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~~June 30, ~~2022~~2023


			☐			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,~~August 9, 2023, the number of shares outstanding of the Registrant’s Common Stock was ~~5,092,204.~~5,115,678.

Table of Contents

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 Income (Loss 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

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


		(Unaudited) September 30, 2022		December 31, 2021			(Unaudited) June 30, 2023		December 31, 2022
(Dollars in thousands, except per share and share data)	(Dollars in thousands, except per share and share data)					(Dollars in thousands, except per share and share data)

ASSETS	ASSETS					ASSETS
Cash and Due From Banks:	Cash and Due From Banks:					Cash and Due From Banks:
Interest Bearing		$	99,949	$	63,968
Non-Interest Bearing		22,852		55,706
Interest-Earning						Interest-Earning	$	60,287	$	82,957
Noninterest-Earning						Noninterest-Earning	17,806		20,743
Total Cash and Due From Banks	Total Cash and Due From Banks	122,801		119,674		Total Cash and Due From Banks	78,093		103,700

Securities:	Securities:					Securities:
Available-for-Sale Debt Securities, at Fair Value	Available-for-Sale Debt Securities, at Fair Value	191,232		222,108		Available-for-Sale Debt Securities, at Fair Value	179,061		187,360
Equity Securities, at Fair Value	Equity Securities, at Fair Value	2,614		2,866		Equity Securities, at Fair Value	2,366		2,698
Total Securities	Total Securities	193,846		224,974		Total Securities	181,427		190,058

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
Loans, Net of Allowance for Credit Losses of $10,666 and $12,819 at June 30, 2023 and December 31, 2022, Respectively						Loans, Net of Allowance for Credit Losses of $10,666 and $12,819 at June 30, 2023 and December 31, 2022, Respectively	1,090,488		1,037,054

Premises and Equipment, Net	Premises and Equipment, Net	18,064		18,399		Premises and Equipment, Net	18,582		17,844
Bank-Owned Life Insurance	Bank-Owned Life Insurance	25,750		25,332		Bank-Owned Life Insurance	25,082		25,893
Goodwill	Goodwill	9,732		9,732		Goodwill	9,732		9,732
Intangible Assets, Net	Intangible Assets, Net	3,959		5,295		Intangible Assets, Net	2,622		3,513
Accrued Interest Receivable and Other Assets	Accrued Interest Receivable and Other Assets	21,680		12,859		Accrued Interest Receivable and Other Assets	26,707		21,144
TOTAL ASSETS	TOTAL ASSETS	$	1,425,920	$	1,425,479	TOTAL ASSETS	$	1,432,733	$	1,408,938

LIABILITIES	LIABILITIES					LIABILITIES

Deposits:	Deposits:					Deposits:
Non-Interest Bearing Demand Deposits		407,107		385,775
NOW Accounts		298,755		272,518
Noninterest-Bearing Demand Accounts						Noninterest-Bearing Demand Accounts	$	316,098	$	390,405
Interest-Bearing Demand Accounts						Interest-Bearing Demand Accounts	374,654		311,825
Money Market Accounts	Money Market Accounts	198,715		192,125		Money Market Accounts	185,814		209,125
Savings Accounts	Savings Accounts	250,378		239,482		Savings Accounts	217,267		248,022
Time Deposits	Time Deposits	120,879		136,713		Time Deposits	169,482		109,126
Total Deposits	Total Deposits	1,275,834		1,226,613		Total Deposits	1,263,315		1,268,503

Short-Term Borrowings	Short-Term Borrowings	18,108		39,266		Short-Term Borrowings	—		8,060
Other Borrowings	Other Borrowings	17,627		17,601		Other Borrowings	34,658		14,638
Accrued Interest Payable and Other Liabilities	Accrued Interest Payable and Other Liabilities	7,645		8,875		Accrued Interest Payable and Other Liabilities	18,171		7,582
TOTAL LIABILITIES	TOTAL LIABILITIES	1,319,214		1,292,355		TOTAL LIABILITIES	1,316,144		1,298,783

STOCKHOLDERS' EQUITY	STOCKHOLDERS' EQUITY					STOCKHOLDERS' EQUITY
Preferred Stock, No Par Value; 5,000,000 Shares Authorized	Preferred Stock, No Par Value; 5,000,000 Shares Authorized	—		—		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
Common Stock, $0.4167 Par Value; 35,000,000 Shares Authorized, 5,733,408 Shares Issued and 5,111,678 Shares Outstanding at June 30, 2023, with 5,708,433 and 5,100,189 Shares Issued and Outstanding at December 31, 2022.						Common Stock, $0.4167 Par Value; 35,000,000 Shares Authorized, 5,733,408 Shares Issued and 5,111,678 Shares Outstanding at June 30, 2023, with 5,708,433 and 5,100,189 Shares Issued and Outstanding at December 31, 2022.	2,389		2,379
Capital Surplus	Capital Surplus	83,793		83,294		Capital Surplus	84,325		83,953
Retained Earnings	Retained Earnings	60,930		57,534		Retained Earnings	70,314		63,861
Treasury Stock, at Cost (605,761 and 420,321 Shares at September 30, 2022 and December 31, 2021, Respectively)		(13,745)		(9,144)
Treasury Stock, at Cost (621,730 and 608,244 Shares at June 30, 2023 and December 31, 2022, Respectively)						Treasury Stock, at Cost (621,730 and 608,244 Shares at June 30, 2023 and December 31, 2022, Respectively)	(14,100)		(13,797)
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss	(26,648)		(927)		Accumulated Other Comprehensive Loss	(26,339)		(26,241)
TOTAL STOCKHOLDERS' EQUITY	TOTAL STOCKHOLDERS' EQUITY	106,706		133,124		TOTAL STOCKHOLDERS' EQUITY	116,589		110,155
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,425,920	$	1,425,479	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,432,733	$	1,408,938

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

Table of Contents

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
(Dollars in thousands, except share and per share data)	(Dollars in thousands, except share and per share data)									(Dollars in thousands, except share and per share data)

INTEREST AND DIVIDEND INCOME	INTEREST AND DIVIDEND INCOME									INTEREST AND DIVIDEND INCOME
Loans, Including Fees	Loans, Including Fees	$	10,815	$	9,718	$	30,098	$	29,800	Loans, Including Fees	$	13,426	$	9,733	$	25,797	$	19,284
Investment Securities:	Investment Securities:									Investment Securities:
Taxable	Taxable	985		843		2,878		2,124		Taxable	950		988		1,914		1,893
Tax-Exempt	Tax-Exempt	49		71		172		223		Tax-Exempt	42		57		83		123
Dividends	Dividends	21		19		64		63		Dividends	25		20		49		42
Other Interest and Dividend Income	Other Interest and Dividend Income	417		135		649		384		Other Interest and Dividend Income	760		160		1,605		232
TOTAL INTEREST AND DIVIDEND INCOME	TOTAL INTEREST AND DIVIDEND INCOME	12,287		10,786		33,861		32,594		TOTAL INTEREST AND DIVIDEND INCOME	15,203		10,958		29,448		21,574
INTEREST EXPENSE	INTEREST EXPENSE									INTEREST EXPENSE
Deposits	Deposits	1,079		715		2,214		2,489		Deposits	3,842		604		6,346		1,134
Short-Term Borrowings	Short-Term Borrowings	19		25		56		72		Short-Term Borrowings	3		18		5		37
Other Borrowings	Other Borrowings	174		36		522		112		Other Borrowings	238		173		393		347
TOTAL INTEREST EXPENSE	TOTAL INTEREST EXPENSE	1,272		776		2,792		2,673		TOTAL INTEREST EXPENSE	4,083		795		6,744		1,518
NET INTEREST AND DIVIDEND INCOME	NET INTEREST AND DIVIDEND INCOME	11,015		10,010		31,069		29,921		NET INTEREST AND DIVIDEND INCOME	11,120		10,163		22,704		20,056
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
Provision For Credit Losses - Loans										Provision For Credit Losses - Loans	492		3,784		572		3,784
Recovery For Credit Losses - Unfunded Commitments										Recovery For Credit Losses - Unfunded Commitments	(60)		—		(60)		—
NET INTEREST AND DIVIDEND INCOME AFTER PROVISION (RECOVERY) FOR CREDIT LOSSES										NET INTEREST AND DIVIDEND INCOME AFTER PROVISION (RECOVERY) FOR CREDIT LOSSES	10,688		6,379		22,192		16,272
NONINTEREST INCOME	NONINTEREST INCOME									NONINTEREST INCOME
Service Fees	Service Fees	544		602		1,629		1,762		Service Fees	448		559		892		1,085
Insurance Commissions	Insurance Commissions	1,368		1,194		4,535		3,998		Insurance Commissions	1,511		1,369		3,434		3,167
Other Commissions	Other Commissions	244		93		512		431		Other Commissions	224		179		368		268
Net Gain on Sales of Loans		—		49		—		166
Net (Loss) Gain on Securities		(46)		24		(252)		482
Net Loss on Sales of Loans										Net Loss on Sales of Loans	(5)		—		(3)		—
Net Loss on Securities										Net Loss on Securities	(100)		(199)		(332)		(206)
Net Gain on Purchased Tax Credits	Net Gain on Purchased Tax Credits	14		18		43		53		Net Gain on Purchased Tax Credits	7		14		14		28

Net Gain (Loss) on Disposal of Fixed Assets	Net Gain (Loss) on Disposal of Fixed Assets	439		—		431		(3)		Net Gain (Loss) on Disposal of Fixed Assets	—		—		11		(8)
Income from Bank-Owned Life Insurance	Income from Bank-Owned Life Insurance	140		138		418		411		Income from Bank-Owned Life Insurance	139		142		280		278
Net Gain on Bank-Owned Life Insurance Claims										Net Gain on Bank-Owned Life Insurance Claims	1		—		303		—
Other Income	Other Income	36		80		143		291		Other Income	44		41		113		106
TOTAL NONINTEREST INCOME	TOTAL NONINTEREST INCOME	2,739		2,198		7,459		7,591		TOTAL NONINTEREST INCOME	2,269		2,105		5,080		4,718
NONINTEREST EXPENSE	NONINTEREST EXPENSE									NONINTEREST EXPENSE
Salaries and Employee Benefits	Salaries and Employee Benefits	4,739		4,787		13,843		14,757		Salaries and Employee Benefits	5,231		4,539		10,310		9,104
Occupancy	Occupancy	768		615		2,230		2,349		Occupancy	789		776		1,490		1,462
Equipment	Equipment	170		205		561		782		Equipment	283		182		501		392
Data Processing	Data Processing	540		541		1,471		1,666		Data Processing	718		446		1,575		931
FDIC Assessment	FDIC Assessment	147		293		484		792		FDIC Assessment	224		128		376		337
PA Shares Tax	PA Shares Tax	240		224		721		714		PA Shares Tax	195		240		455		480
Contracted Services	Contracted Services	288		1,441		1,223		2,878		Contracted Services	434		348		581		935
Legal and Professional Fees	Legal and Professional Fees	334		180		876		788		Legal and Professional Fees	246		389		428		541
Advertising	Advertising	131		225		362		558		Advertising	75		115		154		231
Other Real Estate Owned (Income)	Other Real Estate Owned (Income)	(38)		(89)		(113)		(153)		Other Real Estate Owned (Income)	(35)		(37)		(72)		(75)
Amortization of Intangible Assets	Amortization of Intangible Assets	445		446		1,336		1,481		Amortization of Intangible Assets	446		446		891		891
Intangible Assets Impairment		—		—		—		1,178
Writedown of Fixed Assets		—		2		—		2,270

Other Expense	Other Expense	1,063		903		2,899		2,830		Other Expense	895		838		1,841		1,837
TOTAL NONINTEREST EXPENSE	TOTAL NONINTEREST EXPENSE	8,827		9,773		25,893		32,890		TOTAL NONINTEREST EXPENSE	9,501		8,410		18,530		17,066
Income Before Income Tax Expense		4,927		2,435		8,851		5,822
Income Tax Expense		998		452		1,757		1,217
Income Before Income Tax Expense (Benefit)										Income Before Income Tax Expense (Benefit)	3,456		74		8,742		3,924
Income Tax Expense (Benefit)										Income Tax Expense (Benefit)	699		(44)		1,827		759
NET INCOME	NET INCOME	$	3,929	$	1,983	$	7,094	$	4,605	NET INCOME	$	2,757	$	118	$	6,915	$	3,165
EARNINGS PER SHARE	EARNINGS PER SHARE									EARNINGS PER SHARE
Basic	Basic	$	0.77	$	0.37	$	1.38	$	0.85	Basic	$	0.54	$	0.02	$	1.35	$	0.61
Diluted	Diluted	0.77		0.37		1.37		0.85		Diluted	0.54		0.02		1.35		0.61
WEIGHTED AVERAGE SHARES OUTSTANDING	WEIGHTED AVERAGE SHARES OUTSTANDING									WEIGHTED AVERAGE SHARES OUTSTANDING
Basic	Basic	5,106,861		5,373,032		5,150,632		5,412,989		Basic	5,111,987		5,147,846		5,110,799		5,172,881
Diluted	Diluted	5,118,627		5,390,128		5,165,376		5,420,792		Diluted	5,116,134		5,156,975		5,118,396		5,189,144

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

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
(Dollars in thousands)

Net Income	$	2,757	$	118	$	6,915	$	3,165

Other Comprehensive Loss:
Change in Unrealized Loss on Investment Securities Available-for-Sale	(2,704)		(8,680)		(124)		(21,032)
Income Tax Effect	583		1,870		26		4,531



Other Comprehensive Loss, Net of Income Tax Effect	(2,121)		(6,810)		(98)		(16,501)
Total Comprehensive Income (Loss)	$	636	$	(6,692)	$	6,817	$	(13,336)

~~(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

Table of Contents

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
Three Months Ended June 30, 2023															Three Months Ended June 30, 2023	Shares Issued	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(Dollars in thousands, except share and per share data)	(Dollars in thousands, except share and per share data)														(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:
March 31, 2023															March 31, 2023	5,730,908	$	2,388	$	84,118	$	68,834	$	(13,927)	$	(24,218)	$	117,195

Comprehensive Income:															Comprehensive Income:
Net Income	Net Income	—	—		—		3,929		—		—		3,929		Net Income	—	—		—		2,757		—		—		2,757
Other Comprehensive Loss	Other Comprehensive Loss	—	—		—		—		—		(9,220)		(9,220)		Other Comprehensive Loss	—	—		—		—		—		(2,121)		(2,121)
Restricted Stock Awards Granted	Restricted Stock Awards Granted	—	—		—		—		—		—		—		Restricted Stock Awards Granted	2,500	1		(1)		—		—		—		—
Restricted Stock Awards Forfeited	Restricted Stock Awards Forfeited	—	—		34		—		(34)		—		—		Restricted Stock Awards Forfeited	—	—		21		—		(21)		—		—
Stock-Based Compensation Expense	Stock-Based Compensation Expense	—	—		145		—		—		—		145		Stock-Based Compensation Expense	—	—		187		—		—		—		187
Exercise of Stock Options	Exercise of Stock Options	—	—				—		(2)		—		(2)		Exercise of Stock Options	—	—		—		—		45		—		45
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
Treasury stock purchased, at cost (8,792 shares)															Treasury stock purchased, at cost (8,792 shares)	—	—		—		—		(197)		—		(197)
Dividends Paid ($0.25 Per Share)															Dividends Paid ($0.25 Per Share)	—	—		—		(1,277)		—		—		(1,277)
June 30, 2023															June 30, 2023	5,733,408	$	2,389	$	84,325	$	70,314	$	(14,100)	$	(26,339)	$	116,589

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


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

March 31, 2022	5,701,758	$	2,376	$	83,422	$	59,343	$	(12,367)	$	(10,618)	$	122,156
Comprehensive Loss:
Net Income	—	—		—		118		—		—		118
Other Comprehensive Loss	—	—		—		—		—		(6,810)		(6,810)
Restricted Stock Awards Forfeited	(325)	—		43		—		(43)		—		—
Restricted Stock Awards Granted	1,000	—		—		—		—		—		—
Stock-Based Compensation Expense	—	—		149		—		—		—		149

Treasury Stock Purchased, at cost (27,439 shares)	—	—		—		—		(605)		—		(605)
Dividends Paid ($0.24 Per Share)	—	—		—		(1,236)		—		—		(1,236)
June 30, 2022	5,702,433	$	2,376	$	83,614	$	58,225	$	(13,015)	$	(17,428)	$	113,772

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
Six Months Ended June 30, 2023															Six Months Ended June 30, 2023	Shares Issued	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
(Dollars in thousands, except share and per share data)	(Dollars in thousands, except share and per share data)														(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:
December 31, 2022															December 31, 2022	5,708,433	$	2,379	$	83,953	$	63,861	$	(13,797)	$	(26,241)	$	110,155
Adoption of Accounting Standard ASU 2016-13															Adoption of Accounting Standard ASU 2016-13	—	—		—		2,092		—		—		2,092
Balance at January 1, 2023, adjusted															Balance at January 1, 2023, adjusted	5,708,433	$	2,379	$	83,953	$	65,953	$	(13,797)	$	(26,241)	$	112,247
Comprehensive Income:															Comprehensive Income:
Net Income	Net Income	—	—		—		7,094		—		—		7,094		Net Income	—	—		—		6,915		—		—		6,915
Other Comprehensive Loss	Other Comprehensive Loss	—	—		—		—		—		(25,721)		(25,721)		Other Comprehensive Loss	—	—		—		—		—		(98)		(98)
Restricted Stock Awards Granted	Restricted Stock Awards Granted	21,765	9		(9)		—		—		—		—		Restricted Stock Awards Granted	24,975	10		(10)		—		—		—		—
Restricted Stock Awards Forfeited	Restricted Stock Awards Forfeited	(325)	—		81		—		(81)		—		—		Restricted Stock Awards Forfeited	—	—		21		—		(21)		—		—
Stock-Based Compensation Expense	Stock-Based Compensation Expense	—	—		424		—		—		—		424		Stock-Based Compensation Expense	—	—		361		—		—		—		361
Exercise of Stock Options	Exercise of Stock Options	—	—		3		—		162		—		165		Exercise of Stock Options	—	—		—		—		45		—		45
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
Treasury stock purchased, at cost (14,478 shares)															Treasury stock purchased, at cost (14,478 shares)	—	—		—		—		(327)		—		(327)
Dividends Paid ($0.50 Per Share)															Dividends Paid ($0.50 Per Share)	—	—		—		(2,554)		—		—		(2,554)
June 30, 2023															June 30, 2023	5,733,408	$	2,389	$	84,325	$	70,314	$	(14,100)	$	(26,339)	$	116,589

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


Six Months Ended June 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	—	—		—		3,165		—		—		3,165
Other Comprehensive Loss	—	—		—		—		—		(16,501)		(16,501)
Restricted Stock Awards Forfeited	(325)	—		47		—		(47)		—		—
Restricted Stock Awards Granted	21,765	9		(9)		—		—		—		—
Stock-Based Compensation Expense	—	—		279		—		—		—		279
Exercise of Stock Options	—	—		3		—		164		—		167
Treasury Stock Purchased, at cost (159,279 shares)	—	—		—		—		(3,988)		—		(3,988)
Dividends Paid ($0.48 Per Share)	—	—		—		(2,474)		—		—		(2,474)
June 30, 2022	5,702,433	$	2,376	$	83,614	$	58,225	$	(13,015)	$	(17,428)	$	113,772

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
Six Months Ended June 30,						Six Months Ended June 30,	2023		2022
(Dollars in thousands)	(Dollars in thousands)					(Dollars in thousands)

OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net Income	Net Income	$	7,094	$	4,605	Net Income	$	6,915	$	3,165
Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities	Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities					Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities
Net Amortization on Securities	Net Amortization on Securities	48		38		Net Amortization on Securities	40		36
Depreciation and Amortization	Depreciation and Amortization	1,997		1,810		Depreciation and Amortization	1,420		1,282
Provision (Recovery) for Loan Losses		3,784		(1,200)
Intangible Asset Impairment		—		1,178
Provision for Credit Losses - Loans						Provision for Credit Losses - Loans	572		3,784
Recovery for Credit Losses - Unfunded Commitments						Recovery for Credit Losses - Unfunded Commitments	(60)		—

Writedown on Fixed Assets		—		2,270
Lease Impairment		—		227
Loss (Gain) on Securities		252		(482)

Loss on Securities						Loss on Securities	332		206
Gain on Purchased Tax Credits	Gain on Purchased Tax Credits	(43)		(53)		Gain on Purchased Tax Credits	(14)		(28)
Income from Bank-Owned Life Insurance	Income from Bank-Owned Life Insurance	(418)		(411)		Income from Bank-Owned Life Insurance	(280)		(278)

Proceeds From Mortgage Loans Sold	Proceeds From Mortgage Loans Sold	—		8,182		Proceeds From Mortgage Loans Sold	269		—
Originations of Mortgage Loans for Sale	Originations of Mortgage Loans for Sale	—		(15,289)		Originations of Mortgage Loans for Sale	(266)		—
Gain on Sale of Loans		—		(166)
Loss on Sale of Loans						Loss on Sale of Loans	3		—
Gain on Sale of Other Real Estate Owned and Repossessed Assets	Gain on Sale of Other Real Estate Owned and Repossessed Assets	(1)		(76)		Gain on Sale of Other Real Estate Owned and Repossessed Assets	—		(1)
Noncash Expense for Stock-Based Compensation	Noncash Expense for Stock-Based Compensation	424		415		Noncash Expense for Stock-Based Compensation	361		279
(Increase) Decrease in Accrued Interest Receivable	(Increase) Decrease in Accrued Interest Receivable	(59)		517		(Increase) Decrease in Accrued Interest Receivable	(561)		36
Net (Gain) Loss on Disposal of Fixed Assets	Net (Gain) Loss on Disposal of Fixed Assets	(431)		3		Net (Gain) Loss on Disposal of Fixed Assets	(11)		8
(Increase) Decrease in Taxes Payable		(947)		295
Decrease in Taxes Payable						Decrease in Taxes Payable	(839)		(2,462)

Increase (Decrease) in Accrued Interest Payable	Increase (Decrease) in Accrued Interest Payable	29		(277)		Increase (Decrease) in Accrued Interest Payable	963		(42)
Refund of Federal and State Income Taxes		—		1,311

Other, Net	Other, Net	(2,679)		(319)		Other, Net	(308)		(725)
NET CASH PROVIDED BY OPERATING ACTIVITIES	NET CASH PROVIDED BY OPERATING ACTIVITIES	9,050		2,578		NET CASH PROVIDED BY OPERATING ACTIVITIES	8,536		5,260
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Investment Securities Available for Sale:	Investment Securities Available for Sale:					Investment Securities Available for Sale:
Proceeds From Principal Repayments and Maturities	Proceeds From Principal Repayments and Maturities	24,869		29,563		Proceeds From Principal Repayments and Maturities	8,135		17,021
Purchases of Securities	Purchases of Securities	(26,826)		(119,924)		Purchases of Securities	—		(26,826)
Proceeds from Sale of Securities		—		11,967
Net (Increase) Decrease in Loans		(24,480)		33,378

Net Increase in Loans						Net Increase in Loans	(45,113)		(9,576)
Purchase of Premises and Equipment	Purchase of Premises and Equipment	(470)		(2,275)		Purchase of Premises and Equipment	(1,345)		(262)
Proceeds from Disposal of Premises and Equipment	Proceeds from Disposal of Premises and Equipment	480		—		Proceeds from Disposal of Premises and Equipment	36		—

Proceeds From a Claim on Bank-Owned Life Insurance						Proceeds From a Claim on Bank-Owned Life Insurance	731		—
Proceeds From Sale of Other Real Estate Owned	Proceeds From Sale of Other Real Estate Owned	37		285		Proceeds From Sale of Other Real Estate Owned	—		37
Decrease in Restricted Equity Securities		619		533
(Increase) Decrease in Restricted Equity Securities						(Increase) Decrease in Restricted Equity Securities	(503)		599

NET CASH USED IN INVESTING ACTIVITIES	NET CASH USED IN INVESTING ACTIVITIES	(25,771)		(46,473)		NET CASH USED IN INVESTING ACTIVITIES	(38,059)		(19,007)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Net Increase in Deposits		49,221		52,542
Net (Decrease) Increase in Short-Term Borrowings		(21,158)		12,260
Net Decrease in Deposits						Net Decrease in Deposits	(5,188)		(11,423)
Net Decrease in Short-Term Borrowings						Net Decrease in Short-Term Borrowings	(8,060)		(7,088)

Principal Payments on Other Borrowed Funds		—		(2,000)
Proceeds From Other Borrowed Funds						Proceeds From Other Borrowed Funds	20,000		—
Cash Dividends Paid	Cash Dividends Paid	(3,698)		(3,898)		Cash Dividends Paid	(2,554)		(2,474)
Treasury Stock, Purchases at Cost	Treasury Stock, Purchases at Cost	(4,682)		(2,451)		Treasury Stock, Purchases at Cost	(327)		(3,988)
Exercise of Stock Options	Exercise of Stock Options	165		54		Exercise of Stock Options	45		167
NET CASH PROVIDED BY FINANCING ACTIVITIES		19,848		56,507
INCREASE IN CASH AND CASH EQUIVALENTS		3,127		12,612
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES						NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	3,916		(24,806)
DECREASE IN CASH AND CASH EQUIVALENTS						DECREASE IN CASH AND CASH EQUIVALENTS	(25,607)		(38,553)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR	CASH AND DUE FROM BANKS AT BEGINNING OF YEAR	119,674		160,911		CASH AND DUE FROM BANKS AT BEGINNING OF YEAR	103,700		119,674
CASH AND DUE FROM BANKS AT END OF PERIOD	CASH AND DUE FROM BANKS AT END OF PERIOD	$	122,801	$	173,523	CASH AND DUE FROM BANKS AT END OF PERIOD	$	78,093	$	81,121

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
Six Months Ended June 30,						Six Months Ended June 30,	2023		2022
(Dollars in thousands)	(Dollars in thousands)					(Dollars in thousands)

SUPPLEMENTAL CASH FLOW INFORMATION:	SUPPLEMENTAL CASH FLOW INFORMATION:					SUPPLEMENTAL CASH FLOW INFORMATION:
Cash Paid For:	Cash Paid For:					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
Interest on Deposits and Borrowings (Including Interest Credited to Deposits of $5,462 and $1,166, Respectively)						Interest on Deposits and Borrowings (Including Interest Credited to Deposits of $5,462 and $1,166, Respectively)	$	5,781	$	1,560

SUPPLEMENTAL NONCASH DISCLOSURE:	SUPPLEMENTAL NONCASH DISCLOSURE:					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

Proceeds receivable from claims on bank-owned life insurance						Proceeds receivable from claims on bank-owned life insurance	664		—
Other Real Estate Acquired in Settlement of Loans	Other Real Estate Acquired in Settlement of Loans	—		37		Other Real Estate Acquired in Settlement of Loans	166		—

Syndicated Loans Purchased and Sold not Settled, net						Syndicated Loans Purchased and Sold not Settled, net	6,976		—
Right of Use Asset Recognized	Right of Use Asset Recognized	1,284		—		Right of Use Asset Recognized	—		1,284
Lease Liability Recognized	Lease Liability 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 credit 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.~~2022. 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~~The Bank operates 1110 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~~

The disclosures below supplement the accounting policies ~~during the nine months ended September 30, 2022. See~~previously disclosed in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the ~~SEC, for additional information regarding our critical accounting policies.~~

~~Recent~~SEC. The updates reflect the adoption of Financial Accounting ~~Standards~~

~~In September 2016, the FASB issued~~Standard Board ("FASB") ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, referred to as ASC 326 or, more commonly, referred to as Current Expected Credit Losses (CECL).

Allowance for Credit Losses (ACL)

On January 1, 2023, the Company adopted ASU 2016-13, ~~amends guidance on~~which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss methodology. The Company adopted ASU 2016-13 using a modified retrospective approach. Results for reporting periods beginning after January 1, 2023 are presented under Topic 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption resulted in a decrease of $3.4 million to the Company’s ACL related to loans receivable (ACL - Loans) and an increase of $718,000 in ACL for unfunded commitments (ACL - Unfunded Commitments). The net impact resulted in a $2.1 million increase to retained earnings, net of deferred taxes.

The ACL represents the estimated amount considered necessary to cover lifetime expected credit losses ~~for~~inherent in financial 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~~balance sheet date. The measurement of ~~all~~ expected ~~credit losses. The allowance for~~ credit losses is ~~a valuation account that is deducted from the~~applicable to loans receivable and securities measured at amortized ~~cost basis~~cost. It also applies to off-balance sheet credit exposures such as loan commitments and unused lines 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~~credit. The allowance is established through ~~net~~a provision for credit losses that is charged against 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 effectivemethodology 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 todetermining the allowance for ~~loan~~credit losses ~~upon adoption, but cannot yet determine the magnitude~~is considered a critical accounting policy by management because of the ~~one-time adjustment~~high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded ACL. The ACL is reported separately as a contra-asset on the consolidated statement of financial condition. The expected credit loss for unfunded loan commitments is reported on the Consolidated Statement of Financial Condition in other liabilities while the provision for credit losses related to unfunded commitments is reported in provision for credit losses - unfunded commitments in the Consolidated Statements of Income.

ACL on Loans Receivable

The ACL on loans is deducted from the amortized cost basis of the loan to present the net amount expected to be collected. Expected losses are evaluated and calculated on a collective, or pooled, basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether loans within a pool continue to exhibit similar risk characteristics. If the risk characteristics of a loan change, such that they are no longer similar to other loans in the pool, the Company will evaluate the loan with a different pool of loans that share similar risk characteristics. If the loan does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. The Company evaluates the pooling methodology at least annually. Loans are charged off against the ACL when the Company believes the balances to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off or expected to be charged off.

The Company has chosen to segment its portfolio consistent with the manner in which it manages credit risk. Such segments include residential mortgage, commercial real estate mortgages, construction, commercial business, consumer and other. For most segments, the Company calculates estimated credit losses using a probability of default and loss given default methodology, the results of which are applied to the aggregated discounted cash flow of each individual loan within the segment. The point in time probability of default and loss given default are then conditioned by macroeconomic scenarios to incorporate reasonable and supportable forecasts that affect the collectability of the reported amount.

The Company estimates the ACL on loans via a quantitative analysis which considers relevant available information from internal and external sources related to past events and current conditions, as well as the incorporation of reasonable and supportable forecasts. The Company evaluates a variety of factors including third party economic forecasts, industry trends and other available published economic information in arriving at its forecasts. After the reasonable and supportable forecast period, the Company reverts, on a straight-line basis, to average historical losses. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a restructuring will be executed with an individual borrower or the ~~overall impact~~renewal option is included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Also included in the ACL on loans are qualitative reserves to cover losses that are expected but, in the Company’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above. Factors that the Company considers include changes in lending policies and procedures, business conditions, the nature and size of the ~~new guidance~~portfolio, portfolio concentrations, the volume and severity of past due loans and non-accrual loans, and the effect of external factors such as competition, legal and regulatory requirements, among others. Furthermore, the Company considers the inherent uncertainty in quantitative models that are built upon historical data.

Individually Evaluated Loans

On a case-by-case basis, the Company may conclude that a loan should be evaluated on an individual basis based on its disparate risk characteristics. When the ~~Company’s consolidated financial condition~~Company determines that a loan no longer shares similar risk characteristics with other loans in the portfolio, the allowance will be determined on an individual basis using the present value of expected cash flows or, ~~results~~for collateral-dependent loans, the fair value of ~~operation.~~the collateral as of the reporting date, less estimated selling costs, as applicable. If the fair value of the collateral is less than the amortized cost basis of the loan, the Company will charge off the difference between the fair value of the collateral, less estimated costs to sell at the reporting date, and the amortized cost basis of the loan.

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ACL on Off-Balance Sheet Commitments

The ~~FASB issued ASU 2022-22,~~Company is required to include unfunded commitments that are expected to be funded in the future within the allowance calculation, other than those that are unconditionally cancellable. To arrive at that reserve, the reserve percentage for each applicable segment is applied to the unused portion of the expected commitment balance and is multiplied by the expected funding rate. To determine the expected funding rate, the Company uses a historical utilization rate for each segment. As noted above, the ACL on unfunded loan commitments is included in other liabilities on the Consolidated Statement of Financial ~~Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings~~Condition and ~~Vintage Disclosures. This ASU eliminates~~ the ~~TDR recognition~~related credit expense is recorded in provision for credit losses - unfunded commitments in the Consolidated Statements of Income.

ACL on Available for Sale Securities

For available for sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities available for sale that do not meet the above criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating by a rating agency, 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 requirementsadverse conditions related to ~~certain modifications~~the security, among other factors. If this assessment indicates that a credit loss exists, the present value of ~~receivables made~~cash flows expected 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 withinbe collected from 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 disclosesecurity are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for ~~financing receivables~~the credit loss, limited by the amount that the fair value is less than the amortized cost. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of tax. The Company elected the practical expedient of zero loss estimates for securities issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major agencies and have a long history of no credit ~~quality indicator~~losses.

Changes in the ACL are recorded as provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued Interest Receivable

The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans and ~~class~~available for sale securities. Accrued interest receivable on loans is reported as a component of ~~financing~~accrued interest receivable ~~by year~~and other assets on the Consolidated Statement of ~~origination.~~Financial Condition, totaled $4.0 million at June 30, 2023 and is excluded from the estimate of credit losses. Accrued interest receivable on available of sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $534,000, at June 30, 2023 and is excluded from the estimate of credit losses.

Recent Accounting Standards

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 that extends the period of time preparers can utilize the reference rate reform relief guidance. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, as amended. This ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued. The elective guidance in the ASU applies to modifications of contract terms that will directly replace, or have the potential to replace, an affected rate with another interest rate index, as well as certain contemporaneous modifications of other contract terms related to the replacement of an affected rate. The ASU notes that changes in contract terms that are made to effect the reference rate reform transition are considered related to the replacement of a reference rate if they are not the result of a business decision that is separate from or in addition to changes to the terms of a contract to effect that transition. The optional expedient allows companies to account for the modification as if it was not substantial (i.e., do not treat as an extinguishment of debt). To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, ASU 2022-06 defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. For all entities, ~~that have adopted~~ the amendments in ~~updated 2016-13, the amendments in this update~~ASU 2022-06 are effective ~~for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. For entities that have not yet adopted~~upon issuance. As of June 30, 2023, the ~~amendments~~Company has identified approximately $16.2 million in ~~update 2016-13,~~outstanding loan balances and a $5.0 million corporate debt security tied to the ~~effective dates for the amendments in this update are the same as the effective dates in Update 2016-13.~~LIBOR reference rate. The Company has not yet ~~adopted~~made any contract modifications. The Company is currently evaluating the ~~accounting standard as ASU 2016-13 has not been adopted. Management continues to evaluate the~~potential impact ~~of its future adoption~~ of this guidance on ~~the Company's~~its consolidated statements of financial ~~statements.~~statements and results of operations.

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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,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
(Dollars in thousands, except share and per share data)	(Dollars in thousands, except share and per share data)									(Dollars in thousands, except share and per share data)

Net Income	Net Income	$	3,929	$	1,983	$	7,094	$	4,605	Net Income	$	2,757	$	118	$	6,915	$	3,165

Weighted-Average Basic Common Shares Outstanding	Weighted-Average Basic Common Shares Outstanding	5,106,861		5,373,032		5,150,632		5,412,989		Weighted-Average Basic Common Shares Outstanding	5,111,987		5,147,846		5,110,799		5,172,881
Dilutive Effect of Common Stock Equivalents (Stock Options and Restricted Stock)	Dilutive Effect of Common Stock Equivalents (Stock Options and Restricted Stock)	11,766		17,096		14,744		7,803		Dilutive Effect of Common Stock Equivalents (Stock Options and Restricted Stock)	4,147		9,129		7,597		16,263
Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding	Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding	5,118,627		5,390,128		5,165,376		5,420,792		Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding	5,116,134		5,156,975		5,118,396		5,189,144

Earnings Per Share:	Earnings Per Share:									Earnings Per Share:
Basic	Basic	$	0.77	$	0.37	$	1.38	$	0.85	Basic	$	0.54	$	0.02	$	1.35	$	0.61
Diluted	Diluted	0.77		0.37		1.37		0.85		Diluted	0.54		0.02		1.35		0.61

~~Table of Contents~~

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,			Three Months Ended June 30,		Six Months Ended June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Stock Options	Stock Options	149,367	71,741	149,367	199,641	Stock Options	339,123	156,118	339,123	156,118
Restricted Stock	Restricted Stock	36,490	23,000	37,490	32,360	Restricted Stock	58,527	37,940	51,727	37,940

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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									June 30, 2023
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(Dollars in thousands)	(Dollars in thousands)									(Dollars in thousands)

Available-for-Sale Debt Securities:	Available-for-Sale Debt Securities:									Available-for-Sale Debt Securities:
U.S. Government Agencies	U.S. Government Agencies	$	53,993	$	—	$	(9,646)	$	44,347	U.S. Government Agencies	$	53,994	$	—	$	(8,612)	$	45,382
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	14,053		—		(920)		13,133		Obligations of States and Political Subdivisions	13,810		—		(598)		13,212
Mortgage-Backed Securities - Government-Sponsored Enterprises	Mortgage-Backed Securities - Government-Sponsored Enterprises	48,045		—		(5,559)		42,486		Mortgage-Backed Securities - Government-Sponsored Enterprises	43,226		—		(4,818)		38,408
Collateralized Mortgage Obligations - Government Sponsored Enterprises	Collateralized Mortgage Obligations - Government Sponsored Enterprises	99,623		—		(16,807)		82,816		Collateralized Mortgage Obligations - Government Sponsored Enterprises	92,117		—		(17,418)		74,699
Corporate Debt	Corporate Debt	9,485		—		(1,035)		8,450		Corporate Debt	9,486		—		(2,126)		7,360
Total Available-for-Sale Debt Securities	Total Available-for-Sale Debt Securities	225,199		—		(33,967)		191,232		Total Available-for-Sale Debt Securities	212,633		—		(33,572)		179,061

Equity Securities:	Equity Securities:									Equity Securities:
Mutual Funds	Mutual Funds							873		Mutual Funds							875
Other	Other							1,741		Other							1,491
Total Equity Securities	Total Equity Securities							2,614		Total Equity Securities							2,366
Total Securities	Total Securities							$	193,846	Total Securities							$	181,427


	December 31, 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	$	—	$	(9,359)	$	44,634
Obligations of States and Political Subdivisions	14,053		—		(711)		13,342
Mortgage-Backed Securities - Government-Sponsored Enterprises	46,345		—		(4,918)		41,427
Collateralized Mortgage Obligations - Government Sponsored Enterprises	96,930		—		(17,288)		79,642
Corporate Debt	9,487		—		(1,172)		8,315
Total Available-for-Sale Debt Securities	220,808		—		(33,448)		187,360

Equity Securities:
Mutual Funds							875
Other							1,823
Total Equity Securities							2,698
Total Securities							$	190,058

1012

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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																June 30, 2023
		Less than 12 months					12 Months or Greater					Total						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			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)	(Dollars in thousands)																(Dollars in thousands)

U.S. Government Agencies	U.S. Government Agencies	1	$	2,576	$	(424)	12	$	41,771	$	(9,222)	13	$	44,347	$	(9,646)	U.S. Government Agencies	—	$	—	$	—	13	$	45,382	$	(8,612)	13	$	45,382	$	(8,612)
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	34	13,133		(920)		—	—		—		34	13,133		(920)		Obligations of States and Political Subdivisions	23	9,343		(413)		10	3,869		(185)		33	13,212		(598)
Mortgage Backed Securities- Government Sponsored Enterprises	Mortgage Backed Securities- Government Sponsored Enterprises	38	29,578		(3,166)		4	12,908		(2,393)		42	42,486		(5,559)		Mortgage Backed Securities- Government Sponsored Enterprises	24	13,333		(781)		18	25,075		(4,037)		42	38,408		(4,818)
Collateralized Mortgage Obligations - Government Sponsored Enterprises	Collateralized Mortgage Obligations - Government Sponsored Enterprises	16	46,959		(9,451)		6	35,857		(7,356)		22	82,816		(16,807)		Collateralized Mortgage Obligations - Government Sponsored Enterprises	1	59		(1)		20	74,640		(17,417)		21	74,699		(17,418)
Corporate Debt	Corporate Debt	2	3,850		(675)		1	4,600		(360)		3	8,450		(1,035)		Corporate Debt	—	—		—		3	7,360		(2,126)		3	7,360		(2,126)
Total	Total	91	$	96,096	$	(14,636)	23	$	95,136	$	(19,331)	114	$	191,232	$	(33,967)	Total	48	$	22,735	$	(1,195)	64	$	156,326	$	(32,377)	112	$	179,061	$	(33,572)

~~Table of Contents~~


		December 31, 2021																December 31, 2022
		Less than 12 months					12 Months or Greater					Total						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			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)	(Dollars in thousands)																(Dollars in thousands)

U.S. Government Agencies	U.S. Government Agencies	5	$	17,729	$	(269)	7	$	31,830	$	(1,164)	12	$	49,559	$	(1,433)	U.S. Government Agencies	1	$	2,600	$	(400)	12	$	42,034	$	(8,959)	13	$	44,634	$	(9,359)
Obligations of States and Political Subdivisions	Obligations of States and Political Subdivisions	—	—		—		—	—		—		—	—		—		Obligations of States and Political Subdivisions	34	13,342		(711)		—	—		—		34	13,342		(711)
Mortgage Backed Securities- Government Sponsored Enterprises	Mortgage Backed Securities- Government Sponsored Enterprises	8	28,772		(282)		—	—		—		8	28,772		(282)		Mortgage Backed Securities- Government Sponsored Enterprises	34	19,433		(1,018)		8	21,994		(3,900)		42	41,427		(4,918)
Collateralized Mortgage Obligations - Government Sponsored Enterprises	Collateralized Mortgage Obligations - Government Sponsored Enterprises	10	77,560		(2,074)		—	—		—		10	77,560		(2,074)		Collateralized Mortgage Obligations - Government Sponsored Enterprises	12	25,395		(3,393)		10	54,247		(13,895)		22	79,642		(17,288)
Corporate Debt	Corporate Debt	2	7,450		(31)		—	—		—		2	7,450		(31)		Corporate Debt	1	1,665		(335)		2	6,650		(837)		3	8,315		(1,172)
Total	Total	25	$	131,511	$	(2,656)	7	$	31,830	$	(1,164)	32	$	163,341	$	(3,820)	Total	82	$	62,435	$	(5,857)	32	$	124,925	$	(27,591)	114	$	187,360	$	(33,448)

For debt securities, the Company does not believe that any individual unrealized loss as of ~~September~~June 30, ~~2022~~2023 or December 31, ~~2021,~~2022, represents ~~an other-than-temporary~~a credit related 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~~a credit related 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~~unrealized losses on securities ~~that are temporarily impaired~~ at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities.

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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~~Total securities available to be pledged have a fair value of $171.7 million at June 30, 2023 and $179.0 million at December 31, 2022 of which securities with a fair value of ~~$179.6~~$171.4 million and ~~$121.0~~$175.6 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, ~~are~~were pledged to secure uninsured 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

~~Table of Contents~~


	June 30, 2023
	Amortized Cost		Fair Value
(Dollars in thousands)

Due in One Year or Less	$	—	$	—
Due after One Year through Five Years	26,527		23,478
Due after Five Years through Ten Years	57,391		49,177
Due after Ten Years	128,715		106,406
Total	$	212,633	$	179,061

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 realized sales and unrealized market adjustments for the periods indicated. There were no realized gain or loss on sales of debt securities for the periods indicated. All gains and losses presented in the table below are reported in Net ~~(Loss) Gain~~Loss 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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
(Dollars in thousands)






Equity Securities
Net Unrealized Loss Recognized on Securities Held	$	(100)	$	(199)	$	(332)	$	(206)
Net Realized Gain Recognized on Securities Sold	—		—		—		—
Net Loss on Equity Securities	$	(100)	$	(199)	$	(332)	$	(206)
Net Loss on Securities	$	(100)	$	(199)	$	(332)	$	(206)

Note 4. Loans and Allowance for ~~Loan~~Credit 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

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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.,~~and other business assets, 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.

~~Table of Contents~~

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


		September 30, 2022				December 31, 2021
		Amount		Percent		Amount		Percent			June 30, 2023		December 31, 2022
(Dollars in thousands)	(Dollars in thousands)									(Dollars in thousands)

Real Estate:	Real Estate:									Real Estate:
Residential	Residential	$	328,248	31.5	%	$	320,798	31.4	%	Residential	$	338,493	$	330,725
Commercial	Commercial	432,516		41.5		392,124		38.5		Commercial	458,614		436,805
Construction	Construction	49,502		4.7		85,028		8.3		Construction	44,523		44,923
Commercial and Industrial	Commercial and Industrial	62,196		6.0		89,010		8.7		Commercial and Industrial	102,266		70,044
Consumer	Consumer	150,615		14.4		122,152		12.0		Consumer	134,788		146,927
Other	Other	19,865		1.9		11,684		1.1		Other	22,470		20,449
Total Loans	Total Loans	1,042,942		100.0	%	1,020,796		100.0	%	Total Loans	1,101,154		1,049,873
Allowance for Loan Losses		(12,854)				(11,582)
Allowance for Credit Losses										Allowance for Credit Losses	(10,666)		(12,819)
Loans, Net	Loans, Net	$	1,030,088			$	1,009,214			Loans, Net	$	1,090,488	$	1,037,054

~~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~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were ~~$27,000~~$1,000 and ~~$678,000,~~$5,000, respectively. Additionally, ~~$117,000~~$1,000 and ~~$651,000~~$4,000 of net PPP loan origination fees were earned for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, compared to ~~$380,000~~$130,000 and ~~$1.4 million~~$534,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively. All PPP loans are classified as commercial and industrial loans held for investment. No allowance for ~~loan~~credit 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~~$1.1 million and ~~$1.9~~$1.2 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Company uses an eight-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first four categories are not considered criticized and are aggregated as “pass” rated. 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.

~~Table of Contents~~

The following table presents the Company’s loans by year of origination, loan segmentation and risk indicator summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of ~~the dates indicated. At September~~June 30, ~~2022 and December 31, 2021, there~~2023. There were no loans in the criticized category of ~~Loss~~loss.

Table of Contents


	Classified Loans by Origination Year (as of June 30, 2023)
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Total
Real Estate:
Residential
Pass	$	18,613	$	45,643	$	43,464	$	60,025	$	40,379	$	113,249	$	14,213	$	335,586
Special Mention	—		—		514		—		—		411		—		925
Substandard	—		—		154		—		—		1,828		—		1,982
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total	18,613		45,643		44,132		60,025		40,379		115,488		14,213		338,493
Commercial
Pass	33,675		76,166		92,455		50,075		49,195		116,799		1,732		420,097
Special Mention	—		—		1,496		2,970		5,576		15,509		—		25,551
Substandard	—		—		—		—		4,521		8,445		—		12,966
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total	33,675		76,166		93,951		53,045		59,292		140,753		1,732		458,614
Construction
Pass	7,694		15,531		10,184		7,784		—		—		937		42,130
Special Mention	—		1,249		850		—		—		1		—		2,100
Substandard	—		—		—		—		—		293		—		293
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total	7,694		16,780		11,034		7,784		—		294		937		44,523
Commercial and Industrial
Pass	22,732		17,719		9,665		6,188		3,756		930		30,027		91,017
Special Mention	—		—		—		18		5		3,314		3,533		6,870
Substandard	—		—		—		—		—		4,012		—		4,012
Doubtful	—		—		—		—		—		367		—		367
Loss	—		—		—		—		—		—		—		—
Total	22,732		17,719		9,665		6,206		3,761		8,623		33,560		102,266
Consumer
Pass	14,617		57,770		31,372		13,857		5,940		6,939		4,091		134,586
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		77		20		2		—		103		—		202
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total	14,617		57,847		31,392		13,859		5,940		7,042		4,091		134,788
Other
Pass	—		15,312		47		685		1,337		4,189		851		22,421
Special Mention	—		—		—		—		—		49		—		49
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total	—		15,312		47		685		1,337		4,238		851		22,470
Total Loans	$	97,331	$	229,467	$	190,221	$	141,604	$	110,709	$	276,438	$	55,384	$	1,101,154
Gross Charge Offs	$	—	$	92	$	21	$	—	$	—	$	105	$	16	$	234

Table of Contents

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

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											December 31, 2022
		Pass		Special Mention		Substandard		Doubtful		Total			Pass		Special Mention		Substandard		Doubtful		Total
(Dollars in Thousands)	(Dollars in Thousands)											(Dollars in Thousands)

Real Estate:	Real Estate:											Real Estate:
Residential	Residential	$	317,964	$	845	$	1,989	$	—	$	320,798	Residential	$	327,531	$	1,180	$	2,014	$	—	$	330,725
Commercial	Commercial	355,895		27,168		9,061		—		392,124		Commercial	395,168		29,680		11,957		—		436,805
Construction	Construction	69,441		13,035		2,552		—		85,028		Construction	42,693		1,912		318		—		44,923
Commercial and Industrial	Commercial and Industrial	72,584		14,463		1,451		512		89,010		Commercial and Industrial	58,562		10,977		90		415		70,044
Consumer	Consumer	122,136		—		16		—		122,152		Consumer	146,807		—		120		—		146,927
Other	Other	11,616		68		—		—		11,684		Other	20,394		55		—		—		20,449
Total Loans	Total Loans	$	949,636	$	55,579	$	15,069	$	512	$	1,020,796	Total Loans	$	991,155	$	43,804	$	14,499	$	415	$	1,049,873

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															June 30, 2023
		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			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)	(Dollars in Thousands)															(Dollars in Thousands)

Real Estate:	Real Estate:															Real Estate:
Residential	Residential	$	326,527	$	99	$	—	$	—	$	99	$	1,622	$	328,248	Residential	$	334,719	$	2,155	$	144	$	—	$	2,299	$	1,475	$	338,493
Commercial	Commercial	430,569		91		—		—		91		1,856		432,516		Commercial	456,563		—		—		—		—		2,051		458,614
Construction	Construction	49,502		—		—		—		—		—		49,502		Construction	44,105		418		—		—		418		—		44,523
Commercial and Industrial	Commercial and Industrial	61,599		19		139		—		158		439		62,196		Commercial and Industrial	101,899		—		—		—		—		367		102,266
Consumer	Consumer	150,071		365		66		—		431		113		150,615		Consumer	133,915		590		81		—		671		202		134,788
Other	Other	19,865		—		—		—		—		—		19,865		Other	22,470		—		—		—		—		—		22,470
Total Loans	Total Loans	$	1,038,133	$	574	$	205	$	—	$	779	$	4,030	$	1,042,942	Total Loans	$	1,093,671	$	3,163	$	225	$	—	$	3,388	$	4,095	$	1,101,154


	December 31, 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	$	325,591	$	3,451	$	34	$	—	$	3,485	$	1,649	$	330,725
Commercial	434,933		58		—		—		58		1,814		436,805
Construction	44,923		—		—		—		—		—		44,923
Commercial and Industrial	69,621		8		—		—		8		415		70,044
Consumer	145,887		854		66		—		920		120		146,927
Other	20,449		—		—		—		—		—		20,449
Total Loans	$	1,041,404	$	4,371	$	100	$	—	$	4,471	$	3,998	$	1,049,873

1517

Table of Contents

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~~June 30, ~~2022~~2023 were current was ~~$56,000~~$61,000 and ~~$142,000~~$86,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, and ~~$33,000~~$43,000 and ~~$136,000~~$94,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively.

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


	June 30, 2023
	Nonaccrual With No ACL		Nonaccrual With ACL		Loans Past Due 90 Days Still Accruing		Total Nonperforming Assets
(Dollars in Thousands)

Nonaccrual Loans:
Real Estate:
Residential	$	1,475	$	—	$	—	$	1,475
Commercial	2,051		—		—		2,051

Commercial and Industrial	367		—		—		367
Consumer	202		—		—		202
Total Nonaccrual Loans	$	4,095	$	—	$	—	4,095

Other Real Estate Owned:
Residential							129
Commercial							37
Total Other Real Estate Owned							166

Total Nonperforming Assets							$	4,261

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

In conjunction with the adoption of ASU 2016-13, ASU 2022-02 was adopted and eliminates the troubled debt restructurings ("TDR") recognition and measurement. With the elimination of TDRs, ASU 2022-02 requires that all modifications and refinancing, including those with borrowers that are experiencing financial difficulty are subject to the modification guidance in ASC 310-20. Loan modifications could meet the definition of a new loan if certain terms of the loan are modified to the benefit of the lender and the modification to the terms of the loan are more than minor. Both of these criteria have to be met to define the modification as a new loan. If a loan modification meets the criteria of new loan, then the new loan should include the remaining net investment in the original loan, additional funds advanced, fees received, and direct loan origination costs with the refinancing or restructuring. Additionally, the effective interest rate should be recalculated based on the amortized cost basis of the new loan and reassess contractual cash flow. For the three and six months ended June 30, 2023, there were no new loan modifications to borrowers experiencing financial difficulty in the past 12 months under the current guidance.

1618

Table of Contents

The following table sets forth the amounts and categories of nonperforming assets at the dates ~~indicated.~~indicated as of December 31, 2022, prior to the adoption of ASU 2016-13. Included in nonperforming loans and assets are ~~troubled debt restructurings (“TDRs”),~~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


	December 31, 2022
(Dollars in Thousands)

Nonaccrual Loans:
Real Estate:
Residential	$	1,649
Commercial	1,814

Commercial and Industrial	415
Consumer	120
Total Nonaccrual Loans	3,998

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	3,998

Troubled Debt Restructurings, Accruing:
Real Estate
Residential	534
Commercial	1,260
Commercial and Industrial	7
Total Troubled Debt Restructurings, Accruing	1,801

Total Nonperforming Loans	5,799






Total Nonperforming Assets	$	5,799

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~~$756,000 and ~~$571,000~~$1.4 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

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

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


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

March 31, 2023	$	2,156	$	3,056	$	805	$	1,997	$	2,098	$	158	$	—	$	10,270
Charge-offs	(97)		—		—		—		(51)		—		—		(148)
Recoveries	1		23		—		8		20		—		—		52
Provision (Recovery) for Credit Losses - Loans	296		137		133		135		(219)		10		—		492
June 30, 2023	$	2,356	$	3,216	$	938	$	2,140	$	1,848	$	168	$	—	$	10,666

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Table of Contents


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

December 31, 2022	$	2,074	$	5,810	$	502	$	2,313	$	1,517	$	—	$	603	$	12,819
Impact of ASC 326 - Loans	137		(3,244)		488		(1,057)		774		120		(603)		(3,385)
Charge-offs	(97)		—		—		—		(104)		—		—		(201)
Recoveries	14		23		—		766		58		—		—		861
Provision (Recovery) for Credit Losses - Loans	228		627		(52)		118		(397)		48		—		572
June 30, 2023	$	2,356	$	3,216	$	938	$	2,140	$	1,848	$	168	$	—	$	10,666

The ~~following table presents~~Company’s allowance for credit losses on unfunded commitments is recognized as a ~~summary~~liability (accrued interest payable and other liabilities on the Consolidated Statement of Financial Condition), with adjustments to the reserve recognized in provision for credit losses - unfunded commitments on the Consolidated Statement of Income. The Company’s activity in the allowance for credit losses on unfunded commitments for the periods ended was as follows:


(in thousands)	Allowance for Credit Losses
Balance at March 31, 2023	$	718
Impact of CECL adoption	—
Recovery for credit losses - unfunded commitments	(60)
Balance at June 30, 2023	$	658


(in thousands)	Allowance for Credit Losses
Balance at December 31, 2022	$	—
Impact of CECL adoption	718
Recovery for credit losses - unfunded commitments	(60)
Balance at June 30, 2023	$	658

Loans that do not share risk characteristics are evaluated on an individual basis. For loans that are individually evaluated and collateral dependent, financial loans where the Company has determined that foreclosure of the ~~loans considered~~collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be ~~impaired as~~provided substantially through the operation or sale 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
collateral, the ACL - Loans is measured based on the difference between the fair

1820

Table of Contents

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~~value of the collateral and the amortized cost basis of the asset as of the measurement date. During the three and six months ended June 30, 2023, there were no loans ~~evaluated for impairment decreased $964,000 at September 30, 2022 compared~~that required a credit loss to ~~December 31, 2021 and was primarily related to commercial real estate loans.~~

be individually assigned.

The following tables present the activity in the allowance for ~~loan~~credit losses summarized by primary segments and segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for potential impairment at the dates and for the periods ~~indicated.~~indicated, prior to the adoption of ASU 2016-13.

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


	December 31, 2022
	Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Unallocated		Total
(Dollars in thousands)

Individually Evaluated for Impairment	$	—	$	21	$	—	$	3	$	—	$	—	$	—	$	24
Collectively Evaluated for Potential Impairment	$	2,074	$	5,789	$	502	$	2,310	$	1,517	$	—	$	603	$	12,795


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

March 31, 2022	$	1,472	$	6,326	$	704	$	1,130	$	1,292	$	—	$	671	$	11,595
Charge-offs	(15)		—		—		(2,712)		(20)		—		—		(2,747)
Recoveries	126		—		—		57		18		—		—		201
Provision (Recovery)	71		(303)		(233)		3,874		212		—		163		3,784
June 30, 2022	$	1,654	$	6,023	$	471	$	2,349	$	1,502	$	—	$	834	$	12,833


	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	(32)		—		—		(2,712)		(40)		—		—		(2,784)
Recoveries	128		—		—		68		55		—		—		251
Provision (Recovery)	138		63		(778)		3,842		437		—		82		3,784
June 30, 2022	$	1,654	$	6,023	$	471	$	2,349	$	1,502	$	—	$	834	$	12,833

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Table of Contents

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


	June 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	$	—	$	86	$	—	$	244	$	—	$	—	$	—	$	330
Collectively Evaluated for Potential Impairment	$	1,654	$	5,937	$	471	$	2,105	$	1,502	$	—	$	834	$	12,503

~~Table of Contents~~

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 allocatedindicated, prior to the ~~PPP loan portfolio due to the Bank complying with the lender obligations that ensure SBA guarantee.~~adoption of ASU 2016-13.

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

~~Table of Contents~~


		December 31, 2021															December 31, 2022
		Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total			Real Estate Residential		Real Estate Commercial		Real Estate Construction		Commercial and Industrial		Consumer		Other		Total
(Dollars in thousands)	(Dollars in thousands)															(Dollars in thousands)

Individually Evaluated for Impairment	Individually Evaluated for Impairment	$	1,133	$	9,999	$	2,553	$	1,979	$	—	$	—	$	15,664	Individually Evaluated for Impairment	$	1,042	$	13,217	$	318	$	512	$	—	$	—	$	15,089
Collectively Evaluated for Potential Impairment	Collectively Evaluated for Potential Impairment	319,665		382,125		82,475		87,031		122,152		11,684		1,005,132		Collectively Evaluated for Potential Impairment	329,683		423,588		44,605		69,532		146,927		20,449		1,034,784
Total Loans	Total Loans	$	320,798	$	392,124	$	85,028	$	89,010	$	122,152	$	11,684	$	1,020,796	Total Loans	$	330,725	$	436,805	$	44,923	$	70,044	$	146,927	$	20,449	$	1,049,873

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~~2022	$	~~726~~487
Accretable Yield	~~(178)~~(122)
~~September~~June 30, ~~2022~~2023	$	~~548~~365

~~Note 5. Short-Term Borrowings~~

~~Borrowings with original maturities~~

Pre Adoption of ~~one year or less are classified as short-term~~ASC 326 – Impaired Loans

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For periods prior to the adoption of CECL, loans were considered impaired when, based on current information and ~~may consist of borrowings~~events, it was probable the Company would be unable to collect all amounts due in accordance with the ~~Federal Home Loan Bank ("FHLB"), securities sold under agreements~~original contractual terms of the loan agreement, including scheduled principal and interest payments. The following table presents a summary of the loans considered to ~~repurchase or borrowings on revolving lines~~be impaired as of ~~credit with~~ the ~~Federal Reserve Bank or other correspondent banks. Securities sold under repurchase agreements are comprised~~date indicated.


	December 31, 2022
	Recorded Investment		Related Allowance		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)

With No Related Allowance Recorded:
Real Estate:
Residential	$	1,042	$	—	$	1,047	$	1,085	$	51
Commercial	11,609		—		11,766		10,928		549
Construction	318		—		318		403		19
Commercial and Industrial	505		—		777		734		35
Total With No Related Allowance Recorded	$	13,474	$	—	$	13,908	$	13,150	$	654

With A Related Allowance Recorded:
Real Estate:

Commercial	$	1,608	$	21	$	1,608	$	954	$	79
Construction	—		—		—		830		36
Commercial and Industrial	7		3		7		253		1
Total With A Related Allowance Recorded	$	1,615	$	24	$	1,615	$	2,037	$	116

Total Impaired Loans
Real Estate:
Residential	$	1,042	$	—	$	1,047	$	1,085	$	51
Commercial	13,217		21		13,374		11,882		628
Construction	318		—		318		1,233		55
Commercial and Industrial	512		3		784		987		36
Total Impaired Loans	$	15,089	$	24	$	15,523	$	15,187	$	770

The recorded investment of ~~customer repurchase agreements, which are overnight sweep accounts with next-day maturities utilized by~~loans evaluated for impairment decreased $15.1 million at June 30, 2023 compared to December 31, 2022 and was primarily related to 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.real estate loans.

~~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 6.5. 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.

~~Table of Contents~~

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.

Table of Contents

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~~six months ended ~~September~~June 30, ~~2022~~2023 or year ended December 31, ~~2021.~~2022.

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

~~Table of Contents~~


	Fair Value Hierarchy	June 30, 2023		December 31, 2022
(Dollars in thousands)

Securities:
Available-for-Sale Debt Securities
U.S. Government Agencies	Level 2	$	45,382	$	44,634
Obligations of States and Political Subdivisions	Level 2	13,212		13,342
Mortgage-Backed Securities - Government-Sponsored Enterprises	Level 2	38,408		41,427
Collateralized Mortgage Obligations - Government Sponsored Enterprises	Level 2	74,699		79,642
Corporate Debt	Level 2	7,360		8,315
Total Available-for-Sale Debt Securities		179,061		187,360

Equity Securities
Mutual Funds	Level 1	875		875
Other	Level 1	1,491		1,823
Total Equity Securities		2,366		2,698
Total Securities		$	181,427	$	190,058

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

Financial Asset

Fair Value Hierarchy

June 30,
2023

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%

OREO

Level 3

122

Appraisal of Collateral (1)

Liquidation Expenses (2)

36.6%

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%

Financial Asset

Fair Value Hierarchy

December 31,
2022

Valuation
Techniques

Significant Unobservable Inputs

Range

Weighted Average

(Dollars in thousands)

Individually Evaluated Loans

Level 3

1,591

Appraisal of Collateral (1)

Appraisal Adjustments (2)

7.2%

(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~~

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Expected credit losses on individually evaluated loans deemed to be collateral dependent are ~~evaluated when a loan is identified as impaired and~~ valued atbased upon the lower of amortized cost or fair value ~~at that time. Impaired loans that are~~of the underlying collateral ~~dependent are written down~~less costs to ~~fair value through the establishment of specific reserves.~~sell. 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~~June 30, ~~2022 and~~2023, the Company did not have any loans that would be required to be remeasured. At December 31, ~~2021,~~2022, the fair value of ~~impaired~~individually evaluated loans ~~consists~~consisted of ~~the~~ loan balances of ~~$2.1~~$1.6 million ~~and $2.3 million, respectively,~~ less their specific valuation allowances of ~~$214,000 and $299,000, respectively.~~$24,000.

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. At June 30, 2023 and December 31, 2022, the Company did not have any MSRs that would be required to be remeasured.

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.

~~Table of Contents~~

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


			September 30, 2022				December 31, 2021						June 30, 2023				December 31, 2022
		Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value			Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
(Dollars in thousands)	(Dollars in thousands)										(Dollars in thousands)

Financial Assets:	Financial Assets:										Financial Assets:
Cash and Due From Banks:	Cash and Due From Banks:										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
Interest-Earning											Interest-Earning	Level 1	$	60,287	$	60,287	$	82,957	$	82,957
Noninterest-Earning											Noninterest-Earning	Level 1	17,806		17,806		20,743		20,743
Securities	Securities	See Above	193,846		193,846		224,974		224,974		Securities	See Above	181,427		181,427		190,058		190,058

Loans, Net	Loans, Net	Level 3	1,030,088		1,002,426		1,009,214		1,039,980		Loans, Net	Level 3	1,090,488		1,051,815		1,037,054		1,011,098

Restricted Stock	Restricted Stock	Level 2	2,784		2,784		3,403		3,403		Restricted Stock	Level 2	3,252		3,252		2,749		2,749
Mortgage Servicing Rights	Mortgage Servicing Rights	Level 3	658		1,019		730		773		Mortgage Servicing Rights	Level 3	585		998		633		1,000
Accrued Interest Receivable	Accrued Interest Receivable	Level 2	3,409		3,409		3,350		3,350		Accrued Interest Receivable	Level 2	4,544		4,544		3,983		3,983
Financial Liabilities:	Financial Liabilities:										Financial Liabilities:

Deposits	Deposits	Level 2	1,275,834		1,272,403		1,226,613		1,227,653		Deposits	Level 2	1,263,315		1,259,640		1,268,503		1,264,846
Short-Term Borrowings	Short-Term Borrowings	Level 2	18,108		18,099		39,266		39,266		Short-Term Borrowings	Level 2	—		—		8,060		8,060
Other Borrowed Funds	Other Borrowed Funds										Other Borrowed Funds
FHLB Borrowings	FHLB Borrowings	Level 2	3,000		3,000		3,000		3,000		FHLB Borrowings	Level 2	20,000		19,922		—		—
Subordinated Debt	Subordinated Debt	Level 2	14,627		13,490		14,601		15,000		Subordinated Debt	Level 2	14,658		12,355		14,638		13,490
Accrued Interest Payable	Accrued Interest Payable	Level 2	515		515		486		486		Accrued Interest Payable	Level 2	1,318		1,318		355		355

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Note 7.6. 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.

~~Table of Contents~~

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			June 30, 2023		December 31, 2022
(Dollars in thousands)	(Dollars in thousands)					(Dollars in thousands)

Standby Letters of Credit	Standby Letters of Credit	$	110	$	110	Standby Letters of Credit	$	110	$	110
Performance Letters of Credit	Performance Letters of Credit	1,657		2,873		Performance Letters of Credit	838		1,064
Construction Mortgages	Construction Mortgages	39,631		55,597		Construction Mortgages	43,464		45,722
Personal Lines of Credit	Personal Lines of Credit	6,992		7,055		Personal Lines of Credit	7,355		6,824
Overdraft Protection Lines	Overdraft Protection Lines	5,402		5,709		Overdraft Protection Lines	4,947		5,241
Home Equity Lines of Credit	Home Equity Lines of Credit	23,526		21,187		Home Equity Lines of Credit	23,459		22,784
Commercial Lines of Credit	Commercial Lines of Credit	65,443		83,316		Commercial Lines of Credit	65,250		74,921
Total Commitments	Total Commitments	$	142,761	$	175,847	Total Commitments	$	145,423	$	156,666

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.

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Note 8.7. 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,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
(Dollars in thousands)	(Dollars in thousands)									(Dollars in thousands)

Operating Lease Expense	Operating Lease Expense	$	89	$	74	$	261	$	257	Operating Lease Expense	$	77	$	89	$	154	$	171
Short-Term Lease Expense	Short-Term Lease Expense	—		8		—		25		Short-Term Lease Expense	—		1		—		1
Variable Lease Expense	Variable Lease Expense	7		8		21		24		Variable Lease Expense	8		7		15		14
Total Lease Expense	Total Lease Expense	$	96	$	90	$	282	$	306	Total Lease Expense	$	85	$	97	$	169	$	186

~~Table of Contents~~


		September 30, 2022			December 31, 2021				June 30, 2023			December 31, 2022
(Dollars in thousands)	(Dollars in thousands)							(Dollars in thousands)

Operating Leases:	Operating Leases:							Operating Leases:
ROU Assets	ROU Assets	$	1,730		$	674		ROU Assets	$	1,801		$	1,926
Weighted Average Lease Term in Years	Weighted Average Lease Term in Years	8.71			7.33			Weighted Average Lease Term in Years	7.80			8.13
Weighted Average Discount Rate	Weighted Average Discount Rate	2.58		%	2.51		%	Weighted Average Discount Rate	2.87		%	2.87		%


	~~September~~June 30, ~~2022~~2023
(Dollars in thousands)

Maturity Analysis:
Due in One Year	$	~~328~~360
Due After One Year to Two Years	~~263~~331
Due After Two Years to Three Years	~~240~~233
Due After Three Years to Four Years	~~195~~236
Due After Four to Five Years	~~198~~225
Due After Five Years	~~915~~776
Total	$	~~2,139~~2,161
Less: Present Value Discount	~~234~~223
Lease Liabilities	$	~~1,905~~1,938

There were no new lease agreements entered into during the six months ended June 30, 2023. During the ~~nine~~six months ended ~~September~~June 30, 2022, the Company entered into a new lease agreement for the McMurray, PA branch, for a 10-year term ending March 31, 2032, as well as a new lease agreement for the Waynesburg branch, for a 5-year term ending July 31, 2027. ~~The increase to the operating Right of Use Asset and corresponding lease liability is approximately $1.3 million.~~

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Note 9.8. 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,					Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
(Dollars in thousands)	(Dollars in thousands)									(Dollars in thousands)

Non-Employee Compensation	Non-Employee Compensation	$	139	$	184	$	410	$	473	Non-Employee Compensation	$	151	$	139	$	302	$	270
Printing and Supplies	Printing and Supplies	63		55		190		218		Printing and Supplies	70		46		124		127
Postage	Postage	163		86		300		265		Postage	59		33		162		137
Telephone	Telephone	132		145		390		472		Telephone	124		119		268		258
Charitable Contributions	Charitable Contributions	39		45		120		80		Charitable Contributions	24		39		58		80
Dues and Subscriptions	Dues and Subscriptions	24		33		121		121		Dues and Subscriptions	43		39		121		97
Loan Expenses	Loan Expenses	209		86		459		288		Loan Expenses	90		124		147		250
Meals and Entertainment	Meals and Entertainment	33		31		101		91		Meals and Entertainment	27		38		41		68
Travel	Travel	43		27		116		77		Travel	52		34		106		73
Training	Training	10		5		41		29		Training	17		13		51		31
Bank Assessment	Bank Assessment	47		46		141		134		Bank Assessment	46		47		98		94
Insurance	Insurance	70		54		201		173		Insurance	83		69		156		131
Miscellaneous	Miscellaneous	91		106		309		409		Miscellaneous	109		98		207		221
Total Other Noninterest Expense	Total Other Noninterest Expense	$	1,063	$	903	$	2,899	$	2,830	Total Other Noninterest Expense	$	895	$	838	$	1,841	$	1,837

Table of Contents

Note ~~10.~~9. Segment and Related Information

At ~~September~~June 30, ~~2022,~~2023, 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.

~~Table of Contents~~

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

September 30, 2022
June 30, 2023												June 30, 2023
Assets	Assets	$	1,425,905	$	5,173	$	121,522	$	(126,680)	$	1,425,920	Assets	$	1,432,181	$	5,576	$	131,258	$	(136,282)	$	1,432,733
Liabilities	Liabilities	1,321,603		1,835		14,815		(19,039)		1,319,214		Liabilities	1,317,617		2,337		14,669		(18,479)		1,316,144
Stockholders' Equity	Stockholders' Equity	104,302		3,338		106,707		(107,641)		106,706		Stockholders' Equity	114,564		3,239		116,589		(117,803)		116,589

December 31, 2021
December 31, 2022												December 31, 2022
Assets	Assets	$	1,425,588	$	5,110	$	147,829	$	(153,048)	$	1,425,479	Assets	$	1,409,510	$	5,585	$	124,879	$	(131,036)	$	1,408,938
Liabilities	Liabilities	1,299,325		1,731		14,705		(23,406)		1,292,355		Liabilities	1,301,783		1,996		14,724		(19,720)		1,298,783
Stockholders' Equity	Stockholders' Equity	126,263		3,379		133,124		(129,642)		133,124		Stockholders' Equity	107,727		3,589		110,155		(111,316)		110,155

Three Months Ended September 30, 2022
Three Months Ended June 30, 2023												Three Months Ended June 30, 2023
Interest and Dividend Income	Interest and Dividend Income	$	12,267	$	1	$	1,246	$	(1,227)	$	12,287	Interest and Dividend Income	$	15,182	$	2	$	1,297	$	(1,278)	$	15,203
Interest Expense	Interest Expense	1,117		—		155		—		1,272		Interest Expense	3,926		—		157		—		4,083
Net Interest and Dividend Income	Net Interest and Dividend Income	11,150		1		1,091		(1,227)		11,015		Net Interest and Dividend Income	11,256		2		1,140		(1,278)		11,120
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
Provision for Credit Losses - Loans												Provision for Credit Losses - Loans	492		—		—		—		492
Recovery for Credit Losses - Unfunded Commitments												Recovery for Credit Losses - Unfunded Commitments	(60)		—		—		—		(60)
Net Interest and Dividend Income After Provision for Credit Losses												Net Interest and Dividend Income After Provision for Credit Losses	10,824		2		1,140		(1,278)		10,688
Noninterest Income (Loss)	Noninterest Income (Loss)	3,023		4,572		(136)		—		7,459		Noninterest Income (Loss)	810		1,545		(86)		—		2,269
Noninterest Expense	Noninterest Expense	22,806		3,074		13		—		25,893		Noninterest Expense	8,457		1,044		—		—		9,501
Undistributed Net Income of Subsidiary	Undistributed Net Income of Subsidiary	1,064		—		3,762		(4,826)		—		Undistributed Net Income of Subsidiary	357		—		1,656		(2,013)		—
Income Before Income Tax Expense (Benefit)	Income Before Income Tax Expense (Benefit)	8,974		1,502		6,925		(8,550)		8,851		Income Before Income Tax Expense (Benefit)	3,534		503		2,710		(3,291)		3,456
Income Tax Expense (Benefit)	Income Tax Expense (Benefit)	1,488		438		(169)		—		1,757		Income Tax Expense (Benefit)	600		146		(47)		—		699
Net Income	Net Income	$	7,486	$	1,064	$	7,094	$	(8,550)	$	7,094	Net Income	$	2,934	$	357	$	2,757	$	(3,291)	$	2,757

Six Months Ended June 30, 2023												Six Months Ended June 30, 2023
Interest and Dividend Income												Interest and Dividend Income	$	29,405	$	3	$	2,593	$	(2,553)	$	29,448
Interest Expense												Interest Expense	6,433		—		311		—		6,744
Net Interest and Dividend Income												Net Interest and Dividend Income	22,972		3		2,282		(2,553)		22,704
Provision for Credit Losses - Loans												Provision for Credit Losses - Loans	572		—		—		—		572
Recovery for Credit Losses - Unfunded Commitments												Recovery for Credit Losses - Unfunded Commitments	(60)		—		—		—		(60)
Net Interest and Dividend Income After Provision for Credit Losses												Net Interest and Dividend Income After Provision for Credit Losses	22,460		3		2,282		(2,553)		22,192
Noninterest Income (Loss)												Noninterest Income (Loss)	1,911		3,501		(332)		—		5,080
Noninterest Expense												Noninterest Expense	16,382		2,143		5		—		18,530
Undistributed Net Income of Subsidiary												Undistributed Net Income of Subsidiary	965		—		4,842		(5,807)		—
Income Before Income Tax Expense (Benefit)												Income Before Income Tax Expense (Benefit)	8,954		1,361		6,787		(8,360)		8,742
Income Tax Expense (Benefit)												Income Tax Expense (Benefit)	1,559		396		(128)		—		1,827
Net Income												Net Income	$	7,395	$	965	$	6,915	$	(8,360)	$	6,915

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

Three Months Ended September 30, 2021
Three Months Ended June 30, 2022												Three Months Ended June 30, 2022
Interest and Dividend Income												Interest and Dividend Income	$	10,940	$	2	$	1,255	$	(1,239)	$	10,958
Interest Expense												Interest Expense	640		—		155		—		795
Net Interest and Dividend Income												Net Interest and Dividend Income	10,300		2		1,100		(1,239)		10,163
Provision for Credit Losses												Provision for Credit Losses	3,784		—		—		—		3,784
Net Interest and Dividend Income After Provision for Credit Losses												Net Interest and Dividend Income After Provision for Credit Losses	6,516		2		1,100		(1,239)		6,379
Noninterest Income (Loss)												Noninterest Income (Loss)	903		1,369		(167)		—		2,105
Noninterest Expense												Noninterest Expense	7,420		985		5		—		8,410
Undistributed Net Income (Loss) of Subsidiary												Undistributed Net Income (Loss) of Subsidiary	273		—		(897)		624		—
Income Before Income Tax (Benefit) Expense												Income Before Income Tax (Benefit) Expense	272		386		31		(615)		74
Income Tax (Benefit) Expense												Income Tax (Benefit) Expense	(70)		113		(87)		—		(44)
Net Income												Net Income	$	342	$	273	$	118	$	(615)	$	118

Six Months Ended June 30, 2022												Six Months Ended June 30, 2022
Interest and Dividend Income	Interest and Dividend Income	$	10,768	$	1	$	1,311	$	(1,294)	$	10,786	Interest and Dividend Income	$	21,535	$	3	$	2,534	$	(2,498)	$	21,574
Interest Expense	Interest Expense	776		—		—		—		776		Interest Expense	1,208		—		310		—		1,518
Net Interest and Dividend Income	Net Interest and Dividend Income	9,992		1		1,311		(1,294)		10,010		Net Interest and Dividend Income	20,327		3		2,224		(2,498)		20,056
Provision for Loan Losses	Provision for Loan Losses	—		—		—		—		—		Provision for Loan Losses	3,784		—		—		—		3,784
Net Interest and Dividend Income After Provision for Loan Losses	Net Interest and Dividend Income After Provision for Loan Losses	9,992		1		1,311		(1,294)		10,010		Net Interest and Dividend Income After Provision for Loan Losses	16,543		3		2,224		(2,498)		16,272
Noninterest Income	Noninterest Income	975		1,195		28		—		2,198		Noninterest Income	1,680		3,166		(128)		—		4,718
Noninterest Expense	Noninterest Expense	8,750		1,020		3		—		9,773		Noninterest Expense	15,065		1,992		9		—		17,066
Undistributed Net Income of Subsidiary	Undistributed Net Income of Subsidiary	124		—		654		(778)		—		Undistributed Net Income of Subsidiary	834		—		955		(1,789)		—
Income Before Income Tax Expense		2,341		176		1,990		(2,072)		2,435
Income Tax Expense		393		52		7		—		452
Income Before Income Tax Expense (Benefit)												Income Before Income Tax Expense (Benefit)	3,992		1,177		3,042		(4,287)		3,924
Income Tax Expense (Benefit)												Income Tax Expense (Benefit)	540		343		(124)		—		759
Net Income	Net Income	$	1,948	$	124	$	1,983	$	(2,072)	$	1,983	Net Income	$	3,452	$	834	$	3,166	$	(4,287)	$	3,165

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

Table of Contents

Note ~~11.~~10. 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				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
Outstanding Options at December 31, 2022								Outstanding Options at December 31, 2022	283,748	$	24.52	5.6
Granted	Granted	89,465	25.79					Granted	68,975	21.63
Exercised	Exercised	(12,500)	22.25					Exercised	(2,000)	22.25
Forfeited	Forfeited	(12,858)	26.43					Forfeited	(2,600)	25.25
Outstanding Options at September 30, 2022		271,748	$	24.56	5.4
Outstanding Options at June 30, 2023								Outstanding Options at June 30, 2023	348,123	$	23.95	6.0

Exercisable Options at September 30, 2022		177,683	$	24.32	3.6
Exercisable Options at June 30, 2023								Exercisable Options at June 30, 2023	189,549	$	24.54	3.5

		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Service Period in Years				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
Nonvested Options at June 30, 2023								Nonvested Options at June 30, 2023	158,574	$	23.25	9.1

Summary of Significant Assumptions for Newly Issued Stock Options	Summary of Significant Assumptions for Newly Issued Stock Options							Summary of Significant Assumptions for Newly Issued Stock Options
Expected Term in Years	Expected Term in Years				6.5			Expected Term in Years				6.5
Expected Volatility	Expected Volatility				28.7		%	Expected Volatility				29.5		%
Expected Dividends	Expected Dividends				$	0.96		Expected Dividends				$	1.00
Risk Free Rate of Return	Risk Free Rate of Return				1.60		%	Risk Free Rate of Return				3.63		%
Weighted Average Grant Date Fair Value (per share)	Weighted Average Grant Date Fair Value (per share)				$	4.86		Weighted Average Grant Date Fair Value (per share)				$	4.37

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		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
Nonvested Restricted Stock at December 31, 2022						Nonvested Restricted Stock at December 31, 2022	64,125	$	24.32	4.3
Granted	Granted	21,765	26.07			Granted	24,975	21.66
Vested	Vested	(1,120)	19.14			Vested	(4,408)	26.00
Forfeited	Forfeited	(3,715)	24.01			Forfeited	(860)	24.36
Nonvested Restricted Stock at September 30, 2022		73,070	$	24.61	4.2
Nonvested Restricted Stock at June 30, 2023						Nonvested Restricted Stock at June 30, 2023	83,832	$	23.44	4.1

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~~$187,000 and ~~$169,000~~$149,000 for the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022. Stock based compensation was $361,000 and ~~$424,000 and $415,000~~$279,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021, respectively.~~2022.

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, total unrecognized compensation expense was ~~$386,945~~$650,000 and ~~$65,000,~~$430,000, respectively, related to stock options, and ~~$1.4~~$1.7 million and ~~$1.3~~$1.4 million, respectively, related to restricted stock awards.

Intrinsic value represents the amount by which the fair value of the underlying stock at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 exceeds the exercise price of the stock options. The intrinsic value of stock options was ~~$32,280~~$35,000 and ~~$296,000~~$25,000 at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, there were ~~362,175~~203,775 and ~~500,000~~333,335 shares available under the Plan to be issued in connection with the exercise of stock options, and ~~144,870~~81,510 and ~~200,000~~133,334 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.

Table of Contents

Note ~~12.~~11. 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.~~2022.

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”~~“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 1110 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.

~~Table of Contents~~

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~~June 30, ~~2022,~~2023, compared to the consolidated financial condition as of December 31, ~~2021~~2022 and the consolidated results of operations for the ~~nine~~three and six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~three and six months ended ~~September~~June 30, ~~2021.~~2022.

Table of Contents

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 similar 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.

~~Table of Contents~~

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							Three Months Ended						Six Months Ended
		September 30,													June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
(Dollars in thousands)	(Dollars in thousands)													(Dollars in thousands)

Interest Income (GAAP)	Interest Income (GAAP)	$	12,287		$	10,786		$	33,861		$	32,594		Interest Income (GAAP)	$	15,203		$	10,958		$	29,448		$	21,574
Adjustment to FTE Basis	Adjustment to FTE Basis	31			41			105			131			Adjustment to FTE Basis	35			34			65			71
Interest Income (FTE) (Non-GAAP)	Interest Income (FTE) (Non-GAAP)	12,318			10,827			33,966			32,725			Interest Income (FTE) (Non-GAAP)	15,238			10,992			29,513			21,645
Interest Expense (GAAP)	Interest Expense (GAAP)	1,272			776			2,792			2,673			Interest Expense (GAAP)	4,083			795			6,744			1,518
Net Interest Income (FTE) (Non-GAAP)	Net Interest Income (FTE) (Non-GAAP)	$	11,046		$	10,051		$	31,174		$	30,052		Net Interest Income (FTE) (Non-GAAP)	$	11,155		$	10,197		$	22,769		$	20,127

Net Interest Rate Spread (GAAP)	Net Interest Rate Spread (GAAP)	3.10		%	2.77		%	3.03		%	2.80		%	Net Interest Rate Spread (GAAP)	2.78		%	3.00		%	2.95		%	3.00		%
Adjustment to FTE Basis	Adjustment to FTE Basis	0.01			0.01			0.01			0.01			Adjustment to FTE Basis	0.01			0.01			0.01			0.01
Net Interest Rate Spread (FTE) (Non-GAAP)	Net Interest Rate Spread (FTE) (Non-GAAP)	3.11			2.78			3.04			2.81			Net Interest Rate Spread (FTE) (Non-GAAP)	2.79			3.01			2.96			3.01

Net Interest Margin (GAAP)	Net Interest Margin (GAAP)	3.29		%	2.88		%	3.17		%	2.92		%	Net Interest Margin (GAAP)	3.29		%	3.12		%	3.40		%	3.10		%
Adjustment to FTE Basis	Adjustment to FTE Basis	0.01			0.01			0.01			0.01			Adjustment to FTE Basis	0.01			0.01			0.01			0.01
Net Interest Margin (FTE) (Non-GAAP)	Net Interest Margin (FTE) (Non-GAAP)	3.30			2.89			3.18			2.93			Net Interest Margin (FTE) (Non-GAAP)	3.30			3.13			3.41			3.11

~~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~~

Table of ~~SBA guaranteed loans.~~Contents

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 %
cb financial services.jpg

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			June 30, 2023		December 31, 2022
(Dollars in thousands, except share and per share data)	(Dollars in thousands, except share and per share data)					(Dollars in thousands, except share and per share data)

Stockholders' Equity (GAAP)	Stockholders' Equity (GAAP)	$	106,706	$	133,124	Stockholders' Equity (GAAP)	$	116,589	$	110,155
Goodwill and Other Intangible Assets, Net	Goodwill and Other Intangible Assets, Net	(13,691)		(15,027)		Goodwill and Other Intangible Assets, Net	(12,354)		(13,245)
Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator)	Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator)	$	93,015	$	118,097	Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator)	$	104,235	$	96,910

Common Shares Outstanding (Denominator)	Common Shares Outstanding (Denominator)	5,096,672		5,260,672		Common Shares Outstanding (Denominator)	5,111,678		5,100,189

Book Value per Common Share (GAAP)	Book Value per Common Share (GAAP)	$	20.94	$	25.31	Book Value per Common Share (GAAP)	$	22.81	$	21.60

Tangible Book Value per Common Share (Non-GAAP)	Tangible Book Value per Common Share (Non-GAAP)	$	18.25	$	22.45	Tangible Book Value per Common Share (Non-GAAP)	$	20.39	$	19.00

Table of Contents

Consolidated Statements of Financial Condition Analysis

Assets

Total assets increased ~~$441,000,~~$23.8 million, or ~~0.03%~~1.7%, to $1.43 billion at ~~both September~~June 30, ~~2022 and~~2023 compared to $1.41 billion at December 31, ~~2021.~~2022.

Cash and Securities

•Cash and due from banks ~~increased $3.1~~decreased $25.6 million, or ~~2.6%~~24.7%, to ~~$122.8~~$78.1 million at ~~September~~June 30, ~~2022,~~2023, compared to ~~$119.7~~$103.7 million at December 31, ~~2021. The change is primarily~~2022, due to ~~an increase in deposits as further described below in the Liabilities section.~~loan growth.

•Securities decreased ~~$31.1~~$8.6 million, or ~~13.8%~~4.5%, to ~~$193.8~~$181.4 million at ~~September~~June 30, ~~2022,~~2023, compared to ~~$225.0~~$190.1 million at December 31, ~~2021. Current period activity included $26.8~~2022. The securities balance was primarily impacted by $8.1 million of ~~purchases,~~repayments on mortgage-backed and ~~$24.9 million of pay downs. The purchases were made to earn~~collateralized mortgage obligation securities and a ~~higher yield on excess cash. In addition, there was a $32.8 million~~$332,000 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~~value in the equity securities portfolio, which is primarily comprised of bank stocks.

~~Payroll Protection Program (“PPP”) Update~~

Loans, Allowance for Credit Losses (ACL) and Credit Quality

•~~PPP~~Total loans ~~decreased $23.8~~increased $51.3 million, or 4.9%, to ~~$768,000~~$1.10 billion at ~~September~~June 30, ~~2022~~2023 compared to ~~$24.5~~$1.05 billion at December 31, 2022. Loan growth was driven by increases in commercial and industrial loans, commercial real estate and residential mortgages of $32.2 million, $21.8 million, and $7.8 million, respectively, partially offset by a decrease in consumer loans of $12.1 million. Growth in commercial and industrial loans included the purchase of $8.9 million of syndicated loans.

•The ACL - Loans was $10.7 million at June 30, 2023 and $12.8 million at December 31, ~~2021 as~~2022. As a result, the ACL - Loans to total loans was 0.97% at June 30, 2023 compared to 1.22% at December 31, 2022. The change in the ACL -Loans was primarily due to the Company's adoption of ~~forgiveness~~CECL. At adoption, the Company decreased its ACL - Loans by $3.4 million. Contributing to the change in ACL - Loans was a prior year charge-off of $2.7 million and ~~repayments.~~qualitative factors that significantly impacted the incurred loss model driven by historical activity compared to the newly adopted CECL methodology that is centered around using a forecast approach.

•$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 $130,000Net charge-offs 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,~~2023 were $96,000, 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%0.04% of average loans on an annualized basis. Net charge-offs for the ~~nine~~three months ended ~~September~~June 30, 2022 were $2.5 million, or ~~0.33%~~1.01% of average loans on an annualized ~~basis.~~basis primarily due to the aforementioned $2.7 million charge-off of a commercial and industrial loan. Net recoveries for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2023 were ~~$10,000, and has an immaterial effect on ratios~~$660,000 primarily due to recoveries totaling $750,000 related to the prior year charged-off loan. Net charge-offs for the ~~period.~~six months ended June 30, 2022 were $2.5 million.

•Nonperforming loans, which includes nonaccrual loans and accruing loans past due 90 days or more, ~~and accruing loans that are considered troubled debt restructurings,~~ were ~~$5.9~~$4.1 million at ~~September~~June 30, ~~2022~~2023 compared to ~~$7.3~~$5.8 million at December 31, ~~2021. Current nonperforming~~2022. The decrease of $1.7 million was due to ten loans totaling $1.7 million being moved from nonaccrual to accrual status during the current period. Nonperforming loans to total loans ratio was ~~0.56%~~0.37% at June 30, 2023 compared to ~~0.71%~~0.55% at December 31, ~~2021.~~2022.

Other

•Intangible ~~Assets~~assets decreased ~~$1.3 million,~~$891,000, or ~~24.6%~~25.6%, to ~~$4.0~~$2.6 million at ~~September~~June 30, ~~2022~~2023 compared to ~~$5.3~~$3.5 million at December 31, ~~2021~~2022 primarily due to amortization expense recognized during the period.

•Accrued interest ~~receivable~~ and other assets increased ~~$8.8~~$5.6 million, or ~~68.4%;~~26.8%, to ~~$21.7~~$26.7 million at ~~September~~June 30, ~~2022,~~2023, compared to ~~$12.9~~$21.1 million at December 31, ~~2021. This change~~2022 due to the sale of a $2.0 million syndicated loan which was sold but not yet settled at the end of the period, and increases in accounts receivable for Exchange Underwriters, income taxes receivable and BOLI death benefit claims receivable $853,000, $761,000 and $664,000.

Liabilities

Total liabilities increased $17.4 million, or 1.3%, to $1.32 billion at June 30, 2023 compared to $1.30 billion at December 31, 2022.

Deposits

•Total deposits decreased $5.2 million to $1.26 billion as of June 30, 2023 compared to $1.27 billion at December 31, 2022. Interest-bearing demand deposits increased $62.8 million and time deposits increased $60.4 million, while non interest-bearing demand deposits decreased $74.3 million, money market deposits decreased $23.3 million and savings deposits decreased $30.8 million. The increase in interest-bearing demand deposits is primarily ~~driven by deferred taxes as a~~the result of ~~the increase in market~~higher interest rates ~~conditions and~~attracting more customers and/or additional deposits from existing customers while higher time deposits resulted from the ~~corresponding decrease in the market value~~offering of ~~the mostly fixed rate~~a higher-rate certificate of deposit product. FDIC insured deposits totaled approximately 61.1% of total deposits while an additional 16.5% of deposits were collateralized with investment securities ~~portfolio.~~at June 30, 2023.

Table of Contents

Borrowings

•Long-term borrowings increased $20.0 million, or 136.6%, to $34.7 million at June 30, 2023, compared to $14.6 million at December 31, 2022. During the second quarter, the Bank entered into $20.0 million of FHLB advances for a term of 24 months at 4.92%, the proceeds of which were utilized to match fund originations within the Bank's commercial and industrial loan portfolio.

•Short-term borrowings decreased $8.1 million, or 100.0%, as there were no short-term borrowings at June 30, 2023, compared to $8.1 million at December 31, 2022. At December 31, 2022, short-term borrowings were comprised entirely of securities sold under agreements to repurchase. These accounts were transitioned into other deposit products and account for a portion of the interest-bearing demand deposit increase.

Accrued Interest Payable and Other Liabilities

•Accrued interest payable and other liabilities increased $10.6 million, or 139.8%, to $18.2 million at June 30, 2023, compared to $7.6 million at December 31, 2022 primarily due to the purchase of $8.9 million of syndicated loans which were unfunded at the end of the period.

Stockholders’ Equity

Stockholders’ equity increased $6.4 million, or 5.8%, to $116.6 million at June 30, 2023, compared to $110.2 million at December 31, 2022.

•Net income was $6.9 million for the six months ended June 30, 2023.

•The Company declared and paid $2.6 million in dividends to common stockholders in the current period.

•The Company's January 1, 2023 adoption of CECL resulted in a $2.1 million positive adjustment to stockholders' equity, net of tax.

•On April 21, 2022, a $10.0 million repurchase program was authorized, with the Company repurchasing 74,656 shares at an average price of $22.38 per share since the inception of the plan. In total, the Company repurchased $274,000 of common stock since December 31, 2022. The plan expired May 1, 2023.

•Book value per share (GAAP) was $22.81 at June 30, 2023 compared to $21.60 at December 31, 2022, an increase of $1.21. Tangible book value per share (Non-GAAP) increased $1.39, or 7.3%, to $20.39 compared to $19.00 at December 31, 2022. Refer to Explanation of Use of Non-GAAP Financial Measures in this Report.

Table of Contents

~~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~~June 30, ~~2022~~2023 and ~~2021~~2022

Overview. Net income was ~~$3.9~~$2.8 million for the three months ended ~~September~~June 30, ~~2022,~~2023, an increase of ~~$1.9~~$2.6 million compared to net income of ~~$2.0 million~~$118,000 for the three months ended ~~September~~June 30, ~~2021.~~2022.

Net Interest and Dividend Income. Net interest and dividend income increased $1.0 million, or ~~10.0%~~9.4%, to ~~$11.0~~$11.1 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$10.0~~$10.2 million for the three months ended ~~September~~June 30, ~~2021.~~2022. Net interest margin (GAAP) increased to 3.29% for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~2.88%~~3.12% for the three months ended ~~September~~June 30, ~~2021. Net~~2022. Fully Tax Equivalent (FTE) net interest margin ~~(FTE)~~ (Non-GAAP) increased 4117 basis points (bps) to 3.30% for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~2.89%~~3.13% for the three months ended ~~September~~June 30, ~~2021.~~2022.

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~~$4.2 million, or ~~13.9%~~38.7%, to ~~$12.3~~$15.2 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$10.8~~$11.0 million the three months ended ~~September~~June 30, ~~2021.~~2022.

◦Interest income on loans increased ~~$1.1~~$3.7 million, or ~~11.3%~~37.9%, to ~~$10.8~~$13.4 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to $9.7 million for the three months ended ~~September~~June 30, ~~2021.~~2022. The average balance of loans increased ~~$19.9~~$71.5 million to ~~$1.02~~$1.08 billion from ~~$1.00~~$1.01 billion, generating $724,000 of additional interest income on loans, and the average yield increased 35112 bps to ~~4.20%~~5.00% compared to ~~3.85%.~~

~~Table of Contents~~

◦~~Interest and fee~~3.88% causing a $3.0 million increase in interest 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.loans.

◦Interest income on ~~taxable investment securities~~interest-earning deposits at other banks increased ~~$142,000, or 16.8%,~~$599,000, to ~~$985,000~~$721,000 for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$843,000~~$122,000 for the three months ended ~~September~~June 30, ~~2021 driven~~2022 as the average yield increased 443 bps, partially offset by a ~~$24.3~~decrease of $1.9 million in average balances. The increase in the average ~~balance coupled with a 6 bps increased in average yield.~~yield was the result of the Federal Reserve Board's interest rate increases.

Interest Expense

•Interest expense increased ~~$496,000,~~$3.3 million, or ~~63.9%~~413.6%, to ~~$1.3~~$4.1 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$776,000~~$795,000 for the three months ended ~~September~~June 30, ~~2021.~~2022.

◦Interest expense on deposits increased ~~$364,000,~~$3.2 million, or ~~50.9%~~536.1%, to ~~$1.1~~$3.8 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$715,000~~$604,000 for the three months ended ~~September~~June 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~~2022. Rising market interest rates led to the repricing of ~~higher-cost~~interest-bearing demand and money market deposits and a shift in deposits from non interest-bearing to interest-bearing demand and time deposits and resulted in a 19137 bps, or ~~59.9%~~466.9%, increase in the average cost of interest-bearing deposits compared to the three months ended ~~September~~June 30, ~~2021. In addition, the average balance of time deposits and the related average cost decreased $45.2~~2022. This accounted for a $3.2 million ~~and 11 bps, respectively. These decreases are partially offset by an~~ increase in ~~average other borrowings of $11.6~~interest expense. Additionally, interest-bearing deposit balances increased $104.5 million, or ~~193.7%~~12.7%, to ~~$17.6~~$930.1 million as of ~~September~~June 30, ~~2022~~2023 compared to ~~$6.0~~$825.6 million as of ~~September~~June 30, ~~2021, which was driven by an~~2022, accounting for a $70,000 increase in ~~subordinated debt balance.~~

interest expense.

Table of Contents

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,													Three Months Ended June 30,
		2022						2021							2023						2022
		Average Balance		Interest and Dividends		Yield/ Cost (1)		Average Balance		Interest and Dividends		Yield/ Cost (1)			Average Balance		Interest and Dividends		Yield/ Cost (1)		Average Balance		Interest and Dividends		Yield/ Cost (1)
(Dollars in thousands) (Unaudited)	(Dollars in thousands) (Unaudited)													(Dollars in thousands) (Unaudited)

Assets:	Assets:													Assets:
Interest-Earning Assets:	Interest-Earning Assets:													Interest-Earning Assets:
Loans, Net (2)	Loans, Net (2)	$	1,024,363	$	10,833	4.20	%	$	1,004,474	$	9,740	3.85	%	Loans, Net (2)	$	1,079,399	$	13,450	5.00	%	$	1,007,874	$	9,751	3.88	%
Debt Securities	Debt Securities													Debt Securities
Taxable	Taxable	222,110		985		1.77		197,763		843		1.71		Taxable	209,292		950		1.82		228,315		988		1.73
Exempt From Federal Tax	Exempt From Federal Tax	7,998		62		3.10		11,647		90		3.09		Exempt From Federal Tax	6,180		53		3.43		9,109		73		3.21
Equity Securities	Equity Securities	2,693		21		3.12		2,655		19		2.86		Equity Securities	2,693		25		3.71		2,693		20		2.97
Interest Bearing Deposits at Banks		67,870		378		2.23		160,935		92		0.23
Interest-Earning Deposits at Banks														Interest-Earning Deposits at Banks	54,466		721		5.30		56,379		122		0.87
Other Interest-Earning Assets	Other Interest-Earning Assets	2,784		39		5.56		3,512		43		4.86		Other Interest-Earning Assets	2,783		39		5.62		3,235		38		4.71
Total Interest-Earning Assets	Total Interest-Earning Assets	1,327,818		12,318		3.68		1,380,986		10,827		3.11		Total Interest-Earning Assets	1,354,813		15,238		4.51		1,307,605		10,992		3.37
Noninterest-Earning Assets	Noninterest-Earning Assets	68,796						88,291						Noninterest-Earning Assets	51,928						84,323
Total Assets	Total Assets	$	1,396,614					$	1,469,277					Total Assets	$	1,406,741					$	1,391,928

Liabilities and Stockholders' Equity:	Liabilities and Stockholders' Equity:													Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:	Interest-Bearing Liabilities:													Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits ~~(3)~~	Interest-Bearing Demand Deposits ~~(3)~~	$	278,412	393		0.56	%	$	275,411	48		0.07	%	Interest-Bearing Demand Deposits ~~(3)~~	$	354,497	1,582		1.79	%	$	260,655	111		0.17	%
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
Savings Accounts														Savings Accounts	225,175		53		0.09		248,356		20		0.03
Money Market Accounts														Money Market Accounts	194,565		1,033		2.13		188,804		61		0.13
Time Deposits ~~(3)~~	Time Deposits ~~(3)~~	123,438		397		1.28		168,654		591		1.39		Time Deposits ~~(3)~~	155,867		1,174		3.02		127,832		412		1.29
Total Interest-Bearing Deposits ~~(3)~~	Total Interest-Bearing Deposits ~~(3)~~	842,369		1,079		0.51		894,033		715		0.32		Total Interest-Bearing Deposits ~~(3)~~	930,104		3,842		1.66		825,647		604		0.29
Short-Term Borrowings	Short-Term Borrowings													Short-Term Borrowings	480		3		2.51		34,135		18		0.21
Securities Sold Under Agreements to Repurchase		28,738		19		0.26		40,818		25		0.24
Other Borrowings	Other Borrowings	17,621		174		3.92		6,000		36		2.38		Other Borrowings	21,026		238		4.54		17,611		173		3.94
Total Interest-Bearing Liabilities	Total Interest-Bearing Liabilities	888,728		1,272		0.57		940,851		776		0.33		Total Interest-Bearing Liabilities	951,610		4,083		1.72		877,393		795		0.36
Noninterest-Bearing Demand Deposits	Noninterest-Bearing Demand Deposits	390,658						387,746						Noninterest-Bearing Demand Deposits	326,262						391,975
Other Liabilities	Other Liabilities	2,636						8,019						Other Liabilities	10,920						4,415
Total Liabilities	Total Liabilities	1,282,022						1,336,616						Total Liabilities	1,288,792						1,273,783
Stockholders' Equity	Stockholders' Equity	114,592						132,661						Stockholders' Equity	117,949						118,145
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	1,396,614					$	1,469,277					Total Liabilities and Stockholders' Equity	$	1,406,741					$	1,391,928
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
Net Interest Income (FTE) (Non-GAAP) (3)														Net Interest Income (FTE) (Non-GAAP) (3)			$	11,155					$	10,197
Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)														Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)					2.79	%					3.01	%
Net Interest-Earning Assets (4)														Net Interest-Earning Assets (4)	$	403,203					$	430,212
Net Interest Margin (GAAP) (6))														Net Interest Margin (GAAP) (6))					3.29						3.12
Net Interest Margin (FTE) (Non-GAAP) (3)(6)														Net Interest Margin (FTE) (Non-GAAP) (3)(6)					3.30						3.13
Return on Average Assets (1)	Return on Average Assets (1)					1.12						0.54		Return on Average Assets (1)					0.79						0.03
Return on Average Equity (1)	Return on Average Equity (1)					13.60						5.93		Return on Average Equity (1)					9.38						0.40
Average Equity to Average Assets	Average Equity to Average Assets					8.20						9.03		Average Equity to Average Assets					8.38						8.49
Average Interest-Earning Assets to Average Interest-Bearing Liabilities	Average Interest-Earning Assets to Average Interest-Bearing Liabilities					149.41						146.78		Average Interest-Earning Assets to Average Interest-Bearing Liabilities					142.37						149.03
PPP Loans	PPP Loans	$	2,424	$	123	20.13		$	40,313	$	484	4.76		PPP Loans	$	38	$	1	10.56		$	5,546	$	144	10.41

(1)Annualized based on three months ended results.

(2) Net of the allowance for ~~loan~~credit 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)~~(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

~~(6)~~(5) 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)~~(6) Net interest margin represents annualized net interest income divided by average total interest-earning assets.

Table of Contents

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							Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022
		Increase (Decrease) Due to							Increase (Decrease) Due to
		Volume		Rate		Total			Volume		Rate		Total
(Dollars in thousands) (Unaudited)	(Dollars in thousands) (Unaudited)							(Dollars in thousands) (Unaudited)

Interest and Dividend Income:	Interest and Dividend Income:							Interest and Dividend Income:
Loans, net	Loans, net	$	192	$	901	$	1,093	Loans, net	$	724	$	2,975	$	3,699
Debt Securities:	Debt Securities:							Debt Securities:
Taxable	Taxable	111		31		142		Taxable	(87)		49		(38)
Exempt From Federal Tax	Exempt From Federal Tax	(28)		—		(28)		Exempt From Federal Tax	(25)		5		(20)
Marketable Equity Securities		—		2		2
Equity Securities								Equity Securities	—		5		5
Cash at Other Banks	Cash at Other Banks	(89)		375		286		Cash at Other Banks	(3)		602		599
Other Interest-Earning Assets	Other Interest-Earning Assets	(10)		6		(4)		Other Interest-Earning Assets	(5)		6		1
Total Interest-Earning Assets	Total Interest-Earning Assets	176		1,315		1,491		Total Interest-Earning Assets	604		3,642		4,246

Interest Expense:	Interest Expense:							Interest Expense:
Deposits	Deposits	(41)		405		364		Deposits	70		3,168		3,238
Short-Term Borrowings:
Securities Sold Under Agreements to Repurchase		(8)		2		(6)
Short-Term Borrowings								Short-Term Borrowings	(34)		19		(15)
Other Borrowings	Other Borrowings	104		34		138		Other Borrowings	37		28		65
Total Interest-Bearing Liabilities	Total Interest-Bearing Liabilities	55		441		496		Total Interest-Bearing Liabilities	73		3,215		3,288
Change in Net Interest and Dividend Income	Change in Net Interest and Dividend Income	$	121	$	874	$	995	Change in Net Interest and Dividend Income	$	531	$	427	$	958

Provision for ~~Loan~~Credit Losses. ~~There was no~~Effective January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The provision for ~~loan~~credit losses recorded for the three months ended ~~September~~June 30, 2023 was $432,000 and was required primarily due to loan growth coupled with a modeled slowdown in loan prepayment speeds. This compared to $3.8 million in provision for credit losses recorded for the three months ended June 30, 2022, ~~or September 30, 2021.~~primarily due to the charge-off of a $2.7 million commercial and industrial loan to a borrower that ceased operations.

Noninterest Income. Noninterest income increased ~~$541,000,~~$164,000, or ~~24.6%~~7.8%, to ~~$2.7~~$2.3 million for the three months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$2.2~~$2.1 million for the three months ended ~~September~~June 30, ~~2021. The~~2022. This increase was ~~largely due~~primarily related 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$142,000 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,~~commissions and a decrease in net ~~gain~~losses on ~~sale~~securities of ~~loans decreased $49,000 as there were no loans sold during the three months ended September 30, 2022.~~$99,000.

Noninterest Expense. Noninterest expense ~~decreased $946,000,~~increased $1.1 million, or ~~9.7%~~13.0%, to ~~$8.8~~$9.5 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$9.8~~$8.4 million for the three months ended ~~September~~June 30, ~~2021.~~2022. Salaries and benefits ~~decreased $48,000~~increased $692,000, or 15.2%, to $5.2 million primarily due to merit increases, revenue producing staff additions and ~~contracted services decreased $1.2 million~~associated $160,000 of recruiting costs, and $80,000 of severance costs related to ~~$288,000 for~~ the ~~three months ended September 30,~~discontinuation of indirect automobile lending. Data processing expense increased $272,000, or 61.0%, to $718,000, due to increased ongoing costs related to the fourth quarter 2022 ~~compared~~core conversion and equipment expense increased $101,000 or 55.5%, to ~~$1.4 million for~~$283,000, due to costs associated with the ~~three months ended September 30, 2021. This was a result~~implementation of ~~branch optimization initiatives completed in the prior year. These decreases were partially offset by an increase in occupancy expenses of $153,000.~~new interactive teller machines.

Income Taxes. Income tax expense was ~~$998,000~~$699,000 for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$452,000~~and income tax benefit of $44,000 for the three months ended ~~September~~June 30, ~~2021.~~2022. This change was primarily driven by an increase in pre-tax income ~~of $4.9~~to $3.5 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$2.4 million~~$74,000 for the three months ended ~~September~~June 30, ~~2021.~~2022.

Table of Contents

Results of Operations for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

Overview. Net income was ~~$7.1~~$6.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, an increase of ~~$2.5~~$3.8 million compared to ~~$4.6~~$3.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

Net Interest and Dividend Income. Net interest and dividend income increased ~~$1.1~~$2.6 million, or ~~3.8%~~13.2% to ~~$31.1~~$22.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$29.9~~$20.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Net interest margin (GAAP) increased to 3.40% for the six months ended June 30, 2023 compared to 3.10% for the six months ended June 30, 2022. Net interest margin (Non-GAAP FTE) increased 2530 bps to ~~3.18%~~3.41% for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~2.93%~~3.11% the ~~nine~~six months ended ~~September~~June 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.~~2022.

Interest and Dividend Income

•Interest and dividend income increased ~~$1.3~~$7.9 million, or ~~3.9%~~36.5%, to ~~$33.9~~$29.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$32.6~~$21.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

◦Interest income on loans increased ~~$298,000~~$6.5 million or ~~1.0%~~33.8% to ~~$30.1~~$25.8 million during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$29.8~~$19.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. Average loans ~~decreased $3.8~~increased $51.6 million, while the loan yield for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 increased 6106 bps to ~~3.98%~~4.92% compared to ~~3.92%~~3.86% for the ~~nine~~six months ended ~~September~~June 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.2022.

◦Interest income on ~~taxable investment securities~~interest-earning deposits at other banks increased ~~$754,000, or 35.5%,~~$1.4 million, to ~~$2.9~~$1.5 million for the ~~nine~~six months ended ~~September~~June 30, 2023 compared to $156,000 for the six months ended June 30, 2022 ~~compared to $2.1 million for~~as the ~~nine months ended September 30, 2021 driven by a $73.4 million~~average yield increased 420 bps, and average balances increased $6.6 million. The increase in the average ~~taxable investment securities balance and partially offset by a 17 bps decrease in average yield.~~yield was the result of the Federal Reserve Board's interest rate increases.

Interest Expense

•Interest expense increased ~~$119,000,~~$5.2 million, or ~~4.5%~~344.3%, to ~~$2.8~~$6.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$2.7~~$1.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

◦Interest expense on deposits ~~decreased $275,000,~~increased $5.2 million, or ~~11.0%~~459.6%, to ~~$2.2~~$6.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$2.5~~$1.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021. While average interest-bearing deposits decreased $55.0 million, rising~~2022. Rising market interest rates led to the repricing of ~~higher-cost~~interest-bearing demand and money market deposits and a shift in deposits from non interest-bearing to interest-bearing demand and time deposits and resulted in a 2113 bps ~~decrease~~increase in average cost of interest-bearing deposits compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021. In addition, the average balance of time deposits and the related average cost decreased $50.0~~2022. This accounted for a $5.1 million ~~and 22 bps, respectively. These decreases are partially offset by an 18 bps~~ increase in interest expense. Additionally, interest-bearing ~~demand deposit average cost as well as an~~deposits increased $76.1 million, or 9.1%, accounting for a $115,000 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.interest expense.

Table of Contents

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

~~Table of Contents~~

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,													Six Months Ended June 30,
		2022						2021							2023						2022
		Average Balance		Interest and Dividends		Yield/ Cost (1)		Average Balance		Interest and Dividends		Yield/ Cost (1)			Average Balance		Interest and Dividends		Yield/ Cost (1)		Average Balance		Interest and Dividends		Yield/ Cost (1)
(Dollars in thousands) (Unaudited)	(Dollars in thousands) (Unaudited)													(Dollars in thousands) (Unaudited)
Assets:	Assets:													Assets:
Interest-Earning Assets:	Interest-Earning Assets:													Interest-Earning Assets:
Loans, Net (2)	Loans, Net (2)	$	1,013,871	$	30,157	3.98	%	$	1,017,632	$	29,872	3.92	%	Loans, Net (2)	$	1,060,092	$	25,840	4.92	%	$	1,008,539	$	19,322	3.86	%
Debt Securities	Debt Securities													Debt Securities
Taxable	Taxable	222,132		2,878		1.73		148,718		2,124		1.90		Taxable	211,213		1,914		1.81		222,144		1,893		1.70
Tax Exempt	Tax Exempt	9,093		218		3.20		12,284		282		3.06		Tax Exempt	6,225		105		3.37		9,649		156		3.23
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
Equity Securities														Equity Securities	2,693		49		3.64		2,693		42		3.12
Interest-Earning Deposits at Banks														Interest-Earning Deposits at Banks	64,455		1,526		4.74		57,829		156		0.54
Other Interest-Earning Assets	Other Interest-Earning Assets	3,165		115		4.86		3,820		141		4.93		Other Interest-Earning Assets	2,709		79		5.88		3,358		76		4.56
Total Interest-Earning Assets	Total Interest-Earning Assets	1,312,167		33,966		3.46		1,372,192		32,725		3.19		Total Interest-Earning Assets	1,347,387		29,513		4.42		1,304,212		21,645		3.35
Noninterest-Earning Assets	Noninterest-Earning Assets	91,607						87,863						Noninterest-Earning Assets	50,159						103,201
Total Assets	Total Assets	$	1,403,774					$	1,460,055					Total Assets	$	1,397,546					$	1,407,413
Liabilities and Stockholders' Equity:	Liabilities and Stockholders' Equity:													Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:	Interest-Bearing Liabilities:													Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits ~~(3)~~	Interest-Bearing Demand Deposits ~~(3)~~	$	271,897	554		0.27	%	$	270,136	181		0.09	%	Interest-Bearing Demand Deposits ~~(3)~~	$	344,965	2,773		1.62	%	$	268,585	160		0.12	%
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
Savings Accounts														Savings Accounts	233,689		90		0.08		246,084		38		0.03
Money Market Accounts														Money Market Accounts	203,952		1,972		1.95		190,605		102		0.11
Time Deposits ~~(3)~~	Time Deposits ~~(3)~~	127,732		1,231		1.29		177,690		2,007		1.51		Time Deposits ~~(3)~~	128,659		1,511		2.37		129,914		834		1.29
Total Interest-Bearing Deposits ~~(3)~~	Total Interest-Bearing Deposits ~~(3)~~	837,608		2,214		0.35		892,574		2,489		0.37		Total Interest-Bearing Deposits ~~(3)~~	911,265		6,346		1.40		835,188		1,134		0.27
ST Borrowings
Securities Sold Under Agreements to Repurchase		33,553		56		0.22		43,745		72		0.22
Short-Term Borrowings														Short-Term Borrowings	910		5		1.11		36,000		37		0.21
Other Borrowings	Other Borrowings	17,612		522		3.96		6,396		112		2.34		Other Borrowings	17,850		393		4.44		17,608		347		3.97
Total Interest-Bearing Liabilities	Total Interest-Bearing Liabilities	888,773		2,792		0.42		942,715		2,673		0.38		Total Interest-Bearing Liabilities	930,025		6,744		1.46		888,796		1,518		0.34
Noninterest-Bearing Demand Deposits	Noninterest-Bearing Demand Deposits	388,964						374,865						Noninterest-Bearing Demand Deposits	344,203						388,103
Other Liabilities	Other Liabilities	5,177						8,293						Other Liabilities	6,959						6,468
Total Liabilities	Total Liabilities	1,282,914						1,325,873						Total Liabilities	1,281,187						1,283,367
Stockholders' Equity	Stockholders' Equity	120,860						134,182						Stockholders' Equity	116,359						124,046
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	1,403,774					$	1,460,055					Total Liabilities and Stockholders' Equity	$	1,397,546					$	1,407,413
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
Net Interest Income (FTE) (Non-GAAP) (3)														Net Interest Income (FTE) (Non-GAAP) (3)			$	22,769					$	20,127
Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)														Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)					2.96	%					3.01	%
Net Interest-Earning Assets (4)														Net Interest-Earning Assets (4)	$	417,362					$	415,416
Net Interest Margin (GAAP) (6)														Net Interest Margin (GAAP) (6)					3.40						3.10
Net Interest Margin (FTE) (Non-GAAP) (3)(6)														Net Interest Margin (FTE) (Non-GAAP) (3)(6)					3.41						3.11
Return on Average Assets (1)	Return on Average Assets (1)					0.68						0.42		Return on Average Assets (1)					1.00						0.45
Return on Average Equity (1)	Return on Average Equity (1)					7.85						4.59		Return on Average Equity (1)					11.98						5.15
Average Equity to Average Assets	Average Equity to Average Assets					8.61						9.19		Average Equity to Average Assets					8.33						8.81
Average Interest-Earning Assets to Average Interest-Bearing Liabilities	Average Interest-Earning Assets to Average Interest-Bearing Liabilities					147.64						145.56		Average Interest-Earning Assets to Average Interest-Bearing Liabilities					144.88						146.74
PPP Loans	PPP Loans	$	7,503	$	712	12.69		$	51,579	$	1,797	4.66		PPP Loans	$	69	$	4	11.69		$	10,085	$	589	11.78

(1)Annualized based on ~~nine~~six months ended results.

(2) Net of the allowance for ~~loan~~credit 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)~~(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

~~(6)~~(5) 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)~~(6) Net interest margin represents annualized net interest income divided by average total interest-earning assets.

Table of Contents

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							Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
		Increase (Decrease) Due to							Increase (Decrease) Due to
		Volume		Rate		Total			Volume		Rate		Total
(Dollars in thousands) (Unaudited)	(Dollars in thousands) (Unaudited)							(Dollars in thousands) (Unaudited)

Interest and Dividend Income:	Interest and Dividend Income:							Interest and Dividend Income:
Loans, net	Loans, net	$	(170)	$	455	$	285	Loans, net	$	989	$	5,529	$	6,518
Debt Securities:	Debt Securities:							Debt Securities:
Taxable	Taxable	958		(204)		754		Taxable	(98)		119		21
Exempt From Federal Tax	Exempt From Federal Tax	(77)		13		(64)		Exempt From Federal Tax	(58)		7		(51)
Marketable Equity Securities		1		—		1
Equity Securities								Equity Securities	—		7		7
Cash at Other Banks	Cash at Other Banks	(260)		551		291		Cash at Other Banks	19		1,351		1,370
Other Interest-Earning Assets	Other Interest-Earning Assets	(24)		(2)		(26)		Other Interest-Earning Assets	(17)		20		3
Total Interest-Earning Assets	Total Interest-Earning Assets	428		813		1,241		Total Interest-Earning Assets	835		7,033		7,868

Interest Expense:	Interest Expense:							Interest Expense:
Deposits	Deposits	(145)		(130)		(275)		Deposits	115		5,097		5,212
Short-Term Borrowings:
Securities Sold Under Agreements to Repurchase		(16)		—		(16)
Short-Term Borrowings								Short-Term Borrowings	(65)		33		(32)
Other Borrowings	Other Borrowings	295		115		410		Other Borrowings	4		42		46
Total Interest-Bearing Liabilities	Total Interest-Bearing Liabilities	134		(15)		119		Total Interest-Bearing Liabilities	54		5,172		5,226
Change in Net Interest and Dividend Income	Change in Net Interest and Dividend Income	$	294	$	828	$	1,122	Change in Net Interest and Dividend Income	$	781	$	1,861	$	2,642

Provision for ~~Loan~~Credit Losses. The provision for ~~loan~~credit losses was $572,000 for the six months ended June 30, 2023, and $3.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022, compared to a $1.2 million recovery for the nine months ended September 30, 2021.The~~2022.The increased provision for ~~loan~~credit losses for the six months ended June 30, 2022 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~~loan 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.who ceased operations.

Noninterest Income. Noninterest income ~~decreased $132,000,~~increased $362,000, or ~~1.7%~~7.7%, to ~~$7.5~~$5.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$7.6~~$4.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021. The decrease~~2022. This increase 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~~related to a ~~decline~~$303,000 increase in net gains 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 bybank-owned life insurance claims resulting from two death claims and an increase of ~~$537,000,~~$267,000, or ~~13.4%~~8.4%, in insurance commissions to ~~$4.5~~$3.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, compared to ~~$4.0~~$3.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 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~~Conversely, service fees decreased $193,000, or 17.8%, to $892,000 for six months ended ~~September~~June 30, 2023, compared to $1.1 million for the six months ended June 30, 2022 and the net loss on equity securities increased to $332,000 for the six months ended June 30, 2023 compared to $206,000 for the six months ended June 30, 2022, which was due to a decline of $126,000 in the ~~sale~~market value of ~~the land and buildings~~equity securities, comprised mainly of ~~the former Pioneer and Bellaire~~ bank ~~branches.~~stocks.

Noninterest Expense. Noninterest expense ~~decreased $7.0~~increased $1.5 million, or ~~21.3%~~8.6%, to ~~$25.9~~$18.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$32.9~~$17.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021. The primary drivers were decreases of~~2022. Salaries and benefits increased $1.2 million primarily due to revenue producing staffing additions, recruiting costs and ~~$2.3 million as previously noted~~severance related to the ~~writedown~~discontinuation of ~~fixed assets~~indirect automobile lending. Data processing expense increased $644,000 due to increased ongoing costs related to the fourth quarter 2022 core conversion and ~~intangible impairment~~equipment expense increased $109,000 due to costs associated with ~~branch consolidation and sale~~the implementation of new interactive teller machines. Conversely, contracted services decreased $354,000 due primarily to costs associated with project management of strategic initiatives ~~in 2021, respectively. In addition, salaries and benefits decreased~~during 2022.

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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~~$1.1 million to ~~$1.76~~$1.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$1.22 million~~$759,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. The change between the periods is consistent with the change in pre-tax income, as pre-tax income was ~~$8.9~~$8.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to pre-tax income of ~~$5.8~~$3.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

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 76 in the Notes to Consolidated Financial Statements of this report for a summary of commitments outstanding as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

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~~June 30, ~~2022~~2023 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~~$78.1 million at ~~September~~June 30, ~~2022.~~2023. 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~~$10.1 million at ~~September~~June 30, ~~2022.~~2023. In addition, at ~~September~~June 30, ~~2022,~~2023, the Company had the ability to borrow up to ~~$440.8~~$466.1 million from the FHLB of Pittsburgh, of which ~~$429.1~~$444.1 million is available. The Company also has the ability to borrow up to ~~$105.5 million~~$115.9 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~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022, currently these credit arrangements have remained unused.

At ~~September~~June 30, ~~2022, $76.9~~2023, $79.1 million, or ~~63.6%~~46.7% 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. The Bank's current deposit portfolio is 61.1% insured by the FDIC, and with additional coverage of 16.5% from the Bank's investment securities; of the total deposits held at the Bank only 22.4% are uninsured.

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~~June 30, ~~2022,~~2023, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of ~~$16.6~~$16.0 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.

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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~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action. At ~~September~~June 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.2023.

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					June 30, 2023				December 31, 2022
		Amount		Ratio		Amount		Ratio			Amount		Ratio		Amount		Ratio
(Dollars in thousands)	(Dollars in thousands)									(Dollars in thousands)

Common Equity Tier 1 (to risk weighted assets)	Common Equity Tier 1 (to risk weighted assets)									Common Equity Tier 1 (to risk weighted assets)
Actual	Actual	$	117,868	12.02	%	$	113,086	11.95	%	Actual	$	129,044	12.54	%	$	121,188	12.33	%
For Capital Adequacy Purposes	For Capital Adequacy Purposes	44,139		4.50		42,571		4.50		For Capital Adequacy Purposes	46,307		4.50		44,221		4.50
To Be Well Capitalized	To Be Well Capitalized	63,756		6.50		61,491		6.50		To Be Well Capitalized	66,888		6.50		63,875		6.50

Tier 1 Capital (to risk weighted assets)	Tier 1 Capital (to risk weighted assets)									Tier 1 Capital (to risk weighted assets)
Actual	Actual	117,868		12.02		113,086		11.95		Actual	129,044		12.54		121,188		12.33
For Capital Adequacy Purposes	For Capital Adequacy Purposes	58,852		6.00		56,761		6.00		For Capital Adequacy Purposes	61,742		6.00		58,961		6.00
To Be Well Capitalized	To Be Well Capitalized	78,469		8.00		75,682		8.00		To Be Well Capitalized	82,323		8.00		78,615		8.00

Total Capital (to risk weighted assets)	Total Capital (to risk weighted assets)									Total Capital (to risk weighted assets)
Actual	Actual	130,136		13.27		124,668		13.18		Actual	140,368		13.64		133,478		13.58
For Capital Adequacy Purposes	For Capital Adequacy Purposes	78,469		8.00		75,682		8.00		For Capital Adequacy Purposes	82,323		8.00		78,615		8.00
To Be Well Capitalized	To Be Well Capitalized	98,086		10.00		94,602		10.00		To Be Well Capitalized	102,904		10.00		98,269		10.00

Tier 1 Leverage (to adjusted total assets)	Tier 1 Leverage (to adjusted total assets)									Tier 1 Leverage (to adjusted total assets)
Actual	Actual	117,868		8.51		113,086		7.76		Actual	129,044		9.26		121,188		8.66
For Capital Adequacy Purposes	For Capital Adequacy Purposes	55,407		4.00		58,307		4.00		For Capital Adequacy Purposes	55,732		4.00		55,969		4.00
To Be Well Capitalized	To Be Well Capitalized	69,258		5.00		72,884		5.00		To Be Well Capitalized	69,665		5.00		69,962		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

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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, 300 and ~~300~~400 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.~~scenarios.

The table below sets forth, as of ~~September~~June 30, ~~2022,~~2023, 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							EVE						EVE as a Percent of Portfolio Value of Assets				Net Interest Earnings at Risk
Change in Interest Rates in Basis Points	Change in Interest Rates in Basis Points	Dollar Amount		Dollar Change		Percent Change		NPV Ratio		Basis Point Change		Dollar Amount		Dollar Change		Percent Change		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)	(Dollars in thousands)																	(Dollars in thousands)

+400																		+400	$	127,446	$	(51,985)	(29.0)	%	10.59	%		(272)	$	46,003	$	(1,253)	(2.7)	%
+300	+300	$	204,778	$	(36,873)	(15.3)	%	15.92	%		(125)	$	46,260	$	946	2.1	%	+300	138,247		(41,184)		(23.0)		11.19			(212)	46,270		(986)		(2.1)
+200	+200	221,014		(20,637)		(8.5)	%	16.63			(54)	46,099		785		1.7		+200	151,447		(27,984)		(15.6)		11.92			(139)	46,610		(646)		(1.4)
+100	+100	238,932		(2,719)		(1.1)	%	17.38			21	45,930		616		1.4		+100	165,781		(13,650)		(7.6)		12.67			(64)	46,948		(308)		(0.7)
Flat	Flat	241,651		—		—	%	17.17			—	45,314		—		—		Flat	179,431		—		—		13.31			—	47,256		—		—
(100)	(100)	273,688		32,037		13.3	%	18.58			141	44,401		(913)		(2.0)		(100)	190,722		11,291		6.3		13.73			42	46,696		(560)		(1.2)
(200)																		(200)	197,755		18,324		10.2		13.84			53	45,613		(1,643)		(3.5)
(300)																		(300)	201,794		22,363		12.5		13.73			42	44,012		(3,244)		(6.9)
(400)																		(400)	198,716		19,285		10.7		13.20			(11)	42,811		(4,445)		(9.4)

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~~June 30, ~~2022.~~2023. 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~~June 30, ~~2022,~~2023, 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,~~2022, 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~~June 30, ~~2022.~~2023.

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



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
April 1-30, 2023	6,792	$	21.63	6,792	$	8,329,501
May 1-31, 2023	—	—		—	—
June 1-30, 2023	—	—		—	—
Total	6,792	$	21.63	6,792	$	—

(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~~$10.0 million of the Company's outstanding common stock. This repurchase ~~was set to expire~~program expired on May 1, 2023. In connection with the program, the Company purchased a total of ~~57,710~~74,656 shares of the Company's common stock at an average price of ~~$22.51~~$22.38 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~~June 30, ~~2022,~~2023, 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 (Loss), (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~~August 11, 2023	/s/ John H. Montgomery
		John H. Montgomery
		President and Chief Executive Officer

Date:	~~November 9, 2022~~August 11, 2023	/s/ Jamie L. Prah
		Jamie L. Prah
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Chief Accounting Officer)


	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


	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


	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