield of 1.89 % and purchased $ 69.3 million of higher-yielding mortgage-backed and collateralized mortgage obligation securities with an average yield of 5.49 %.

In 2022, there were no gross realized gains or losses on the sale of debt securities.

NOTE 4— LOANS AND RELATED ALLOWANCE FOR CREDIT LOSSES

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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The following table summarizes the major classifications of loans as of the dates indicated:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 2023

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Loans, Net $ 1,082,821 $ 1,100,689

Total unamortized net deferred loan fees were $ 1.0 million and $ 1.2 million at December 31, 2023 and December 31, 2022, 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 $ 846,000 and $ 1.0 million at December 31, 2024 and 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.

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Loans classified as Loss are considered uncollectible and of such little value that continuance as an asset is not warranted.

The following table presents the Company's loans by year of origination, loan segmentation and risk indicator summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of December 31, 2023.

The following tables present the Company's loans by year of origination, loan segmentation and risk indicator 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.

There were no loans in the criticized category of Loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s loan segmentation and risk indicator summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of December 31, 2022, prior to the adoption of ASU 2016-13:

December 31, Pass Special

Substandard Doubtful Total

(Dollars in Thousands)

Residential $ 327,531 $ 1,180 $ 2,014 $ — $ 330,725

Commercial 395,168 29,680 11,957 — 436,805

Construction 42,693 1,912 318 — 44,923

Classified Loans by Origination Year (at December 31, 2023)

(Dollars in Thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Total

Pass $ 33,579 $ 49,903 $ 44,749 $ 58,344 $ 38,008 $ 104,931 $ 14,932 $ 344,446

Special Mention — 1,034 507 — — 345 — 1,886

Substandard — — — — — 1,476 — 1,476

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 33,579 50,937 45,256 58,344 38,008 106,752 14,932 347,808

Pass 56,466 72,006 85,285 49,356 49,442 112,749 2,017 427,321

Special Mention 1,206 5,485 9,030 2,445 2,730 10,281 — 31,177

Substandard — — — — 2,717 5,939 — 8,656

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 57,672 77,491 94,315 51,801 54,889 128,969 2,017 467,154

Pass 13,322 12,469 2,932 540 — — — 29,263

Special Mention 4,489 2,153 663 6,548 — — — 13,853

Substandard — — — — — — — —

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 17,811 14,622 3,595 7,088 — — — 43,116

Commercial and Industrial

Consumer 146,807 — 120 — 146,927

Other 20,394 55 — — 20,449

Pass 31,609 16,334 8,652 5,556 3,366 2,875 32,172 100,564

Special Mention — — — 12 — 3,215 3,250 6,477

Substandard — — — — — 4,237 — 4,237

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 31,609 16,334 8,652 5,568 3,366 10,327 35,422 111,278

Pass 12,726 49,027 25,528 10,365 3,786 4,715 5,408 111,555

Special Mention — — — — — — — —

Substandard — — — 24 — 64 — 88

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 12,726 49,027 25,528 10,389 3,786 4,779 5,408 111,643

Pass 4,047 17,248 41 646 1,278 3,701 851 27,812

Special Mention — 1,585 — — — — — 1,585

Substandard — — — — — — — —

Doubtful — — — — — — — —

Loss — — — — — — — —

Total 4,047 18,833 41 646 1,278 3,701 851 29,397

Total Loans $ 157,444 $ 227,244 $ 177,387 $ 133,836 $ 101,327 $ 254,528 $ 58,630 $ 1,110,396

Gross Charge Offs $ — $ 163 $ 44 $ 18 $ 2 $ 314 $ 48 $ 589

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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:

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Total Loans $ 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 December 31, 2024 and 2023 were current was $ 21,000 and $ 150,000 for the years ended December 31, 2024 and 2023, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional interest income that would have been recorded if the loans that were nonaccrual at December 31, 2023 were current was $ 150,000 and $ 203,000 for the years ended December 31, 2023 and 2022, respectively.

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

December 31, 2024

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$ 1,388 $ — $ — $ 1,388

Total Nonaccrual Loans

$ 1,789 $ — $ — 1,789

Total Other Real Estate Owned —

Total Nonperforming Assets

December 31, 2023

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

(Dollars in Thousands)

Nonaccrual Loans:

$ 1,476 $ — $ — $ 1,476

Commercial and Industrial

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Total Nonperforming Assets

No interest income on nonaccrual loans was recognized during the year ended December 31, 2023.

In conjunction with the adoption of ASU 2016-13, ASU 2022-02 was adopted and eliminates the troubled debt restructurings ("TDR") recognition and measurement.

With the elimination of TDRs, ASU 2022-02 requires that all modifications and refinancing, including those with borrowers that are experiencing financial difficulty are subject to the modification guidance in ASC 310-20.

Interest income of $ 339,000 and $ 76,000 was recognized on nonaccrual loans during the years ended December 31, 2024 and 2023, respectively.

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

Loan modifications could meet the definition of a new loan if certain terms of the loan are modified to the benefit of the lender and the modification to the terms of the loan are more than minor.

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

For the year ended December 31, 2023, there were no new loan modifications to borrowers experiencing financial difficulty in the past 12 months under the current guidance.

The following table sets forth the amounts and categories of nonperforming assets as of December 31, 2022, prior to adoption of ASU 2016-13.

Included in nonperforming loans and assets are TDRs, which are loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Modifications to Borrowers Experiencing Financial Difficulty

The following table present the amortized cost of loans to borrowers experiencing financial difficulty by portfolio segment and type of modification during the periods presented:

December 31, 2024

Extension Payment

Delay Interest

Reduction Total % of Portfolio Segment

dollars in thousands

Nonaccrual Loans:

Commercial and Industrial

Total Nonaccrual Loans

Accruing Loans Past Due 90 Days or More:

Total Accruing Loans Past Due 90 Days or More

Total Nonaccrual Loans and Accruing Loans Past Due 90 Days or More

Troubled Debt Restructurings, Accruing:

Commercial and Industrial

Total Troubled Debt Restructurings, Accruing

Total Nonperforming Loans

Total Nonperforming 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 $ 907 ,000 and $ 1.4 million at December 31, 2023 and 2022, respectively.

The activity in the ACL - Loans is summarized below by primary segments for the year ended December 31, 2023.

Residential $ — $ — $ — $ — — %

Commercial 4,746 — — 4,746 0.98 %

Construction — — — — — %

Commercial & Industrial — — — — — %

Consumer — — — — — %

Other — — — — — %

$ 4,746 $ — $ — $ 4,746 0.43 %

(1) Excludes loans that were fully paid off or fully charged-off by period end.

The following table describes the effect of loan modifications made to borrowers experiencing financial difficulty during the periods presented:

December 31, 2024

Weighted Average

Term Extension

(in months) Weighted Average

Payment Delay

(in months) Weighted Average

Interest Rate

Residential — — — %

Commercial 6 — — %

Construction — — — %

Commercial & Industrial — — — %

Consumer — — — %

Other — — — %

No modifications involved forgiveness of principal or interest rate reductions.

There were no commitments to lend additional funds to borrowers experiencing difficulty whose terms have been restructured as of December 31, 2024.

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 $ 1.2 million and $ 907,000 at December 31, 2024 and 2023, respectively.

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

Residential Real

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Construction Commercial

Industrial Consumer Other Unallocated Total

Industrial Consumer Other Total

(Dollars in Thousands)

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

Impact of ASC 326 - Loans

137 ( 3,244 ) 488 ( 1,057 ) 774 120 ( 603 ) ( 3,385 )

Charge-offs ( 28 ) ( 127 ) — ( 12 ) ( 485 ) — ( 652 )

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Provision (Recovery) for Credit Losses - Loans ( 189 ) 600 625 ( 272 ) ( 377 ) ( 8 ) 379

1,094 32 ( 351 ) ( 439 ) ( 749 ) 129 — ( 284 )

December 31, 2024 $ 2,926 $ 3,103 $ 1,264 $ 1,584 $ 687 $ 241 $ 9,805

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 year ended was as follows:

(Dollars in Thousands)

Allowance for Credit Losses

Balance at December 31, 2022 $ —

Impact of CECL Adoption 718

Recovery for Credit Losses - Unfunded Commitments ( 218 )

Balance at December 31, 2023 $ 500

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 year ended December 31, 2023, there were no loans that required a credit loss to be individually assigned.

The following tables present the activity in the allowance for credit 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, prior to the adoption of ASU 2016-13.

Residential Real

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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 )

Charge-offs ( 219 ) — — — ( 370 ) — — ( 589 )

Recoveries 43 32 — 876 195 — — 1,146

(Recovery) Provision for Loan Losses 541 ( 150 ) ( 747 ) 3,757 532 — ( 149 ) 3,784

Provision (Recovery) for Credit Losses - Loans 1,094 32 ( 351 ) ( 439 ) ( 749 ) 129 — ( 284 )

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

Individually Evaluated for Impairment $ — $ 21 $ — $ 3 $ — $ — $ — $ 24

Collectively Evaluated for Potential Impairment $ 2,074 $ 5,789 $ 502 $ 2,310 $ 1,517 $ — $ 603 $ 12,795

The following table presents the major classifications of loans summarized by individually evaluated for impairment and collectively evaluated for potential impairment at the date indicated, prior to the adoption of ASU 2016-13.

December 31, Real

Residential Real

Commercial Real

Construction Commercial

Industrial Consumer Other Total

(Dollars in Thousands)

Individually Evaluated for Impairment $ 1,042 $ 13,217 $ 318 $ 512 $ — $ — $ 15,089

Collectively Evaluated for Potential Impairment 329,683 423,588 44,605 69,532 146,927 20,449 1,034,784

Total Loans $ 330,725 $ 436,805 $ 44,923 $ 70,044 $ 146,927 $ 20,449 $ 1,049,873

Pre Adoption of ASC 326 – Impaired Loans

For periods prior to the adoption of CECL, loans were considered impaired when, based on current information and events, it was probable the Company would be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investment Related

Allowance Unpaid

Balance Average

Investment Interest

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

(Dollars in Thousands)

With No Related Allowance Recorded:

Residential $ 1,042 $ — $ 1,047 $ 1,085 $ 51

Commercial 11,609 — 11,766 10,928 549

Construction 318 — 318 403 19

Commercial and Industrial 505 — 777 734 35

Total With No Related Allowance Recorded $ 13,474 $ — $ 13,908 $ 13,150 $ 654

With A Related Allowance Recorded:

Commercial $ 1,608 $ 21 $ 1,608 $ 954 $ 79

Construction — — — 830 36

Commercial and Industrial 7 3 7 253 1

Total With A Related Allowance Recorded $ 1,615 $ 24 $ 1,615 $ 2,037 $ 116

Total Impaired Loans:

Residential $ 1,042 $ — $ 1,047 $ 1,085 $ 51

Commercial 13,217 21 13,374 11,882 628

Construction 318 — 318 1,233 55

Commercial and Industrial 512 3 784 987 36

Total Impaired Loans $ 15,089 $ 24 $ 15,523 $ 15,187 $ 770

Allowance for Credit Losses

Balance at December 31, 2023 $ 500

Provision for Credit Losses - Unfunded Commitments 191

Balance at December 31, 2024 $ 691

(in thousands) Allowance for Credit Losses

Balance at December 31, 2022 $ —

Impact of CECL Adoption 718

Recovery for Credit Losses - Unfunded Commitments ( 218 )

Balance at December 31, 2023 500

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

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

The following table presents changes in the accretable discount on the loans acquired at fair value for the dates indicated.

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Balance at December 31, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain directors and executive officers of the Company, including family members or companies in which they are principal owners, are loan customers of the Company.

5 unchanged sentences

Balance, December 31 $ 18,297 $ 15,604

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5— PREMISES AND EQUIPMENT

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Core Deposit Intangible $ 11,860 $ ( 11,860 ) $ — $ 11,860 $ ( 10,902 ) $ 958

Customer List — — — 1,800 ( 837 ) 963

Total Intangible Assets $ 11,860 $ ( 11,860 ) $ — $ 11,860 $ ( 10,902 ) $ 958

On December 1, 2023, the sale of EU was completed, resulting in the removal of the customer list intangible, net of accumulated amortization, of $ 789,000 .

Amortization of intangible assets totaled $ 1.8 million for the years ended December 31, 2023 and 2022, respectively.

The estimated amortization expense of intangible assets assumes no activities, such as acquisitions, which would result in additional amortizable intangible assets.

Estimated amortization expense of intangible assets in subsequent fiscal years is as follows.

(Dollars in Thousands)

2029 and Thereafter —

Total Estimated Intangible Asset Amortization Expense $ 958

Amortization of intangible assets totaled $ 1.0 million and $ 1.8 million for the years ended December 31, 2024 and 2023, respectively.

All intangible assets were fully amortized as of December 31, 2024 and no further amortization expense is expected assuming there are no activities, such as acquisitions, which would result in additional amortizable intangible assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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government agencies, mortgage-backed securities, and collateralized mortgage obligations are pledged as collateral under these agreements in an amount at least equal to the outstanding balance and the collateral pledging requirements are monitored on a daily basis.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the components of short-term borrowings for the years indicated.

9 unchanged sentences

Securities Sold Under Agreements to Repurchase:

Balance at Period End $ — — % $ 8,060 0.19 %

Average Balance Outstanding During the Period — — % 332 0.60 %

Maximum Amount Outstanding at any Month End — 121

Securities Collateralizing the Agreements at Period-End:

Carrying Value $ — $ 10,947

Market Value — 9,396

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9— OTHER BORROWED FUNDS

9 unchanged sentences

Due After One Year to Two Years — — % 20,000 4.92 %

Due After Two Years to Three Years — — — —

Total $ 20,000 4.92 % $ 20,000 4.92 %

1 unchanged sentence

If the FHLB is required to make payment for a beneficiary’s draw, the payment amount is converted into a collateralized advance to the Bank.

Standby letters of credit issued on our behalf by the FHLB to secure public deposits were $ 18.9 million and $ 26.2 million as of December 31, 2023 and 2022.

There were no standby letters of credit issued on our behalf by the FHLB to secure public deposits as of December 31, 2024 and $ 18.9 million as of December 31, 2023.

The Bank maintains a Borrower-In-Custody of Collateral line of credit agreement with the Federal Reserve Bank (“FRB”) for $ 84.0 million that requires monthly certification of collateral, is subject to annual renewal and is secured by $ 108.3 million of commercial and consumer indirect auto loans.

The Bank also maintains multiple line of credit arrangements with various

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

unaffiliated banks totaling $ 50.0 million as of December 31, 2023 and 2022, respectively, of which no draws are outstanding other than the subordinated debt disclosed below.

The Bank also maintains multiple line of credit arrangements with various unaffiliated banks totaling $ 50.0 million as of December 31, 2024 and 2023, respectively, of which no draws are outstanding other than the subordinated debt disclosed below.

Subordinated Debt

19 unchanged sentences

Nonaccrual Loan Interest 53 57

Amortization of Intangibles — 105

Purchase Accounting Adjustments 289 53

6 unchanged sentences

Lease Liability 607 380

Right of Use Asset Impairment — 60

Restructuring Costs 88 88

5 unchanged sentences

Depreciation 2,030 1,588

Net Unrealized Gain on Equity Securities — 1

Mortgage Servicing Rights 99 115

Accrued Payroll — 3

ROU Asset 587 357

Goodwill — 74

Gross Deferred Tax Liabilities 3,164 2,487

1 unchanged sentence

Deferred taxes at December 31, 2024 and 2023, are included in Accrued Interest Receivable and Other Assets in the accompanying Consolidated Statements of Financial Condition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the federal income tax expense at statutory income tax rates and the actual income tax expense on income before taxes for the periods indicated is as follows:

6 unchanged sentences

Stock Options - ISO 25 0.2 44 0.1

Goodwill Impairment — — — —

Other ( 138 ) ( 1.0 ) ( 300 ) ( 1.0 )

4 unchanged sentences

There were no interest or penalties accrued at December 31, 2024 and 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11— EMPLOYEE BENEFITS

19 unchanged sentences

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 $ 1.1 million and $ 600,000 for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023 and 2022, total unrecognized compensation expense was

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 505,000 and $ 430,000 , respectively, related to stock options, and $ 1.4 million related to restricted stock awards for both periods.

Stock-based compensation expense related to restricted stock awards and stock options was $ 812,000 and $ 1.1 million for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024 and 2023, total unrecognized compensation expense was $ 701 ,000 and $ 505,000 , respectively, related to stock options, and $ 1.2 million and $ 1.4 million, respectively, related to restricted stock awards for December 31, 2024 and 2023, respectively.

At December 31, 2024, the unrecognized compensation expense related to stock options and restricted stock is expected to be recognized over the weighted average remaining vesting period of 3.33 years.

In conjunction with non-qualified stock options, the Company did not recognize any tax benefit due to exercises of non-qualified stock options for the year ended December 31, 2023, compared to a tax benefit of $ 2,000 recognized for the year ended December 31, 2022.

In the prior year, there was an exercise of non-qualified stock options with a tax expense of $ 4,000 partially offset by the benefit of $ 2,000 .

In conjunction with non-qualified stock options, the Company recognized a tax benefit of $ 27,000 due to exercises of non-qualified stock options for the year ended December 31, 2024, compared to no tax benefit recognized for the year ended December 31, 2023.

In the current year, there were exercises of non-qualified stock options with a tax benefit of $ 29,000 partially offset by tax expense of $ 2,000 .

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

The intrinsic value of outstanding stock options was $ 335,000 and $ 25,000 at December 31, 2023 and 2022, respectively.

At December 31, 2023, there were 161,464 shares of common stock available and reserved under the 2021 Plan to be issued of which a maximum of 161,464 shares may be issued as stock options and 64,586 shares may be issued as restricted stock awards or units based on the terms of the Plan whereby the Share Limit is reduced, on a one-for-one basis, for each share of common stock subject to a stock option grant, and on a two and one-half-for-one basis for each share of common stock issued pursuant to restricted stock awards or units.

At December 31, 2023, 40,225 restricted shares and 78,975 options have been granted under the 2021 Plan.

At December 31, 2022, under the 2021 Plan, 333,335 or 133,334 shares,were available to be issued in connection with the exercise of stock options and restricted stock awards or units;

and under the 2015 Plan, no shares were available to issue.

The 2015 Plan shall remain in effect as long as any awards are outstanding, but as a result of the approval of the 2021 Plan, no more awards can be granted under the 2015 Plan.

The intrinsic value of outstanding stock options was $ 1.9 million and $ 335,000 at December 31, 2024 and 2023, respectively.

At December 31, 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 terms of the Plan.

At December 31, 2024, no shares have been granted under the 2024 Plan.

Under the 2021 Plan, there were 25,410 restricted shares and 93,950 options granted in 2024.

Under the 2021 Plan, there were 161,464 or 64,586 shares available at December 31, 2023 to be issued in connection with the exercise of stock options and restricted stock awards or units.

The 2021 and 2015 Plans 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 2015 or 2021 Plans.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents stock option data for the period indicated:

19 unchanged sentences

Nonvested Options at December 31, 2024 186,973 $ 22.90 8.3

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents restricted stock award data for the period indicated.

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Nonvested Restricted Stock at December 31, 2024 65,029 $ 22.64 3.0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12— COMMITMENTS AND CONTINGENT LIABILITIES

5 unchanged sentences

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

Commitments and conditional obligations are evaluated the same as on-balance-sheet instruments but do not have a corresponding reserve recorded.

The Company’s opinion on not implementing a corresponding reserve for off-balance-sheet instruments is supported by historical factors of no losses recorded due to these items.

The Company is continually evaluating these items for credit quality and any future need for the corresponding reserve.

The Company maintains an ACL on unfunded commitments to provide for the risk of loss inherent in these arrangements.

The Company is required to include unfunded commitments that are expected to be funded in the future within the allowance calculation, other than those that are unconditionally cancellable.

To arrive at that reserve, the reserve percentage for each applicable segment is applied to the unused portion of the expected commitment balance and is multiplied by the expected funding rate.

To determine the expected funding rate, the Company uses a historical utilization rate for each segment.

The ACL on unfunded loan commitments is included in other liabilities on the Consolidated Statement of Financial Condition and the related expense is recorded in provision for credit losses - unfunded commitments in the Consolidated Statement of Income.

The unused and available credit balances of financial instruments whose contracts represent credit risk are as follows:

17 unchanged sentences

These instruments are issued primarily to support bid or performance-related contracts.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

period for these instruments is typically a one-year period with an annual renewal option subject to prior approval by management.

The coverage period for these instruments is typically a one-year period with an annual renewal option subject to prior approval by management.

Fees earned from the issuance of these letters are recognized upon expiration of the letter.

1 unchanged sentence

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

NOTE 13— VARIABLE INTEREST ENTITIES

The Company has an investment in the following non-consolidated entity that meets the definition of a variable interest entity ("VIE").

Low Income Housing Tax Credit Investments

The Company makes equity investments in an entity that sponsors affordable housing and other community development projects that qualify for the Low Income Housing Tax Credit ("LIHTC") program pursuant to Section 42 of the Internal Revenue Code.

The purpose of this investment is not only to assist the Bank in meeting its responsibilities under the Community Reinvestment Act, but also to provide an investment return, primarily through the realization of tax benefits.

The LIHTC partnership is managed by unrelated general partners that have the power to direct the activities which most

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

significantly affect the performance of the partnership.

The Company is therefore not the primary beneficiary of the LIHTC partnership and accordingly, does not consolidate this VIE.

The Company's funding requirements are limited to its invested capital and any additional unfunded commitments for future equity contributions.

The Company's maximum exposure to loss as a result of its involvement is limited to the carrying amounts of the investments, including the unfunded commitments.

The investment in the LIHTC partnership is included in Accrued Interest Receivable and Other Assets and unfunded commitments are included in Accrued Interest Payable and Other Liabilities on the Consolidated Statements of Financial Condition.

The Company currently expects to fund these commitments by the end of 2035.

The following table presents the balance of the Company's LIHTC investment and related unfunded commitments:

December 31, 2024 December 31, 2023

(dollars in thousands)

Low Income Housing Tax Credit Investments $ 6,000 $ —

Amortization ( 55 ) —

Net Low Income Housing Tax Credit Investments $ 5,945 $ —

Unfunded Commitments $ 4,995 $ —

The Company accounts for qualifying LIHTC investments under the proportional amortization method.

Under this method an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance as a component of income tax expense.

The following table presents other information relating to Community Bank's low income housing tax credit investments:

Year Ended December 31,

(dollars in thousands)

Tax Credits and Other Tax Benefits Recognized $ 70 $ —

Proportional Amortization Expense Included in Provision for Income Taxes $ 55 $ —

NOTE 14— STOCKHOLDERS' EQUITY AND REGULATORY CAPITAL

In June 2021, the Company authorized a program to repurchase up to $ 7.5 million of its outstanding shares of common stock.

In April 2022, the Company authorized a program to repurchase up to $ 10.0 million of its outstanding shares of common stock.

Under the program, repurchases may be transacted in the open-market or in negotiated private transactions and are conducted pursuant to a trading plan adopted in accordance with limitations set forth in Rule 10b5-1 of the Securities and Exchange Commission.

1 unchanged sentence

Repurchases are made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to various factors, including but not limited to, the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance.

On February 15, 2022, the Company completed this stock repurchase program.

In connection with the program, the Company repurchased a total of 308,996 shares of the Company’s common stock at an average price of $ 24.27 per share.

In April 2022, the Company authorized a new repurchase program of $ 10.0 million of its outstanding shares of common stock.

The program expired on May 1, 2023.

In connection with the program, the Company repurchased a total of 74,656 shares of the Company's common stock at an average price of $ 22.38 per share.

On July 22, 2024, the Company announced that the Board had approved a program commencing on July 25, 2024 to repurchase up to 5 %, or 257,095 shares, of the Company's then outstanding common stock.

This repurchase program is set to expire on July 25, 2025.

In connection with the program, as of December 31, 2024, the Company had purchased a total of 23,928 shares of the Company's common stock at an average price of $ 27.47 per share.

On January 29, 2025, the Company's Board of Directors declared a cash dividend of $ 0.25 per outstanding share of common stock, which was paid on February 28, 2025.

3 unchanged sentences

The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the Regulatory Capital Rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier I capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets.

As of December 31, 2024 and 2023, the Bank was considered "well capitalized" under the regulatory framework for prompt corrective action.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Bank’s regulatory capital amounts and ratios, as well as the minimum amounts and ratios

30 unchanged sentences

Total Lease Expense $ 470 $ 338

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 2023

4 unchanged sentences

Weighted Average Discount Rate 4.18 % 2.86 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024

27 unchanged sentences

Derivatives Not Designated as Hedging Instruments

The Company has three risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant.

The Company has four risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant.

The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivatives Designated as Hedging Instruments

4 unchanged sentences

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 December 31, 2023

23 unchanged sentences

Fair values for Level 2 securities were primarily determined by a third-party pricing service using both quoted prices for similar assets, when available, and model-based valuation techniques that derive fair value based on market-corroborated data, such as instruments with similar prepayment speeds and default interest rates.

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.

The Company uses derivative instruments, including interest rate swaps and risk participation agreements, and the fair value of such instruments are calculated using accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative, considering the contractual terms of each derivative, and uses observable market-based inputs, such as interest rate curves and implied volatilities.

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.

These instruments are classified as Level 2.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no transfers from Level 1 to Level 2 and no transfers into or out of Level 3 during the years ended December 31, 2024 and 2023, respectively.

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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, Fair Value Hierarchy 2024 2023

18 unchanged sentences

Total Liabilities $ 867 $ 1,871

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the financial assets measured at fair value on a nonrecurring basis on the Consolidated Statements of Financial Condition as of the dates indicated by level within the fair value hierarchy.

6 unchanged sentences

(Dollars in Thousands)

OREO Level 3 — Appraisal of Collateral (1)

Liquidation Expenses (2)

Impaired Loans Individually Assessed Level 3 $ 5,244 Appraisal of Collateral (1)

Appraisal Adjustments (2)

25 % to 52 % 26.2 %

2 unchanged sentences

(Dollars in Thousands)

Impaired Loans Individually Assessed Level 3 $ 1,591 Appraisal of Collateral (1)

OREO Level 3 — Appraisal of Collateral (1)

Appraisal Adjustments (2)

3 unchanged sentences

The range and weighted average of appraisal adjustments and liquidation expense are presented as a percent of the appraisal.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impaired loans are evaluated and valued at the time the loan is identified as impaired, at the lower of cost or fair value.

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

At December 31, 2022, the fair value of impaired loans consists of the loan balance $ 1.6 million less a specific valuation allowance of $ 24,000 .

At December 31, 2024, the fair value of impaired loans consists of loan balances of $ 5.6 million less specific valuation allowances of $ 398,000 .

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

The fair value of 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.

6 unchanged sentences

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.

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

At December 31, 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 carrying value, which consisted of the outstanding balance of $ 37,000 less write-downs of $ 37,000 .

Financial instruments are defined as cash, evidence of an ownership in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.

3 unchanged sentences

In addition, changes in the assumptions on which the estimated fair values are based may have significant impact on the resulting estimated fair values.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The estimated fair values of the Company’s financial instruments at the dates indicated are as follows:

12 unchanged sentences

Deposits Level 2 1,283,517 1,284,494 1,267,159 1,263,574

Short-term Borrowings Level 2 — — 8,060 8,060

Other Borrowed Funds

3 unchanged sentences

Accrued Interest Payable Level 2 2,496 2,496 1,814 1,814

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19— OTHER NONINTEREST EXPENSE

3 unchanged sentences

Non-employee Compensation $ 564 $ 580

Printing and Supplies 238 250

Postage 286 339

Telephone 515 524

Charitable Contributions 118 173

Dues and Subscriptions 213 174

Insurance 333 326

Miscellaneous 332 538

Postage 246 286

Travel 230 236

Printing and Supplies 225 238

Loan Expenses 202 257

Dues and Subscriptions 197 213

Bank Assessment 187 192

Charitable Contributions 155 118

Meals and Entertainment 141 155

Travel 236 173

Training 42 72

Bank Assessment 192 194

Insurance 326 275

Miscellaneous 538 436

TOTAL OTHER NONINTEREST EXPENSE $ 3,369 $ 3,735

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20— CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

13 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 162,194 $ 154,698

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Statements of Income

5 unchanged sentences

Net Interest and Dividend Income 4,596 4,573

Net Loss on Securities ( 122 ) ( 54 )

Net Gain (Loss) on Securities 60 ( 122 )

Noninterest Expense 23 18

4 unchanged sentences

NET INCOME $ 12,594 $ 22,550

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Statements of Cash Flows

9 unchanged sentences

NET CASH PROVIDED BY OPERATING ACTIVITIES 5,438 5,326

INVESTING ACTIVITIES

FINANCING ACTIVITIES

4 unchanged sentences

NET CASH USED IN FINANCING ACTIVITIES ( 5,334 ) ( 5,542 )

DECREASE IN CASH AND DUE FROM BANKS ( 216 ) ( 4,051 )

INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 104 ( 216 )

CASH AND DUE FROM BANKS AT BEGINNING OF THE YEAR 14,300 14,516

CASH AND DUE FROM BANKS AT END OF THE YEAR $ 14,404 $ 14,300

The Parent Company's Statements of Comprehensive Income (Loss) and Statements of Changes in Stockholders' Equity are identical to the Consolidated Statements of Comprehensive Income (Loss) and the Consolidated Statements of Changes in Stockholders' Equity and are not presented.

The Parent Company's Statements of Comprehensive Income and Statements of Changes in Stockholders' Equity are identical to the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Changes in Stockholders' Equity and are not presented.

NOTE 21— SEGMENT REPORTING AND RELATED INFORMATION

At December 31, 2023, the Company’s business activities were comprised of two operating segments, which are community banking and insurance brokerage services.

CB Financial Services, Inc.

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

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

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing performance.

The Company's President and Chief Executive Officer functions as its CODM.

At December 31, 2024, the Company has one reportable segment, community banking services, upon which the CODM makes decisions regarding how to allocate resources and assess performance.

Individual bank branches offer a group of similar services, including commercial, real estate and consumer loans, time deposits, checking and savings accounts all with similar operating and economic characteristics.

While the CODM monitors the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis.

The CODM uses net interest income, noninterest income and net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the Company, pursue acquisitions or pay out dividends.

Net income is used to monitor budget versus actual results.

These metrics and the Company's significant expense categories are disclosed on the Company's Consolidated Statements of Income.

Prior to 2024, the Company managed its operations through two reportable segments, consisting of community banking services and insurance brokerage services.

The insurance brokerage services were offered through the Bank's wholly-owned subsidiary, Exchange Underwriters (EU).

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EU had an independent board of directors from the Company and was managed separately from community banking services.

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 following table represents selected financial data for the Company’s subsidiaries and consolidated results for 2023 and 2022.

Community Bank Exchange Underwriters, Inc.

CB Financial Services, Inc.

Net Eliminations Consolidated

(Dollars in Thousands)

December 31, 2023

Assets $ 1,452,469 $ 28,830 $ 154,698 $ ( 179,906 ) $ 1,456,091

Liabilities 1,315,110 7,571 14,864 ( 21,288 ) 1,316,257

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

December 31, 2022

Assets $ 1,409,510 $ 5,585 $ 124,879 $ ( 131,036 ) $ 1,408,938

Liabilities 1,301,783 1,996 14,724 ( 19,720 ) 1,298,783

Stockholders' Equity 107,727 3,589 110,155 ( 111,316 ) 110,155

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

During 2024, the Company recognized an additional gain of $ 138,000 following the final settlement of all liabilities and an earn-out payment of $ 708,000 .

Assets remaining in the EU subsidiary at

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2024 consisted primarily of cash received from the sale of assets.

The Bank intends to merge EU into the Bank during 2025.

Following are the results of operations and selected financial information by operating segment for 2023:

Year Ended December 31, 2023

Interest and Dividend Income $ 62,135 $ 6 $ 5,195 $ ( 5,111 ) $ 62,225

Community Banking Insurance Brokerage Total Eliminations Consolidated Total

Interest Income $ 62,219 $ 6 $ 62,225 $ — $ 62,225

Interest Expense 17,672 — 17,672 — 17,672

2 unchanged sentences

Recovery for Credit Losses - Unfunded Commitments ( 218 ) — ( 218 ) — ( 218 )

Net Interest and Dividend Income After Recovery for Credit Losses 45,587 6 4,573 ( 5,111 ) 45,055

Noninterest Income (Loss) ( 6,280 ) 30,414 ( 122 ) — 24,012

Noninterest Expense 34,714 4,050 18 — 38,782

Undistributed Net Income of Subsidiary 18,986 — 18,046 ( 37,032 ) —

Income Before Income Tax Expense (Benefit) 23,579 26,370 22,479 ( 42,143 ) 30,285

Income Tax Expense (Benefit) 422 7,384 ( 71 ) — 7,735

Net Income $ 23,157 $ 18,986 $ 22,550 $ ( 42,143 ) $ 22,550

Year Ended December 31, 2022

Interest and Dividend Income $ 47,632 $ 6 $ 5,025 $ ( 4,947 ) $ 47,716

Interest Expense 4,159 — 622 — 4,781

Net Interest and Dividend Income 43,473 6 4,403 ( 4,947 ) 42,935

Provision for Loan Losses 3,784 — — — 3,784

Net Interest and Dividend Income After Provision for Loan Losses 39,689 6 4,403 ( 4,947 ) 39,151

Noninterest Income (Loss) 3,867 6,007 ( 54 ) — 9,820

Noninterest (Loss) Income ( 6,402 ) 30,414 24,012 — 24,012

Noninterest Expense (1)

Undistributed Net Income of Subsidiary 1,315 — 6,778 ( 8,093 ) —

Income Before Income Tax Expense (Benefit) 14,134 1,878 11,108 ( 13,040 ) 14,080

Income Tax Expense (Benefit) 2,409 563 ( 139 ) — 2,833

Salaries and Employee Benefits 18,776 3,127 21,903 — 21,903

Occupancy 2,839 159 2,998 — 2,998

Equipment 896 168 1,064 — 1,064

Data Processing 3,014 — 3,014 — 3,014

Federal Deposit Insurance Corporation Assessment 754 — 754 — 754

Pennsylvania Shares Tax 889 — 889 — 889

Contracted Services 1,070 96 1,166 — 1,166

Legal and Professional Fees 1,169 13 1,182 — 1,182

Advertising 370 56 426 — 426

Other Real Estate Owned (Income) ( 115 ) — ( 115 ) — ( 115 )

Amortization of Intangible Assets 1,592 174 1,766 — 1,766

Other Expense 3,478 257 3,735 — 3,735

Total Noninterest Expense 34,732 4,050 38,782 — 38,782

Income before Income Taxes $ 3,915 $ 26,370 $ 30,285 $ — $ 30,285

Income Tax Expense 351 7,384 7,735 — 7,735

Net Income $ 3,564 $ 18,986 $ 22,550 $ — $ 22,550

Total Assets $ 1,607,167 $ 28,830 $ 1,635,997 $ ( 179,906 ) $ 1,456,091

(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

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 9A. Controls and Procedures