CB Financial Services, Inc. - Quarter Report: 2022 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


			☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


			☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-36706


			CB FINANCIAL SERVICES, INC.
			(Exact name of registrant as specified in its charter)


Pennsylvania						51-0534721
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


100 N. Market Street, Carmichaels, PA						15320
(Address of principal executive offices)						(Zip Code)


			(724) 966-5041
			(Registrant’s telephone number, including area code)


			N/A
			(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Common stock, par value $0.4167 per share

CBFV

The Nasdaq Stock Market, LLC

(Title of each class)

(Trading symbol)

(Name of each exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


			Large accelerated filer ☐						Accelerated filer ☐
			Non-accelerated filer ☒						Smaller reporting company ☒
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 7, 2022, the number of shares outstanding of the Registrant’s Common Stock was 5,092,204.

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FORM 10-Q

INDEX


			Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)			1
Consolidated Statements of Financial Condition			1
Consolidated Statements of Income			2
Consolidated Statements of Comprehensive (L o s s ) Income			3
Consolidated Statements of Changes In Stockholders’ Equity			4
Consolidated Statements of Cash Flows			6
Notes to the Consolidated Financial Statements (Unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			32
Item 3. Quantitative and Qualitative Disclosure about Market Risk.			44
Item 4. Controls and Procedures.			45
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.			46
Item 1A. Risk Factors.			46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			46
Item 3. Defaults Upon Senior Securities.			46
Item 4. Mine Safety Disclosures.			46
Item 5. Other Information.			46
Item 6. Exhibits			47
SIGNATURES			48

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	(Unaudited) September 30, 2022		December 31, 2021
(Dollars in thousands, except per share and share data)

ASSETS
Cash and Due From Banks:
Interest Bearing	$	99,949	$	63,968
Non-Interest Bearing	22,852		55,706
Total Cash and Due From Banks	122,801		119,674

Securities:
Available-for-Sale Debt Securities, at Fair Value	191,232		222,108
Equity Securities, at Fair Value	2,614		2,866
Total Securities	193,846		224,974

Loans, Net of Allowance for Loan Losses of $12,854 and $11,582 at September 30, 2022 and December 31, 2021, Respectively	1,030,088		1,009,214

Premises and Equipment, Net	18,064		18,399
Bank-Owned Life Insurance	25,750		25,332
Goodwill	9,732		9,732
Intangible Assets, Net	3,959		5,295
Accrued Interest Receivable and Other Assets	21,680		12,859
TOTAL ASSETS	$	1,425,920	$	1,425,479

LIABILITIES

Deposits:
Non-Interest Bearing Demand Deposits	407,107		385,775
NOW Accounts	298,755		272,518
Money Market Accounts	198,715		192,125
Savings Accounts	250,378		239,482
Time Deposits	120,879		136,713
Total Deposits	1,275,834		1,226,613

Short-Term Borrowings	18,108		39,266
Other Borrowings	17,627		17,601
Accrued Interest Payable and Other Liabilities	7,645		8,875
TOTAL LIABILITIES	1,319,214		1,292,355

STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value; 5,000,000 Shares Authorized	—		—
Common Stock, $0.4167 Par Value; 35,000,000 Shares Authorized, 5,702,433 Shares Issued and 5,096,672 Shares Outstanding at September 30, 2022, with 5,680,993 and 5,260,672 Shares Issued and Outstanding at December 31, 2021.	2,376		2,367
Capital Surplus	83,793		83,294
Retained Earnings	60,930		57,534
Treasury Stock, at Cost (605,761 and 420,321 Shares at September 30, 2022 and December 31, 2021, Respectively)	(13,745)		(9,144)
Accumulated Other Comprehensive Loss	(26,648)		(927)
TOTAL STOCKHOLDERS' EQUITY	106,706		133,124
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,425,920	$	1,425,479

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

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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(Dollars in thousands, except share and per share data)

INTEREST AND DIVIDEND INCOME
Loans, Including Fees	$	10,815	$	9,718	$	30,098	$	29,800
Investment Securities:
Taxable	985		843		2,878		2,124
Tax-Exempt	49		71		172		223
Dividends	21		19		64		63
Other Interest and Dividend Income	417		135		649		384
TOTAL INTEREST AND DIVIDEND INCOME	12,287		10,786		33,861		32,594
INTEREST EXPENSE
Deposits	1,079		715		2,214		2,489
Short-Term Borrowings	19		25		56		72
Other Borrowings	174		36		522		112
TOTAL INTEREST EXPENSE	1,272		776		2,792		2,673
NET INTEREST AND DIVIDEND INCOME	11,015		10,010		31,069		29,921
Provision (Recovery) For Loan Losses	—		—		3,784		(1,200)
NET INTEREST INCOME AFTER PROVISION (RECOVERY) FOR LOAN LOSSES	11,015		10,010		27,285		31,121
NONINTEREST INCOME
Service Fees	544		602		1,629		1,762
Insurance Commissions	1,368		1,194		4,535		3,998
Other Commissions	244		93		512		431
Net Gain on Sales of Loans	—		49		—		166
Net (Loss) Gain on Securities	(46)		24		(252)		482
Net Gain on Purchased Tax Credits	14		18		43		53

Net Gain (Loss) on Disposal of Fixed Assets	439		—		431		(3)
Income from Bank-Owned Life Insurance	140		138		418		411
Other Income	36		80		143		291
TOTAL NONINTEREST INCOME	2,739		2,198		7,459		7,591
NONINTEREST EXPENSE
Salaries and Employee Benefits	4,739		4,787		13,843		14,757
Occupancy	768		615		2,230		2,349
Equipment	170		205		561		782
Data Processing	540		541		1,471		1,666
FDIC Assessment	147		293		484		792
PA Shares Tax	240		224		721		714
Contracted Services	288		1,441		1,223		2,878
Legal and Professional Fees	334		180		876		788
Advertising	131		225		362		558
Other Real Estate Owned (Income)	(38)		(89)		(113)		(153)
Amortization of Intangible Assets	445		446		1,336		1,481
Intangible Assets Impairment	—		—		—		1,178
Writedown of Fixed Assets	—		2		—		2,270
Other Expense	1,063		903		2,899		2,830
TOTAL NONINTEREST EXPENSE	8,827		9,773		25,893		32,890
Income Before Income Tax Expense	4,927		2,435		8,851		5,822
Income Tax Expense	998		452		1,757		1,217
NET INCOME	$	3,929	$	1,983	$	7,094	$	4,605
EARNINGS PER SHARE
Basic	$	0.77	$	0.37	$	1.38	$	0.85
Diluted	0.77		0.37		1.37		0.85
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic	5,106,861		5,373,032		5,150,632		5,412,989
Diluted	5,118,627		5,390,128		5,165,376		5,420,792

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

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(Dollars in thousands)

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

Other Comprehensive (Loss) Income:
Change in Unrealized (Loss) Income on Investment Securities Available-for-Sale	(11,753)		(733)		(32,785)		(2,662)
Income Tax Effect	2,533		158		7,064		571

Reclassification Adjustment for Gain on Sale of Debt Securities Included in Net Income (1)	—		—		—		(225)
Income Tax Effect (2)	—		—		—		48
Other Comprehensive (Loss), Net of Income Tax Effect	(9,220)		(575)		(25,721)		(2,268)
Total Comprehensive (Loss) Income	$	(5,291)	$	1,408	$	(18,627)	$	2,337

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

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

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

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)


Three Months Ended September 30, 2022	Shares Issued	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(Dollars in thousands, except share and per share data)

June 30, 2022	5,702,433	$	2,376	$	83,614	$	58,225	$	(13,015)	$	(17,428)	$	113,772
Comprehensive Loss:
Net Income	—	—		—		3,929		—		—		3,929
Other Comprehensive Loss	—	—		—		—		—		(9,220)		(9,220)
Restricted Stock Awards Granted	—	—		—		—		—		—		—
Restricted Stock Awards Forfeited	—	—		34		—		(34)		—		—
Stock-Based Compensation Expense	—	—		145		—		—		—		145
Exercise of Stock Options	—	—				—		(2)		—		(2)
Treasury stock purchased, at cost (30,271 shares)	—	—		—		—		(694)		—		(694)
Dividends Paid ($0.24 Per Share)	—	—		—		(1,224)		—		—		(1,224)
September 30, 2022	5,702,433	$	2,376	$	83,793	$	60,930	$	(13,745)	$	(26,648)	$	106,706


Three Months Ended September 30, 2021	Shares Issued	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income		Total Stockholders' Equity
(Dollars in thousands, except share and per share data)

June 30, 2021	5,680,993	$	2,367	$	82,969	$	51,146	$	(5,655)	$	1,709	$	132,536
Comprehensive Income:
Net Income	—	—		—		1,983		—		—		1,983
Other Comprehensive Loss	—	—		—		—		—		(575)		(575)


Stock-Based Compensation Expense	—	—		169		—		—		—		169
Exercise of Stock Options	—	—		(8)		—		62		—		54
Treasury Stock Purchased, at cost (81,676 shares)	—	—		—		—		(1,890)		—		(1,890)
Dividends Paid ($0.24 Per Share)	—	—		—		(1,290)		—		—		(1,290)
September 30, 2021	5,680,993	$	2,367	$	83,130	$	51,839	$	(7,483)	$	1,134	$	130,987

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

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Nine Months Ended September 30, 2022	Shares Issued	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(Dollars in thousands, except share and per share data)

December 31, 2021	5,680,993	$	2,367	$	83,294	$	57,534	$	(9,144)	$	(927)	$	133,124
Comprehensive Loss:
Net Income	—	—		—		7,094		—		—		7,094
Other Comprehensive Loss	—	—		—		—		—		(25,721)		(25,721)
Restricted Stock Awards Granted	21,765	9		(9)		—		—		—		—
Restricted Stock Awards Forfeited	(325)	—		81		—		(81)		—		—
Stock-Based Compensation Expense	—	—		424		—		—		—		424
Exercise of Stock Options	—	—		3		—		162		—		165
Treasury stock purchased, at cost (189,550 shares)	—	—		—		—		(4,682)		—		(4,682)
Dividends Paid ($0.72 Per Share)	—	—		—		(3,698)		—		—		(3,698)
September 30, 2022	5,702,433	$	2,376	$	83,793	$	60,930	$	(13,745)	$	(26,648)	$	106,706


Nine Months Ended September 30, 2021	Shares Issued	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income		Total Stockholders' Equity
(Dollars in thousands, except share and per share data)

December 31, 2020	5,680,993	$	2,367	$	82,723	$	51,132	$	(5,094)	$	3,402	$	134,530
Comprehensive Income:
Net Income	—	—		—		4,605		—		—		4,605
Other Comprehensive Loss	—	—		—		—		—		(2,268)		(2,268)


Stock-Based Compensation Expense	—	—		415		—		—		—		415
Exercise of Stock Options	—	—		(8)		—		62		—		54
Treasury Stock Purchased, at cost (106,973 shares)	—	—		—		—		(2,451)		—		(2,451)
Dividends Paid ($0.72 Per Share)	—	—		—		(3,898)		—		—		(3,898)
September 30, 2021	5,680,993	$	2,367	$	83,130	$	51,839	$	(7,483)	$	1,134	$	130,987

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


Nine Months Ended September 30,	2022		2021
(Dollars in thousands)

OPERATING ACTIVITIES
Net Income	$	7,094	$	4,605
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities
Net Amortization on Securities	48		38
Depreciation and Amortization	1,997		1,810
Provision (Recovery) for Loan Losses	3,784		(1,200)
Intangible Asset Impairment	—		1,178

Writedown on Fixed Assets	—		2,270
Lease Impairment	—		227
Loss (Gain) on Securities	252		(482)
Gain on Purchased Tax Credits	(43)		(53)
Income from Bank-Owned Life Insurance	(418)		(411)
Proceeds From Mortgage Loans Sold	—		8,182
Originations of Mortgage Loans for Sale	—		(15,289)
Gain on Sale of Loans	—		(166)
Gain on Sale of Other Real Estate Owned and Repossessed Assets	(1)		(76)
Noncash Expense for Stock-Based Compensation	424		415
(Increase) Decrease in Accrued Interest Receivable	(59)		517
Net (Gain) Loss on Disposal of Fixed Assets	(431)		3
(Increase) Decrease in Taxes Payable	(947)		295

Increase (Decrease) in Accrued Interest Payable	29		(277)
Refund of Federal and State Income Taxes	—		1,311
Other, Net	(2,679)		(319)
NET CASH PROVIDED BY OPERATING ACTIVITIES	9,050		2,578
INVESTING ACTIVITIES
Investment Securities Available for Sale:
Proceeds From Principal Repayments and Maturities	24,869		29,563
Purchases of Securities	(26,826)		(119,924)
Proceeds from Sale of Securities	—		11,967
Net (Increase) Decrease in Loans	(24,480)		33,378
Purchase of Premises and Equipment	(470)		(2,275)
Proceeds from Disposal of Premises and Equipment	480		—

Proceeds From Sale of Other Real Estate Owned	37		285
Decrease in Restricted Equity Securities	619		533

NET CASH USED IN INVESTING ACTIVITIES	(25,771)		(46,473)
FINANCING ACTIVITIES
Net Increase in Deposits	49,221		52,542
Net (Decrease) Increase in Short-Term Borrowings	(21,158)		12,260

Principal Payments on Other Borrowed Funds	—		(2,000)
Cash Dividends Paid	(3,698)		(3,898)
Treasury Stock, Purchases at Cost	(4,682)		(2,451)
Exercise of Stock Options	165		54
NET CASH PROVIDED BY FINANCING ACTIVITIES	19,848		56,507
INCREASE IN CASH AND CASH EQUIVALENTS	3,127		12,612
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR	119,674		160,911
CASH AND DUE FROM BANKS AT END OF PERIOD	$	122,801	$	173,523

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

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


Nine Months Ended September 30, 2022	2022		2021
(Dollars in thousands)

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:
Interest on Deposits and Borrowings (Including Interest Credited to Deposits of $2,322 and $2,761, Respectively)	$	2,764	$	2,951
Income Taxes	3,247		1,524
SUPPLEMENTAL NONCASH DISCLOSURE:
Transfer of Loans to Loans Held for Sale	—		10,056
Transfer of Premises and Equipment to Premises and Equipment Held for Sale and Other Assets	—		1,075
Transfer of Deposits to Deposits Held for Sale	—		102,647
Other Real Estate Acquired in Settlement of Loans	—		37



Right of Use Asset Recognized	1,284		—
Lease Liability Recognized	1,284		—

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters”). CB Financial, the Bank and Exchange Underwriters are collectively referred to as the “Company”. All intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with general practice within the banking industry. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading in any material respect. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and income and expenses for the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for losses on loans, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, other-than-temporary impairment evaluations of securities, goodwill and intangible assets impairment, and the valuation of deferred tax assets.

In the opinion of management, the accompanying unaudited interim financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations at the dates and for the periods presented. All these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Interim results are not necessarily indicative of results for a full year.

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

Nature of Operations

The Company derives substantially all its income from banking and bank-related services which include interest income on commercial, commercial mortgage, residential real estate and consumer loan financing, as well as interest and dividend income on securities, insurance commissions, and fees generated from deposit services to its customers. The Company provides banking services through its subsidiary, Community Bank, a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania. The Bank is a community-oriented institution offering residential and commercial real estate loans, commercial and industrial loans, and consumer loans as well as a variety of deposit products for individuals and businesses in its market area. After the consolidation of six branches and the sale of two branches in 2021, the Bank operates 11 branches in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania, and three branches in Marshall and Ohio Counties in West Virginia. Property and casualty, commercial liability, surety and other insurance products are offered through Exchange Underwriters, a full-service, independent insurance agency.

Critical Accounting Policies; Use of Critical Accounting Estimates

There were no material changes in our critical accounting policies during the nine months ended September 30, 2022. See Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, for additional information regarding our critical accounting policies.

Recent Accounting Standards

In September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP; and instead requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP; however, this ASU requires that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects companies holding financial assets and net investment in leases that are not accounted for at

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fair value through net income. The ASU 2016-13 amendments affect loans, debt securities, trade receivables, net investments in leases, off balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 was originally effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. In November 2019, the FASB approved a delay of the required implementation date of ASU 2016-13 for smaller reporting companies, including the Company, resulting in a required implementation date for the Company of January 1, 2023. Early adoption will continue to be permitted. In preparation for the implementation of this ASU, the Company has formed a cross-functional team, contracted with a third-party software provider, and is consulting with a third-party professional advisory service to assist in the model development. The Company plans to assess the overall impact by running the existing and new allowance models in parallel prior to the period of implementation. The Company expects to recognize a one-time adjustment to the allowance for loan losses upon adoption, but cannot yet determine the magnitude of the one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial condition or results of operation.

The FASB issued ASU 2022-22, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the TDR recognition and measurement guidance, and instead, requires that an entity evaluate (consistent with the accounting for other loan modifications) whether a modification represents a new loan or a continuation of an existing loan. In addition, this ASU enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. For public business entities, this ASU requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20. Gross write-off information must be included in the vintage disclosures required for public business entities in accordance with paragraph 326-20-50-6, which requires that en entity disclose the amortized cost basis for financing receivables by credit quality indicator and class of financing receivable by year of origination. For entities that have adopted the amendments in updated 2016-13, the amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For entities that have not yet adopted the amendments in update 2016-13, the effective dates for the amendments in this update are the same as the effective dates in Update 2016-13. The Company has not yet adopted the accounting standard as ASU 2016-13 has not been adopted. Management continues to evaluate the impact of its future adoption of this guidance on the Company's consolidated financial statements.

Note 2. Earnings Per Share

There are no convertible securities which would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statements of Income is used as the numerator.

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(Dollars in thousands, except share and per share data)

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

Weighted-Average Basic Common Shares Outstanding	5,106,861		5,373,032		5,150,632		5,412,989
Dilutive Effect of Common Stock Equivalents (Stock Options and Restricted Stock)	11,766		17,096		14,744		7,803
Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding	5,118,627		5,390,128		5,165,376		5,420,792

Earnings Per Share:
Basic	$	0.77	$	0.37	$	1.38	$	0.85
Diluted	0.77		0.37		1.37		0.85

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The dilutive effect on weighted average diluted common shares outstanding is the result of outstanding stock options and nonvested restricted stock. The following table presents for the periods indicated (a) options to purchase shares of common stock that were outstanding but not included in the computation of earnings per share because the options’ exercise price was greater than the average market price of the common shares for the period, and (b) shares of restricted stock awards that were not included in the computation of diluted earnings per share because the hypothetical repurchase of shares under the treasury stock method exceeded the weighted average nonvested restricted awards, therefore the effects would be anti-dilutive.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Stock Options	149,367	71,741	149,367	199,641
Restricted Stock	36,490	23,000	37,490	32,360

Note 3. Securities

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


	September 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(Dollars in thousands)

Available-for-Sale Debt Securities:
U.S. Government Agencies	$	53,993	$	—	$	(9,646)	$	44,347
Obligations of States and Political Subdivisions	14,053		—		(920)		13,133
Mortgage-Backed Securities - Government-Sponsored Enterprises	48,045		—		(5,559)		42,486
Collateralized Mortgage Obligations - Government Sponsored Enterprises	99,623		—		(16,807)		82,816
Corporate Debt	9,485		—		(1,035)		8,450
Total Available-for-Sale Debt Securities	225,199		—		(33,967)		191,232

Equity Securities:
Mutual Funds							873
Other							1,741
Total Equity Securities							2,614
Total Securities							$	193,846

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	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(Dollars in thousands)

Available-for-Sale Debt Securities:
U.S. Government Agencies	$	53,992	$	2	$	(1,433)	$	52,561
Obligations of States and Political Subdivisions	17,951		1,004		—		18,955
Mortgage-Backed Securities - Government-Sponsored Enterprises	55,373		1,468		(282)		56,559
Collateralized Mortgage Obligations - Government Sponsored Enterprises	88,493		164		(2,074)		86,583
Corporate Debt	7,481		—		(31)		7,450
Total Available-for-Sale Debt Securities	223,290		2,638		(3,820)		222,108

Equity Securities:
Mutual Funds							990
Other							1,876
Total Equity Securities							2,866
Total Securities							$	224,974

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:


	September 30, 2022
	Less than 12 months					12 Months or Greater					Total
	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
(Dollars in thousands)

U.S. Government Agencies	1	$	2,576	$	(424)	12	$	41,771	$	(9,222)	13	$	44,347	$	(9,646)
Obligations of States and Political Subdivisions	34	13,133		(920)		—	—		—		34	13,133		(920)
Mortgage Backed Securities- Government Sponsored Enterprises	38	29,578		(3,166)		4	12,908		(2,393)		42	42,486		(5,559)
Collateralized Mortgage Obligations - Government Sponsored Enterprises	16	46,959		(9,451)		6	35,857		(7,356)		22	82,816		(16,807)
Corporate Debt	2	3,850		(675)		1	4,600		(360)		3	8,450		(1,035)
Total	91	$	96,096	$	(14,636)	23	$	95,136	$	(19,331)	114	$	191,232	$	(33,967)

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	December 31, 2021
	Less than 12 months					12 Months or Greater					Total
	Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses		Number of Securities	Fair Value		Gross Unrealized Losses
(Dollars in thousands)

U.S. Government Agencies	5	$	17,729	$	(269)	7	$	31,830	$	(1,164)	12	$	49,559	$	(1,433)
Obligations of States and Political Subdivisions	—	—		—		—	—		—		—	—		—
Mortgage Backed Securities- Government Sponsored Enterprises	8	28,772		(282)		—	—		—		8	28,772		(282)
Collateralized Mortgage Obligations - Government Sponsored Enterprises	10	77,560		(2,074)		—	—		—		10	77,560		(2,074)
Corporate Debt	2	7,450		(31)		—	—		—		2	7,450		(31)
Total	25	$	131,511	$	(2,656)	7	$	31,830	$	(1,164)	32	$	163,341	$	(3,820)

For debt securities, the Company does not believe that any individual unrealized loss as of September 30, 2022 or December 31, 2021, represents an other-than-temporary impairment. The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate an other-than-temporary impairment. The Company’s management considers the length of time and the extent to which the fair value has been less than cost, and the financial condition of the issuer. The securities that are temporarily impaired at September 30, 2022 and December 31, 2021 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities. The Company does not intend to sell, and it is more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.

Securities available-for-sale with a fair value of $179.6 million and $121.0 million at September 30, 2022 and December 31, 2021, respectively, are pledged to secure public deposits, short-term borrowings and for other purposes as required or permitted by law. Total securities available to be pledged have a fair value of $182.8 million at September 30, 2022 and $214.7 million at December 31, 2021.

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


	September 30, 2022
	Amortized Cost		Fair Value
(Dollars in thousands)

Due in One Year or Less	$	245	$	244
Due after One Year through Five Years	10,477		9,211
Due after Five Years through Ten Years	72,745		62,072
Due after Ten Years	141,732		119,705
Total	$	225,199	$	191,232

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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. All gains and losses presented in the table below are reported in Net (Loss) Gain on Securities on the Consolidated Statements of Income.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(Dollars in thousands)

Debt Securities
Gross Realized Gain	$	—	$	—	$	—	$	225
Gross Realized Loss	—		—		—		—
Net Gain on Debt Securities	$	—	$	—	$	—	$	225

Equity Securities
Net Unrealized (Loss) Gain Recognized on Securities Held	$	(46)	$	18	$	(252)	$	251
Net Realized Gain Recognized on Securities Sold	—		6		—		6
Net (Loss) Gain on Equity Securities	$	(46)	$	24	$	(252)	$	257
Net (Loss) Gain on Securities	$	(46)	$	24	$	(252)	$	482

Note 4. Loans and Allowance for Loan Losses

The Company’s loan portfolio is segmented to enable management to monitor risk and performance. Real estate loans are further segregated into three classes. Residential mortgages include those secured by residential properties and include home equity loans, while commercial mortgages consist of loans to commercial borrowers secured by commercial real estate. Construction loans typically consist of loans to build commercial buildings and acquire and develop residential real estate. The commercial and industrial segment consists of loans to finance the activities of commercial customers. The consumer segment consists primarily of indirect auto loans as well as personal installment loans and personal or overdraft lines of credit.

Residential mortgage loans are typically longer-term loans and, therefore, generally present greater interest rate risk than the consumer and commercial loans. 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 credit risk than loans secured by residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income-producing properties, and the increased difficulty in evaluating and monitoring these types of loans. Furthermore, the repayment of commercial real estate loans is typically dependent upon the successful operation of the related real estate project. 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 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. At the end of the construction phase, the loan generally converts to a permanent residential or commercial mortgage loan. Construction loan risks include overfunding in comparison to the plans, untimely completion of work, and leasing and stabilization after project completion.

Commercial and industrial loans are generally secured by business assets, inventories, accounts receivable, etc., which present collateral risk.

Consumer loans generally have higher interest rates and shorter terms than residential mortgage loans; however, they have additional credit risk due to the type of collateral securing the loan.

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


	September 30, 2022				December 31, 2021
	Amount		Percent		Amount		Percent
(Dollars in thousands)

Real Estate:
Residential	$	328,248	31.5	%	$	320,798	31.4	%
Commercial	432,516		41.5		392,124		38.5
Construction	49,502		4.7		85,028		8.3
Commercial and Industrial	62,196		6.0		89,010		8.7
Consumer	150,615		14.4		122,152		12.0
Other	19,865		1.9		11,684		1.1
Total Loans	1,042,942		100.0	%	1,020,796		100.0	%
Allowance for Loan Losses	(12,854)				(11,582)
Loans, Net	$	1,030,088			$	1,009,214

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

Net unamortized PPP loan origination fees as of September 30, 2022 and December 31, 2021 were $27,000 and $678,000, respectively. Additionally, $117,000 and $651,000 of net PPP loan origination fees were earned for the three and nine months ended September 30, 2022, respectively, compared to $380,000 and $1.4 million for the three and nine months ended September 30, 2021, respectively. All PPP loans are classified as commercial and industrial loans held for investment. No allowance for loan loss was allocated to the PPP loan portfolio due to the Bank complying with the lender obligations that ensure SBA guarantee.

Total unamortized net deferred loan fees were $1.3 million and $1.9 million at September 30, 2022 and December 31, 2021, respectively.

The Company uses an eight-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first four categories are not considered criticized and are aggregated as “pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are below average quality, resulting in an undue credit risk, but not to the point of justifying a substandard classification. Loans in the substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans classified as doubtful have all the weaknesses inherent in loans classified as substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as Loss are considered uncollectible and of such little value that continuance as an asset is not warranted.

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The following table presents loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated. At September 30, 2022 and December 31, 2021, there were no loans in the criticized category of Loss within the internal risk rating system.


	September 30, 2022
	Pass		Special Mention		Substandard		Doubtful		Total
(Dollars in Thousands)

Real Estate:
Residential	$	325,702	$	344	$	2,202	$	—	$	328,248
Commercial	386,294		34,743		11,479		—		432,516
Construction	48,065		1,109		328		—		49,502
Commercial and Industrial	52,765		8,897		95		439		62,196
Consumer	150,502		—		113		—		150,615
Other	19,805		60		—		—		19,865
Total Loans	$	983,133	$	45,153	$	14,217	$	439	$	1,042,942


	December 31, 2021
	Pass		Special Mention		Substandard		Doubtful		Total
(Dollars in Thousands)

Real Estate:
Residential	$	317,964	$	845	$	1,989	$	—	$	320,798
Commercial	355,895		27,168		9,061		—		392,124
Construction	69,441		13,035		2,552		—		85,028
Commercial and Industrial	72,584		14,463		1,451		512		89,010
Consumer	122,136		—		16		—		122,152
Other	11,616		68		—		—		11,684
Total Loans	$	949,636	$	55,579	$	15,069	$	512	$	1,020,796

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


	September 30, 2022
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
(Dollars in Thousands)

Real Estate:
Residential	$	326,527	$	99	$	—	$	—	$	99	$	1,622	$	328,248
Commercial	430,569		91		—		—		91		1,856		432,516
Construction	49,502		—		—		—		—		—		49,502
Commercial and Industrial	61,599		19		139		—		158		439		62,196
Consumer	150,071		365		66		—		431		113		150,615
Other	19,865		—		—		—		—		—		19,865
Total Loans	$	1,038,133	$	574	$	205	$	—	$	779	$	4,030	$	1,042,942

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	December 31, 2021
	Loans Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Non- Accrual		Total Loans
(Dollars in Thousands)

Real Estate:
Residential	$	317,583	$	1,805	$	17	$	—	$	1,822	$	1,393	$	320,798
Commercial	389,522		544		—		—		544		2,058		392,124
Construction	85,028		—		—		—		—		—		85,028
Commercial and Industrial	87,407		107		—		—		107		1,496		89,010
Consumer	121,636		419		81		—		500		16		122,152
Other	11,684		—		—		—		—		—		11,684
Total Loans	$	1,012,860	$	2,875	$	98	$	—	$	2,973	$	4,963	$	1,020,796

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

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The following table sets forth the amounts and categories of nonperforming assets at the dates indicated. Included in nonperforming loans and assets are troubled debt restructurings (“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.


	September 30, 2022			December 31, 2021
(Dollars in Thousands)

Nonaccrual Loans:
Real Estate:
Residential	$	1,622		$	1,393
Commercial	1,856			2,058

Commercial and Industrial	439			1,496
Consumer	113			16
Total Nonaccrual Loans	4,030			4,963

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	4,030			4,963

Troubled Debt Restructurings, Accruing:
Real Estate
Residential	544			613
Commercial	1,297			1,674
Commercial and Industrial	9			16
Total Troubled Debt Restructurings, Accruing	1,850			2,303

Total Nonperforming Loans	5,880			7,266

Other Real Estate Owned:
Residential	—			36

Total Other Real Estate Owned	—			36

Total Nonperforming Assets	$	5,880		$	7,302

Nonperforming Loans to Total Loans	0.56		%	0.71		%
Nonperforming Assets to Total Assets	0.41			0.51

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

As of September 30, 2022, the Company had no TDR loans in forbearance. There were no modifications to troubled debt restructurings during the three months ended September 30, 2022. As of December 31, 2021, there was no TDR loan in forbearance.

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


	September 30, 2022
							Quarter Ended				Year to Date
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)

With No Related Allowance Recorded:
Real Estate:
Residential	$	1,053			$	1,058	$	1,057	$	14	$	1,110	$	37
Commercial	11,140				11,255		11,254		121		10,681		289
Construction	328				328		331		5		430		13
Commercial and Industrial	104				104		115		2		906		47
Total With No Related Allowance Recorded	$	12,625	$	—	$	12,745	$	12,757	$	142	$	13,127	$	386

With A Related Allowance Recorded:
Real Estate:
Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial	1,636		68		1,636		1,644		35		733		47
Construction	—		146		—		—		—		1,106		36
Commercial and Industrial	439		—		703		447		—		242		1
Total With A Related Allowance Recorded	$	2,075	$	214	$	2,339	$	2,091	$	35	$	2,081	$	84

Total Impaired Loans:
Real Estate:
Residential	$	1,053	$	—	$	1,058	$	1,057	$	14	$	1,110	$	37
Commercial	12,776		68		12,891		12,898		156		11,414		336
Construction	328		146		328		331		5		1,536		49
Commercial and Industrial	543		—		807		562		2		1,148		48
Total Impaired Loans	$	14,700	$	214	$	15,084	$	14,848	$	177	$	15,208	$	470

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	December 31, 2021
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)

With No Related Allowance Recorded:
Real Estate:
Residential	$	1,133			$	1,137	$	1,158	$	46
Commercial	9,733				9,787		27,207		927
Construction	540				540		887		34
Commercial and Industrial	1,979				2,286		3,230		49
Total With No Related Allowance Recorded	$	13,385	$	—	$	13,750	$	32,482	$	1,056

With A Related Allowance Recorded:
Real Estate:
Residential	$	—	$	—	$	—	$	—	$	—
Commercial	266		195		266		421		19
Construction	2,013		104		2,013		169		7
Commercial and Industrial	—		—		—		1,316		29
Total With A Related Allowance Recorded	$	2,279	$	299	$	2,279	$	1,906	$	55

Total Impaired Loans
Real Estate:
Residential	$	1,133	$	—	$	1,137	$	1,158	$	46
Commercial	9,999		195		10,053		27,628		946
Construction	2,553		104		2,553		1,056		41
Commercial and Industrial	1,979		—		2,286		4,546		78
Total Impaired Loans	$	15,664	$	299	$	16,029	$	34,388	$	1,111

The recorded investment of loans evaluated for impairment decreased $964,000 at September 30, 2022 compared to December 31, 2021 and was primarily related to commercial real estate loans.

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


	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

June 30, 2022	$	1,654	$	6,023	$	471	$	2,349	$	1,502	$	—	$	834	$	12,833
Charge-offs	—		—		—		—		(46)		—		—		(46)
Recoveries	16		—		—		38		13		—		—		67
Provision (Recovery)	148		(24)		94		(211)		89		—		(96)		—
September 30, 2022	$	1,818	$	5,999	$	565	$	2,176	$	1,558	$	—	$	738	$	12,854

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	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

December 31, 2021	$	1,420	$	5,960	$	1,249	$	1,151	$	1,050	$	—	$	752	$	11,582
Charge-offs	(33)		—		—		(2,712)		(85)		—		—		(2,830)
Recoveries	143		—		—		106		69		—		—		318
Provision (Recovery)	288		39		(684)		3,631		524		—		(14)		3,784
September 30, 2022	$	1,818	$	5,999	$	565	$	2,176	$	1,558	$	—	$	738	$	12,854


	September 30, 2022
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

Individually Evaluated for Impairment	$	—	$	68	$	146	$	—	$	—	$	—	$	—	$	214
Collectively Evaluated for Potential Impairment	$	1,818	$	5,931	$	419	$	2,176	$	1,558	$	—	$	738	$	12,640


	December 31, 2021
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

Individually Evaluated for Impairment	$	—	$	195	$	104	$	—	$	—	$	—	$	—	$	299
Collectively Evaluated for Potential Impairment	$	1,420	$	5,765	$	1,145	$	1,151	$	1,050	$	—	$	752	$	11,283


	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

June 30, 2021	$	1,588	$	5,582	$	1,136	$	1,152	$	941	$	—	$	1,145	$	11,544
Charge-offs	—		—		—		—		(19)		—		—		(19)
Recoveries	2		—		—		11		43		—		—		56
(Recovery) Provision	(98)		347		(71)		(21)		(12)		—		(145)		—
September 30, 2021	$	1,492	$	5,929	$	1,065	$	1,142	$	953	$	—	$	1,000	$	11,581

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	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

December 31, 2020	$	2,249	$	6,010	$	889	$	1,423	$	1,283	$	—	$	917	$	12,771
Charge-offs	—		—		—		—		(139)		—		—		(139)
Recoveries	15		—		—		33		101		—		—		149
(Recovery) Provision	(772)		(81)		176		(314)		(292)		—		83		(1,200)
September 30, 2021	$	1,492	$	5,929	$	1,065	$	1,142	$	953	$	—	$	1,000	$	11,581


	September 30, 2021
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

Individually Evaluated for Impairment	$	—	$	199	$	—	$	—	$	—	$	—	$	—	$	199
Collectively Evaluated for Potential Impairment	$	1,492	$	5,730	$	1,065	$	1,142	$	953	$	—	$	1,000	$	11,382

The following table presents the major classifications of loans summarized by individually evaluated for impairment and collectively evaluated for potential impairment as of the dates indicated. At September 30, 2022 and December 31, 2021, commercial and industrial loans include $768,000 and $24.5 million, respectively, of PPP loans collectively evaluated for potential impairment. No allowance for loan loss was allocated to the PPP loan portfolio due to the Bank complying with the lender obligations that ensure SBA guarantee.


	September 30, 2022
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
(Dollars in thousands)

Individually Evaluated for Impairment	$	1,053	$	12,776	$	328	$	543	$	—	$	—	$	14,700
Collectively Evaluated for Potential Impairment	327,195		419,740		49,174		61,653		150,615		19,865		1,028,242
Total Loans	$	328,248	$	432,516	$	49,502	$	62,196	$	150,615	$	19,865	$	1,042,942

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	December 31, 2021
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
(Dollars in thousands)

Individually Evaluated for Impairment	$	1,133	$	9,999	$	2,553	$	1,979	$	—	$	—	$	15,664
Collectively Evaluated for Potential Impairment	319,665		382,125		82,475		87,031		122,152		11,684		1,005,132
Total Loans	$	320,798	$	392,124	$	85,028	$	89,010	$	122,152	$	11,684	$	1,020,796

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


	Accretable Discount
(Dollars in Thousands)

December 31, 2021	$	726
Accretable Yield	(178)
September 30, 2022	$	548

Note 5. Short-Term Borrowings

Borrowings with original maturities of one year or less are classified as short-term and may consist of borrowings with the Federal Home Loan Bank ("FHLB"), securities sold under agreements to repurchase or borrowings on revolving lines of credit with the Federal Reserve Bank or other correspondent banks. Securities sold under repurchase agreements are comprised of customer repurchase agreements, which are overnight sweep accounts with next-day maturities utilized by commercial customers to earn interest on their funds. Securities 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.

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


	September 30, 2022				December 31, 2021
	Amount		Weighted Average Rate		Amount		Weighted Average Rate
(Dollars in thousands)

Securities Sold Under Agreements to Repurchase:
Balance at Period End	$	18,108	0.57	%	$	39,266	0.17	%
Average Balance Outstanding During the Period	33,581		0.22		43,988		0.22
Maximum Amount Outstanding at any Month End	39,219				52,777

Securities Collaterizing the Agreements at Period-End:
Carrying Value	39,280				59,867
Market Value	33,584				59,339

Note 6. Fair Value Disclosure

FASB ASC 820 “Fair Value Measurement” defines fair value and provides the framework for measuring fair value and required disclosures about fair value measurements. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability at the transaction date. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in valuation methods to determine fair value.

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The three levels of fair value hierarchy are as follows:

Level 1 – Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.

Level 2 – Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets, and other observable inputs.

Level 3 – Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows, and other similar techniques.

This hierarchy requires the use of observable market data when available. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

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. The majority of the Company’s securities are included in Level 2 of the fair value hierarchy. 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. There were no transfers into or out of Level 3 during the nine months ended September 30, 2022 or year ended December 31, 2021.


	Fair Value Hierarchy	September 30 2022		December 31 2021
(Dollars in thousands)

Securities:
Available-for-Sale Debt Securities
U.S. Government Agencies	Level 2	$	44,347	$	52,561
Obligations of States and Political Subdivisions	Level 2	13,133		18,955
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level 2	42,486		56,559
Collateralized Mortgage Obligations - Government Sponsored Enterprises	Level 2	82,816		86,583
Corporate Debt	Level 2	8,450		7,450
Total Available-for-Sale Debt Securities		191,232		222,108

Equity Securities
Mutual Funds	Level 1	873		990
Other	Level 1	1,741		1,876
Total Equity Securities		2,614		2,866
Total Securities		$	193,846	$	224,974

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The following table presents the financial assets on the Consolidated Statements of Financial Condition measured at fair value on a nonrecurring basis as of the dates indicated by level within the fair value hierarchy for only those nonrecurring assets that had a fair value below the carrying amount. The table also presents the significant unobservable inputs used in the fair value measurements.

Financial Asset

Fair Value Hierarchy

September 30,
2022

Valuation
Techniques

Significant Unobservable Inputs

Range

Weighted Average

(Dollars in thousands)

Impaired Loans Individually Assessed

Level 3

1,861

Appraisal of Collateral (1)

Appraisal Adjustments (2)

13.3%


Financial Asset	Fair Value Hierarchy	December 31, 2021		Valuation Techniques	Significant Unobservable Inputs	Range					Weighted Average
(Dollars in thousands)

Impaired Loans Individually Assessed	Level 3	$	1,980	Appraisal of Collateral (1)	Appraisal Adjustments (2)	0	%	to	50	%	15.8%

Mortgage Servicing Rights	Level 3	141		Discounted Cash Flow	Discount Rate	9	%	to	11	%	10.1%
					Prepayment Speed	6	%	to	36	%	7.5%
OREO	Level 3	36		Appraisal of Collateral (1)	Liquidation Expenses (2)	10	%	to	30	%	26.6%

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which may include various Level 3 inputs, which are not identifiable.

(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of appraisal adjustments and liquidation expense are presented as a percent of the appraisal.

Impaired loans are evaluated when a loan is identified as impaired and valued at the lower of cost or fair value at that time. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Fair value is measured based on the value of the collateral securing these loans and is classified as Level 3 in the fair value hierarchy. At September 30, 2022 and December 31, 2021, the fair value of impaired loans consists of the loan balances of $2.1 million and $2.3 million, respectively, less their specific valuation allowances of $214,000 and $299,000, respectively.

The fair value of mortgage servicing rights ("MSRs") is determined by calculating the present value of estimated future net servicing cash flows, considering expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. The expected rate of mortgage loan prepayments is the most significant factor driving the value of MSRs. MSRs are considered impaired if the carrying value exceeds fair value. Since the valuation model includes significant unobservable inputs as listed above, MSRs are classified as Level 3. MSRs are reported in Other Assets in the Consolidated Statements of Financial Condition and are amortized into mortgage servicing income in Other Income in the Consolidated Statements of Income.

OREO properties are evaluated at the time of acquisition and recorded at fair value, less estimated selling costs. After acquisition, OREO is recorded at the lower of cost or fair value, less estimated selling costs. 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.

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.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses and other factors, as determined through various option pricing formulas or simulation modeling. As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in the assumptions on which the estimated fair values are based may have significant impact on the resulting estimated fair values.

As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.

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


		September 30, 2022				December 31, 2021
	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
(Dollars in thousands)

Financial Assets:
Cash and Due From Banks:
Interest Bearing	Level 1	$	99,949	$	99,949	$	63,968	$	63,968
Non-Interest Bearing	Level 1	22,852		22,852		55,706		55,706
Securities	See Above	193,846		193,846		224,974		224,974

Loans, Net	Level 3	1,030,088		1,002,426		1,009,214		1,039,980

Restricted Stock	Level 2	2,784		2,784		3,403		3,403
Mortgage Servicing Rights	Level 3	658		1,019		730		773
Accrued Interest Receivable	Level 2	3,409		3,409		3,350		3,350
Financial Liabilities:

Deposits	Level 2	1,275,834		1,272,403		1,226,613		1,227,653
Short-Term Borrowings	Level 2	18,108		18,099		39,266		39,266
Other Borrowed Funds
FHLB Borrowings	Level 2	3,000		3,000		3,000		3,000
Subordinated Debt	Level 2	14,627		13,490		14,601		15,000
Accrued Interest Payable	Level 2	515		515		486		486

Note 7. Commitments and Contingent Liabilities

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business primarily to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and performance letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Statements of Financial Condition. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and performance letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

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.

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


	September 30, 2022		December 31, 2021
(Dollars in thousands)

Standby Letters of Credit	$	110	$	110
Performance Letters of Credit	1,657		2,873
Construction Mortgages	39,631		55,597
Personal Lines of Credit	6,992		7,055
Overdraft Protection Lines	5,402		5,709
Home Equity Lines of Credit	23,526		21,187
Commercial Lines of Credit	65,443		83,316
Total Commitments	$	142,761	$	175,847

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the customer. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.

Performance letters of credit represent conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments are issued primarily to support bid or performance-related contracts. 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. For secured letters of credit, the collateral is typically Company deposit instruments or customer business assets.

Note 8. Leases

The Company evaluates contracts at commencement to determine if a lease is present. The Company’s lease contracts are all classified as operating leases and create operating right-of-use (“ROU”) assets and corresponding lease liabilities on the Consolidated Statements of Financial Condition. The leases are primarily ROU assets of land and building for branch and loan production locations. ROU assets are reported in Accrued Interest Receivable and Other Assets and the related lease liabilities in Accrued Interest Payable and Other Liabilities on the Consolidated Statements of Financial Condition.

The following tables present the lease expense, ROU assets, weighted average term, discount rate and maturity analysis of lease liabilities for operating leases for the periods and dates indicated.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(Dollars in thousands)

Operating Lease Expense	$	89	$	74	$	261	$	257
Short-Term Lease Expense	—		8		—		25
Variable Lease Expense	7		8		21		24
Total Lease Expense	$	96	$	90	$	282	$	306

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	September 30, 2022			December 31, 2021
(Dollars in thousands)

Operating Leases:
ROU Assets	$	1,730		$	674
Weighted Average Lease Term in Years	8.71			7.33
Weighted Average Discount Rate	2.58		%	2.51		%


	September 30, 2022
(Dollars in thousands)

Maturity Analysis:
Due in One Year	$	328
Due After One Year to Two Years	263
Due After Two Years to Three Years	240
Due After Three Years to Four Years	195
Due After Four to Five Years	198
Due After Five Years	915
Total	$	2,139
Less: Present Value Discount	234
Lease Liabilities	$	1,905

During the nine months ended September 30, 2022, the Company entered into a new lease agreement for the McMurray, PA branch, for a 10-year term ending March 31, 2032, as well as a new lease agreement for the Waynesburg branch, for a 5-year term ending July 31, 2027. The increase to the operating Right of Use Asset and corresponding lease liability is approximately $1.3 million.

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Note 9. Other Noninterest Expense

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(Dollars in thousands)

Non-Employee Compensation	$	139	$	184	$	410	$	473
Printing and Supplies	63		55		190		218
Postage	163		86		300		265
Telephone	132		145		390		472
Charitable Contributions	39		45		120		80
Dues and Subscriptions	24		33		121		121
Loan Expenses	209		86		459		288
Meals and Entertainment	33		31		101		91
Travel	43		27		116		77
Training	10		5		41		29
Bank Assessment	47		46		141		134
Insurance	70		54		201		173
Miscellaneous	91		106		309		409
Total Other Noninterest Expense	$	1,063	$	903	$	2,899	$	2,830

Note 10. Segment and Related Information

At September 30, 2022, the Company’s business activities were comprised of two operating segments, which are community banking and insurance brokerage services. CB Financial is the parent company of the Bank and Exchange Underwriters, a wholly owned subsidiary of the Bank. Exchange Underwriters has an independent board of directors from the Company and is managed separately from the banking and related financial services that the Company offers. Exchange Underwriters is an independent insurance agency that offers property, casualty, commercial liability, surety and other insurance products.

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


	Community Bank		Exchange Underwriters, Inc.		CB Financial Services, Inc.		Net Eliminations		Consolidated
(Dollars in thousands)

September 30, 2022
Assets	$	1,425,905	$	5,173	$	121,522	$	(126,680)	$	1,425,920
Liabilities	1,321,603		1,835		14,815		(19,039)		1,319,214
Stockholders' Equity	104,302		3,338		106,707		(107,641)		106,706

December 31, 2021
Assets	$	1,425,588	$	5,110	$	147,829	$	(153,048)	$	1,425,479
Liabilities	1,299,325		1,731		14,705		(23,406)		1,292,355
Stockholders' Equity	126,263		3,379		133,124		(129,642)		133,124

Three Months Ended September 30, 2022
Interest and Dividend Income	$	12,267	$	1	$	1,246	$	(1,227)	$	12,287
Interest Expense	1,117		—		155		—		1,272
Net Interest and Dividend Income	11,150		1		1,091		(1,227)		11,015
Provision for Loan Losses	—		—		—		—		—
Net Interest and Dividend Income After Provision for Loan Losses	11,150		1		1,091		(1,227)		11,015
Noninterest Income (Loss)	1,343		1,406		(10)		—		2,739
Noninterest Expense	7,741		1,082		4		—		8,827
Undistributed Net Income (Loss) of Subsidiary	230		—		2,807		(3,037)		—
Income Before Income Tax Expense (Benefit)	4,982		325		3,884		(4,264)		4,927
Income Tax Expense (Benefit)	948		95		(45)		—		998
Net Income	$	4,034	$	230	$	3,929	$	(4,264)	$	3,929

Nine Months Ended September 30, 2022
Interest and Dividend Income	$	33,802	$	4	$	3,779	$	(3,724)	$	33,861
Interest Expense	2,325		—		467		—		2,792
Net Interest and Dividend Income	31,477		4		3,312		(3,724)		31,069
Provision for Loan Losses	3,784		—		—		—		3,784
Net Interest and Dividend Income After Provision for Loan Losses	27,693		4		3,312		(3,724)		27,285
Noninterest Income (Loss)	3,023		4,572		(136)		—		7,459
Noninterest Expense	22,806		3,074		13		—		25,893
Undistributed Net Income of Subsidiary	1,064		—		3,762		(4,826)		—
Income Before Income Tax Expense (Benefit)	8,974		1,502		6,925		(8,550)		8,851
Income Tax Expense (Benefit)	1,488		438		(169)		—		1,757
Net Income	$	7,486	$	1,064	$	7,094	$	(8,550)	$	7,094

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	Community Bank		Exchange Underwriters, Inc.		CB Financial Services, Inc.		Net Eliminations		Consolidated
(Dollars in thousands)

Three Months Ended September 30, 2021
Interest and Dividend Income	$	10,768	$	1	$	1,311	$	(1,294)	$	10,786
Interest Expense	776		—		—		—		776
Net Interest and Dividend Income	9,992		1		1,311		(1,294)		10,010
Provision for Loan Losses	—		—		—		—		—
Net Interest and Dividend Income After Provision for Loan Losses	9,992		1		1,311		(1,294)		10,010
Noninterest Income	975		1,195		28		—		2,198
Noninterest Expense	8,750		1,020		3		—		9,773
Undistributed Net Income of Subsidiary	124		—		654		(778)		—
Income Before Income Tax Expense	2,341		176		1,990		(2,072)		2,435
Income Tax Expense	393		52		7		—		452
Net Income	$	1,948	$	124	$	1,983	$	(2,072)	$	1,983

Nine Months Ended September 30, 2021
Interest and Dividend Income	$	32,536	$	4	$	8,456	$	(8,402)	$	32,594
Interest Expense	2,673		—		—		—		2,673
Net Interest and Dividend Income	29,863		4		8,456		(8,402)		29,921
(Recovery) for Loan Losses	(1,200)		—		—		—		(1,200)
Net Interest and Dividend Income After (Recovery) for Loan Losses	31,063		4		8,456		(8,402)		31,121
Noninterest Income	3,319		3,995		277		—		7,591
Noninterest Expense	29,898		2,983		9		—		32,890
Undistributed Net Income (Loss) of Subsidiary	710		—		(4,096)		3,386		—
Income Before Income Tax Expense	5,194		1,016		4,628		(5,016)		5,822
Income Tax Expense	888		306		23		—		1,217
Net Income	$	4,306	$	710	$	4,605	$	(5,016)	$	4,605

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Note 11. Stock Based Compensation

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


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years
Outstanding Options at December 31, 2021	207,641	$	24.01	4.8
Granted	89,465	25.79
Exercised	(12,500)	22.25
Forfeited	(12,858)	26.43
Outstanding Options at September 30, 2022	271,748	$	24.56	5.4

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

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Service Period in Years
Nonvested Options at September 30, 2022	94,065	$	25.02	9.0

Summary of Significant Assumptions for Newly Issued Stock Options
Expected Term in Years				6.5
Expected Volatility				28.7		%
Expected Dividends				$	0.96
Risk Free Rate of Return				1.60		%
Weighted Average Grant Date Fair Value (per share)				$	4.86

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


	Number of Shares	Weighted Average Grant Date Fair Value Price		Weighted Average Remaining Service Period in Years
Nonvested Restricted Stock at December 31, 2021	56,140	$	23.90	5.3
Granted	21,765	26.07
Vested	(1,120)	19.14
Forfeited	(3,715)	24.01
Nonvested Restricted Stock at September 30, 2022	73,070	$	24.61	4.2

The Company recognizes expense over a five-year vesting period for the restricted stock awards and stock options. Stock-based compensation expense related to restricted stock awards and stock options was $145,000 and $169,000 for the three months ended September 30, 2022 and 2021, and $424,000 and $415,000 for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022 and December 31, 2021, total unrecognized compensation expense was $386,945 and $65,000, respectively, related to stock options, and $1.4 million and $1.3 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at September 30, 2022 and December 31, 2021 exceeds the exercise price of the stock options. The intrinsic value of stock options was $32,280 and $296,000 at September 30, 2022 and December 31, 2021, respectively.

At September 30, 2022 and December 31, 2021, respectively, there were 362,175 and 500,000 shares available under the Plan to be issued in connection with the exercise of stock options, and 144,870 and 200,000 shares that may be issued as restricted stock awards or units. Restricted stock awards or units may be issued above this amount provided that the number of shares reserved for stock options is reduced by two and one-half shares for each restricted stock award or unit share granted.

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Note 12. Subsequent Events

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion should be read in conjunction with the unaudited consolidated financial statements, notes and tables included in this report. For further information, refer to the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Forward-Looking Statements

This report contains certain “forward-looking statements” within the meaning of the federal securities laws. These statements are not historical facts, but rather statements based on the Company’s current expectations regarding its business strategies, intended results and future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions. Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors which could affect actual results include, but are not limited to, the following:

•General and local economic conditions;

•The scope and duration of economic contraction as a result of the COVID-19 pandemic and its effects on the Company’s business and that of the Company’s customers;

•Government action in response to the COVID-19 pandemic and its effects on the Company's business and that of the Company's customers;

•Our ability to realize the expected cost savings and other efficiencies related to our branch optimization and operational efficiency initiatives;

•Changes in market interest rates, deposit flows, demand for loans, real estate values and competition;

•Competitive products and pricing;

•The ability of our customers to make scheduled loan payments;

•Loan delinquency rates and trends;

•Our ability to manage the risks involved in our business;

•Our ability to integrate the operations of businesses we acquire;

•Our ability to control costs and expenses;

•Inflation, market and monetary fluctuations;

•Changes in federal and state legislation and regulation applicable to our business;

•Actions by our competitors; and

•Other factors disclosed in the Company’s periodic reports as filed with the Securities and Exchange Commission.

Many of these risks and uncertainties have been elevated by and may continue to be elevated by the COVID-19 pandemic. The ability to predict the impact of the ongoing COVID-19 pandemic on the Company’s future operating results with any precision is difficult and depends on many factors beyond our control.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

General

CB Financial Services is a bank holding company established in 2006 and headquartered in Carmichaels, Pennsylvania. CB Financial’s business activity is conducted primarily through its wholly owned bank subsidiary, Community Bank.

The Bank is a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania. The Bank operates from 11 branches in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania and three offices in Marshall and Ohio Counties in West Virginia. The Bank also has a loan production office in Allegheny County, a corporate center in Washington County and an operations center in Greene County, all of which are in Pennsylvania. The Bank is a community-oriented institution offering residential and commercial real estate loans, commercial and industrial loans, and consumer loans as well as a variety of deposit products for individuals and businesses in its market area. Property and casualty, commercial liability, surety and other insurance products are offered through Exchange Underwriters, Inc., the Bank’s wholly owned subsidiary that is a full-service, independent insurance agency located in Washington County.

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Overview

The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith. The detailed discussion focuses on our consolidated financial condition as of September 30, 2022, compared to the consolidated financial condition as of December 31, 2021 and the consolidated results of operations for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provisions for loan losses, noninterest income and noninterest expense. Noninterest income consists primarily of fees and service charges on deposit accounts, insurance commissions, income from bank-owned life insurance and other income. Noninterest expense consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, contracted services, legal and professional fees, advertising, deposit and general insurance and other expenses.

Financial institutions like us, in general, are significantly affected by economic conditions, competition, and the monetary and fiscal policies of the federal government. Lending activities are influenced by the demand for and supply of housing, competition among lenders, interest rate conditions, and funds availability. Our operations and lending are principally concentrated in southwestern Pennsylvania and Ohio Valley market areas.

Explanation of Use of Non-GAAP Financial Measures

In addition to financial measures presented in accordance with U.S. GAAP, we present certain non-GAAP financial measures. We believe these non-GAAP financial measures provide useful information in understanding our underlying results of operations or financial position and our business and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Non-GAAP adjusted items impacting the Company's financial performance are identified to assist investors in providing a complete understanding of factors and trends affecting the Company’s business and in analyzing the Company’s operating results on the same basis as that applied by management. Although we believe that these non-GAAP financial measures enhance the understanding of our business and performance, they should not be considered an alternative to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.

The interest income on interest-earning assets, net interest rate spread and net interest margin are presented on a fully tax-equivalent (“FTE”) basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and securities using the federal statutory income tax rate of 21.0%. We believe the presentation of net interest income on a FTE basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.

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The following table reconciles net interest income, net interest spread and net interest margin on a FTE basis for the periods indicated:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
(Dollars in thousands)

Interest Income (GAAP)	$	12,287		$	10,786		$	33,861		$	32,594
Adjustment to FTE Basis	31			41			105			131
Interest Income (FTE) (Non-GAAP)	12,318			10,827			33,966			32,725
Interest Expense (GAAP)	1,272			776			2,792			2,673
Net Interest Income (FTE) (Non-GAAP)	$	11,046		$	10,051		$	31,174		$	30,052

Net Interest Rate Spread (GAAP)	3.10		%	2.77		%	3.03		%	2.80		%
Adjustment to FTE Basis	0.01			0.01			0.01			0.01
Net Interest Rate Spread (FTE) (Non-GAAP)	3.11			2.78			3.04			2.81

Net Interest Margin (GAAP)	3.29		%	2.88		%	3.17		%	2.92		%
Adjustment to FTE Basis	0.01			0.01			0.01			0.01
Net Interest Margin (FTE) (Non-GAAP)	3.30			2.89			3.18			2.93

Allowance for loan losses to total loans, excluding PPP loans, is a non-GAAP measure that serves as a useful measurement to evaluate the allowance for loan losses without the impact of SBA guaranteed loans.


	September 30, 2022			December 31, 2021
(Dollars in thousands)

Allowance for Loan Losses (Numerator)	$	12,854		$	11,582

Total Loans	1,042,942			$	1,020,796
PPP Loans	(768)			(24,523)
Total Loans, Excluding PPP Loans (Non-GAAP) (Denominator)	$	1,042,174		$	996,273

Allowance for Loan Losses to Total Loans (GAAP)	1.23		%	1.13		%

Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP)	1.23		%	1.16		%

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by period-end common shares outstanding. We believe this non-GAAP measure serves as a useful tool to help evaluate the strength and discipline of the Company's capital management strategies and as an additional, conservative measure of the Company’s total value.


	September 30, 2022		December 31, 2021
(Dollars in thousands, except share and per share data)

Stockholders' Equity (GAAP)	$	106,706	$	133,124
Goodwill and Other Intangible Assets, Net	(13,691)		(15,027)
Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator)	$	93,015	$	118,097

Common Shares Outstanding (Denominator)	5,096,672		5,260,672

Book Value per Common Share (GAAP)	$	20.94	$	25.31

Tangible Book Value per Common Share (Non-GAAP)	$	18.25	$	22.45

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Consolidated Statements of Financial Condition Analysis

Assets

Total assets increased $441,000, or 0.03%, to $1.43 billion at both September 30, 2022 and December 31, 2021.

Cash and Securities

•Cash and due from banks increased $3.1 million, or 2.6%, to $122.8 million at September 30, 2022, compared to $119.7 million at December 31, 2021. The change is primarily due to an increase in deposits as further described below in the Liabilities section.

•Securities decreased $31.1 million, or 13.8%, to $193.8 million at September 30, 2022, compared to $225.0 million at December 31, 2021. Current period activity included $26.8 million of purchases, and $24.9 million of pay downs. The purchases were made to earn a higher yield on excess cash. In addition, there was a $32.8 million decrease in the market value of the debt securities portfolio, primarily due to the increase in market interest rates, and a $252,000 decline in market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program (“PPP”) Update

•PPP loans decreased $23.8 million to $768,000 at September 30, 2022 compared to $24.5 million at December 31, 2021 as a result of forgiveness and repayments.

•$27,000 of net PPP loan origination fees were unearned at September 30, 2022 compared to $678,000 at December 31, 2021. $117,000 of net PPP loan origination fees were earned in the three months ended September 30, 2022 compared to $130,000 for the three months ended June 30, 2022.

Loans, Allowance for Loan Losses and Credit Quality

•Total loans held for investment increased $22.1 million, or 2.17%, to $1.04 billion at September 30, 2022 compared to $1.02 billion at December 31, 2021. Excluding the net decline of $23.8 million in PPP loans in the current period, loans increased $45.9 million.

•The allowance for loan losses was $12.9 million at September 30, 2022 and $11.6 million at December 31, 2021. As a result, the allowance for loan losses to total loans was 1.23% at September 30, 2022 compared to 1.13% at December 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.23% at September 30, 2022 compared to 1.16% at December 31, 2021. The change in the allowance for loan losses was primarily due to adjustments to historical loss factors and changes in qualitative factors in particular economic and industry conditions since December 31, 2021.

•Net recoveries for the three months ended September 30, 2022 were $21,000, or 0.01% of average loans on an annualized basis. Net recoveries for the three months ended September 30, 2021 were $37,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the nine months ended September 30, 2022 were $2.5 million, or 0.33% of average loans on an annualized basis. Net recoveries for the nine months ended September 30, 2021 were $10,000, and has an immaterial effect on ratios for the period.

•Nonperforming loans, which includes nonaccrual loans, accruing loans past due 90 days or more, and accruing loans that are considered troubled debt restructurings, were $5.9 million at September 30, 2022 compared to $7.3 million at December 31, 2021. Current nonperforming loans to total loans ratio was 0.56% compared to 0.71% at December 31, 2021.

Other

•Intangible Assets decreased $1.3 million, or 24.6%, to $4.0 million at September 30, 2022 compared to $5.3 million at December 31, 2021 primarily due to amortization expense recognized during the period.

•Accrued interest receivable and other assets increased $8.8 million, or 68.4%; to $21.7 million at September 30, 2022, compared to $12.9 million at December 31, 2021. This change was primarily driven by deferred taxes as a result of the increase in market interest rates conditions and the corresponding decrease in the market value of the mostly fixed rate securities portfolio.

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Liabilities

Total liabilities increased $26.9 million, or 2.1%, to $1.32 billion at September 30, 2022 compared to $1.29 billion at December 31, 2021.

Deposits

•Total deposits increased $49.2 million to $1.28 billion as of September 30, 2022 compared to $1.23 billion at December 31, 2021, an annualized increase of 5.3%. Interest-bearing and non interest-bearing demand deposits increased $26.2 million and $15.8 million, respectively, partially offset by a decrease in time deposits of $15.8 million. Average total deposits increased $15.4 million, primarily in both interest-bearing and non interest -bearing demand deposits for the three months ended September 30, 2022 compared to the three months ended June 30, 2022.

Borrowings

•Short-term borrowings decreased $21.2 million, or 53.9%, to $18.1 million at September 30, 2022, compared to $39.3 million at December 31, 2021. At September 30, 2022 and December 31, 2021, short-term borrowings were comprised entirely of securities sold under agreements to repurchase, which are related to business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase. A portion of this decrease is due to accounts that were being transitioned into other deposit products and account for most of the interest-bearing demand deposit increase.

Stockholders’ Equity

Stockholders’ equity decreased $26.4 million, or 19.8%, to $106.7 million at September 30, 2022, compared to $133.1 million at December 31, 2021. On February 15, 2022, the Company completed its stock repurchase program that was implemented on June 10, 2021. On April 21, 2022, a new $10 million repurchase program was authorized, with the Company repurchasing 57,710 shares at an average price of $22.51 per share since the inception of the plan.

•Net income was $7.1 million for the nine months ended September 30, 2022.

•Accumulated other comprehensive loss increased $25.7 million primarily due to the effect of market interest rate increases on the fair value of the Company’s debt securities.

•In total, the Company has repurchased $4.7 million since December 31, 2021

•The Company declared and paid $3.7 million in dividends to common stockholders in the current period.

•Book value per share (GAAP) was $20.94 at September 30, 2022 compared to $25.31 at December 31, 2021, a decrease of $4.37. Tangible book value per share (Non-GAAP) decreased $4.20, or 18.7%, to $18.25 compared to $22.45 at December 31, 2021. Refer to Explanation of Use of Non-GAAP Financial Measures in this Report.

Consolidated Results of Operations for the Three Months Ended September 30, 2022 and 2021

Overview. Net income was $3.9 million for the three months ended September 30, 2022, an increase of $1.9 million compared to net income of $2.0 million for the three months ended September 30, 2021.

Net Interest and Dividend Income. Net interest and dividend income increased $1.0 million, or 10.0%, to $11.0 million for the three months ended September 30, 2022 compared to $10.0 million for the three months ended September 30, 2021. Net interest margin (GAAP) increased to 3.29% for the three months ended September 30, 2022 compared to 2.88% for the three months ended September 30, 2021. Net interest margin (FTE) (Non-GAAP) increased 41 basis points (bps) to 3.30% for the three months ended September 30, 2022 compared to 2.89% for the three months ended September 30, 2021.

Interest and Dividend Income

•Net interest margin (GAAP) increased to 3.29% for the three months ended September 30, 2022 compared to 2.88% for the three months ended September 30, 2021. Fully Tax Equivalent (“FTE”) Net interest margin (Non-GAAP) increased 41 bps to 3.30% for the three months ended September 30, 2022 compared to 2.89% for the three months ended September 30, 2021.

•Interest and dividend income increased $1.5 million, or 13.9%, to $12.3 million for the three months ended September 30, 2022 compared to $10.8 million the three months ended September 30, 2021.

◦Interest income on loans increased $1.1 million, or 11.3%, to $10.8 million for the three months ended September 30, 2022 compared to $9.7 million for the three months ended September 30, 2021. The average balance of loans increased $19.9 million to $1.02 billion from $1.00 billion and the average yield increased 35 bps to 4.20% compared to 3.85%.

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◦Interest and fee income on PPP loans was $123,000 for the three months ended September 30, 2022 and contributed 4 bps to loan yield, compared to $484,000 for the three months ended September 30, 2021, which contributed 4 bps to loan yield.

◦The impact of the accretion of the credit mark on acquired loan portfolios was $47,000 for the three months ended September 30, 2022 compared to $94,000 for the three months ended September 30, 2021, or 2 bps in the current period compared to 4 bps in the prior period.

◦Interest income on taxable investment securities increased $142,000, or 16.8%, to $985,000 for the three months ended September 30, 2022 compared to $843,000 for the three months ended September 30, 2021 driven by a $24.3 million increase in average balance coupled with a 6 bps increased in average yield.

Interest Expense

•Interest expense increased $496,000, or 63.9%, to $1.3 million for the three months ended September 30, 2022 compared to $776,000 for the three months ended September 30, 2021.

◦Interest expense on deposits increased $364,000, or 50.9%, to $1.1 million for the three months ended September 30, 2022 compared to $715,000 for the three months ended September 30, 2021. While average interest-earning deposit balances decreased $51.7 million, or 5.8%, to $842.4 million as of September 30, 2022 compared to $894.0 million as of September 30, 2021 , rising interest rates led to the repricing of higher-cost demand and money market deposits and resulted in a 19 bps, or 59.9%, increase in average cost compared to the three months ended September 30, 2021. In addition, the average balance of time deposits and the related average cost decreased $45.2 million and 11 bps, respectively. These decreases are partially offset by an increase in average other borrowings of $11.6 million or 193.7% to $17.6 million as of September 30, 2022 compared to $6.0 million as of September 30, 2021, which was driven by an increase in subordinated debt balance.

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Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan and securities interest income utilizing a marginal federal income tax rate of 21.0% for the periods presented. As such, amounts will not agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.


	Three Months Ended September 30,
	2022						2021
	Average Balance		Interest and Dividends		Yield/ Cost (1)		Average Balance		Interest and Dividends		Yield/ Cost (1)
(Dollars in thousands) (Unaudited)

Assets:
Interest-Earning Assets:
Loans, Net (2)	$	1,024,363	$	10,833	4.20	%	$	1,004,474	$	9,740	3.85	%
Debt Securities
Taxable	222,110		985		1.77		197,763		843		1.71
Exempt From Federal Tax	7,998		62		3.10		11,647		90		3.09
Equity Securities	2,693		21		3.12		2,655		19		2.86
Interest Bearing Deposits at Banks	67,870		378		2.23		160,935		92		0.23
Other Interest-Earning Assets	2,784		39		5.56		3,512		43		4.86
Total Interest-Earning Assets	1,327,818		12,318		3.68		1,380,986		10,827		3.11
Noninterest-Earning Assets	68,796						88,291
Total Assets	$	1,396,614					$	1,469,277

Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits (3)	$	278,412	393		0.56	%	$	275,411	48		0.07	%
Savings (3)	251,148		20		0.03		251,801		21		0.03
Money Market (3)	189,371		269		0.56		198,167		55		0.11
Time Deposits (3)	123,438		397		1.28		168,654		591		1.39
Total Interest-Bearing Deposits (3)	842,369		1,079		0.51		894,033		715		0.32
Short-Term Borrowings
Securities Sold Under Agreements to Repurchase	28,738		19		0.26		40,818		25		0.24
Other Borrowings	17,621		174		3.92		6,000		36		2.38
Total Interest-Bearing Liabilities	888,728		1,272		0.57		940,851		776		0.33
Noninterest-Bearing Demand Deposits	390,658						387,746
Other Liabilities	2,636						8,019
Total Liabilities	1,282,022						1,336,616
Stockholders' Equity	114,592						132,661
Total Liabilities and Stockholders' Equity	$	1,396,614					$	1,469,277
Net Interest Income (FTE) (Non-GAAP) (4)			$	11,046					$	10,051
Net Interest Rate Spread (FTE) (Non-GAAP) (4)(6)					3.11	%					2.78	%
Net Interest-Earning Assets (5)	$	439,090					$	440,135
Net Interest Margin (GAAP) (7))					3.29						2.88
Net Interest Margin (FTE) (Non-GAAP) (4)(7)					3.30						2.89
Return on Average Assets (1)					1.12						0.54
Return on Average Equity (1)					13.60						5.93
Average Equity to Average Assets					8.20						9.03
Average Interest-Earning Assets to Average Interest-Bearing Liabilities					149.41						146.78
PPP Loans	$	2,424	$	123	20.13		$	40,313	$	484	4.76

(1)Annualized based on three months ended results.

(2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.

(3) Includes Deposits Held for Sale that were sold in December 2021.

(4) Refer to Explanation and Use of Non-GAAP Financial Measures in this filing for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(6) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(7) Net interest margin represents annualized net interest income divided by average total interest-earning assets.

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Rate/Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan and securities income utilizing a marginal federal income tax rate of 21.0%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.


	Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021
	Increase (Decrease) Due to
	Volume		Rate		Total
(Dollars in thousands) (Unaudited)

Interest and Dividend Income:
Loans, net	$	192	$	901	$	1,093
Debt Securities:
Taxable	111		31		142
Exempt From Federal Tax	(28)		—		(28)
Marketable Equity Securities	—		2		2
Cash at Other Banks	(89)		375		286
Other Interest-Earning Assets	(10)		6		(4)
Total Interest-Earning Assets	176		1,315		1,491

Interest Expense:
Deposits	(41)		405		364
Short-Term Borrowings:
Securities Sold Under Agreements to Repurchase	(8)		2		(6)
Other Borrowings	104		34		138
Total Interest-Bearing Liabilities	55		441		496
Change in Net Interest and Dividend Income	$	121	$	874	$	995

Provision for Loan Losses. There was no provision for loan losses for the three months ended September 30, 2022 or September 30, 2021.

Noninterest Income. Noninterest income increased $541,000, or 24.6%, to $2.7 million for the three months ended September 30, 2022, compared to $2.2 million for the three months ended September 30, 2021. The increase was largely due to a gain of $439,000 on the disposal of fixed assets during the three months ended September 30, 2022 due to the sale of the land and buildings of the former Pioneer and Bellaire bank branches. During the quarter, the Bank also recorded a $174,000 increase in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher lock-in amounts received and core business including commercial and personal insurance lines. In addition, net gain on sale of loans decreased $49,000 as there were no loans sold during the three months ended September 30, 2022.

Noninterest Expense. Noninterest expense decreased $946,000, or 9.7%, to $8.8 million for the three months ended September 30, 2022 compared to $9.8 million for the three months ended September 30, 2021. Salaries and benefits decreased $48,000 and contracted services decreased $1.2 million to $288,000 for the three months ended September 30, 2022 compared to $1.4 million for the three months ended September 30, 2021. This was a result of branch optimization initiatives completed in the prior year. These decreases were partially offset by an increase in occupancy expenses of $153,000.

Income Taxes. Income tax expense was $998,000 for the three months ended September 30, 2022 compared to $452,000 for the three months ended September 30, 2021. This change was primarily driven by an increase in pre-tax income of $4.9 million for the three months ended September 30, 2022 compared to $2.4 million for the three months ended September 30, 2021.

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Results of Operations for the Nine Months Ended September 30, 2022 and 2021

Overview. Net income was $7.1 million for the nine months ended September 30, 2022, an increase of $2.5 million compared to $4.6 million for the nine months ended September 30, 2021.

Net Interest and Dividend Income. Net interest and dividend income increased $1.1 million, or 3.8% to $31.1 million for the nine months ended September 30, 2022 compared to $29.9 million for the nine months ended September 30, 2021. Net interest margin (Non-GAAP FTE) increased 25 bps to 3.18% for the nine months ended September 30, 2022 compared to 2.93% the nine months ended September 30, 2021. Net interest margin (GAAP) increased to 3.17% for the nine months ended September 30, 2022 compared to 2.92% for the nine months ended September 30, 2021.

Interest and Dividend Income

•Interest and dividend income increased $1.3 million, or 3.9%, to $33.9 million for the nine months ended September 30, 2022 compared to $32.6 million for the nine months ended September 30, 2021.

◦Interest income on loans increased $298,000 or 1.0% to $30.1 million during the nine months ended September 30, 2022 compared to $29.8 million for the nine months ended September 30, 2021. Average loans decreased $3.8 million, while the loan yield for the nine months ended September 30, 2022 increased 6 bps to 3.98% compared to 3.92% for the nine months ended September 30, 2021.

◦Interest and fee income on PPP loans was $712,000 for the nine months ended September 30, 2022 and contributed 7 bps to loan yield, compared to $1.8 million for the nine months ended September 30, 2021, which contributed loan yield 3 bps in the prior period.

◦The impact of the accretion of the credit mark on acquired loan portfolios was $178,000 for the nine months ended September 30, 2022 compared to $385,000 for the nine months ended September 30, 2021, or 2 bps in the current period compared to 4 bps in the prior period.

◦Interest income on taxable investment securities increased $754,000, or 35.5%, to $2.9 million for the nine months ended September 30, 2022 compared to $2.1 million for the nine months ended September 30, 2021 driven by a $73.4 million increased in average taxable investment securities balance and partially offset by a 17 bps decrease in average yield.

Interest Expense

•Interest expense increased $119,000, or 4.5%, to $2.8 million for the nine months ended September 30, 2022 compared to $2.7 million for the nine months ended September 30, 2021.

◦Interest expense on deposits decreased $275,000, or 11.0%, to $2.2 million for the nine months ended September 30, 2022 compared to $2.5 million for the nine months ended September 30, 2021. While average interest-bearing deposits decreased $55.0 million, rising interest rates led to the repricing of higher-cost demand and money market deposits resulted in a 2 bps decrease in average cost compared to the nine months ended September 30, 2021. In addition, the average balance of time deposits and the related average cost decreased $50.0 million and 22 bps, respectively. These decreases are partially offset by an 18 bps increase in interest-bearing demand deposit average cost as well as an increase in average other borrowings of $11.2 million or 175.4% to $17.6 million as of September 30, 2022 compared to $6.4 million as of September 30, 2021, which was driven by an increase in subordinated debt balance.

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan and securities interest income utilizing a marginal federal income tax rate of 21% for the periods presented. As such, amounts will not

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agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.


	Nine Months Ended September 30,
	2022						2021
	Average Balance		Interest and Dividends		Yield/ Cost (1)		Average Balance		Interest and Dividends		Yield/ Cost (1)
(Dollars in thousands) (Unaudited)
Assets:
Interest-Earning Assets:
Loans, Net (2)	$	1,013,871	$	30,157	3.98	%	$	1,017,632	$	29,872	3.92	%
Debt Securities
Taxable	222,132		2,878		1.73		148,718		2,124		1.90
Tax Exempt	9,093		218		3.20		12,284		282		3.06
Marketable Equity Securities	2,693		64		3.17		2,645		63		3.18
Interest Bearing Deposits at Other Banks	61,213		534		1.16		187,093		243		0.17
Other Interest-Earning Assets	3,165		115		4.86		3,820		141		4.93
Total Interest-Earning Assets	1,312,167		33,966		3.46		1,372,192		32,725		3.19
Noninterest-Earning Assets	91,607						87,863
Total Assets	$	1,403,774					$	1,460,055
Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits (3)	$	271,897	554		0.27	%	$	270,136	181		0.09	%
Savings (3)	247,790		58		0.03		246,340		78		0.04
Money Market (3)	190,189		371		0.26		198,408		223		0.15
Time Deposits (3)	127,732		1,231		1.29		177,690		2,007		1.51
Total Interest-Bearing Deposits (3)	837,608		2,214		0.35		892,574		2,489		0.37
ST Borrowings
Securities Sold Under Agreements to Repurchase	33,553		56		0.22		43,745		72		0.22
Other Borrowings	17,612		522		3.96		6,396		112		2.34
Total Interest-Bearing Liabilities	888,773		2,792		0.42		942,715		2,673		0.38
Noninterest-Bearing Demand Deposits	388,964						374,865
Other Liabilities	5,177						8,293
Total Liabilities	1,282,914						1,325,873
Stockholders' Equity	120,860						134,182
Total Liabilities and Stockholders' Equity	$	1,403,774					$	1,460,055
Net Interest Income (FTE) (Non-GAAP) (4)			$	31,174					$	30,052
Net Interest Rate Spread (FTE) (Non-GAAP) (4)(6)					3.04	%					2.81	%
Net Interest-Earning Assets (5)	$	423,394					$	429,477
Net Interest Margin (GAAP) (7)					3.17						2.92
Net Interest Margin (FTE) (Non-GAAP) (4)(7)					3.18						2.93
Return on Average Assets (1)					0.68						0.42
Return on Average Equity (1)					7.85						4.59
Average Equity to Average Assets					8.61						9.19
Average Interest-Earning Assets to Average Interest-Bearing Liabilities					147.64						145.56
PPP Loans	$	7,503	$	712	12.69		$	51,579	$	1,797	4.66

(1)Annualized based on nine months ended results.

(2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.

(3) Includes Deposits Held for Sale that were sold in December 2021.

(4) Refer to Explanation and Use of Non-GAAP Financial Measures in this filing for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(6) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(7) Net interest margin represents annualized net interest income divided by average total interest-earning assets.

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Rate Volume Analysis. The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan and securities income utilizing a marginal federal income tax rate of 21%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.


	Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021
	Increase (Decrease) Due to
	Volume		Rate		Total
(Dollars in thousands) (Unaudited)

Interest and Dividend Income:
Loans, net	$	(170)	$	455	$	285
Debt Securities:
Taxable	958		(204)		754
Exempt From Federal Tax	(77)		13		(64)
Marketable Equity Securities	1		—		1
Cash at Other Banks	(260)		551		291
Other Interest-Earning Assets	(24)		(2)		(26)
Total Interest-Earning Assets	428		813		1,241

Interest Expense:
Deposits	(145)		(130)		(275)
Short-Term Borrowings:
Securities Sold Under Agreements to Repurchase	(16)		—		(16)
Other Borrowings	295		115		410
Total Interest-Bearing Liabilities	134		(15)		119
Change in Net Interest and Dividend Income	$	294	$	828	$	1,122

Provision for Loan Losses. The provision for loan losses was $3.8 million for the nine months ended September 30, 2022, compared to a $1.2 million recovery for the nine months ended September 30, 2021.The increased provision for loan losses was primarily due to a provision for a single loan charge-off of $2.7 million (pre-tax) with respect to a commercial and industrial loan. As previously reported, the charge-off relates to a borrower which is ceasing operations and carried a $3.5 million revolving line of credit which had an outstanding balance of $2.7 million. The remaining increase to the provision was a result of adjustments made to historical loss factors and changes in qualitative factors in particular economic and industry conditions.

Noninterest Income. Noninterest income decreased $132,000, or 1.7%, to $7.5 million for the nine months ended September 30, 2022, compared to $7.6 million for the nine months ended September 30, 2021. The decrease was primarily due to the net loss on equity securities of $252,000 for the nine months ended September 30, 2022 compared to net gain of $482,000 for the nine months ended September 30, 2021, which was largely due to a decline of $503,000 in the market value of equity securities, comprised mainly of bank stocks. In addition, net gain on sales of loans decreased $166,000 as there were no loans sold during for the nine months ended September 30, 2022 compared to $166,000 for the nine months ended September 30, 2021. These changes are partially offset by an increase of $537,000, or 13.4%, in insurance commissions to $4.5 million for the nine months ended September 30, 2022, compared to $4.0 million for the nine months ended September 30, 2021 due to higher lock-in amounts received and core business including commercial and personal insurance lines. During the quarter, the Bank also recorded a $431,000 gain on the disposal of fixed assets during the nine months ended September 30, 2022 due to the sale of the land and buildings of the former Pioneer and Bellaire bank branches.

Noninterest Expense. Noninterest expense decreased $7.0 million, or 21.3%, to $25.9 million for the nine months ended September 30, 2022 compared to $32.9 million for the nine months ended September 30, 2021. The primary drivers were decreases of $1.2 million and $2.3 million as previously noted related to the writedown of fixed assets and intangible impairment associated with branch consolidation and sale initiatives in 2021, respectively. In addition, salaries and benefits decreased

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$914,000 and occupancy decreased $119,000, primarily related to the reduction of footprint and related headcount resulting from the consolidation and sale of branches during 2021. Contracted services decreased $1.7 million to $1.2 million for the nine months ended September 30, 2022 compared to $2.9 million for the nine months ended September 30, 2021. This was a result of branch optimization initiatives completed in the prior year.

Income Taxes. Income tax expense increased $540,000 to $1.76 million for the nine months ended September 30, 2022 compared to $1.22 million for the nine months ended September 30, 2021. The change between the periods is consistent with the change in pre-tax income, as pre-tax income was $8.9 million for the nine months ended September 30, 2022 compared to pre-tax income of $5.8 million for the nine months ended September 30, 2021.

Off-Balance Sheet Arrangements.

Other than loan commitments and standby and performance letters of credit, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a significant current or future effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. Refer to Note 7 in the Notes to Consolidated Financial Statements of this report for a summary of commitments outstanding as of September 30, 2022 and December 31, 2021.

Liquidity and Capital Management

Liquidity. Liquidity is the ability to meet current and future financial obligations of a short-term nature. The Company’s primary sources of funds consist of deposit inflows, loan repayments and maturities, calls and sales of securities. While maturities and scheduled amortization of loans and securities are typically predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

The Company regularly adjusts its investments in liquid assets based upon its assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, and the objectives of its asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits with other banks and short- and intermediate-term securities. The Company believes that it had sufficient liquidity at September 30, 2022 to satisfy its short- and long-term liquidity needs.

The Company’s most liquid assets are cash and due from banks, which totaled $122.8 million at September 30, 2022. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. Unpledged securities, which provide an additional source of liquidity, totaled $14.2 million at September 30, 2022. In addition, at September 30, 2022, the Company had the ability to borrow up to $440.8 million from the FHLB of Pittsburgh, of which $429.1 million is available. The Company also has the ability to borrow up to $105.5 million million from the FRB through its Borrower-In-Custody line of credit agreement and the Company also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million as of both September 30, 2022 and December 31, 2021.

At September 30, 2022, $76.9 million, or 63.6% of total time deposits mature within one year. If these time deposits do not remain with the Company, the Company will be required to seek other sources of funds. Depending on market conditions, the Company may be required to pay higher rates on such deposits or other borrowings than it currently pays on these time deposits. The Company believes, however, based on past experience that a significant portion of its time deposits will remain with it, either as time deposits or as other deposit products. The Company has the ability to attract and retain deposits by adjusting the interest rates offered.

We are committed to maintaining a strong liquidity position; therefore, we monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. The marginal cost of new funding, however, whether from deposits or borrowings from the FHLB, will be carefully considered as we monitor our liquidity needs. Therefore, in order to minimize our cost of funds, we may consider additional borrowings from the FHLB in the future.

CB Financial is a separate legal entity from the Bank and must provide for its own liquidity to pay any dividends to its shareholders and for other corporate purposes. Its primary source of liquidity is dividend payments it receives from the Bank. The Bank’s ability to pay dividends to CB Financial is subject to regulatory limitations. At September 30, 2022, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $16.6 million. The ability to pay future dividends or conduct stock repurchases may be limited under applicable banking regulations and regulatory policies due to expected losses for future periods and/or the inability to upstream funds from the Bank to the Company as a result of lower income or regulatory capital levels.

Capital Management. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, each must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under

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

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.

At September 30, 2022 and December 31, 2021, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action. At September 30, 2022, the Bank's capital ratios were not affected by loans modified in accordance with Section 4013 of the CARES Act. In addition, PPP loans received a zero-percent risk weight under the regulatory capital rules regardless of whether they were pledged as collateral to the Federal Reserve Bank's PPP lending facility, but were included in the Bank's leverage ratio requirement due to the Bank not pledging the loans as collateral to the PPP lending facility.

The following table presents the Bank’s regulatory capital amounts and ratios, as well as the minimum amounts and ratios required to be well capitalized as of the dates indicated.


	September 30, 2022				December 31, 2021
	Amount		Ratio		Amount		Ratio
(Dollars in thousands)

Common Equity Tier 1 (to risk weighted assets)
Actual	$	117,868	12.02	%	$	113,086	11.95	%
For Capital Adequacy Purposes	44,139		4.50		42,571		4.50
To Be Well Capitalized	63,756		6.50		61,491		6.50

Tier 1 Capital (to risk weighted assets)
Actual	117,868		12.02		113,086		11.95
For Capital Adequacy Purposes	58,852		6.00		56,761		6.00
To Be Well Capitalized	78,469		8.00		75,682		8.00

Total Capital (to risk weighted assets)
Actual	130,136		13.27		124,668		13.18
For Capital Adequacy Purposes	78,469		8.00		75,682		8.00
To Be Well Capitalized	98,086		10.00		94,602		10.00

Tier 1 Leverage (to adjusted total assets)
Actual	117,868		8.51		113,086		7.76
For Capital Adequacy Purposes	55,407		4.00		58,307		4.00
To Be Well Capitalized	69,258		5.00		72,884		5.00

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

Management of Interest Rate Risk. The majority of the Company’s assets and liabilities are monetary in nature. Consequently, the Company’s most significant form of market risk is interest rate risk and a principal part of its business strategy is to manage interest rate risk by reducing the exposure of net interest income to changes in market interest rates. Accordingly, the Company’s Board has established an Asset/Liability Management Committee, which is responsible for evaluating the interest rate risk inherent in the Company’s assets and liabilities, for determining the level of risk that is appropriate given the Company’s business strategy, operating environment, capital, liquidity and performance objectives; and for managing this risk consistent with the guidelines approved by the Board. Senior management monitors the level of interest rate risk and the Asset/Liability Management Committee meets on a quarterly basis to review its asset/liability policies and position and interest rate risk position, and to discuss and implement interest rate risk strategies.

The Company monitors interest rate risk through the use of a simulation model. The quarterly reports developed in the simulation model assist the Company in identifying, measuring, monitoring and controlling interest rate risk to ensure compliance within the Company’s policy guidelines. This quantitative analysis measures interest rate risk from both a capital and earnings perspective. With regard to earnings, movements in interest rates and the shape of the yield curve significantly influence the amount of net interest income that is recognized. Movements in market interest rates significantly influence the spread between the interest earned on our interest-earning assets and the interest paid on our interest-bearing liabilities. Our internal interest rate risk analysis

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calculates the sensitivity of our projected net interest income over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into similar instruments. Product pricing and earning asset prepayment speeds are adjusted for each rate scenario.

With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our economic value of equity (“EVE”) ratio to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities. EVE attempts to quantify our economic value using a discounted cash flow methodology while the EVE ratio reflects that value as a form of capital ratio. The degree to which the EVE ratio changes for any hypothetical interest rate scenario from its base case measurement is a reflection of an institution’s sensitivity to interest rate risk.

For both net interest income and capital at risk, our interest rate risk analysis calculates a base case scenario that assumes no change in interest rates. The model then measures changes throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve up and down 100, 200 and 300 basis points with additional scenarios modeled where appropriate. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain falling rate scenarios during periods of lower market interest rates such as that experienced in the current rate environment at September 30, 2022.

The table below sets forth, as of September 30, 2022, the estimated changes in EVE and net interest income at risk that would result from the designated instantaneous changes in market interest rates. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.


	EVE						EVE as a Percent of Portfolio Value of Assets				Net Interest Earnings at Risk
Change in Interest Rates in Basis Points	Dollar Amount		Dollar Change		Percent Change		NPV Ratio		Basis Point Change		Dollar Amount		Dollar Change		Percent Change
(Dollars in thousands)

+300	$	204,778	$	(36,873)	(15.3)	%	15.92	%		(125)	$	46,260	$	946	2.1	%
+200	221,014		(20,637)		(8.5)	%	16.63			(54)	46,099		785		1.7
+100	238,932		(2,719)		(1.1)	%	17.38			21	45,930		616		1.4
Flat	241,651		—		—	%	17.17			—	45,314		—		—
(100)	273,688		32,037		13.3	%	18.58			141	44,401		(913)		(2.0)

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in EVE and net interest income require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the table presented assumes that the composition of the Company’s interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an indication of the Company’s interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and net interest income and will differ from actual results. EVE calculations also may not reflect the fair values of financial instruments. For example, changes in market interest rates can increase the fair values of the Company’s loans, deposits and borrowings.

Item 4. Controls and Procedures.

(a)Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how

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well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.

Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures.

(b)Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, claims seeking damages for improper collection procedures or misrepresentations, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any other pending legal proceedings that we believe would have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect our business, financial condition or future results. The risks described in such Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Company made the following purchases of its common stock during the three months ended September 30, 2022.



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of the Publicly Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
July 1-31, 2022	15,881	$	22.13	15,881	$	9,027,381
August 1-31, 2022	13,054	22.75		13,054	$	8,730,351
September 1-30, 2022	1,336	22.06		1,336	$	8,700,885
Total	30,271	$	22.39	30,271

(1) On April 21, 2022, the Company announced that the Board had approved a program commencing on May 2, 2022 to repurchase up to $10 million of the Company's outstanding common stock. This repurchase was set to expire on May 1, 2023. In connection with the program, the Company purchased a total of 57,710 shares of the Company's common stock at an average price of $22.51 per share.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits


			3.1			Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-4 filed on June 13, 2014 (File No. 333-196749))
			3.2			Bylaws, as amended (incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 20, 2020)
			31.1			Rule 13a-14(a) / 15d-14(a) Certification (Chief Executive Officer)
			31.2			Rule 13a-14(a) / 15d-14(a) Certification (Chief Financial Officer)
			32.1			Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
			101			The following materials for the quarter ended September 30, 2022, formatted in XBRL (Extensible Business Reporting Language); the (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive (Loss) Income , (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements (Unaudited)
			104			Cover Page Interactive Data File (Embedded within Inline XBRL contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		CB FINANCIAL SERVICES, INC.
		(Registrant)

Date:	November 9, 2022	/s/ John H. Montgomery
		John H. Montgomery
		President and Chief Executive Officer

Date:	November 9, 2022	/s/ Jamie L. Prah
		Jamie L. Prah
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Chief Accounting Officer)