Business Wire | Jul 29, 2021 08:30AM EDT

CB Financial Services, Inc. Announces Second Quarter and Year-to-Date 2021 Financial Results and Declares Quarterly Cash Dividend

Jul. 29, 2021

WASHINGTON, Pa.--(BUSINESS WIRE)--Jul. 29, 2021--CB Financial Services, Inc. ("CB" or the "Company") (NASDAQGM: CBFV), the holding company of Community Bank (the "Bank") and Exchange Underwriters, Inc. ("EU"), a wholly-owned insurance subsidiary of the Bank, today announced its second quarter and year-to-date 2021 financial results.

Three Months Ended Six Months Ended

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20

(Dollars inthousands,except per share data)(Unaudited)



Net (Loss) $ (223) $ 2,845 $ 3,079 $ (17,395) $ 2,903 $ 2,622 $ 3,676 Income (GAAP)

ExcludingNon-RecurringItems 3,440 (353) 40 19,337 (408) 3,087 (76) (Non-GAAP) ^(1)

Adjusted NetIncome $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 2,495 $ 5,709 $ 3,600 (Non-GAAP) ^(1)



(Loss)Earnings perCommon Share $ (0.04) $ 0.52 $ 0.57 $ (3.22) $ 0.54 $ 0.48 $ 0.68 - Diluted(GAAP)

AdjustedEarnings perCommon Share $ 0.59 $ 0.46 $ 0.58 $ 0.36 $ 0.46 $ 1.05 $ 0.66 - Diluted(Non-GAAP) ^(1)

(1) Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of net (loss) income and adjusted earnings per common share - diluted in this Press Release.

2021 Second Quarter Financial Highlights

(Comparisons to three months ended June 30, 2020)

* Net loss was $223,000, compared to net income of $2.9 million, largely due to the write-down of fixed assets and intangible assets impairment ($3.4 million including tax effect) relating to the Bank's previously announced branch optimization initiatives, which are excluded in the Company's adjusted financial results. Adjusted net income (non-GAAP) was $3.2 million, compared to adjusted net income of $2.5 million. * Loss per diluted common share (EPS) decreased to $0.04 from earnings per share of $0.54. Adjusted earnings per common share - diluted (non-GAAP) was $0.59, compared to $0.46. * Loss on average assets (annualized) of 0.06%, compared to return on average assets (annualized) of 0.85%. Adjusted return on average assets (annualized) (non-GAAP) of 0.87%, compared to 0.73%. * Loss on average equity (annualized) of 0.66%, compared return on average equity (annualized) to 7.65%. Adjusted return on average equity (annualized) (non-GAAP) of 9.57%, compared to 6.57%. * Net interest margin decreased to 2.84% from 3.28%. * Net interest and dividend income was $9.9 million, compared to $10.3 million. * Noninterest income was $2.2 million, compared to $2.6 million.

(Amounts at June 30, 2021; comparisons to December 31, 2020)

* Total loans including Payroll Protection Program ("PPP") loans and loans held for sale were $1.02 billion, a decrease of $25.9 million. * Total loans including loans held for sale and excluding PPP loans were $969.3 million, a decrease of $20.3 million. * Total deposits including deposits held for sale were $1.28 billion, an increase of $51.5 million. * Total assets increased to a record $1.46 billion, compared to $1.42 billion. * Book value per share was $24.50, compared to $24.76. * Tangible book value per share (Non-GAAP) increased to $21.56, compared to $21.42.

Branch Optimization and Operational Efficiency Update

CB continues to make progress related to the previously announced branch optimization and operational efficiency initiatives. These initiatives include the consolidation of six branches that was completed on June 30, 2021, the sale of two branches expected to be finalized in the fourth quarter of 2021 and implementation of operational efficiencies related to over 185 individualized processes within its branch network and operating environment that are designed to improve the Bank's infrastructure, client experience, efficiency and profitability.

CB presently expects to incur $7.9 million of non-recurring expenses in 2021 and, as of June 30, 2021, has incurred $5.1 million of expenses related to these items. The expenses include $2.3 million writedown on fixed assets and $1.2 million impairment of intangible assets associated with the branch consolidations and sales.

In addition, as part of CB's branch optimization and operational efficiency initiatives, the Company incurred $1.6 million of expenses related to contracted services, employee severance costs, branch lease impairment, professional fees, data processing fees, legal and other expenses.

The majority of the remaining expenses to be recognized in 2021 are related to the operational and revenue efficiency initiative of approximately $1.5 million that will be reflected in contracted services. CB anticipates savings from this initiative ranging from approximately $2.5 million to $3.5 million in 2022, as well as creating possible enhanced revenue and fee generating capacity in future years.

In addition, the Company expects an annual reduction in pre-tax operating expenses in 2021 of approximately $1.0 million, along with $3.0 million of ongoing pre-tax cost savings as a result of the branch optimization initiatives. The Company expects these ongoing savings to be incremental to net income beginning in 2022. This estimated cost excludes the favorable impact of the expected premium from sale of branches expected to be recognized in the fourth quarter of 2021 and currently estimated to be $5.1 million.

Management Commentary

President and CEO John H. Montgomery stated, "The Company reported an increase in adjusted net income during the period, which was largely driven by economic recovery in our core markets in Southwestern Pennsylvania and the Ohio Valley. We were pleased to have only a moderate decline in loan volumes during the recovery, with steady growth in commercial construction and stabilizing auto originations despite lower dealer supplies. Growing our lending business, while expanding core deposit relationships, continues to be a priority for the remainder of the year. We continue to capitalize on successful deposit gathering initiatives to further reduce our cost of funds. Given the current tightening NIM environment, we are hyper-focused on reducing costs and expenses at the bank."

Mr. Montgomery continued, "We remain focused on executing our previously-announced branch optimization initiatives to strengthen our franchise. This resulted in identifying six branches that were consolidated, as well as announcing a Purchase and Assumption Agreement to sell two West Virginia branches by the end of the year, which allows for Community Bank to focus on its core markets as well as improve our efficiency efforts. We have implemented a number of strategies to take advantage of the continued speed of digital adoption in banking, which will improve CB's ability to adapt to a changing consumer environment. We expect this to result in a more streamlined operating infrastructure, which we expect will help to drive better-than-peer operating returns for our shareholders in the future."

Dividend Information

The Company's Board of Directors has declared a $0.24 quarterly cash dividend per outstanding share of common stock, payable on or about August 31, 2021, to stockholders of record as of the close of business on August 20, 2021.

Stock Repurchase Program

On June 10, 2021, CB authorized a program to repurchase up to $7.5 million of the Company's outstanding common stock. The program is effective as of June 14, 2021 and authorized through June 13, 2022. As of July 23, 2021, the Company had expended $1.0 million to repurchase 45,462 shares at an average price of $22.38.

2021 Second Quarter Financial Review

Net Interest and Dividend Income

* Net interest and dividend income decreased $387,000, or 3.7%, to $9.9 million for the three months ended June 30, 2021 compared to $10.3 million for the three months ended June 30, 2020. * Net interest margin (FTE) (Non-GAAP) decreased 45 basis points ("bps") to 2.85% for the three months ended June 30, 2021 compared to 3.30% for the three months ended June 30, 2020. Net interest margin (GAAP) decreased to 2.84% for the three months ended June 30, 2021 compared to 3.28% for the three months ended June 30, 2020. While CB has further controlled its deposit cost structure as deposit balances increased and benefited from nonrenewal or repricing of higher cost time deposits, the net interest margin has decreased primarily due to the low interest rate environment decreasing yields on loans and securities. * Interest and dividend income decreased $907,000, or 7.7%, to $10.8 million for the three months ended June 30, 2021 compared to $11.7 million for the three months ended June 30, 2020. Interest income on loans decreased $641,000, or 6.1%, to $9.9 million for the three months ended June 30, 2021 compared to $10.6 million for the three months ended June 30, 2020. While average loans increased $2.9 million compared to the three months ended June 30, 2020, the average yield decreased 28 bps to 3.93%. Interest and fee income on PPP loans was $636,000 for the three months ended June 30, 2021 and contributed 3 bps to loan yield, compared to $316,000 for the three months ended June 30, 2020, which decreased loan yield 7 bps in the prior period. The impact of the accretion of the credit mark on acquired loan portfolios was $153,000 for the three months ended June 30, 2021 compared to $90,000 for the three months ended June 30, 2020, or 6 bps in the current period compared to 4 bps in the prior period. Interest income on taxable investment securities decreased $305,000, or 32.4%, to $635,000 for the three months ended June 30, 2021 compared to $940,000 for the three months ended June 30, 2020 driven by a $12.6 million decrease in average investment securities balances and 70 bps decrease in average yield. The Federal Reserve's pandemic-driven decision to drop the benchmark interest rate in 2020 resulted in significant calls of U.S. government agency securities and paydowns on mortgage-backed securities in the declining interest rate environment, which were replaced with lower-yielding securities or maintained in cash. Other interest and dividend income, which primarily consists of interest-bearing cash, increased $67,000, or 79.8% to $151,000 for the three months ended June 30, 2021 compared to $84,000 for the three months ended June 30, 2020. Average other interest-earning assets increased $149.4 million compared to the three months ended June 30, 2020 primarily from buildup of cash as a result of securities activity, PPP loan funds and government stimulus payments deposited with the Bank, although average yield declined 10 bps due to interest rate cuts on interest-earning cash deposits held at other financial institutions. * Interest expense decreased $520,000, or 37.0%, to $886,000 for the three months ended June 30, 2021 compared to $1.4 million for the three months ended June 30, 2020. Interest expense on deposits decreased $478,000, or 36.6%, to $827,000 for the three months ended June 30, 2021 compared to $1.3 million for the three months ended June 30, 2020. While average interest-earning deposits increased $47.9 million compared to the three months ended June 30, 2020, interest rate declines for all products driven by pandemic-related market interest rate cuts resulted in a 25 bp, or 40.6%, decrease in average cost compared to the three months ended June 30, 2020. In addition, average time deposits and the related average cost decreased $28.3 million and 31 bps, respectively.

Provision for Loan Losses

Provision for loan losses was a recovery of $1.2 million for the three months ended June 30, 2021 compared to a provision of $300,000 for the three months ended June 30, 2020. A $23.4 million decrease in net reservable loans in the current quarter, which excludes PPP loans and includes the reclassification of $11.4 million of loans to held for sale, along with a decrease in specific reserves on impaired loans and improvements in the economic and industry outlook contributed to the recovery in the current period.

Noninterest income

Noninterest income decreased $429,000, or 16.2%, to $2.2 million for the three months ended June 30, 2021, compared to $2.6 million for the three months ended June 30, 2020. The decrease was largely due to lower net gains on securities and loans compared to the prior period, offset by an increase in other income due to the recognition of a $269,000 valuation allowance adjustment on mortgage servicing rights in the prior period and increase in service fees.

Noninterest Expense

Noninterest expense increased $4.7 million, or 51.3%, to $13.7 million for the three months ended June 30, 2021 compared to $9.1 million for the three months ended June 30, 2020. The increase was largely due to the aforementioned $2.3 million writedown of fixed assets and $1.2 million intangible asset impairment associated with the branch consolidation and sale initiative, as well as $1.3 million of expenses incurred in the current quarter related to various other costs associated with strategic initiatives such as employee severance, contracted services, lease impairment, and legal and investment banker fees.

Statement of Financial Condition Review

Assets

Total assets increased $44.9 million, or 3.2%, to $1.46 billion at June 30, 2021, compared to $1.42 billion at December 31, 2020. The change is primarily due to higher cash and due from banks and securities.

* Cash and due from banks increased $11.1 million, or 6.9%, to $172.0 million at June 30, 2021, compared to $160.9 million at December 31, 2020. The change is primarily due to an increase in deposits as further described below in the Liabilities section. * Securities increased $63.1 million, or 43.4%, to $208.5 million at June 30, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $97.1 million of mortgage-backed securities and U.S. government agency securities purchases, $20.4 million of paydowns on mortgage-backed securities, and $11.9 million of mortgage-backed securities sales, which resulted in the recognition of a $225,000 gain on the sale of securities. The purchases were made to earn a higher yield on excess cash. The sales recognized gains on higher-interest securities with faster prepayment speeds. In addition, there was a $2.2 million decrease in the market value of the debt securities portfolio and a $233,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program ("PPP") Update

* PPP loans decreased $5.6 million to $49.5 million at June 30, 2021 compared to $55.1 million at December 31, 2020, which includes $34.6 million in originations in the current period offset by loan forgiveness. * $1.1 million of net PPP loan origination fees were unearned at December 31, 2020. Due to activity in the current period, $1.4 million of net PPP loan origination fees were unearned at June 30, 2021. $489,000 of net PPP loan origination fees were earned in the second quarter of 2021 compared to $535,000 for the three months ended March 31, 2021.

Loans and Credit Quality

* Total loans held for investment decreased $37.3 million to $1.01 billion at June 30, 2021. This includes the impact of reclassifying $11.4 million of loans to held for sale. Excluding the net decline of $5.6 million in PPP loans in the current period and including $11.4 million of held for sale loans, loans declined $20.3 million. * The allowance for loan losses was $11.5 million at June 30, 2021 compared to $12.8 million at December 31, 2020. There was a net recovery of $1.2 million of provision for loan losses in the current quarter. A $31.7 million decrease in net reservable loans in the current period, which excludes PPP loans and includes the reclassification of $11.4 million of loans to held for sale that do not require a reserve, as well as a decrease in specifically impaired loans and improving economic and industry conditions contributed to the net recovery in the current period. As a result, the allowance for loan losses to total loans was 1.15% at June 30, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.21% at June 30, 2021 compared to 1.29% at December 31, 2020. * Net recoveries for the three months ended June 30, 2021 were $19,000, or (0.01)% of average loans on an annualized basis. Net recoveries for the three months ended June 30, 2020 were $26,000, or (0.01)% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2021 were $27,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the six months ended June 30, 2020 were $19,000, or 0.00% of average loans on an annualized basis. * Nonperforming loans, which includes nonaccrual loans, accruing loans past due 90 days or more, and accruing loans that are considered troubled debt restructurings, were $15.4 million at June 30, 2021 compared to $14.5 million at December 31, 2020. Nonperforming loans to total loans ratio was 1.53% at June 30, 2021 compared to 1.39% at December 31, 2020. * There were nine loans in forbearance totaling $7.8 million at June 30, 2021 compared to 25 loans totaling $18.4 million at March 31, 2021, and 31 loans totaling $24.1 million at December 31, 2021. The remaining loans exit forbearance in July and have begun or are expected to begin making regularly scheduled payments.

Liabilities

Total liabilities increased $46.9 million, or 3.7%, to $1.33 billion at June 30, 2021 compared to $1.28 billion at December 31, 2020.

Deposits

* Total deposits, including deposits held for sale, increased $51.5 million to $1.28 billion as of June 30, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $44.0 million, $16.5 million and $12.9 million, respectively, partially offset by a decrease of $17.0 million in time deposits. IRS and stimulus-related payments totaled $29.9 million in the first quarter and the impact of the PPP loans that were originated and the proceeds of which were initially deposited at the Bank was approximately $28.7 million. Annualized deposit growth rate was 8.4% including IRS and PPP loan deposits. Average total deposits increased $54.9 million, primarily in noninterest and interest-bearing demand deposits, for the three months ended June 30, 2021 compared to the three months ended March 31, 2021.

Borrowed Funds

* Short-term borrowings decreased $2.0 million, or 4.9%, to $39.1 million at June 30, 2021, compared to $41.1 million at December 31, 2020. At June 30, 2021 and December 31, 2020, 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. $10.1 million was excluded from short-term borrowings at June 30, 2021 and reported as deposits held for sale. * Other borrowed funds decreased $2.0 million to $6.0 million at June 30, 2021 due to a Federal Home Loan Bank borrowing that matured in the current period.

Stockholders' Equity

Stockholders' equity decreased $2.0 million, or 1.5%, to $132.5 million at June 30, 2021, compared to $134.5 million at December 31, 2020. Accumulated other comprehensive income decreased $1.7 million primarily due to market interest rate conditions on the Bank's debt securities. In addition, the Company repurchased $561,000 of its common stock as part of its stock repurchase program.

Book value per share

Book value per share was $24.50 at June 30, 2021 compared to $24.76 at December 31, 2020, a decrease of $0.26. Tangible book value per share (Non-GAAP) increased $0.14 to $21.56 compared to $21.42 at December 31, 2020. Refer to "Explanation of Use of Non-GAAP Financial Measures" at the end of this Press Release.

About CB Financial Services, Inc.

CB Financial Services, Inc. is the bank holding company for Community Bank, a Pennsylvania-chartered commercial bank. Community Bank operates its branch network in southwestern Pennsylvania and West Virginia. Community Bank offers a broad array of retail and commercial lending and deposit services and provides commercial and personal insurance brokerage services through Exchange Underwriters, Inc., its wholly owned subsidiary.

For more information about CB Financial Services, Inc. and Community Bank, visit our website at www.communitybank.tv.

Statement About Forward-Looking Statements

Statements contained in this press release that are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and such forward-looking statements are subject to significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Act. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, 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, 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 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 that may be disclosed in the Company's periodic reports as filed with the Securities and Exchange Commission. 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.

CB FINANCIAL SERVICES, INC.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

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



SelectedFinancial 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20ConditionData

ASSETS

Cash and Due $ 172,010 $ 230,000 $ 160,911 $ 112,169 $ 131,403 From Banks

Securities 208,472 142,156 145,400 158,956 148,648

Loans Held 11,409 - - - - for Sale

Loans

Real Estate:

Residential 322,480 339,596 344,142 343,955 344,782

Commercial 360,518 370,118 373,555 353,904 350,506

Construction 85,187 77,714 72,600 69,178 58,295

Commercialand Industrial

Commercialand 70,666 68,551 71,717 73,287 79,057 Industrial

PPP 49,525 60,380 55,096 71,028 70,028

Consumer 106,404 111,650 113,854 117,364 117,145

Other 12,666 13,688 13,789 22,169 22,346

Total Loans 1,007,446 1,041,697 1,044,753 1,050,885 1,042,159

Allowance for (11,544) (12,725) (12,771) (13,780) (12,648) Loan Losses

Loans, Net 995,902 1,028,972 1,031,982 1,037,105 1,029,511

Premises andEquipment 795 - - - - Held for Sale

Premises andEquipment, 18,682 20,240 20,302 20,439 21,818 Net

Bank-OwnedLife 25,052 24,916 24,779 24,639 24,499 Insurance

Goodwill 9,732 9,732 9,732 9,732 28,425

Intangible 6,186 7,867 8,399 8,931 9,463 Assets, Net

AccruedInterest and 13,373 12,938 15,215 20,905 13,385 Other Assets

Total Assets $ 1,461,613 $ 1,476,821 $ 1,416,720 $ 1,392,876 $ 1,407,152





LIABILITIES

Deposits Held $ 102,557 $ - $ - $ - $ - for Sale

Deposits

Non-InterestBearing 368,452 377,137 340,569 335,287 341,180 DemandDeposits

InterestBearing 246,920 280,929 259,870 245,850 237,343 DemandAccounts

Money Market 176,824 198,975 199,029 188,958 184,726 Accounts

Savings 226,639 246,725 235,088 232,691 229,388 Accounts

Time Deposits 154,718 180,697 190,013 196,250 201,303

Total 1,173,553 1,284,463 1,224,569 1,199,036 1,193,940 Deposits



Short-Term 39,054 45,352 41,055 42,061 42,349 Borrowings

Other 6,000 6,000 8,000 11,000 11,000 Borrowings

AccruedInterest and 7,913 7,230 8,566 7,480 7,471 OtherLiabilities

Total 1,329,077 1,343,045 1,282,190 1,259,577 1,254,760 Liabilities



STOCKHOLDERS' $ 132,536 $ 133,776 $ 134,530 $ 133,299 $ 152,392 EQUITY

Three Months Ended

Six Months Ended

Selected Operating Data

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

6/30/21

6/30/20

Interest and Dividend Income

Loans, Including Fees

$

9,936

$

10,146

$

10,833

$

10,709

$

10,577

$

20,082

$

21,341

Securities:

Taxable

635

646

725

753

940

1,281

2,141

Tax-Exempt

74

78

78

79

106

152

212

Dividends

24

20

20

19

20

44

40

Other Interest and Dividend Income

151

98

99

96

84

249

322

Total Interest and Dividend Income

10,820

10,988

11,755

11,656

11,727

21,808

24,056

Interest Expense

Deposits

827

947

1,036

1,150

1,305

1,774

2,986

Short-Term Borrowings

24

23

25

28

39

47

84

Other Borrowings

35

41

60

62

62

76

132

Total Interest Expense

886

1,011

1,121

1,240

1,406

1,897

3,202

Net Interest and Dividend Income

9,934

9,977

10,634

10,416

10,321

19,911

20,854

(Recovery) Provision for Loan Losses

(1,200)

-

-

1,200

300

(1,200)

2,800

Net Interest and Dividend Income After (Recovery) Provision for Loan Losses

11,134

9,977

10,634

9,216

10,021

21,111

18,054

Noninterest Income:

Service Fees

614

546

560

554

487

1,160

1,092

Insurance Commissions

1,209

1,595

1,403

1,079

1,113

2,804

2,396

Other Commissions

173

165

105

76

188

338

298

Net Gain on Sales of Loans

31

86

388

435

441

117

568

Net Gain (Loss) on Securities

11

447

213

(59)

517

458

79

Net Gain on Purchased Tax Credits

17

18

16

15

16

35

31

Gain on sale of branches

-

-

-

-

-

-

-

Net (Loss) Gain on Disposal of Fixed Assets

(3)

-

(13)

(65)

-

(3)

17

Income from Bank-Owned Life Insurance

136

137

140

140

138

273

277

Other Income (Loss)

31

180

(34)

(2)

(252)

211

(238)

Total Noninterest Income

2,219

3,174

2,778

2,173

2,648

5,393

4,520

Noninterest Expense:

Salaries and Employee Benefits

5,076

4,894

5,126

5,124

4,828

9,970

9,559

Occupancy

1,024

710

606

759

699

1,734

1,432

Equipment

311

266

234

220

224

577

481

Data Processing

607

518

476

482

460

1,125

885

FDIC Assessment

249

250

344

172

163

499

321

PA Shares Tax

225

265

350

355

333

490

608

Contracted Services

750

687

577

531

562

1,437

940

Legal and Professional Fees

419

189

185

161

171

608

406

Advertising

193

140

178

148

155

333

338

Other Real Estate Owned (Income)

(26)

(38)

(39)

(12)

(1)

(64)

(18)

Amortization of Intangible Assets

503

532

532

532

532

1,035

1,064

Intangible Assets and Goodwill Impairment

1,178

-

-

18,693

-

1,178

-

Writedown of Fixed Assets

2,268

-

240

884

-

2,268

-

Other

945

982

916

919

945

1,927

2,058

Total Noninterest Expense

13,722

9,395

9,725

28,968

9,071

23,117

18,074

(Loss) Income Before Income Tax (Benefit) Expense

(369)

3,756

3,687

(17,579)

3,598

3,387

4,500

Income Tax (Benefit) Expense

(146)

911

608

(184)

695

765

824

Net (Loss) Income

$

(223)

$

2,845

$

3,079

$

(17,395)

$

2,903

$

2,622

$

3,676

Three Months Ended Six Months Ended

SelectedOperating 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20Data

Interest andDividend Income

Loans,Including $ 9,936 $ 10,146 $ 10,833 $ 10,709 $ 10,577 $ 20,082 $ 21,341 Fees

Securities:

Taxable 635 646 725 753 940 1,281 2,141

Tax-Exempt 74 78 78 79 106 152 212

Dividends 24 20 20 19 20 44 40

OtherInterest and 151 98 99 96 84 249 322 DividendIncome

TotalInterest and 10,820 10,988 11,755 11,656 11,727 21,808 24,056 DividendIncome

Interest Expense

Deposits 827 947 1,036 1,150 1,305 1,774 2,986

Short-Term 24 23 25 28 39 47 84 Borrowings

Other 35 41 60 62 62 76 132 Borrowings

TotalInterest 886 1,011 1,121 1,240 1,406 1,897 3,202 Expense

Net Interestand Dividend 9,934 9,977 10,634 10,416 10,321 19,911 20,854 Income

(Recovery)Provision (1,200) - - 1,200 300 (1,200) 2,800 for LoanLosses

Net Interestand DividendIncome After(Recovery) 11,134 9,977 10,634 9,216 10,021 21,111 18,054 Provisionfor LoanLosses

Noninterest Income:

Service Fees 614 546 560 554 487 1,160 1,092

Insurance 1,209 1,595 1,403 1,079 1,113 2,804 2,396 Commissions

Other 173 165 105 76 188 338 298 Commissions

Net Gain onSales of 31 86 388 435 441 117 568 Loans

Net Gain(Loss) on 11 447 213 (59) 517 458 79 Securities

Net Gain onPurchased 17 18 16 15 16 35 31 Tax Credits

Gain on sale - - - - - - - of branches

Net (Loss)Gain on (3) - (13) (65) - (3) 17 Disposal ofFixed Assets

Income fromBank-Owned 136 137 140 140 138 273 277 LifeInsurance

Other Income 31 180 (34) (2) (252) 211 (238) (Loss)

TotalNoninterest 2,219 3,174 2,778 2,173 2,648 5,393 4,520 Income

Noninterest Expense:

Salaries andEmployee 5,076 4,894 5,126 5,124 4,828 9,970 9,559 Benefits

Occupancy 1,024 710 606 759 699 1,734 1,432

Equipment 311 266 234 220 224 577 481

Data 607 518 476 482 460 1,125 885 Processing

FDIC 249 250 344 172 163 499 321 Assessment

PA Shares 225 265 350 355 333 490 608 Tax

Contracted 750 687 577 531 562 1,437 940 Services

Legal andProfessional 419 189 185 161 171 608 406 Fees

Advertising 193 140 178 148 155 333 338

Other RealEstate Owned (26) (38) (39) (12) (1) (64) (18) (Income)

Amortizationof 503 532 532 532 532 1,035 1,064 IntangibleAssets

IntangibleAssets and 1,178 - - 18,693 - 1,178 - GoodwillImpairment

Writedown of 2,268 - 240 884 - 2,268 - Fixed Assets

Other 945 982 916 919 945 1,927 2,058

TotalNoninterest 13,722 9,395 9,725 28,968 9,071 23,117 18,074 Expense

(Loss)IncomeBefore (369) 3,756 3,687 (17,579) 3,598 3,387 4,500 Income Tax(Benefit)Expense

Income Tax(Benefit) (146) 911 608 (184) 695 765 824 Expense

Net (Loss) $ (223) $ 2,845 $ 3,079 $ (17,395) $ 2,903 $ 2,622 $ 3,676 Income

Three Months Ended

Six Months Ended

Per Common Share Data

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

6/30/21

6/30/20

Dividends Per Common Share

$

0.24

$

0.24

$

0.24

$

0.24

$

0.24

$

0.48

$

0.48

(Loss) Earnings Per Common Share - Basic

(0.04)

0.52

0.57

(3.22)

0.54

0.48

0.68

(Loss) Earnings Per Common Share - Diluted

(0.04)

0.52

0.57

(3.22)

0.54

0.48

0.68

Adjusted Earnings Per Common Share - Diluted (1)

0.59

0.46

0.58

0.36

0.46

1.05

0.66

Weighted Average Common Shares Outstanding - Basic

5,432,234

5,434,374

5,404,874

5,395,342

5,393,712

5,433,298

5,412,456

Weighted Average Common Shares Outstanding - Diluted

5,432,234

5,436,881

5,406,068

5,395,342

5,393,770

5,438,401

5,423,770

Three Months Ended Six Months Ended

Per Common 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20Share Data

DividendsPer Common $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.48 $ 0.48 Share

(Loss)Earnings Per (0.04) 0.52 0.57 (3.22) 0.54 0.48 0.68 Common Share- Basic

(Loss)Earnings Per (0.04) 0.52 0.57 (3.22) 0.54 0.48 0.68 Common Share- Diluted

AdjustedEarnings PerCommon Share 0.59 0.46 0.58 0.36 0.46 1.05 0.66 - Diluted ^(1)



WeightedAverageCommon 5,432,234 5,434,374 5,404,874 5,395,342 5,393,712 5,433,298 5,412,456 SharesOutstanding- Basic

WeightedAverageCommon 5,432,234 5,436,881 5,406,068 5,395,342 5,393,770 5,438,401 5,423,770 SharesOutstanding- Diluted

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

Common Shares Outstanding

5,409,077

5,434,374

5,434,374

5,398,712

5,393,712

Book Value Per Common Share

$

24.50

$

24.62

$

24.76

$

24.69

$

28.25

Tangible Book Value per Common Share (1)

21.56

21.38

21.42

21.23

21.23

Stockholders' Equity to Assets

9.1

%

9.1

%

9.5

%

9.6

%

10.8

%

Tangible Common Equity to Tangible Assets (1)

8.1

8.0

8.3

8.3

8.4

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20

Common Shares 5,409,077 5,434,374 5,434,374 5,398,712 5,393,712 Outstanding

Book Value Per $ 24.50 $ 24.62 $ 24.76 $ 24.69 $ 28.25 Common Share

Tangible Book Valueper Common Share ^ 21.56 21.38 21.42 21.23 21.23 (1)

Stockholders' 9.1 % 9.1 % 9.5 % 9.6 % 10.8 %Equity to Assets

Tangible CommonEquity to Tangible 8.1 8.0 8.3 8.3 8.4 Assets ^(1)

Three Months Ended

Six Months Ended

Selected Financial Ratios (2)

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

6/30/21

6/30/20

Return on Average Assets

(0.06)

%

0.81

%

0.87

%

(4.90)

%

0.85

%

0.36

%

0.55

%

Adjusted Return on Average Assets (1)

0.87

0.71

0.88

0.55

0.73

0.79

0.54

Return on Average Equity

(0.66)

8.54

9.13

(45.13)

7.65

3.92

4.84

Adjusted Return on Average Equity (1)

9.57

7.48

9.25

5.04

6.57

8.53

4.74

Average Interest-Earning Assets to Average Interest-Bearing Liabilities

146.82

142.98

141.58

141.98

140.72

144.94

137.91

Average Equity to Average Assets

9.08

9.48

9.49

10.85

11.08

9.27

11.36

Net Interest Rate Spread

2.72

2.91

3.07

3.03

3.10

2.81

3.22

Net Interest Rate Spread (FTE) (1)

2.74

2.92

3.08

3.05

3.12

2.82

3.23

Net Interest Margin

2.84

3.04

3.21

3.19

3.28

2.94

3.41

Net Interest Margin (FTE) (1)

2.85

3.05

3.22

3.21

3.30

2.95

3.43

Net (Recoveries) Charge-offs to Average Loans

(0.01)

0.02

0.39

0.03

(0.01)

0.01

-

Efficiency Ratio

112.91

71.44

72.51

230.11

69.94

91.36

71.23

Adjusted Efficiency Ratio (1)

80.68

70.06

68.06

69.78

68.58

75.25

67.36

Three Months Ended Six Months Ended

SelectedFinancial Ratios 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20^(2)

Return on (0.06) % 0.81 % 0.87 % (4.90) % 0.85 % 0.36 % 0.55 %Average Assets

Adjusted Returnon Average 0.87 0.71 0.88 0.55 0.73 0.79 0.54 Assets ^(1)

Return on (0.66) 8.54 9.13 (45.13) 7.65 3.92 4.84 Average Equity

Adjusted Returnon Average 9.57 7.48 9.25 5.04 6.57 8.53 4.74 Equity ^(1)

AverageInterest-EarningAssets to 146.82 142.98 141.58 141.98 140.72 144.94 137.91 AverageInterest-BearingLiabilities

Average Equityto Average 9.08 9.48 9.49 10.85 11.08 9.27 11.36 Assets

Net Interest 2.72 2.91 3.07 3.03 3.10 2.81 3.22 Rate Spread

Net InterestRate Spread 2.74 2.92 3.08 3.05 3.12 2.82 3.23 (FTE) ^(1)

Net Interest 2.84 3.04 3.21 3.19 3.28 2.94 3.41 Margin

Net InterestMargin (FTE) ^ 2.85 3.05 3.22 3.21 3.30 2.95 3.43 (1)

Net (Recoveries)Charge-offs to (0.01) 0.02 0.39 0.03 (0.01) 0.01 - Average Loans

Efficiency Ratio 112.91 71.44 72.51 230.11 69.94 91.36 71.23

AdjustedEfficiency Ratio 80.68 70.06 68.06 69.78 68.58 75.25 67.36 ^(1)

Asset Quality Ratios

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

Allowance for Loan Losses to Total Loans (3)

1.15

%

1.22

%

1.22

%

1.31

%

1.21

%

Allowance for Loan Losses to Total Loans, Excluding PPP Loans (1) (3)

1.21

1.30

1.29

1.41

1.30

Allowance for Loan Losses to Nonperforming Loans (3) (4)

74.92

89.29

88.15

91.84

226.59

Allowance for Loan Losses to Noncurrent Loans (3) (5)

90.83

118.08

117.20

114.01

390.73

Delinquent and Nonaccrual Loans to Total Loans (5) (6)

1.37

1.18

1.50

1.23

0.39

Nonperforming Loans to Total Loans (4)

1.53

1.37

1.39

1.43

0.54

Noncurrent Loans to Total Loans (5)

1.26

1.03

1.04

1.15

0.31

Nonperforming Assets to Total Assets (7)

1.07

0.98

1.04

1.09

0.41

Asset Quality Ratios 6/30/21 3/31/21 12/31/20 9/30/20 6/30/20

Allowance for Loan Losses to 1.15 % 1.22 % 1.22 % 1.31 % 1.21 %Total Loans ^(3)

Allowance for Loan Losses toTotal Loans, Excluding PPP 1.21 1.30 1.29 1.41 1.30 Loans ^(1) (3)

Allowance for Loan Losses to 74.92 89.29 88.15 91.84 226.59 Nonperforming Loans ^(3) (4)

Allowance for Loan Losses to 90.83 118.08 117.20 114.01 390.73 Noncurrent Loans ^(3) (5)

Delinquent and NonaccrualLoans to Total Loans ^(5) 1.37 1.18 1.50 1.23 0.39 (6)

Nonperforming Loans to Total 1.53 1.37 1.39 1.43 0.54 Loans ^(4)

Noncurrent Loans to Total 1.26 1.03 1.04 1.15 0.31 Loans ^(5)

Nonperforming Assets to 1.07 0.98 1.04 1.09 0.41 Total Assets ^(7)

Capital Ratios (8)

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

Common Equity Tier 1 Capital (to Risk Weighted Assets)

11.67

%

11.85

%

11.79

%

11.62

%

11.90

%

Tier 1 Capital (to Risk Weighted Assets)

11.67

11.85

11.79

11.62

11.90

Total Capital (to Risk Weighted Assets)

12.92

13.10

13.04

12.88

13.16

Tier 1 Leverage (to Adjusted Total Assets)

7.23

7.87

7.81

7.63

7.90

Capital Ratios ^(8) 6/30/21 3/31/21 12/31/ 9/30/20 6/30/20 20

Common Equity Tier 1 Capital (to 11.67 % 11.85 % 11.79 % 11.62 % 11.90 %Risk Weighted Assets)

Tier 1 Capital (to Risk Weighted 11.67 11.85 11.79 11.62 11.90 Assets)

Total Capital (to Risk Weighted 12.92 13.10 13.04 12.88 13.16 Assets)

Tier 1 Leverage (to Adjusted Total 7.23 7.87 7.81 7.63 7.90 Assets)

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

(2)Interim period ratios are calculated on an annualized basis.

(3)Loans acquired in connection with the mergers with FedFirst Financial Corporation and First West Virginia Bancorp were recorded at their estimated fair value at the acquisition date and did not include a carryover of the pre-merger allowance for loan losses.

(4)Nonperforming loans consist of nonaccrual loans, accruing loans that are 90 days or more past due, and troubled debt restructured loans.

(5)Noncurrent loans consist of nonaccrual loans and accruing loans that are 90 days or more past due.

(6)Delinquent loans consist of accruing loans that are 30 days or more past due.

(7)Nonperforming assets consist of nonperforming loans and other real estate owned.

(8)Capital ratios are for Community Bank only.

Certain items previously reported may have been reclassified to conform with the current reporting period's format. Refer to Explanation of Use of Non-GAAP Financial Measures in this Press(1) Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(2) Interim period ratios are calculated on an annualized basis.

Loans acquired in connection with the mergers with FedFirst Financial Corporation and First West Virginia Bancorp were recorded at their(3) estimated fair value at the acquisition date and did not include a carryover of the pre-merger allowance for loan losses.

Nonperforming loans consist of nonaccrual loans, accruing loans that are(4) 90 days or more past due, and troubled debt restructured loans.

Noncurrent loans consist of nonaccrual loans and accruing loans that are(5) 90 days or more past due.

Delinquent loans consist of accruing loans that are 30 days or more past(6) due.

Nonperforming assets consist of nonperforming loans and other real estate(7) owned.

(8) Capital ratios are for Community Bank only.

Certain items previously reported may have been reclassified to conform withthe current reporting period's format. AVERAGE BALANCES AND YIELDS

Three Months Ended

June 30, 2021

March 31, 2021

December 31, 2020

September 30, 2020

June 30, 2020

Average Balance

Interest and Dividends

Yield / Cost(4)

Average Balance

Interest and Dividends

Yield / Cost (4)

Average Balance

Interest andDividends

Yield / Cost(4)

Average Balance

Interest and Dividends

Yield / Cost(4)

Average Balance

Interest and Dividends

Yield / (Cost(4)

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net (6)

$

1,016,868

$

9,959

3.93

%

$

1,031,853

$

10,168

4.00

%

$

1,032,942

$

10,860

4.18

%

$

1,035,426

$

10,744

4.13

%

$

1,014,000

$

10,612

4.21

%

Debt Securities

Taxable

124,685

635

2.04

122,883

646

2.10

133,026

725

2.18

123,332

753

2.44

137,268

940

2.74

Exempt From Federal Tax

12,276

94

3.06

12,943

96

2.97

13,006

96

2.95

13,054

97

2.97

14,106

130

3.69

Equity Securities

2,649

24

3.62

2,632

20

3.04

2,612

20

3.06

2,580

19

2.95

2,579

20

3.10

Other Interest-Earning Assets

246,392

151

0.25

161,871

98

0.25

137,000

99

0.29

123,171

96

0.31

97,033

84

0.35

Total Interest-Earning Assets

1,402,870

10,863

3.11

1,332,182

11,028

3.36

1,318,586

11,800

3.56

1,297,563

11,709

3.59

1,264,986

11,786

3.75

Noninterest-Earning Assets

82,794

92,550

94,262

115,567

113,176

Total Assets

$

1,485,664

$

1,424,732

$

1,412,848

$

1,413,130

$

1,378,162

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits (7)

$

275,752

55

0.08

%

$

259,065

77

0.12

%

$

252,521

83

0.13

$

245,977

99

0.16

$

236,312

141

0.24

%

Savings (7)

247,238

25

0.04

239,850

32

0.05

232,647

32

0.05

230,567

32

0.06

227,470

35

0.06

Money Market (7)

199,652

71

0.14

197,395

98

0.20

198,983

131

0.26

185,644

140

0.30

182,656

187

0.41

Time Deposits (7)

177,506

676

1.53

187,114

740

1.60

193,194

790

1.63

198,184

879

1.76

205,847

942

1.84

Total Interest-Bearing Deposits (7)

900,148

827

0.37

883,424

947

0.43

877,345

1,036

0.47

860,372

1,150

0.53

852,285

1,305

0.62

Short-Term Borrowings

Securities Sold Under Agreements to Repurchase

49,325

24

0.20

41,094

23

0.23

43,468

25

0.23

42,512

28

0.26

35,642

39

0.44

Other Borrowings

6,000

35

2.34

7,200

41

2.31

10,543

60

2.26

11,000

62

2.24

11,000

62

2.27

Total Interest-Bearing Liabilities

955,473

886

0.37

931,718

1,011

0.44

931,356

1,121

0.48

913,884

1,240

0.54

898,927

1,406

0.63

Noninterest-Bearing Demand Deposits

387,317

349,108

338,223

337,441

317,738

Other Liabilities

7,999

8,869

9,176

8,477

8,815

Total Liabilities

1,350,789

1,289,695

1,278,755

1,259,802

1,225,480

Stockholders' Equity

134,875

135,037

134,093

153,328

152,682

Total Liabilities and Stockholders' Equity

$

1,485,664

$

1,424,732

$

1,412,848

$

1,413,130

$

1,378,162

Net Interest Income (FTE)

(Non-GAAP) (5)

9,977

10,017

10,679

10,469

10,380

Net Interest-Earning Assets (1)

447,397

400,464

387,230

383,679

366,059

Net Interest Rate Spread (FTE)

(Non-GAAP) (2) (5)

2.74

%

2.92

%

3.08

3.05

3.12

%

Net Interest Margin (FTE)

(Non-GAAP) (3)(5)

2.85

3.05

3.22

3.21

3.30

AVERAGE BALANCES AND YIELDS



Three Months Ended

June 30, 2021 March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020

Interest Yield Interest Yield / Interest Yield Interest Yield Interest Yield Average and / Average and Cost Average and / Average and / Average and / Balance Dividends Cost ^ Balance Dividends ^(4) Balance Dividends Cost ^ Balance Dividends Cost ^ Balance Dividends (Cost (4) (4) (4) ^(4)

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net ^(6) $ 1,016,868 $ 9,959 3.93 % $ 1,031,853 $ 10,168 4.00 % $ 1,032,942 $ 10,860 4.18 % $ 1,035,426 $ 10,744 4.13 % $ 1,014,000 $ 10,612 4.21 %

Debt Securities

Taxable 124,685 635 2.04 122,883 646 2.10 133,026 725 2.18 123,332 753 2.44 137,268 940 2.74

Exempt From Federal Tax 12,276 94 3.06 12,943 96 2.97 13,006 96 2.95 13,054 97 2.97 14,106 130 3.69

Equity Securities 2,649 24 3.62 2,632 20 3.04 2,612 20 3.06 2,580 19 2.95 2,579 20 3.10

Other Interest-Earning Assets 246,392 151 0.25 161,871 98 0.25 137,000 99 0.29 123,171 96 0.31 97,033 84 0.35

Total Interest-Earning Assets 1,402,870 10,863 3.11 1,332,182 11,028 3.36 1,318,586 11,800 3.56 1,297,563 11,709 3.59 1,264,986 11,786 3.75

Noninterest-Earning Assets 82,794 92,550 94,262 115,567 113,176

Total Assets $ 1,485,664 $ 1,424,732 $ 1,412,848 $ 1,413,130 $ 1,378,162

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits ^ $ 275,752 55 0.08 % $ 259,065 77 0.12 % $ 252,521 83 0.13 $ 245,977 99 0.16 $ 236,312 141 0.24 %(7)

Savings ^(7) 247,238 25 0.04 239,850 32 0.05 232,647 32 0.05 230,567 32 0.06 227,470 35 0.06

Money Market ^(7) 199,652 71 0.14 197,395 98 0.20 198,983 131 0.26 185,644 140 0.30 182,656 187 0.41

Time Deposits ^(7) 177,506 676 1.53 187,114 740 1.60 193,194 790 1.63 198,184 879 1.76 205,847 942 1.84

Total Interest-Bearing Deposits^ 900,148 827 0.37 883,424 947 0.43 877,345 1,036 0.47 860,372 1,150 0.53 852,285 1,305 0.62 (7)

Short-Term Borrowings

Securities Sold Under Agreements 49,325 24 0.20 41,094 23 0.23 43,468 25 0.23 42,512 28 0.26 35,642 39 0.44 to Repurchase

Other Borrowings 6,000 35 2.34 7,200 41 2.31 10,543 60 2.26 11,000 62 2.24 11,000 62 2.27

Total Interest-Bearing Liabilities 955,473 886 0.37 931,718 1,011 0.44 931,356 1,121 0.48 913,884 1,240 0.54 898,927 1,406 0.63

Noninterest-Bearing Demand 387,317 349,108 338,223 337,441 317,738 Deposits

Other Liabilities 7,999 8,869 9,176 8,477 8,815

Total Liabilities 1,350,789 1,289,695 1,278,755 1,259,802 1,225,480

Stockholders' Equity 134,875 135,037 134,093 153,328 152,682

Total Liabilities and $ 1,485,664 $ 1,424,732 $ 1,412,848 $ 1,413,130 $ 1,378,162 Stockholders' Equity

Net Interest Income (FTE) 9,977 10,017 10,679 10,469 10,380 (Non-GAAP) ^(5)

Net Interest-Earning Assets ^(1) 447,397 400,464 387,230 383,679 366,059

Net Interest Rate Spread (FTE) 2.74 % 2.92 % 3.08 3.05 3.12 %(Non-GAAP) ^(2) (5)

Net Interest Margin (FTE) 2.85 3.05 3.22 3.21 3.30 (Non-GAAP)^ (3)(5)

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

(2)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.

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

(4)Annualized.

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

(6)Includes loans held for sale

(7)Includes deposits held for sale

Net interest-earning assets represent total interest-earning assets less(1) total interest-bearing liabilities.

Net interest rate spread represents the difference between the weighted(2) average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

Net interest margin represents net interest income divided by average(3) total interest-earning assets.

(4) Annualized.

Refer to Explanation and Use of Non-GAAP Financial Measures in this Press(5) Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(6) Includes loans held for sale

(7) Includes deposits held for sale

AVERAGE BALANCES AND YIELDS

Six Months Ended

June 30, 2021

June 30, 2020

Average Balance

Interest and Dividends

Yield / Cost (4)

Average Balance

Interest and Dividends

Yield / Cost (4)

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net (5)

$

1,024,319

$

20,131

3.96

%

$

982,331

$

21,408

4.38

%

Debt Securities

Taxable

123,790

1,281

2.07

147,962

2,141

2.89

Exempt From Federal Tax

12,608

192

3.05

15,471

258

3.34

Marketable Equity Securities

2,641

44

3.33

2,573

40

3.11

Other Interest-Earning Assets

204,365

249

0.25

80,821

322

0.80

Total Interest-Earning Assets

1,367,723

21,897

3.23

1,229,158

24,169

3.95

Noninterest-Earning Assets

87,645

113,616

Total Assets

$

1,455,368

$

1,342,774

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits (6)

$

267,455

133

0.10

%

$

231,397

408

0.35

%

Savings (6)

243,565

57

0.05

222,899

124

0.11

Money Market (6)

198,530

168

0.17

181,819

436

0.48

Time Deposits (6)

182,283

1,416

1.57

210,648

2,018

1.93

Total Interest-Bearing Deposits (6)

891,833

1,774

0.40

846,763

2,986

0.71

Short-Term Borrowings

Securities Sold Under Agreements to Repurchase

45,232

47

0.21

32,592

84

0.52

Other Borrowings

6,597

76

2.32

11,890

132

2.23

Total Interest-Bearing Liabilities

943,662

1,897

0.41

891,245

3,202

0.72

Noninterest-Bearing Demand Deposits

368,318

289,621

Other Liabilities

8,433

9,306

Total Liabilities

1,320,413

1,190,172

Stockholders' Equity

134,955

152,602

Total Liabilities and Stockholders' Equity

$

1,455,368

$

1,342,774

Net Interest Income (FTE) (Non-GAAP)

20,000

20,967

Net Interest-Earning Assets (1)

424,061

337,913

Net Interest Rate Spread (FTE) (Non-GAAP) (2)

2.82

%

3.23

%

Net Interest Margin (FTE) (Non-GAAP) (3)

2.95

3.43

AVERAGE BALANCES AND YIELDS



Six Months Ended

June 30, 2021 June 30, 2020

Interest Yield Interest Yield Average and / Average and / Balance Dividends Cost ^ Balance Dividends Cost ^ (4) (4)

(Dollars inthousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net ^(5) $ 1,024,319 $ 20,131 3.96 % $ 982,331 $ 21,408 4.38 %

Debt Securities

Taxable 123,790 1,281 2.07 147,962 2,141 2.89

Exempt From Federal 12,608 192 3.05 15,471 258 3.34 Tax

Marketable Equity 2,641 44 3.33 2,573 40 3.11 Securities

OtherInterest-Earning 204,365 249 0.25 80,821 322 0.80 Assets

TotalInterest-Earning 1,367,723 21,897 3.23 1,229,158 24,169 3.95 Assets

Noninterest-Earning 87,645 113,616 Assets

Total Assets $ 1,455,368 $ 1,342,774



Liabilities andStockholders' Equity

Interest-Bearing Liabilities:

Interest-BearingDemand Deposits ^ $ 267,455 133 0.10 % $ 231,397 408 0.35 %(6)

Savings ^(6) 243,565 57 0.05 222,899 124 0.11

Money Market ^(6) 198,530 168 0.17 181,819 436 0.48

Time Deposits ^(6) 182,283 1,416 1.57 210,648 2,018 1.93

TotalInterest-Bearing 891,833 1,774 0.40 846,763 2,986 0.71 Deposits ^(6)

Short-Term Borrowings

Securities SoldUnder Agreements to 45,232 47 0.21 32,592 84 0.52 Repurchase

Other Borrowings 6,597 76 2.32 11,890 132 2.23

TotalInterest-Bearing 943,662 1,897 0.41 891,245 3,202 0.72 Liabilities

Noninterest-Bearing 368,318 289,621 Demand Deposits

Other Liabilities 8,433 9,306

Total Liabilities 1,320,413 1,190,172

Stockholders' 134,955 152,602 Equity

Total Liabilitiesand Stockholders' $ 1,455,368 $ 1,342,774 Equity

Net Interest Income 20,000 20,967 (FTE) (Non-GAAP)

NetInterest-Earning 424,061 337,913 Assets ^(1)

Net Interest RateSpread (FTE) 2.82 % 3.23 %(Non-GAAP) ^(2)

Net Interest Margin(FTE) (Non-GAAP)^ 2.95 3.43 (3)

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

(2)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.

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

(4)Annualized

(5)Includes loans held for sale

(6)Includes deposits held for sale

Explanation of Use of Non-GAAP Financial Measures

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

Net interest-earning assets represent total interest-earning assets less(1) total interest-bearing liabilities.

Net interest rate spread represents the difference between the weighted(2) average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

Net interest margin represents net interest income divided by average(3) total interest-earning assets.

(4) Annualized

(5) Includes loans held for sale

(6) Includes deposits held for sale

Explanation of Use of Non-GAAP Financial Measures

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

Three Months Ended Six Months Ended

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20

(Dollars inthousands,except share and per share data)(Unaudited)



Net (Loss) $ (223) $ 2,845 $ 3,079 $ (17,395) $ 2,903 $ 2,622 $ 3,676 Income (GAAP)



Adjustments

(Gain) Loss onSale of (11) (447) (213) 59 (517) (458) (79) Securities

(Gain) Loss onDisposal of 3 - 13 65 - 3 (17) Fixed Assets

Tax effect 2 94 42 (26) 109 96 20



Non-Cash Charges:

IntangibleAssets and 1,178 - - 18,693 - 1,178 - GoodwillImpairment

Writedown on 2,268 - 240 884 - 2,268 - Fixed Assets

Tax Effect - - (42) (338) - - -

Adjusted NetIncome $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 2,495 $ 5,709 $ 3,600 (Non-GAAP)



Weighted-AverageDiluted CommonShares and 5,432,234 5,436,881 5,406,068 5,395,342 5,393,770 5,438,401 5,423,770 Common StockEquivalentsOutstanding



(Loss) Earningsper Common Share $ (0.04) $ 0.52 $ 0.57 $ (3.22) $ 0.54 $ 0.48 $ 0.68 - Diluted (GAAP)



AdjustedEarnings perCommon Share - $ 0.59 $ 0.46 $ 0.58 $ 0.36 $ 0.46 $ 1.05 $ 0.66 Diluted(Non-GAAP)



Net (Loss)Income (GAAP) $ (223) $ 2,845 $ 3,079 $ (17,395) $ 2,903 $ 2,622 $ 3,676 (Numerator)



Annualization 4.01 4.06 3.98 3.98 4.02 2.02 2.01 Factor



Average Assets 1,485,664 1,424,732 1,412,848 1,413,130 1,378,162 1,455,368 1,342,774 (Denominator)



Return onAverage Assets (0.06) % 0.81 % 0.87 % (4.90) % 0.85 % 0.36 % 0.55 %(GAAP)



Adjusted NetIncome $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 2,495 $ 5,709 $ 3,600 (Non-GAAP)(Numerator)



Annualization 4.01 4.06 3.98 3.98 4.02 2.02 2.01 Factor



Average Assets 1,485,664 1,424,732 1,412,848 1,413,130 1,378,162 1,455,368 1,342,774 (Denominator)



Adjusted Returnon Average 0.87 % 0.71 % 0.88 % 0.55 % 0.73 % 0.79 % 0.54 %Assets(Non-GAAP)

Three Months Ended

Six Months Ended

6/30/21

3/31/21

12/31/20

9/30/20

6/30/20

6/30/21

6/30/20

(Dollars in thousands) (Unaudited)

Net (Loss) Income (GAAP) (Numerator)

$

(223)

$

2,845

$

3,079

$

(17,395)

$

2,903

$

2,622

$

3,676

Annualization Factor

4.01

4.06

3.98

3.98

4.02

2.02

2.01

Average Equity (Denominator)

134,875

135,037

134,093

153,328

152,682

134,955

152,602

Return on Average Equity (GAAP)

(0.66)

%

8.54

%

9.13

%

(45.13)

%

7.65

%

3.92

%

4.84

%

Adjusted Net Income (Non-GAAP) (Numerator)

$

3,217

$

2,492

$

3,119

$

1,942

$

2,495

$

5,709

$

3,600

Annualization Factor

4.01

4.06

3.98

3.98

4.02

2.02

2.01

Average Equity (Denominator)

134,875

135,037

134,093

153,328

152,682

134,955

152,602

Adjusted Return on Average Equity (Non-GAAP)

9.57

%

7.48

%

9.25

%

5.04

%

6.57

%

8.53

%

4.74

%

Tangible book value per common share is a non-GAAP measure and is calculated based on tangible common equity divided by period-end common shares outstanding. Tangible common equity to tangible assets is a non-GAAP measure and is calculated based on tangible common equity divided by tangible assets. We believe these non-GAAP measures serve as useful tools 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.

Three Months Ended Six Months Ended

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20

(Dollars inthousands) (Unaudited)



Net (Loss)Income (GAAP) $ (223) $ 2,845 $ 3,079 $ (17,395) $ 2,903 $ 2,622 $ 3,676 (Numerator)



Annualization 4.01 4.06 3.98 3.98 4.02 2.02 2.01 Factor



AverageEquity 134,875 135,037 134,093 153,328 152,682 134,955 152,602 (Denominator)



Return onAverage (0.66) % 8.54 % 9.13 % (45.13) % 7.65 % 3.92 % 4.84 %Equity (GAAP)



Adjusted NetIncome $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 2,495 $ 5,709 $ 3,600 (Non-GAAP)(Numerator)



Annualization 4.01 4.06 3.98 3.98 4.02 2.02 2.01 Factor



AverageEquity 134,875 135,037 134,093 153,328 152,682 134,955 152,602 (Denominator)



AdjustedReturn onAverage 9.57 % 7.48 % 9.25 % 5.04 % 6.57 % 8.53 % 4.74 %Equity(Non-GAAP)

Tangible book value per common share is a non-GAAP measure and is calculated based on tangible common equity divided by period-end common shares outstanding. Tangible common equity to tangible assets is a non-GAAP measure and is calculated based on tangible common equity divided by tangible assets. We believe these non-GAAP measures serve as useful tools 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.

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20

(Dollars inthousands,except share and per sharedata)(Unaudited)



Assets (GAAP) $ 1,461,613 $ 1,476,821 $ 1,416,720 $ 1,392,876 $ 1,407,152

Goodwill andIntangible (15,918) (17,599) (18,131) (18,663) (37,888) Assets, Net

TangibleAssets $ 1,445,695 $ 1,459,222 $ 1,398,589 $ 1,374,213 $ 1,369,264 (Non-GAAP)(Numerator)



Stockholders' $ 132,536 $ 133,776 $ 134,530 $ 133,299 $ 152,392 Equity (GAAP)

Goodwill andIntangible (15,918) (17,599) (18,131) (18,663) (37,888) Assets, Net

TangibleCommon Equityor Tangible $ 116,618 $ 116,177 $ 116,399 $ 114,636 $ 114,504 Book Value(Non-GAAP)(Denominator)



Stockholders'Equity to 9.1 % 9.1 % 9.5 % 9.6 % 10.8 %Assets (GAAP)

TangibleCommon Equityto Tangible 8.1 % 8.0 % 8.3 % 8.3 % 8.4 %Assets(Non-GAAP)



Common SharesOutstanding 5,409,077 5,434,374 5,434,374 5,398,712 5,393,712 (Denominator)



Book Valueper Common $ 24.50 $ 24.62 $ 24.76 $ 24.69 $ 28.25 Share (GAAP)

Tangible BookValue per $ 21.56 $ 21.38 $ 21.42 $ 21.23 $ 21.23 Common Share(Non-GAAP)

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 percent. 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. 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 Six Months Ended

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20

(Dollars inthousands) (Unaudited)



InterestIncome $ 10,820 $ 10,988 $ 11,755 $ 11,656 $ 11,727 $ 21,808 $ 24,056 (GAAP)

Adjustmentto FTE 43 40 45 53 59 89 113 Basis

InterestIncome 10,863 11,028 11,800 11,709 11,786 21,897 24,169 (FTE)(Non-GAAP)

InterestExpense 886 1,011 1,121 1,240 1,406 1,897 3,202 (GAAP)

NetInterestIncome $ 9,977 $ 10,017 $ 10,679 $ 10,469 $ 10,380 $ 20,000 $ 20,967 (FTE)(Non-GAAP)



NetInterest 2.72 % 2.91 % 3.07 % 3.03 % 3.10 % 2.81 % 3.22 %Rate Spread(GAAP)

Adjustmentto FTE 0.02 0.01 0.01 0.02 0.02 0.01 0.01 Basis

NetInterestRate Spread 2.74 2.92 3.08 3.05 3.12 2.82 3.23 (FTE)(Non-GAAP)



NetInterest 2.84 % 3.04 % 3.21 % 3.19 % 3.28 % 2.94 % 3.41 %Margin(GAAP)

Adjustmentto FTE 0.01 0.01 0.01 0.02 0.02 0.01 0.02 Basis

NetInterestMargin 2.85 3.05 3.22 3.21 3.30 2.95 3.43 (FTE)(Non-GAAP)

Adjusted efficiency ratio excludes the effect of certain non-recurring or non-cash items and represents adjusted noninterest expense divided by adjusted operating revenue. The Company evaluates its operational efficiency based on its adjusted efficiency ratio and believes it provides additional perspective on its ongoing performance as well as peer comparability.

Three Months Ended Six Months Ended

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20 6/30/21 6/30/20

(Dollars inthousands) (Unaudited)



Noninterestexpense $ 13,722 $ 9,395 $ 9,725 $ 28,968 $ 9,071 $ 23,117 $ 18,074 (GAAP)



Net Interestand Dividend 9,934 9,977 10,634 10,416 10,321 19,911 20,854 Income(GAAP)



NoninterestIncome 2,219 3,174 2,778 2,173 2,648 5,393 4,520 (GAAP)

OperatingRevenue 12,153 13,151 13,412 12,589 12,969 25,304 25,374 (GAAP)

Efficiency 112.91 % 71.44 % 72.51 % 230.11 % 69.94 % 91.36 % 71.23 %Ratio (GAAP)



Noninterestexpense $ 13,722 $ 9,395 $ 9,725 $ 28,968 $ 9,071 $ 23,117 $ 18,074 (GAAP)

Less:

Other RealEstate Owned (26) (38) (39) (12) (1) (64) (18) (Income)

Amortizationof 503 532 532 532 532 1,035 1,064 IntangibleAssets

IntangibleAssets and 1,178 - - 18,693 - 1,178 - GoodwillImpairment

Writedown on 2,268 - 240 884 - 2,268 - Fixed Assets

AdjustedNoninterest $ 9,799 $ 8,901 $ 8,992 $ 8,871 $ 8,540 $ 18,700 $ 17,028 Expense(Non-GAAP)



Net Interestand Dividend 9,934 9,977 10,634 10,416 10,321 19,911 20,854 Income(GAAP)

NoninterestIncome 2,219 3,174 2,778 2,173 2,648 5,393 4,520 (GAAP)

Less:

Net Gain(Loss) on 11 447 213 (59) 517 458 79 Securities

Net (Loss)Gain on (3) - (13) (65) - (3) 17 Disposal ofFixed Assets

AdjustedNoninterest 2,211 2,727 2,578 2,297 2,131 4,938 4,424 Income(Non-GAAP)

AdjustedOperating 12,145 12,704 13,212 12,713 12,452 24,849 25,278 Revenue(Non-GAAP)

AdjustedEfficiency 80.68 % 70.06 % 68.06 % 69.78 % 68.58 % 75.25 % 67.36 %Ratio(Non-GAAP)

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

6/30/21 3/31/21 12/31/20 9/30/20 6/30/20

(Dollars inthousands) (Unaudited)



Allowance for $ 11,544 $ 12,725 $ 12,771 $ 13,780 $ 12,648 Loan Losses



Total Loans 1,007,446 $ 1,041,697 1,044,753 $ 1,050,885 $ 1,042,159

PPP Loans (49,525) (60,380) (55,096) (71,028) (70,028)

Total Loans,Excluding PPP $ 957,921 $ 981,317 $ 989,657 $ 979,857 $ 972,131 Loans(Non-GAAP)



Allowance forLoan Lossesto TotalLoans, 1.21 % 1.30 % 1.29 % 1.41 % 1.30 %Excluding

PPP Loans(Non-GAAP)

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005298/en/

CONTACT: Company Contact: John H. Montgomery President and Chief Executive Officer Phone: (724) 225-2400 Investor Relations: Adam Prior, Senior Vice President The Equity Group Inc. Phone: (212) 836-9606 Email: aprior@equityny.com