CB Financial Services(CBFV) - 2022 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The unaudited consolidated financial statements for June 30, 2022, detail financial position, operations, and cash flows, showing decreased assets and equity but increased net income Consolidated Statements of Financial Condition As of June 30, 2022, total assets decreased to $1.386 billion, with stockholders' equity significantly reduced due to increased comprehensive loss Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $1,386,461 | $1,425,479 | | Total Cash and Due From Banks | $81,121 | $119,674 | | Loans, Net | $1,015,136 | $1,009,214 | | Total Securities | $213,505 | $224,974 | | Total Liabilities | $1,272,689 | $1,292,355 | | Total Deposits | $1,215,190 | $1,226,613 | | Total Stockholders' Equity | $113,772 | $133,124 | | Accumulated Other Comprehensive Loss | ($17,428) | ($927) | Consolidated Statements of Income (Loss) For the six months ended June 30, 2022, net income increased to $3.165 million, despite a significant provision for loan losses in the quarter Key Income Statement Data (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $10,163 | $9,934 | $20,056 | $19,911 | | Provision (Recovery) For Loan Losses | $3,784 | ($1,200) | $3,784 | ($1,200) | | Total Noninterest Income | $2,105 | $2,219 | $4,718 | $5,393 | | Total Noninterest Expense | $8,410 | $13,722 | $17,066 | $23,117 | | Net Income (Loss) | $118 | ($223) | $3,165 | $2,622 | | Diluted EPS | $0.02 | ($0.04) | $0.61 | $0.48 | Consolidated Statements of Comprehensive (Loss) Income For the six months ended June 30, 2022, the company reported a total comprehensive loss of $13.336 million, driven by unrealized losses on securities Comprehensive (Loss) Income Summary (in thousands) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Income | $3,165 | $2,622 | | Other Comprehensive (Loss) Income, Net of Tax | ($16,501) | ($1,693) | | Total Comprehensive (Loss) Income | ($13,336) | $929 | Consolidated Statements of Changes In Stockholders' Equity Stockholders' equity decreased to $113.8 million by June 30, 2022, primarily due to other comprehensive loss and treasury stock purchases Reconciliation of Stockholders' Equity (Six Months Ended June 30, 2022, in thousands) | Description | Amount | | :--- | :--- | | Beginning Equity (Dec 31, 2021) | $133,124 | | Net Income | $3,165 | | Other Comprehensive Loss | ($16,501) | | Treasury stock purchased, at cost | ($3,988) | | Dividends Paid | ($2,474) | | Stock-Based Compensation & Options | $446 | | Ending Equity (June 30, 2022) | $113,772 | Consolidated Statements of Cash Flows Cash and cash equivalents decreased by $38.6 million for the six months ended June 30, 2022, due to investing and financing activities Summary of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $5,260 | $2,028 | | Net Cash Used in Investing Activities | ($19,007) | ($35,300) | | Net Cash (Used in) Provided by Financing Activities | ($24,806) | $44,371 | | (Decrease) Increase in Cash and Cash Equivalents | ($38,553) | $11,099 | Notes to the Consolidated Financial Statements The notes detail accounting policies, securities, loans, and fair value measurements, including CECL preparation and stable loan portfolio composition - The company is preparing to implement ASU 2016-13 (CECL) on January 1, 2023, and expects to recognize a one-time adjustment to the allowance for loan losses upon adoption, though the magnitude is not yet determined[27] Loan Portfolio Composition (in thousands) | Loan Type | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Residential Real Estate | $325,138 | $320,798 | | Commercial Real Estate | $426,105 | $392,124 | | Construction | $41,277 | $85,028 | | Commercial and Industrial | $65,907 | $89,010 | | Consumer | $148,921 | $122,152 | | Total Loans | $1,027,969 | $1,020,796 | Nonperforming Assets (in thousands) | Category | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Nonaccrual Loans | $3,895 | $4,963 | | Total Troubled Debt Restructurings, Accruing | $1,941 | $2,303 | | Total Nonperforming Loans | $5,836 | $7,266 | | Total Other Real Estate Owned | $0 | $36 | | Total Nonperforming Assets | $5,836 | $7,302 | | Nonperforming Loans to Total Loans | 0.57% | 0.71% | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and operations, noting a 2.7% decrease in total assets but increased net income despite a significant loan loss provision - Total assets decreased by $39.0 million (2.7%) to $1.39 billion at June 30, 2022, from year-end 2021, mainly due to a $38.6 million decrease in cash and due from banks[124] - A provision for loan losses of $3.8 million was recorded in Q2 2022, primarily due to a $2.7 million charge-off on a single commercial and industrial loan[143] - Noninterest expense for Q2 2022 decreased by $5.3 million (38.7%) year-over-year, driven by the absence of prior-year writedowns and impairments related to branch consolidation initiatives[145] Key Performance Ratios | Ratio | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net Interest Margin (GAAP) | 3.12% | 2.84% | | Return on Average Assets | 0.03% | (0.06)% | | Return on Average Equity | 0.40% | (0.66)% | Quantitative and Qualitative Disclosure about Market Risk The company manages interest rate risk, with models indicating a +200 basis point rate shock would increase NII by 9.8% and decrease EVE by 4.9% Interest Rate Risk Sensitivity Analysis (as of June 30, 2022) | Change in Interest Rates (Basis Points) | EVE Percent Change | Net Interest Income Percent Change | | :--- | :--- | :--- | | +300 | (7.8)% | +13.0% | | +200 | (4.9)% | +9.8% | | +100 | (2.2)% | +5.5% | | Flat | 0.0% | 0.0% | | (100) | (0.9)% | (5.6)% | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[172][175] - No material changes to the company's internal control over financial reporting occurred during the quarter ended June 30, 2022[176] PART II - OTHER INFORMATION Legal Proceedings The company is not involved in any pending legal proceedings expected to materially impact its financial condition or operations - The company reports no material pending legal proceedings[177] Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for 2021 have occurred - The report refers to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2021, indicating no material updates[178] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2022, the company repurchased 27,439 shares of common stock at $22.06 per share, with $9.4 million remaining in the program Common Stock Purchases (Q2 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | April 2022 | 0 | N/A | $10,000,000 | | May 2022 | 9,609 | $22.46 | $9,784,144 | | June 2022 | 17,830 | $21.84 | $9,394,786 | | Total | 27,439 | $22.06 | $9,394,786 | Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL financial statements - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL interactive data files (101, 104)[182]