Business Wire | Oct 28, 2021 07:01AM EDT

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

Oct. 28, 2021

WASHINGTON, Pa.--(BUSINESS WIRE)--Oct. 28, 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 third quarter and year-to-date 2021 financial results.

Three Months Ended Nine Months Ended

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

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



Net Income $ 1,983 $ (223) $ 2,845 $ 3,079 $ (17,395) $ 4,605 $ (13,719) (Loss) (GAAP)

ExcludingNon-RecurringItems (17) 3,440 (353) 40 19,337 3,070 19,261 (Non-GAAP) ^(1)

Adjusted NetIncome $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 7,675 $ 5,542 (Non-GAAP) ^(1)



Earnings(Loss) perCommon Share $ 0.37 $ (0.04) $ 0.52 $ 0.57 $ (3.22) $ 0.85 $ (2.54) - Diluted(GAAP)

AdjustedEarnings perCommon Share $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 0.36 $ 1.42 $ 1.03 - Diluted(Non-GAAP) ^(1)

(1)

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

2021 Third Quarter Financial Highlights

(Comparisons to three months ended September 30, 2020 unless otherwise noted)

* Net income was $2.0 million, compared to a net loss of $17.4 million, largely due to noninterest expense reductions as part of the previously announced bank optimization initiative as well as the absence in the current year period of non-cash charges from the prior year period related to goodwill impairment that were due to economic conditions triggered by the COVID-19 pandemic. Adjusted net income (non-GAAP) improved to $2.0 million, compared to adjusted net income of $1.9 million. * Earnings per diluted common share (EPS) increased to $0.37 from loss per diluted common share of $(3.22). Adjusted earnings per common share - diluted (non-GAAP) was $0.36, compared to $0.36. * Return on average assets (annualized) of 0.54%, compared to loss on average assets (annualized) of (4.90)%. Adjusted return on average assets (annualized) (non-GAAP) of 0.53%, compared to 0.55%. * Return on average equity (annualized) of 5.93%, compared to loss on average equity (annualized) of (45.13)%. Adjusted return on average equity (annualized) (non-GAAP) of 5.88%, compared to 5.04%. * Net interest margin (NIM) improved quarter over quarter to 2.88% from 2.84% for the three months ended June 30, 2021. NIM was 3.19% for the prior year period. * Net interest and dividend income was $10.0 million, compared to $10.4 million. * Noninterest income was $2.2 million and remained consistent.

(Amounts at September 30, 2021; comparisons to December 31, 2020, unless otherwise noted)

* Total loans, including Payroll Protection Program ("PPP") loans and loans held for sale, were $1.02 billion, a decrease of $25.7 million. * Total loans, including loans held for sale and excluding PPP loans, increased $17.0 million, or 7.0% annualized, to $986.3 million compared to June 30, 2021. Total loans, including loans held for sale and excluding PPP loans, were $989.7 million at December 31, 2020. * Total deposits, including deposits held for sale, were $1.29 billion, an increase of $63.2 million. * Total assets increased to $1.47 billion, compared to $1.42 billion. * Book value per share was $24.57, compared to $24.76 and $24.50 at June 30, 2021. * Tangible book value per share (Non-GAAP) increased to $21.67, compared to $21.42 and $21.56 at June 30, 2021.

Branch Optimization and Operational Efficiency Update

As previously announced in February 2021, CB has implemented strategic initiatives to improve Community Bank's financial performance and to position the bank for continued profitable growth. Since that announcement, the Company has made substantive progress, including:

* 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 * The identification and enhancement of over 185 individualized processes within its remaining branch network and operating environment 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 September 30, 2021, has incurred $6.3 million of expenses related to these items. The expenses include a $2.3 million writedown on fixed assets and a $1.2 million impairment of intangible assets associated with the branch consolidations in the second quarter and the pending branch sales expected to be finalized in the fourth quarter. In addition, as part of CB's branch optimization and operational efficiency initiatives, the Company incurred $2.9 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 approximately $600,000 in contracted services aimed at improving the operational and revenue efficiency at the bank in the long-term. CB anticipates cost savings from this initiative ranging from approximately $2.5 million to $3.5 million in 2022, as well as expected 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 estimated cost savings to be incremental to net income beginning in 2022. These estimated cost savings exclude 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 third quarter reflected many of the positive changes implemented as part of our branch optimization strategy early in 2021, with substantive improvement in operating expenses that helped to drive improvements in net income and quarter-over-quarter growth in book value. The Bank increased deposits while our commercial loan book grew quarter over quarter excluding PPP loans that continue to roll-off our balance sheet. Commercial real-estate lending continued to improve due to a pipeline of activity in our core Southwestern Pennsylvania and Ohio Valley markets, and we remain conservatively optimistic about the overall economic recovery in our geographic regions. Our focus remains on driving loan production in advance of this recovery, expanding core deposit relationships with greater efficiency, and further reducing the overall cost of funds. During the period, CB improved in all aspects of its asset quality and we're pleased to see quarter-over-quarter improvement in NIM despite a tightening environment."

Mr. Montgomery continued, "Throughout the first half of 2021, our goal was to execute on a cost-savings program designed to enhance the operating efficiency of the Company without any disruption to our loyal customer base and commercial relationships. We moved quickly and were transparent, and have been very pleased to have achieved many of our initial objectives with minimal disruption. Moving forward, we intend to utilize a streamlined operating environment to drive revenue and compete with greater efficiency in core markets where CB has an acknowledged brand recognition and presence. In the coming months, we are implementing more digitization throughout the Bank with a review of each individual process from larger loans to each ATM. We have been very pleased with our progress to date and expect to drive operating returns that are better than our peers in local markets. In addition, we remain committed to CB's shareholders through the payment of dividends and an active share buy-back program."

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 November 30, 2021, to stockholders of record as of the close of business on November 19, 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 was effective as of June 14, 2021 and is authorized through June 13, 2022. As of October 25, 2021, the Company had expended $3.1 million to repurchase 135,968 shares at an average price of $23.02 per share.

2021 Third Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income decreased $406,000, or 3.9%, to $10.0 million for the three months ended September 30, 2021 compared to $10.4 million for the three months ended September 30, 2020.

* Net interest margin (FTE) (Non-GAAP) decreased 32 basis points ("bps") to 2.89% for the three months ended September 30, 2021 compared to 3.21% for the three months ended September 30, 2020. Net interest margin (GAAP) decreased to 2.88% for the three months ended September 30, 2021 compared to 3.19% for the three months ended September 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 decreased year-over-year due to the low interest rate environment decreasing yields on loans and securities. Net interest margin (GAAP) for the three months ended June 30, 2021 was 2.84%. * Interest and dividend income decreased $870,000, or 7.5%, to $10.8 million for the three months ended September 30, 2021 compared to $11.7 million for the three months ended September 30, 2020. Interest income on loans decreased $991,000, or 9.3%, to $9.7 million for the three months ended September 30, 2021 compared to $10.7 million for the three months ended September 30, 2020. The average balance of loans decreased $31.0 million and the average yield decreased 28 bps to 3.85% compared to the three months ended September 30, 2020. Interest and fee income on PPP loans was $484,000 for the three months ended September 30, 2021 and contributed 4 bps to loan yield, compared to $454,000 for the three months ended September 30, 2020, which decreased loan yield 11 bps. The impact of the accretion of the credit mark on acquired loan portfolios was $94,000 for the three months ended September 30, 2021 compared to $127,000 for the three months ended September 30, 2020, or 4 bps in the current period compared to 5 bps in the prior period. Interest income on taxable investment securities increased $90,000, or 12.0%, to $843,000 for the three months ended September 30, 2021 compared to $753,000 for the three months ended September 30, 2020 driven by a $74.4 million increase in average balance and 73 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 $39,000, or 40.6% to $135,000 for the three months ended September 30, 2021 compared to $96,000 for the three months ended September 30, 2020. While the average yield remained comparable to the three months ended September 30, 2020, the average balance of other interest-earning assets increased $41.3 million primarily from buildup of cash as a result of securities activity, PPP loan funds and government stimulus payments deposited with the Bank. * Interest expense decreased $464,000, or 37.4%, to $776,000 for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. Interest expense on deposits decreased $435,000, or 37.8%, to $715,000 for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. While average interest-earning deposit balances increased $33.7 million compared to the three months ended September 30, 2020, interest rate declines for all products driven by pandemic-related market interest rate cuts resulted in a 21 bp, or 39.5%, decrease in average cost compared to the three months ended September 30, 2020. In addition, the average balance of time deposits and the related average cost decreased $29.5 million and 37 bps, respectively.

Provision for Loan Losses

There was no provision for loan losses for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. Specific loan loss reserves on impaired loans decreased in the current quarter. This was partially offset by an increase in loan balances that require a loan loss reserve, which excludes PPP loans and loans held for sale.

Noninterest income

Noninterest income increased $25,000, or 1.2%, to $2.2 million for the three months ended September 30, 2021, and remained consistent with $2.2 million for the three months ended September 30, 2020. The increase 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 decreased $19.2 million, or 66.3%, to $9.8 million for the three months ended September 30, 2021 compared to $29.0 million for the three months ended September 30, 2020. The decrease was largely due to an $18.7 million goodwill impairment and an $884,000 writedown on fixed assets recognized in the prior year period.

Statement of Financial Condition Review

Assets

Total assets increased $58.1 million, or 4.1%, to $1.47 billion at September 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 $12.6 million, or 7.8%, to $173.5 million at September 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 $76.0 million, or 52.3%, to $221.4 million at September 30, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $119.9 million of purchases, $29.6 million of paydowns, and $12.0 million of sales, primarily of mortgage-backed securities, which resulted in the recognition of a $231,000 gain. 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 $2.9 million decrease in the market value of the debt securities portfolio and a $251,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program ("PPP") Update

* PPP loans decreased $22.4 million to $32.7 million at September 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 September 30, 2021. $380,000 of net PPP loan origination fees were earned in the third quarter of 2021 compared to $489,000 for the three months ended June 30, 2021.

Loans and Credit Quality

* Total loans held for investment decreased $43.2 million to $1.00 billion at September 30, 2021. This includes the impact of reclassifying $17.4 million of loans to held for sale. Excluding the net decline of $22.4 million in PPP loans in the current period and including $17.4 million of held for sale loans, loans declined $3.4 million. Compared to June 30, 2021, total loans, including loans held for sale and excluding PPP loans, increased $17.0 million, primarily from $23.1 million in commercial real estate loan growth. * The allowance for loan losses was $11.6 million at September 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 year primarily due to a decrease in specific reserves on impaired loans and improvements in the economic and industry outlook combined with a decrease in loan balances that require a loan loss reserve, which excludes PPP loans and loans held for sale. A $20.8 million decrease in net reservable loans in the current period, which excludes PPP loans and includes the reclassification of $17.4 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 1.16% at September 30, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.20% at September 30, 2021 compared to 1.29% at December 31, 2020. * Net recoveries for the three months ended September 30, 2021 were $37,000, or (0.01)% of average loans on an annualized basis. Net charge-offs for the three months ended September 30, 2020 were $68,000, or 0.03% of average loans on an annualized basis. Net recoveries for the nine months ended September 30, 2021 were $10,000, or 0.00% of average loans on an annualized basis. Net charge-offs for the nine months ended September 30, 2020 were $87,000, or 0.01% 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 within the loans held for investment portfolio, were $10.9 million at September 30, 2021 compared to $14.5 million at December 31, 2020. Nonperforming loans to total loans ratio was 1.09% at September 30, 2021 compared to 1.39% at December 31, 2020. A $3.6 million nonaccrual commercial real estate loan under agreement to sell and transferred into the held for sale portfolio at September 30, 2021 was sold in October and will result in the recognition of an $897,000 gain on sale of loans in the fourth quarter of 2021. This loan previously incurred a $931,000 charge-off in the prior year. * There were no loans in forbearance at September 30, 2021 compared to 9 loans totaling $7.8 million at June 30, 2021, and 31 loans totaling $24.1 million at December 31, 2020. The remaining loans exited forbearance in July and begun making regularly scheduled payments.

Liabilities

Total liabilities increased $61.6 million, or 4.8%, to $1.34 billion at September 30, 2021 compared to $1.28 billion at December 31, 2020.

Deposits

* Total deposits, including deposits held for sale, increased $63.2 million to $1.29 billion as of September 30, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $47.8 million, $15.6 million and $18.4 million, respectively, partially offset by a decrease of $27.6 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 6.9% including IRS and PPP loan deposits. Average total deposits decreased $5.7 million, primarily in time deposits, for the three months ended September 30, 2021 compared to the three months ended June 30, 2021.

Borrowed Funds

* Short-term borrowings increased $1.6 million, or 3.9%, to $42.6 million at September 30, 2021, compared to $41.1 million at December 31, 2020. At September 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. $10.7 million was excluded from short-term borrowings at September 30, 2021 and reported as deposits held for sale. * Other borrowed funds decreased $2.0 million to $6.0 million at September 30, 2021 due to a Federal Home Loan Bank borrowing that matured in the current period.

Stockholders' Equity

Stockholders' equity decreased $3.5 million, or 2.6%, to $131.0 million at September 30, 2021, compared to $134.5 million at December 31, 2020. Accumulated other comprehensive income decreased $2.3 million primarily due to market interest rate conditions on the Bank's debt securities. In addition, the Company repurchased $2.5 million of its common stock as part of its stock repurchase program.

Book value per share

Book value per share was $24.57 at September 30, 2021 compared to $24.76 at December 31, 2020, a decrease of $0.19. Book value per share increased $0.07 compared to $24.50 at June 30, 2021.

Tangible book value per share (Non-GAAP) was $21.67 at September 30, 2021, compared to $21.42 at December 31, 2020, an increase of $0.25. Tangible book value per share increased $0.11 compared to $21.56 at June 30, 2021. 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.

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

2021 Third Quarter Financial Highlights

(Comparisons to three months ended September 30, 2020 unless otherwise noted)

* Net income was $2.0 million, compared to a net loss of $17.4 million, largely due to noninterest expense reductions as part of the previously announced bank optimization initiative as well as the absence in the current year period of non-cash charges from the prior year period related to goodwill impairment that were due to economic conditions triggered by the COVID-19 pandemic. Adjusted net income (non-GAAP) improved to $2.0 million, compared to adjusted net income of $1.9 million. * Earnings per diluted common share (EPS) increased to $0.37 from loss per diluted common share of $(3.22). Adjusted earnings per common share - diluted (non-GAAP) was $0.36, compared to $0.36. * Return on average assets (annualized) of 0.54%, compared to loss on average assets (annualized) of (4.90)%. Adjusted return on average assets (annualized) (non-GAAP) of 0.53%, compared to 0.55%. * Return on average equity (annualized) of 5.93%, compared to loss on average equity (annualized) of (45.13)%. Adjusted return on average equity (annualized) (non-GAAP) of 5.88%, compared to 5.04%. * Net interest margin (NIM) improved quarter over quarter to 2.88% from 2.84% for the three months ended June 30, 2021. NIM was 3.19% for the prior year period. * Net interest and dividend income was $10.0 million, compared to $10.4 million. * Noninterest income was $2.2 million and remained consistent.

(Amounts at September 30, 2021; comparisons to December 31, 2020, unless otherwise noted)

* Total loans, including Payroll Protection Program ("PPP") loans and loans held for sale, were $1.02 billion, a decrease of $25.7 million. * Total loans, including loans held for sale and excluding PPP loans, increased $17.0 million, or 7.0% annualized, to $986.3 million compared to June 30, 2021. Total loans, including loans held for sale and excluding PPP loans, were $989.7 million at December 31, 2020. * Total deposits, including deposits held for sale, were $1.29 billion, an increase of $63.2 million. * Total assets increased to $1.47 billion, compared to $1.42 billion. * Book value per share was $24.57, compared to $24.76 and $24.50 at June 30, 2021. * Tangible book value per share (Non-GAAP) increased to $21.67, compared to $21.42 and $21.56 at June 30, 2021.

Branch Optimization and Operational Efficiency Update

As previously announced in February 2021, CB has implemented strategic initiatives to improve Community Bank's financial performance and to position the bank for continued profitable growth. Since that announcement, the Company has made substantive progress, including:

* 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 * The identification and enhancement of over 185 individualized processes within its remaining branch network and operating environment 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 September 30, 2021, has incurred $6.3 million of expenses related to these items. The expenses include a $2.3 million writedown on fixed assets and a $1.2 million impairment of intangible assets associated with the branch consolidations in the second quarter and the pending branch sales expected to be finalized in the fourth quarter. In addition, as part of CB's branch optimization and operational efficiency initiatives, the Company incurred $2.9 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 approximately $600,000 in contracted services aimed at improving the operational and revenue efficiency at the bank in the long-term. CB anticipates cost savings from this initiative ranging from approximately $2.5 million to $3.5 million in 2022, as well as expected 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 estimated cost savings to be incremental to net income beginning in 2022. These estimated cost savings exclude 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 third quarter reflected many of the positive changes implemented as part of our branch optimization strategy early in 2021, with substantive improvement in operating expenses that helped to drive improvements in net income and quarter-over-quarter growth in book value. The Bank increased deposits while our commercial loan book grew quarter over quarter excluding PPP loans that continue to roll-off our balance sheet. Commercial real-estate lending continued to improve due to a pipeline of activity in our core Southwestern Pennsylvania and Ohio Valley markets, and we remain conservatively optimistic about the overall economic recovery in our geographic regions. Our focus remains on driving loan production in advance of this recovery, expanding core deposit relationships with greater efficiency, and further reducing the overall cost of funds. During the period, CB improved in all aspects of its asset quality and we're pleased to see quarter-over-quarter improvement in NIM despite a tightening environment."

Mr. Montgomery continued, "Throughout the first half of 2021, our goal was to execute on a cost-savings program designed to enhance the operating efficiency of the Company without any disruption to our loyal customer base and commercial relationships. We moved quickly and were transparent, and have been very pleased to have achieved many of our initial objectives with minimal disruption. Moving forward, we intend to utilize a streamlined operating environment to drive revenue and compete with greater efficiency in core markets where CB has an acknowledged brand recognition and presence. In the coming months, we are implementing more digitization throughout the Bank with a review of each individual process from larger loans to each ATM. We have been very pleased with our progress to date and expect to drive operating returns that are better than our peers in local markets. In addition, we remain committed to CB's shareholders through the payment of dividends and an active share buy-back program."

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 November 30, 2021, to stockholders of record as of the close of business on November 19, 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 was effective as of June 14, 2021 and is authorized through June 13, 2022. As of October 25, 2021, the Company had expended $3.1 million to repurchase 135,968 shares at an average price of $23.02 per share.

2021 Third Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income decreased $406,000, or 3.9%, to $10.0 million for the three months ended September 30, 2021 compared to $10.4 million for the three months ended September 30, 2020.

* Net interest margin (FTE) (Non-GAAP) decreased 32 basis points ("bps") to 2.89% for the three months ended September 30, 2021 compared to 3.21% for the three months ended September 30, 2020. Net interest margin (GAAP) decreased to 2.88% for the three months ended September 30, 2021 compared to 3.19% for the three months ended September 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 decreased year-over-year due to the low interest rate environment decreasing yields on loans and securities. Net interest margin (GAAP) for the three months ended June 30, 2021 was 2.84%. * Interest and dividend income decreased $870,000, or 7.5%, to $10.8 million for the three months ended September 30, 2021 compared to $11.7 million for the three months ended September 30, 2020. Interest income on loans decreased $991,000, or 9.3%, to $9.7 million for the three months ended September 30, 2021 compared to $10.7 million for the three months ended September 30, 2020. The average balance of loans decreased $31.0 million and the average yield decreased 28 bps to 3.85% compared to the three months ended September 30, 2020. Interest and fee income on PPP loans was $484,000 for the three months ended September 30, 2021 and contributed 4 bps to loan yield, compared to $454,000 for the three months ended September 30, 2020, which decreased loan yield 11 bps. The impact of the accretion of the credit mark on acquired loan portfolios was $94,000 for the three months ended September 30, 2021 compared to $127,000 for the three months ended September 30, 2020, or 4 bps in the current period compared to 5 bps in the prior period. Interest income on taxable investment securities increased $90,000, or 12.0%, to $843,000 for the three months ended September 30, 2021 compared to $753,000 for the three months ended September 30, 2020 driven by a $74.4 million increase in average balance and 73 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 $39,000, or 40.6% to $135,000 for the three months ended September 30, 2021 compared to $96,000 for the three months ended September 30, 2020. While the average yield remained comparable to the three months ended September 30, 2020, the average balance of other interest-earning assets increased $41.3 million primarily from buildup of cash as a result of securities activity, PPP loan funds and government stimulus payments deposited with the Bank. * Interest expense decreased $464,000, or 37.4%, to $776,000 for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. Interest expense on deposits decreased $435,000, or 37.8%, to $715,000 for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. While average interest-earning deposit balances increased $33.7 million compared to the three months ended September 30, 2020, interest rate declines for all products driven by pandemic-related market interest rate cuts resulted in a 21 bp, or 39.5%, decrease in average cost compared to the three months ended September 30, 2020. In addition, the average balance of time deposits and the related average cost decreased $29.5 million and 37 bps, respectively.

Provision for Loan Losses

There was no provision for loan losses for the three months ended September 30, 2021 compared to $1.2 million for the three months ended September 30, 2020. Specific loan loss reserves on impaired loans decreased in the current quarter. This was partially offset by an increase in loan balances that require a loan loss reserve, which excludes PPP loans and loans held for sale.

Noninterest income

Noninterest income increased $25,000, or 1.2%, to $2.2 million for the three months ended September 30, 2021, and remained consistent with $2.2 million for the three months ended September 30, 2020. The increase 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 decreased $19.2 million, or 66.3%, to $9.8 million for the three months ended September 30, 2021 compared to $29.0 million for the three months ended September 30, 2020. The decrease was largely due to an $18.7 million goodwill impairment and an $884,000 writedown on fixed assets recognized in the prior year period.

Statement of Financial Condition Review

Assets

Total assets increased $58.1 million, or 4.1%, to $1.47 billion at September 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 $12.6 million, or 7.8%, to $173.5 million at September 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 $76.0 million, or 52.3%, to $221.4 million at September 30, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $119.9 million of purchases, $29.6 million of paydowns, and $12.0 million of sales, primarily of mortgage-backed securities, which resulted in the recognition of a $231,000 gain. 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 $2.9 million decrease in the market value of the debt securities portfolio and a $251,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program ("PPP") Update

* PPP loans decreased $22.4 million to $32.7 million at September 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 September 30, 2021. $380,000 of net PPP loan origination fees were earned in the third quarter of 2021 compared to $489,000 for the three months ended June 30, 2021.

Loans and Credit Quality

* Total loans held for investment decreased $43.2 million to $1.00 billion at September 30, 2021. This includes the impact of reclassifying $17.4 million of loans to held for sale. Excluding the net decline of $22.4 million in PPP loans in the current period and including $17.4 million of held for sale loans, loans declined $3.4 million. Compared to June 30, 2021, total loans, including loans held for sale and excluding PPP loans, increased $17.0 million, primarily from $23.1 million in commercial real estate loan growth. * The allowance for loan losses was $11.6 million at September 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 year primarily due to a decrease in specific reserves on impaired loans and improvements in the economic and industry outlook combined with a decrease in loan balances that require a loan loss reserve, which excludes PPP loans and loans held for sale. A $20.8 million decrease in net reservable loans in the current period, which excludes PPP loans and includes the reclassification of $17.4 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 1.16% at September 30, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.20% at September 30, 2021 compared to 1.29% at December 31, 2020. * Net recoveries for the three months ended September 30, 2021 were $37,000, or (0.01)% of average loans on an annualized basis. Net charge-offs for the three months ended September 30, 2020 were $68,000, or 0.03% of average loans on an annualized basis. Net recoveries for the nine months ended September 30, 2021 were $10,000, or 0.00% of average loans on an annualized basis. Net charge-offs for the nine months ended September 30, 2020 were $87,000, or 0.01% 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 within the loans held for investment portfolio, were $10.9 million at September 30, 2021 compared to $14.5 million at December 31, 2020. Nonperforming loans to total loans ratio was 1.09% at September 30, 2021 compared to 1.39% at December 31, 2020. A $3.6 million nonaccrual commercial real estate loan under agreement to sell and transferred into the held for sale portfolio at September 30, 2021 was sold in October and will result in the recognition of an $897,000 gain on sale of loans in the fourth quarter of 2021. This loan previously incurred a $931,000 charge-off in the prior year. * There were no loans in forbearance at September 30, 2021 compared to 9 loans totaling $7.8 million at June 30, 2021, and 31 loans totaling $24.1 million at December 31, 2020. The remaining loans exited forbearance in July and begun making regularly scheduled payments.

Liabilities

Total liabilities increased $61.6 million, or 4.8%, to $1.34 billion at September 30, 2021 compared to $1.28 billion at December 31, 2020.

Deposits

* Total deposits, including deposits held for sale, increased $63.2 million to $1.29 billion as of September 30, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $47.8 million, $15.6 million and $18.4 million, respectively, partially offset by a decrease of $27.6 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 6.9% including IRS and PPP loan deposits. Average total deposits decreased $5.7 million, primarily in time deposits, for the three months ended September 30, 2021 compared to the three months ended June 30, 2021.

Borrowed Funds

* Short-term borrowings increased $1.6 million, or 3.9%, to $42.6 million at September 30, 2021, compared to $41.1 million at December 31, 2020. At September 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. $10.7 million was excluded from short-term borrowings at September 30, 2021 and reported as deposits held for sale. * Other borrowed funds decreased $2.0 million to $6.0 million at September 30, 2021 due to a Federal Home Loan Bank borrowing that matured in the current period.

Stockholders' Equity

Stockholders' equity decreased $3.5 million, or 2.6%, to $131.0 million at September 30, 2021, compared to $134.5 million at December 31, 2020. Accumulated other comprehensive income decreased $2.3 million primarily due to market interest rate conditions on the Bank's debt securities. In addition, the Company repurchased $2.5 million of its common stock as part of its stock repurchase program.

Book value per share

Book value per share was $24.57 at September 30, 2021 compared to $24.76 at December 31, 2020, a decrease of $0.19. Book value per share increased $0.07 compared to $24.50 at June 30, 2021.

Tangible book value per share (Non-GAAP) was $21.67 at September 30, 2021, compared to $21.42 at December 31, 2020, an increase of $0.25. Tangible book value per share increased $0.11 compared to $21.56 at June 30, 2021. 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 9/30/21 6/30/21 3/31/21 12/31/20 9/30/20ConditionData

ASSETS

Cash and Due $ 173,523 $ 172,010 $ 230,000 $ 160,911 $ 112,169 From Banks

Securities 221,351 208,472 142,156 145,400 158,956

Loans Held 17,407 11,409 - - - for Sale

Loans

Real Estate:

Residential 317,373 322,480 339,596 344,142 343,955

Commercial 379,621 360,518 370,118 373,555 353,904

Construction 78,075 85,187 77,714 72,600 69,178

Commercialand Industrial

Commercialand 69,657 70,666 68,551 71,717 73,287 Industrial

PPP 32,703 49,525 60,380 55,096 71,028

Consumer 112,087 106,404 111,650 113,854 117,364

Other 12,083 12,666 13,688 13,789 22,169

Total Loans 1,001,599 1,007,446 1,041,697 1,044,753 1,050,885

Allowance for (11,581) (11,544) (12,725) (12,771) (13,780) Loan Losses

Loans, Net 990,018 995,902 1,028,972 1,031,982 1,037,105

Premises andEquipment 795 795 - - - Held for Sale

Premises andEquipment, 18,502 18,682 20,240 20,302 20,439 Net

Bank-OwnedLife 25,190 25,052 24,916 24,779 24,639 Insurance

Goodwill 9,732 9,732 9,732 9,732 9,732

Intangible 5,740 6,186 7,867 8,399 8,931 Assets, Net

AccruedInterest and 12,560 13,373 12,938 15,215 20,905 Other Assets

Total Assets $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 $ 1,392,876





LIABILITIES

Deposits Held $ 102,647 $ 102,557 $ - $ - $ - for Sale

Deposits

Non-InterestBearing 373,320 368,452 377,137 340,569 335,287 DemandDeposits

InterestBearing 244,004 246,920 280,929 259,870 245,850 DemandAccounts

Money Market 190,426 176,824 198,975 199,029 188,958 Accounts

Savings 232,679 226,639 246,725 235,088 232,691 Accounts

Time Deposits 144,727 154,718 180,697 190,013 196,250

Total 1,185,156 1,173,553 1,284,463 1,224,569 1,199,036 Deposits



Short-Term 42,623 39,054 45,352 41,055 42,061 Borrowings

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

AccruedInterest and 7,405 7,913 7,230 8,566 7,480 OtherLiabilities

Total 1,343,831 1,329,077 1,343,045 1,282,190 1,259,577 Liabilities



STOCKHOLDERS' $ 130,987 $ 132,536 $ 133,776 $ 134,530 $ 133,299 EQUITY

Three Months Ended

Nine Months Ended

Selected Operating Data

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

9/30/21

9/30/20

Interest and Dividend Income

Loans, Including Fees

$

9,718

$

9,936

$

10,146

$

10,833

$

10,709

$

29,800

$

32,050

Securities:

Taxable

843

635

646

725

753

2,124

2,894

Tax-Exempt

71

74

78

78

79

223

291

Dividends

19

24

20

20

19

63

59

Other Interest and Dividend Income

135

151

98

99

96

384

418

Total Interest and Dividend Income

10,786

10,820

10,988

11,755

11,656

32,594

35,712

Interest Expense

Deposits

715

827

947

1,036

1,150

2,489

4,136

Short-Term Borrowings

25

24

23

25

28

72

112

Other Borrowings

36

35

41

60

62

112

194

Total Interest Expense

776

886

1,011

1,121

1,240

2,673

4,442

Net Interest and Dividend Income

10,010

9,934

9,977

10,634

10,416

29,921

31,270

(Recovery) Provision for Loan Losses

-

(1,200)

-

-

1,200

(1,200)

4,000

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

10,010

11,134

9,977

10,634

9,216

31,121

27,270

Noninterest Income:

Service Fees

602

614

546

560

554

1,762

1,646

Insurance Commissions

1,194

1,209

1,595

1,403

1,079

3,998

3,475

Other Commissions

93

173

165

105

76

431

374

Net Gain on Sales of Loans

49

31

86

388

435

166

1,003

Net Gain (Loss) on Securities

24

11

447

213

(59)

482

20

Net Gain on Purchased Tax Credits

18

17

18

16

15

53

46

Net Loss on Disposal of Fixed Assets

-

(3)

-

(13)

(65)

(3)

(48)

Income from Bank-Owned Life Insurance

138

136

137

140

140

411

417

Other Income (Loss)

80

31

180

(34)

(2)

291

(240)

Total Noninterest Income

2,198

2,219

3,174

2,778

2,173

7,591

6,693

Noninterest Expense:

Salaries and Employee Benefits

4,787

5,076

4,894

5,126

5,124

14,757

14,683

Occupancy

615

1,024

710

606

759

2,349

2,191

Equipment

205

311

266

234

220

782

701

Data Processing

541

607

518

476

482

1,666

1,367

FDIC Assessment

293

249

250

344

172

792

493

PA Shares Tax

224

225

265

350

355

714

963

Contracted Services

1,441

750

687

577

531

2,878

1,471

Legal and Professional Fees

180

419

189

185

161

788

567

Advertising

225

193

140

178

148

558

486

Other Real Estate Owned (Income)

(89)

(26)

(38)

(39)

(12)

(153)

(30)

Amortization of Intangible Assets

446

503

532

532

532

1,481

1,596

Intangible Assets and Goodwill Impairment

-

1,178

-

-

18,693

1,178

18,693

Writedown of Fixed Assets

2

2,268

-

240

884

2,270

884

Other

903

945

982

916

919

2,830

2,977

Total Noninterest Expense

9,773

13,722

9,395

9,725

28,968

32,890

47,042

Income (Loss) Before Income Tax Expense (Benefit)

2,435

(369)

3,756

3,687

(17,579)

5,822

(13,079)

Income Tax Expense (Benefit)

452

(146)

911

608

(184)

1,217

640

Net Income (Loss)

$

1,983

$

(223)

$

2,845

$

3,079

$

(17,395)

$

4,605

$

(13,719)

Three Months Ended Nine Months Ended

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

Interest andDividend Income

Loans,Including $ 9,718 $ 9,936 $ 10,146 $ 10,833 $ 10,709 $ 29,800 $ 32,050 Fees

Securities:

Taxable 843 635 646 725 753 2,124 2,894

Tax-Exempt 71 74 78 78 79 223 291

Dividends 19 24 20 20 19 63 59

OtherInterest and 135 151 98 99 96 384 418 DividendIncome

TotalInterest and 10,786 10,820 10,988 11,755 11,656 32,594 35,712 DividendIncome

Interest Expense

Deposits 715 827 947 1,036 1,150 2,489 4,136

Short-Term 25 24 23 25 28 72 112 Borrowings

Other 36 35 41 60 62 112 194 Borrowings

TotalInterest 776 886 1,011 1,121 1,240 2,673 4,442 Expense

Net Interestand Dividend 10,010 9,934 9,977 10,634 10,416 29,921 31,270 Income

(Recovery)Provision - (1,200) - - 1,200 (1,200) 4,000 for LoanLosses

Net Interestand DividendIncome After(Recovery) 10,010 11,134 9,977 10,634 9,216 31,121 27,270 Provisionfor LoanLosses

Noninterest Income:

Service Fees 602 614 546 560 554 1,762 1,646

Insurance 1,194 1,209 1,595 1,403 1,079 3,998 3,475 Commissions

Other 93 173 165 105 76 431 374 Commissions

Net Gain onSales of 49 31 86 388 435 166 1,003 Loans

Net Gain(Loss) on 24 11 447 213 (59) 482 20 Securities

Net Gain onPurchased 18 17 18 16 15 53 46 Tax Credits

Net Loss onDisposal of - (3) - (13) (65) (3) (48) Fixed Assets

Income fromBank-Owned 138 136 137 140 140 411 417 LifeInsurance

Other Income 80 31 180 (34) (2) 291 (240) (Loss)

TotalNoninterest 2,198 2,219 3,174 2,778 2,173 7,591 6,693 Income

Noninterest Expense:

Salaries andEmployee 4,787 5,076 4,894 5,126 5,124 14,757 14,683 Benefits

Occupancy 615 1,024 710 606 759 2,349 2,191

Equipment 205 311 266 234 220 782 701

Data 541 607 518 476 482 1,666 1,367 Processing

FDIC 293 249 250 344 172 792 493 Assessment

PA Shares 224 225 265 350 355 714 963 Tax

Contracted 1,441 750 687 577 531 2,878 1,471 Services

Legal andProfessional 180 419 189 185 161 788 567 Fees

Advertising 225 193 140 178 148 558 486

Other RealEstate Owned (89) (26) (38) (39) (12) (153) (30) (Income)

Amortizationof 446 503 532 532 532 1,481 1,596 IntangibleAssets

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

Writedown of 2 2,268 - 240 884 2,270 884 Fixed Assets

Other 903 945 982 916 919 2,830 2,977

TotalNoninterest 9,773 13,722 9,395 9,725 28,968 32,890 47,042 Expense

Income(Loss)Before 2,435 (369) 3,756 3,687 (17,579) 5,822 (13,079) Income TaxExpense(Benefit)

Income TaxExpense 452 (146) 911 608 (184) 1,217 640 (Benefit)

Net Income $ 1,983 $ (223) $ 2,845 $ 3,079 $ (17,395) $ 4,605 $ (13,719) (Loss)

Three Months Ended

Nine Months Ended

Per Common Share Data

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

9/30/21

9/30/20

Dividends Per Common Share

$

0.24

$

0.24

$

0.24

$

0.24

$

0.24

$

0.72

$

0.72

Earnings (Loss) Per Common Share - Basic

0.37

(0.04)

0.52

0.57

(3.22)

0.85

(2.54)

Earnings (Loss) Per Common Share - Diluted

0.37

(0.04)

0.52

0.57

(3.22)

0.85

(2.54)

Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1)

0.36

0.59

0.46

0.58

0.36

1.42

1.03

Weighted Average Common Shares Outstanding - Basic

5,373,032

5,432,234

5,434,374

5,404,874

5,395,342

5,412,989

5,406,710

Weighted Average Common Shares Outstanding - Diluted

5,390,128

5,432,234

5,436,881

5,406,068

5,395,342

5,420,792

5,406,710

Three Months Ended Nine Months Ended

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

DividendsPer Common $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.72 $ 0.72 Share

Earnings(Loss) PerCommon 0.37 (0.04) 0.52 0.57 (3.22) 0.85 (2.54) Share -Basic

Earnings(Loss) PerCommon 0.37 (0.04) 0.52 0.57 (3.22) 0.85 (2.54) Share -Diluted

AdjustedEarningsPer CommonShare - 0.36 0.59 0.46 0.58 0.36 1.42 1.03 Diluted(Non-GAAP)^(1)



WeightedAverageCommon 5,373,032 5,432,234 5,434,374 5,404,874 5,395,342 5,412,989 5,406,710 SharesOutstanding- Basic

WeightedAverageCommon 5,390,128 5,432,234 5,436,881 5,406,068 5,395,342 5,420,792 5,406,710 SharesOutstanding- Diluted

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

Common Shares Outstanding

5,330,401

5,409,077

5,434,374

5,434,374

5,398,712

Book Value Per Common Share

$

24.57

$

24.50

$

24.62

$

24.76

$

24.69

Tangible Book Value per Common Share (1)

21.67

21.56

21.38

21.42

21.23

Stockholders' Equity to Assets

8.9

%

9.1

%

9.1

%

9.5

%

9.6

%

Tangible Common Equity to Tangible Assets (1)

7.9

8.1

8.0

8.3

8.3

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

Common Shares 5,330,401 5,409,077 5,434,374 5,434,374 5,398,712 Outstanding

Book Value Per $ 24.57 $ 24.50 $ 24.62 $ 24.76 $ 24.69 Common Share

Tangible Book Valueper Common Share ^ 21.67 21.56 21.38 21.42 21.23 (1)

Stockholders' 8.9 % 9.1 % 9.1 % 9.5 % 9.6 %Equity to Assets

Tangible CommonEquity to Tangible 7.9 8.1 8.0 8.3 8.3 Assets ^(1)

Three Months Ended

Nine Months Ended

Selected Financial Ratios (2)

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

9/30/21

9/30/20

Return on Average Assets

0.54

%

(0.06)

%

0.81

%

0.87

%

(4.90)

%

0.42

%

(1.34)

%

Adjusted Return on Average Assets (1)

0.53

0.87

0.71

0.88

0.55

0.70

0.54

Return on Average Equity

5.93

(0.66)

8.54

9.13

(45.13)

4.59

(11.99)

Adjusted Return on Average Equity (1)

5.88

9.57

7.48

9.25

5.04

7.65

4.84

Average Interest-Earning Assets to Average Interest-Bearing Liabilities

146.78

146.82

142.98

141.58

141.98

145.56

139.30

Average Equity to Average Assets

9.03

9.08

9.48

9.49

10.85

9.19

11.19

Net Interest Rate Spread

2.77

2.72

2.91

3.07

3.03

2.80

3.15

Net Interest Rate Spread (FTE) (1)

2.78

2.74

2.92

3.08

3.05

2.81

3.17

Net Interest Margin

2.88

2.84

3.04

3.21

3.19

2.92

3.34

Net Interest Margin (FTE) (1)

2.89

2.85

3.05

3.22

3.21

2.93

3.35

Net (Recoveries) Charge-offs to Average Loans

(0.01)

(0.01)

0.02

0.39

0.03

-

0.01

Efficiency Ratio

80.05

112.91

71.44

72.51

230.11

87.68

123.92

Adjusted Efficiency Ratio (1)

77.27

80.68

70.06

68.06

69.78

75.92

68.17

Three Months Ended Nine Months Ended

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

Return on 0.54 % (0.06) % 0.81 % 0.87 % (4.90) % 0.42 % (1.34) %Average Assets

Adjusted Returnon Average 0.53 0.87 0.71 0.88 0.55 0.70 0.54 Assets ^(1)

Return on 5.93 (0.66) 8.54 9.13 (45.13) 4.59 (11.99) Average Equity

Adjusted Returnon Average 5.88 9.57 7.48 9.25 5.04 7.65 4.84 Equity ^(1)

AverageInterest-EarningAssets to 146.78 146.82 142.98 141.58 141.98 145.56 139.30 AverageInterest-BearingLiabilities

Average Equityto Average 9.03 9.08 9.48 9.49 10.85 9.19 11.19 Assets

Net Interest 2.77 2.72 2.91 3.07 3.03 2.80 3.15 Rate Spread

Net InterestRate Spread 2.78 2.74 2.92 3.08 3.05 2.81 3.17 (FTE) ^(1)

Net Interest 2.88 2.84 3.04 3.21 3.19 2.92 3.34 Margin

Net InterestMargin (FTE) ^ 2.89 2.85 3.05 3.22 3.21 2.93 3.35 (1)

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

Efficiency Ratio 80.05 112.91 71.44 72.51 230.11 87.68 123.92

AdjustedEfficiency Ratio 77.27 80.68 70.06 68.06 69.78 75.92 68.17 ^(1)

Asset Quality Ratios

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

Allowance for Loan Losses to Total Loans

1.16

%

1.15

%

1.22

%

1.22

%

1.31

%

Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1)

1.20

1.21

1.30

1.29

1.41

Allowance for Loan Losses to Nonperforming Loans (3)

106.18

74.92

89.29

88.15

91.84

Allowance for Loan Losses to Noncurrent Loans (4)

135.37

90.83

118.08

117.20

114.01

Delinquent and Nonaccrual Loans to Total Loans (4) (5)

0.97

1.37

1.18

1.50

1.23

Nonperforming Loans to Total Loans (3)

1.09

1.53

1.37

1.39

1.43

Noncurrent Loans to Total Loans (4)

0.85

1.26

1.03

1.04

1.15

Nonperforming Assets to Total Assets (6)

0.74

1.07

0.98

1.04

1.09

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

Allowance for Loan Losses to Total 1.16 % 1.15 % 1.22 % 1.22 % 1.31 %Loans

Allowance for Loan Losses to TotalLoans, Excluding PPP Loans 1.20 1.21 1.30 1.29 1.41 (Non-GAAP) ^(1)

Allowance for Loan Losses to 106.18 74.92 89.29 88.15 91.84 Nonperforming Loans ^(3)

Allowance for Loan Losses to 135.37 90.83 118.08 117.20 114.01 Noncurrent Loans ^(4)

Delinquent and Nonaccrual Loans to 0.97 1.37 1.18 1.50 1.23 Total Loans ^(4) (5)

Nonperforming Loans to Total Loans 1.09 1.53 1.37 1.39 1.43 ^(3)

Noncurrent Loans to Total Loans ^ 0.85 1.26 1.03 1.04 1.15 (4)

Nonperforming Assets to Total 0.74 1.07 0.98 1.04 1.09 Assets ^(6)

Capital Ratios (7)

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

Common Equity Tier 1 Capital (to Risk Weighted Assets)

11.53

%

11.67

%

11.85

%

11.79

%

11.62

%

Tier 1 Capital (to Risk Weighted Assets)

11.53

11.67

11.85

11.79

11.62

Total Capital (to Risk Weighted Assets)

12.78

12.92

13.10

13.04

12.88

Tier 1 Leverage (to Adjusted Total Assets)

7.38

7.23

7.87

7.81

7.63

Capital Ratios ^(7) 9/30/21 6/30/21 3/31/21 12/31/ 9/30/20 20

Common Equity Tier 1 Capital (to Risk 11.53 % 11.67 % 11.85 % 11.79 % 11.62 %Weighted Assets)

Tier 1 Capital (to Risk Weighted Assets) 11.53 11.67 11.85 11.79 11.62

Total Capital (to Risk Weighted Assets) 12.78 12.92 13.10 13.04 12.88

Tier 1 Leverage (to Adjusted Total 7.38 7.23 7.87 7.81 7.63 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)

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

(4)

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

(5)

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

(6)

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

(7)

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.

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

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

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

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

(7) 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

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 2020

September 30, 2020

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)

Average

Balance

Interest

and

Dividends

Yield / Cost(1)

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net (2)

$

1,004,474

$

9,740

3.85

%

$

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

%

Debt Securities

Taxable

197,763

843

1.71

124,685

635

2.04

122,883

646

2.10

133,026

725

2.18

123,332

753

2.44

Exempt From Federal Tax

11,647

90

3.09

12,276

94

3.06

12,943

96

2.97

13,006

96

2.95

13,054

97

2.97

Equity Securities

2,655

19

2.86

2,649

24

3.62

2,632

20

3.04

2,612

20

3.06

2,580

19

2.95

Other Interest-Earning Assets

164,447

135

0.33

246,392

151

0.25

161,871

98

0.25

137,000

99

0.29

123,171

96

0.31

Total Interest-Earning Assets

1,380,986

10,827

3.11

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

Noninterest-Earning Assets

88,291

82,794

92,550

94,262

115,567

Total Assets

$

1,469,277

$

1,485,664

$

1,424,732

$

1,412,848

$

1,413,130

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits (3)

$

275,411

48

0.07

%

$

275,752

55

0.08

%

$

259,065

77

0.12

$

252,521

83

0.13

$

245,977

99

0.16

%

Savings (3)

251,801

21

0.03

247,238

25

0.04

239,850

32

0.05

232,647

32

0.05

230,567

32

0.06

Money Market (3)

198,167

55

0.11

199,652

71

0.14

197,395

98

0.20

198,983

131

0.26

185,644

140

0.30

Time Deposits (3)

168,654

591

1.39

177,506

676

1.53

187,114

740

1.60

193,194

790

1.63

198,184

879

1.76

Total Interest-Bearing Deposits (3)

894,033

715

0.32

900,148

827

0.37

883,424

947

0.43

877,345

1,036

0.47

860,372

1,150

0.53

Short-Term Borrowings

Securities Sold Under Agreements to Repurchase

40,818

25

0.24

49,325

24

0.20

41,094

23

0.23

43,468

25

0.23

42,512

28

0.26

Other Borrowings

6,000

36

2.38

6,000

35

2.34

7,200

41

2.31

10,543

60

2.26

11,000

62

2.24

Total Interest-Bearing Liabilities

940,851

776

0.33

955,473

886

0.37

931,718

1,011

0.44

931,356

1,121

0.48

913,884

1,240

0.54

Noninterest-Bearing Demand Deposits

387,746

387,317

349,108

338,223

337,441

Other Liabilities

8,019

7,999

8,869

9,176

8,477

Total Liabilities

1,336,616

1,350,789

1,289,695

1,278,755

1,259,802

Stockholders' Equity

132,661

134,875

135,037

134,093

153,328

Total Liabilities and Stockholders' Equity

$

1,469,277

$

1,485,664

$

1,424,732

$

1,412,848

$

1,413,130

Net Interest Income (FTE)

(Non-GAAP) (4)

10,051

9,977

10,017

10,679

10,469

Net Interest-Earning Assets (5)

440,135

447,397

400,464

387,230

383,679

Net Interest Rate Spread (FTE)

(Non-GAAP) (4) (6)

2.78

%

2.74

%

2.92

3.08

3.05

%

Net Interest Margin (FTE)

(Non-GAAP) (4)(7)

2.89

2.85

3.05

3.22

3.21

PPP Loans

40,313

484

4.76

57,661

636

4.42

56,945

676

4.81

64,914

768

4.71

70,571

454

2.56

AVERAGE BALANCES AND YIELDS



Three Months Ended

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

Interest Interest Interest Interest Interest Average Yield / Average Yield / Average Yield / Average Yield / Average Yield / and Cost ^(1) and Cost ^(1) and Cost ^(1) and Cost ^(1) and Cost ^(1) Balance Balance Balance Balance Balance Dividends Dividends Dividends Dividends Dividends

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net ^(2) $ 1,004,474 $ 9,740 3.85 % $ 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 %

Debt Securities

Taxable 197,763 843 1.71 124,685 635 2.04 122,883 646 2.10 133,026 725 2.18 123,332 753 2.44

Exempt From Federal Tax 11,647 90 3.09 12,276 94 3.06 12,943 96 2.97 13,006 96 2.95 13,054 97 2.97

Equity Securities 2,655 19 2.86 2,649 24 3.62 2,632 20 3.04 2,612 20 3.06 2,580 19 2.95

Other Interest-Earning Assets 164,447 135 0.33 246,392 151 0.25 161,871 98 0.25 137,000 99 0.29 123,171 96 0.31

Total Interest-Earning Assets 1,380,986 10,827 3.11 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

Noninterest-Earning Assets 88,291 82,794 92,550 94,262 115,567

Total Assets $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 $ 1,413,130

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand $ 275,411 48 0.07 % $ 275,752 55 0.08 % $ 259,065 77 0.12 $ 252,521 83 0.13 $ 245,977 99 0.16 %Deposits ^(3)

Savings ^(3) 251,801 21 0.03 247,238 25 0.04 239,850 32 0.05 232,647 32 0.05 230,567 32 0.06

Money Market ^(3) 198,167 55 0.11 199,652 71 0.14 197,395 98 0.20 198,983 131 0.26 185,644 140 0.30

Time Deposits ^(3) 168,654 591 1.39 177,506 676 1.53 187,114 740 1.60 193,194 790 1.63 198,184 879 1.76

Total Interest-Bearing 894,033 715 0.32 900,148 827 0.37 883,424 947 0.43 877,345 1,036 0.47 860,372 1,150 0.53 Deposits^ (3)

Short-Term Borrowings

Securities Sold Under 40,818 25 0.24 49,325 24 0.20 41,094 23 0.23 43,468 25 0.23 42,512 28 0.26 Agreements to Repurchase

Other Borrowings 6,000 36 2.38 6,000 35 2.34 7,200 41 2.31 10,543 60 2.26 11,000 62 2.24

Total Interest-Bearing 940,851 776 0.33 955,473 886 0.37 931,718 1,011 0.44 931,356 1,121 0.48 913,884 1,240 0.54 Liabilities

Noninterest-Bearing Demand 387,746 387,317 349,108 338,223 337,441 Deposits

Other Liabilities 8,019 7,999 8,869 9,176 8,477

Total Liabilities 1,336,616 1,350,789 1,289,695 1,278,755 1,259,802

Stockholders' Equity 132,661 134,875 135,037 134,093 153,328

Total Liabilities and $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 $ 1,413,130 Stockholders' Equity

Net Interest Income (FTE)

(Non-GAAP) ^(4) 10,051 9,977 10,017 10,679 10,469

Net Interest-Earning Assets ^ 440,135 447,397 400,464 387,230 383,679 (5)

Net Interest Rate Spread(FTE)

(Non-GAAP) ^(4) (6) 2.78 % 2.74 % 2.92 3.08 3.05 %

Net Interest Margin (FTE)

(Non-GAAP)^ (4)(7) 2.89 2.85 3.05 3.22 3.21

PPP Loans 40,313 484 4.76 57,661 636 4.42 56,945 676 4.81 64,914 768 4.71 70,571 454 2.56

(1)

Annualized based on three months ended results.

(2)

Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale.

(3)

Includes Deposits Held for Sale.

(4)

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.

(5)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(6)

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

(7)

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

(1) Annualized based on three months ended results.

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

(3) Includes Deposits Held for Sale.

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

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

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

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

AVERAGE BALANCES AND YIELDS

Nine Months Ended

September 30, 2021

September 30, 2020

Average

Balance

Interest

and

Dividends

Yield /

Cost (7)

Average

Balance

Interest

and

Dividends

Yield /

Cost (7)

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net (1)

$

1,017,632

$

29,872

3.92

%

$

1,000,157

$

32,152

4.29

%

Debt Securities

Taxable

148,718

2,124

1.90

139,691

2,894

2.76

Exempt From Federal Tax

12,284

282

3.06

14,660

354

3.22

Marketable Equity Securities

2,645

63

3.18

2,575

59

3.06

Other Interest-Earning Assets

190,913

384

0.27

95,040

418

0.59

Total Interest-Earning Assets

1,372,192

32,725

3.19

1,252,123

35,877

3.83

Noninterest-Earning Assets

87,863

114,271

Total Assets

$

1,460,055

$

1,366,394

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits (2)

$

270,136

181

0.09

%

$

236,293

506

0.29

%

Savings (2)

246,340

78

0.04

225,473

156

0.09

Money Market (2)

198,408

223

0.15

183,103

576

0.42

Time Deposits (2)

177,690

2,007

1.51

206,463

2,898

1.87

Total Interest-Bearing Deposits (2)

892,574

2,489

0.37

851,332

4,136

0.65

Short-Term Borrowings

Securities Sold Under Agreements to Repurchase

43,745

72

0.22

35,923

112

0.42

Other Borrowings

6,396

112

2.34

11,591

194

2.24

Total Interest-Bearing Liabilities

942,715

2,673

0.38

898,846

4,442

0.66

Noninterest-Bearing Demand Deposits

374,865

305,677

Other Liabilities

8,293

9,025

Total Liabilities

1,325,873

1,213,548

Stockholders' Equity

134,182

152,846

Total Liabilities and Stockholders' Equity

$

1,460,055

$

1,366,394

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

30,052

31,435

Net Interest-Earning Assets (3)(4)

429,477

353,277

Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)

2.81

%

3.17

%

Net Interest Margin (FTE) (Non-GAAP) (3)(6)

2.93

3.35

PPP Loans

51,579

1,797

4.66

39,241

770

2.62

AVERAGE BALANCES AND YIELDS



Nine Months Ended

September 30, 2021 September 30, 2020

Interest Yield Interest Yield Average / Average / and and Balance Cost ^ Balance Cost ^ Dividends (7) Dividends (7)

(Dollars inthousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net ^(1) $ 1,017,632 $ 29,872 3.92 % $ 1,000,157 $ 32,152 4.29 %

Debt Securities

Taxable 148,718 2,124 1.90 139,691 2,894 2.76

Exempt From Federal 12,284 282 3.06 14,660 354 3.22 Tax

Marketable Equity 2,645 63 3.18 2,575 59 3.06 Securities

OtherInterest-Earning 190,913 384 0.27 95,040 418 0.59 Assets

TotalInterest-Earning 1,372,192 32,725 3.19 1,252,123 35,877 3.83 Assets

Noninterest-Earning 87,863 114,271 Assets

Total Assets $ 1,460,055 $ 1,366,394



Liabilities andStockholders' Equity

Interest-Bearing Liabilities:

Interest-BearingDemand Deposits ^ $ 270,136 181 0.09 % $ 236,293 506 0.29 %(2)

Savings ^(2) 246,340 78 0.04 225,473 156 0.09

Money Market ^(2) 198,408 223 0.15 183,103 576 0.42

Time Deposits ^(2) 177,690 2,007 1.51 206,463 2,898 1.87

TotalInterest-Bearing 892,574 2,489 0.37 851,332 4,136 0.65 Deposits ^(2)

Short-Term Borrowings

Securities SoldUnder Agreements to 43,745 72 0.22 35,923 112 0.42 Repurchase

Other Borrowings 6,396 112 2.34 11,591 194 2.24

TotalInterest-Bearing 942,715 2,673 0.38 898,846 4,442 0.66 Liabilities

Noninterest-Bearing 374,865 305,677 Demand Deposits

Other Liabilities 8,293 9,025

Total Liabilities 1,325,873 1,213,548

Stockholders' 134,182 152,846 Equity

Total Liabilitiesand Stockholders' $ 1,460,055 $ 1,366,394 Equity

Net Interest Income(FTE) (Non-GAAP) ^ 30,052 31,435 (3)

NetInterest-Earning 429,477 353,277 Assets ^(3)(4)

Net Interest RateSpread (FTE) 2.81 % 3.17 %(Non-GAAP) ^(3)(5)

Net Interest Margin(FTE) (Non-GAAP)^ 2.93 3.35 (3)(6)

PPP Loans 51,579 1,797 4.66 39,241 770 2.62

(1)

Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale.

(2)

Includes Deposits Held for Sale.

(3)

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.

(4)

Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(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.

(6)

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

(7)

Annualized.

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.

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

(2) Includes Deposits Held for Sale.

Refer to Explanation and Use of Non-GAAP Financial Measures in this Press(3) Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

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

Net interest rate spread represents the difference between the weighted(5) average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

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

(7) Annualized.

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 Nine Months Ended

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

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



Net Income $ 1,983 $ (223) $ 2,845 $ 3,079 $ (17,395) $ 4,605 $ (13,719) (Loss) (GAAP)



Adjustments

(Gain) Loss onSale of (24) (11) (447) (213) 59 (482) (20) Securities

Loss on Disposal - 3 - 13 65 3 48 of Fixed Assets

Tax effect 5 2 94 42 (26) 101 (6)



Non-Cash Charges:

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

Writedown on 2 2,268 - 240 884 2,270 884 Fixed Assets

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

Adjusted NetIncome $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 7,675 $ 5,542 (Non-GAAP)



Weighted-AverageDiluted CommonShares and 5,390,128 5,432,234 5,436,881 5,406,068 5,395,342 5,420,792 5,406,710 Common StockEquivalentsOutstanding



Earnings (Loss)per Common Share $ 0.37 $ (0.04) $ 0.52 $ 0.57 $ (3.22) $ 0.85 $ (2.54) - Diluted (GAAP)



AdjustedEarnings perCommon Share - $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 0.36 $ 1.42 $ 1.03 Diluted(Non-GAAP)



Net Income(Loss) (GAAP) $ 1,983 $ (223) $ 2,845 $ 3,079 $ (17,395) $ 4,605 $ (13,719) (Numerator)



Annualization 3.97 4.01 4.06 3.98 3.98 1.34 1.34 Factor



Average Assets 1,469,277 1,485,664 1,424,732 1,412,848 1,413,130 1,460,055 1,366,394 (Denominator)



Return onAverage Assets 0.54 % (0.06) % 0.81 % 0.87 % (4.90) % 0.42 % (1.34) %(GAAP)



Adjusted NetIncome $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 7,675 $ 5,542 (Non-GAAP)(Numerator)



Annualization 3.97 4.01 4.06 3.98 3.98 1.34 1.34 Factor



Average Assets 1,469,277 1,485,664 1,424,732 1,412,848 1,413,130 1,460,055 1,366,394 (Denominator)



Adjusted Returnon Average 0.53 % 0.87 % 0.71 % 0.88 % 0.55 % 0.70 % 0.54 %Assets(Non-GAAP)

Three Months Ended

Nine Months Ended

9/30/21

6/30/21

3/31/21

12/31/20

9/30/20

9/30/21

9/30/20

(Dollars in thousands) (Unaudited)

Net Income (Loss) (GAAP) (Numerator)

$

1,983

$

(223)

$

2,845

$

3,079

$

(17,395)

$

4,605

$

(13,719)

Annualization Factor

3.97

4.01

4.06

3.98

3.98

1.34

1.34

Average Equity (Denominator) (GAAP)

132,661

134,875

135,037

134,093

153,328

134,182

152,846

Return on Average Equity (GAAP)

5.93

%

(0.66)

%

8.54

%

9.13

%

(45.13)

%

4.59

%

(11.99)

%

Adjusted Net Income (Non-GAAP) (Numerator)

$

1,966

$

3,217

$

2,492

$

3,119

$

1,942

$

7,675

$

5,542

Annualization Factor

3.97

4.01

4.06

3.98

3.98

1.34

1.34

Average Equity (Denominator) (GAAP)

132,661

134,875

135,037

134,093

153,328

134,182

152,846

Adjusted Return on Average Equity (Non-GAAP)

5.88

%

9.57

%

7.48

%

9.25

%

5.04

%

7.65

%

4.84

%

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 Nine Months Ended

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

(Dollars inthousands) (Unaudited)



Net Income(Loss) (GAAP) $ 1,983 $ (223) $ 2,845 $ 3,079 $ (17,395) $ 4,605 $ (13,719) (Numerator)



Annualization 3.97 4.01 4.06 3.98 3.98 1.34 1.34 Factor



AverageEquity 132,661 134,875 135,037 134,093 153,328 134,182 152,846 (Denominator)(GAAP)



Return onAverage 5.93 % (0.66) % 8.54 % 9.13 % (45.13) % 4.59 % (11.99) %Equity (GAAP)



Adjusted NetIncome $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 1,942 $ 7,675 $ 5,542 (Non-GAAP)(Numerator)



Annualization 3.97 4.01 4.06 3.98 3.98 1.34 1.34 Factor



AverageEquity 132,661 134,875 135,037 134,093 153,328 134,182 152,846 (Denominator)(GAAP)



AdjustedReturn onAverage 5.88 % 9.57 % 7.48 % 9.25 % 5.04 % 7.65 % 4.84 %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.

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

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



Assets (GAAP) $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720 $ 1,392,876

Goodwill andIntangible (15,472) (15,918) (17,599) (18,131) (18,663) Assets, Net

TangibleAssets $ 1,459,346 $ 1,445,695 $ 1,459,222 $ 1,398,589 $ 1,374,213 (Non-GAAP)(Numerator)



Stockholders' $ 130,987 $ 132,536 $ 133,776 $ 134,530 $ 133,299 Equity (GAAP)

Goodwill andIntangible (15,472) (15,918) (17,599) (18,131) (18,663) Assets, Net

TangibleCommon Equityor Tangible $ 115,515 $ 116,618 $ 116,177 $ 116,399 $ 114,636 Book Value(Non-GAAP)(Denominator)



Stockholders'Equity to 8.9 % 9.1 % 9.1 % 9.5 % 9.6 %Assets (GAAP)

TangibleCommon Equityto Tangible 7.9 % 8.1 % 8.0 % 8.3 % 8.3 %Assets(Non-GAAP)



Common SharesOutstanding 5,330,401 5,409,077 5,434,374 5,434,374 5,398,712 (Denominator)



Book Valueper Common $ 24.57 $ 24.50 $ 24.62 $ 24.76 $ 24.69 Share (GAAP)

Tangible BookValue per $ 21.67 $ 21.56 $ 21.38 $ 21.42 $ 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 Nine Months Ended

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

(Dollars inthousands) (Unaudited)



InterestIncome $ 10,786 $ 10,820 $ 10,988 $ 11,755 $ 11,656 $ 32,594 $ 35,712 (GAAP)

Adjustmentto FTE 41 43 40 45 53 131 165 Basis

InterestIncome 10,827 10,863 11,028 11,800 11,709 32,725 35,877 (FTE)(Non-GAAP)

InterestExpense 776 886 1,011 1,121 1,240 2,673 4,442 (GAAP)

NetInterestIncome $ 10,051 $ 9,977 $ 10,017 $ 10,679 $ 10,469 $ 30,052 $ 31,435 (FTE)(Non-GAAP)



NetInterest 2.77 % 2.72 % 2.91 % 3.07 % 3.03 % 2.80 % 3.15 %Rate Spread(GAAP)

Adjustmentto FTE 0.01 0.02 0.01 0.01 0.02 0.01 0.02 Basis

NetInterestRate Spread 2.78 2.74 2.92 3.08 3.05 2.81 3.17 (FTE)(Non-GAAP)



NetInterest 2.88 % 2.84 % 3.04 % 3.21 % 3.19 % 2.92 % 3.34 %Margin(GAAP)

Adjustmentto FTE 0.01 0.01 0.01 0.01 0.02 0.01 0.01 Basis

NetInterestMargin 2.89 2.85 3.05 3.22 3.21 2.93 3.35 (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 Nine Months Ended

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

(Dollars inthousands) (Unaudited)



NoninterestExpense $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 28,968 $ 32,890 $ 47,042 (GAAP)



Net Interestand Dividend 10,010 9,934 9,977 10,634 10,416 29,921 31,270 Income(GAAP)



NoninterestIncome 2,198 2,219 3,174 2,778 2,173 7,591 6,693 (GAAP)

OperatingRevenue 12,208 12,153 13,151 13,412 12,589 37,512 37,963 (GAAP)

Efficiency 80.05 % 112.91 % 71.44 % 72.51 % 230.11 % 87.68 % 123.92 %Ratio (GAAP)



NoninterestExpense $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 28,968 $ 32,890 $ 47,042 (GAAP)

Less:

Other RealEstate Owned (89) (26) (38) (39) (12) (153) (30) (Income)

Amortizationof 446 503 532 532 532 1,481 1,596 IntangibleAssets

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

Writedown on 2 2,268 - 240 884 2,270 884 Fixed Assets

AdjustedNoninterest $ 9,414 $ 9,799 $ 8,901 $ 8,992 $ 8,871 $ 28,114 $ 25,899 Expense(Non-GAAP)



Net Interestand Dividend 10,010 9,934 9,977 10,634 10,416 29,921 31,270 Income(GAAP)

NoninterestIncome 2,198 2,219 3,174 2,778 2,173 7,591 6,693 (GAAP)

Less:

Net Gain(Loss) on 24 11 447 213 (59) 482 20 Securities

Net Loss onDisposal of - (3) - (13) (65) (3) (48) Fixed Assets

AdjustedNoninterest 2,174 2,211 2,727 2,578 2,297 7,112 6,721 Income(Non-GAAP)

AdjustedOperating 12,184 12,145 12,704 13,212 12,713 37,033 37,991 Revenue(Non-GAAP)

AdjustedEfficiency 77.27 % 80.68 % 70.06 % 68.06 % 69.78 % 75.92 % 68.17 %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.

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

(Dollars inthousands) (Unaudited)



Allowance for $ 11,581 $ 11,544 $ 12,725 $ 12,771 $ 13,780 Loan Losses



Total Loans 1,001,599 $ 1,007,446 1,041,697 $ 1,044,753 $ 1,050,885

PPP Loans (32,703) (49,525) (60,380) (55,096) (71,028)

Total Loans,Excluding PPP $ 968,896 $ 957,921 $ 981,317 $ 989,657 $ 979,857 Loans(Non-GAAP)



Allowance forLoan Lossesto TotalLoans, 1.20 % 1.21 % 1.30 % 1.29 % 1.41 %Excluding

PPP Loans(Non-GAAP)

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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