Business Wire | Jan 28, 2022 04:30PM EST

CB Financial Services, Inc. Announces Fourth Quarter and Full Year 2021 Financial Results and Declares Quarterly Cash Dividend

Jan. 28, 2022

WASHINGTON, Pa.--(BUSINESS WIRE)--Jan. 28, 2022--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 fourth quarter and year-to-date 2021 financial results.

Three Months Ended Year Ended

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

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



Net Income $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 )(Loss) (GAAP)

ExcludingNon-RecurringItems (4,122 ) (17 ) 3,440 (353 ) 40 (1,053 ) 19,343 (Non-GAAP) ^(1)

Adjusted NetIncome $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 (Non-GAAP) ^(1)



Earnings(Loss) perCommon Share $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 )- Diluted(GAAP)

AdjustedEarnings perCommon Share $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 - 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 Fourth Quarter Financial Highlights

(Comparisons to three months ended December 31, 2020 unless otherwise noted)

* Net income was $7.0 million, compared to $3.1 million, largely due to the $5.2 million gain recognized from the sale of branches. Adjusted net income (non-GAAP) was $2.8 million, compared to $3.1 million. * Earnings per diluted common share (EPS) increased to $1.31 from $0.57. Adjusted earnings per common share - diluted (non-GAAP) was $0.53, compared to $0.58. * Return on average assets (annualized) of 1.87%, compared to 0.87%. Adjusted return on average assets (annualized) (non-GAAP) of 0.76%, compared to 0.88%. * Return on average equity (annualized) of 20.95%, compared to 9.13%. Adjusted return on average equity (annualized) (non-GAAP) of 8.55%, compared to 9.25%. * Net interest margin (NIM) improved quarter over quarter to 2.95% from 2.88% for the three months ended September 30, 2021. NIM was 3.21% for the prior year period. * Net interest and dividend income was $10.2 million, compared to $10.6 million. * Non-interest income increased to $8.7 million, compared to $2.8 million, primarily due to the $5.2 million gain on sale of branches.

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

* Total loans, including Payroll Protection Program ("PPP") loans, were $1.02 billion, a decrease of $24.0 million. Total loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, to $996.3 million compared to $968.9 million at September 30, 2021 and included 35.9% and 13.2% annualized growth in consumer and commercial real estate loans, respectively. Total loans, excluding PPP loans, were $989.7 million at December 31, 2020. * Nonperforming loans to total loans was 0.71%, a decrease of 68 bps, compared to 1.39%. * Total deposits were $1.23 billion, an increase of $2.0 million, inclusive of selling $102.8 million of deposits of two branches in December 2021. * Total assets increased to $1.43 billion, compared to $1.42 billion. * Book value per share was $25.31, compared to $24.76 and $24.57 at September 30, 2021. Tangible book value per share (Non-GAAP) increased to $22.45, compared to $21.42 and $21.67 at September 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 substantially completed this project, highlighted by:

* The consolidation of six branches that was completed on June 30, 2021 and the sale of two branches that was completed in December 2021 that resulted in a gain on sale of $5.2 million. $6.1 million of loans and $102.8 million of deposits were sold as part of the sale of the branches. The Company anticipates $3.0 million of ongoing pre-tax cost savings as a result of the branch optimization initiatives. * The identification and enhancement of over 185 individualized processes within its branch network and operating environment designed to improve the Bank's infrastructure, client experience, efficiency and profitability. The project was expensed in 2021. The majority of process improvements have been implemented with the remaining items to be implemented in 2022. CB anticipates cost savings from the operational efficiency 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.

Management Commentary

President and CEO John H. Montgomery stated, "The fourth quarter was highlighted by the sale of two branches, which resulted in a $5.2 million gain for the bank while completing the optimization initiative announced early in 2021. We undertook that initiative with the primary goals of reducing our expenses while also positioning the bank for growth and I am proud of our team for succeeding on both fronts. With the optimization effort now substantially complete, we intend to focus all our energy on continuing the growth we saw take hold during the second half of 2021. Despite the reduction of our deposit balances resulting from the sale of two branches, we were still able to grow our loan book 11.3% in the current quarter, which is a result we're proud of. Our loan book experienced solid demand across nearly all our end markets, fueled by the continuing economic recovery in our geographic region."

Mr. Montgomery continued, "As we enter 2022, we are well-positioned for a rising rate environment. We are squarely focused on capturing growth opportunities and are investing in our business in support of that. A key component of our optimization initiative was the reduction of low return uses of capital so that capital could be repurposed for higher growth investment. With that in mind, we expect to bring on a Chief Commercial Banking Officer and a Director of Client Experience and Retail Banking during the first quarter. Set against the backdrop of reduced annual expense levels and rising interest rates, our expectation is for continued growth and expansion of profitability. 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 February 28, 2022, to stockholders of record as of the close of business on February 18, 2022.

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 January 21, 2022, the Company had repurchased 191,314 shares at an average price of $23.34 per share for a total of $4.5 million.

2021 Fourth Quarter Financial Review

Net Interest and Dividend Income

* Net interest and dividend income decreased $403,000, or 3.8%, to $10.2 million for the three months ended December 31, 2021 compared to $10.6 million for the three months ended December 31, 2020. * Net interest margin (FTE) (Non-GAAP) decreased 26 basis points ("bps") to 2.96% for the three months ended December 31, 2021 compared to 3.22% for the three months ended December 31, 2020. Net interest margin (GAAP) decreased to 2.95% for the three months ended December 31, 2021 compared to 3.21% for the three months ended December 31, 2020. While CB has further controlled its deposit cost structure as deposit balances increased and benefited from non-renewal 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. The fourth quarter of 2021 was aided by the full payoff of a $3.1 million nonperforming commercial real estate loan in the hotel portfolio, which resulted in the recognition of $201,000 of interest income. Net interest margin (GAAP) for the three months ended September 30, 2021 was 2.88%. * Interest and dividend income decreased $792,000, or 6.7%, to $11.0 million for the three months ended December 31, 2021 compared to $11.8 million for the three months ended December 31, 2020. Interest income on loans decreased $929,000, or 8.6%, to $9.9 million for the three months ended December 31, 2021 compared to $10.8 million for the three months ended December 31, 2020. The average balance of loans decreased $28.1 million and the average yield decreased 26 bps to 3.92% compared to the three months ended December 31, 2020. Interest and fee income on PPP loans was $391,000 for the three months ended December 31, 2021 and contributed 4 bps to loan yield, compared to $768,000 for the three months ended December 31, 2020, which contributed 3 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $83,000 for the three months ended December 31, 2021 compared to $141,000 for the three months ended December 31, 2020, or 3 bps in the current period compared to 5 bps in the prior period. Interest income on taxable investment securities increased $141,000, or 19.4%, to $866,000 for the three months ended December 31, 2021 compared to $725,000 for the three months ended December 31, 2020 driven by a $72.3 million increase in average balance partially offset by a 49 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 pay-downs on mortgage-backed securities in the declining interest rate environment, which, in combination with excess liquidity, were replaced with purchases of lower-yielding securities. * Interest expense decreased $389,000, or 34.7%, to $732,000 for the three months ended December 31, 2021 compared to $1.1 million for the three months ended December 31, 2020. Interest expense on deposits decreased $400,000, or 38.6%, to $636,000 for the three months ended December 31, 2021 compared to $1.0 million for the three months ended December 31, 2020. While average interest-earning deposit balances increased $17.5 million compared to the three months ended December 31, 2020, controlling the deposit cost structure as deposit balances increased combined with non-renewal or repricing of higher-cost time deposit resulted in a 19 bp, or 40.4%, decrease in average cost compared to the three months ended December 31, 2020. The average balance of time deposits and the related average cost decreased $38.9 million and 32 bps, respectively.

Provision for Loan Losses

There was a $75,000 provision for loan losses for the three months ended December 31, 2021 compared to no provision for loan losses for the three months ended December 31, 2020. The provision was primarily due to loan growth in the current period, exclusive of PPP loan forgiveness, offset by adjustments in the qualitative factors driven by improving economic and industry conditions.

Noninterest income

Noninterest income increased $5.9 million, or 212.8%, to $8.7 million for the three months ended December 31, 2021, compared to $2.8 million for the three months ended December 31, 2020. The increase was largely due to a gain of $5.2 million from the sale of two branches during the quarter. In addition, net gain on sale of loans increased $589,000 to $977,000 for the three months ended December 31, 2021 compared to $388,000 for the three months ended December 31, 2020 primarily due to the sale of a nonperforming commercial real estate loan in the hotel portfolio that resulted in the recognition of an $897,000 gain. The loan previously incurred a $931,000 charge-off in the fourth quarter of 2020.

Noninterest Expense

Noninterest expense increased $247,000, or 2.5%, to $10.0 million for the three months ended December 31, 2021 compared to $9.7 million for the three months ended December 31, 2020. Contracted services increased $556,000 to $1.1 million for the three months ended December 31, 2021 compared to $577,000 for the three months ended December 31, 2020 primarily due to $859,000 in expenses associated with the engagement of a third-party workflow optimization expert to assist in implementing robotic process automations and more effective sales management designed to improve operational efficiencies in the near and long-term and engagement of other third party specialists to assist in core platform improvements and efficiencies.

Statement of Financial Condition Review

Assets

Total assets increased $8.8 million, or 0.6%, to $1.43 billion at December 31, 2021, compared to $1.42 billion at December 31, 2020.

* Cash and due from banks decreased $41.2 million, or 25.6%, to $119.7 million at December 31, 2021, compared to $160.9 million at December 31, 2020. The change is primarily related to securities purchases and sale of branches, partially offset by net repayments on loans. * Securities increased $79.6 million, or 54.7%, to $225.0 million at December 31, 2021, compared to $145.4 million at December 31, 2020. Current period activity included $135.0 million of purchases, $38.4 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 sales recognized gains on higher-interest securities with faster prepayment speeds. The purchases were made to earn a higher yield on excess cash. In addition, there was a $5.5 million decrease in the market value of the debt securities portfolio and a $295,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program ("PPP") Update

* PPP loans decreased $30.6 million to $24.5 million at December 31, 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. * $678,000 of net PPP loan origination fees were unearned at December 31, 2021 compared to $1.1 million at December 31, 2020. $321,000 of net PPP loan origination fees were earned for the three month ended December 31, 2021 compared to $604,000 for the three months ended December 31, 2020 and $380,000 for the three months ended September 30, 2021.

Loans and Credit Quality

* Total loans held for investment decreased $24.0 million, or 2.3%, to $1.02 billion at December 31, 2021 compared to $1.04 billion at December 31, 2020. Excluding the net decline of $30.6 million in PPP loans in the current period, loans increased $6.6 million. Compared to September 30, 2021, loans held for investment, excluding PPP loans, increased $27.4 million, or 11.3% annualized, primarily from increases of $12.5 million in commercial real estate loans, $10.1 million in consumer loans driven by efficiencies in the indirect auto loan process that did not sacrifice credit quality, and $7.0 million in net construction loan disbursements. * The allowance for loan losses was $11.6 million at December 31, 2021 compared to $12.8 million at December 31, 2020. There was a net recovery of $1.1 million of provision for loan losses in the current year primarily due to a decrease in specific reserves on impaired loans and improving economic and industry conditions resulting in a decrease in qualitative factors. As a result, the allowance for loan losses to total loans was 1.13% at December 31, 2021 compared to 1.22% at December 31, 2020. The allowance for loan losses to total loans, excluding PPP loans, was 1.16% at December 31, 2021 compared to 1.29% at December 31, 2020. * Net charge-offs for the three months ended December 31, 2021 were $74,000, or 0.03% of average loans on an annualized basis. Net charge-offs for the three months ended December 31, 2020 were $1.0 million, or 0.39% of average loans on an annualized basis. In the prior period, there was a $931,000 charge-off on a commercial real estate loan related to a hotel. This loan was subsequently sold and resulted in the recognition of an $897,000 gain on sale in the current period. Net charge-offs for the year ended December 31, 2021 were $64,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the year ended December 31, 2020 were $1.1 million, or 0.11% 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 $7.3 million at December 31, 2021 compared to $14.5 million at December 31, 2020. The decrease is primarily attributable to the full payoff and sale in the current year of two of the Bank's larger nonperforming commercial real estate loans that were secured by hotels. Nonperforming loans to total loans ratio was 0.71% at December 31, 2021 compared to 1.39% at December 31, 2020.

Liabilities

Total liabilities increased $10.2 million, or 0.8%, to $1.29 billion at December 31, 2021 compared to $1.28 billion at December 31, 2020.

Deposits

* Despite the impact of the sale of $102.8 million of deposits from the sale of two branches completed in December 2021, total deposits increased $2.0 million to $1.23 billion as of December 31, 2021 compared to $1.22 billion at December 31, 2020. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $45.2 million, $12.6 million and $4.4 million, respectively, partially offset by a decrease of $53.3 million in time deposits.

Borrowed Funds

* Short-term borrowings decreased $1.8 million, or 4.4%, to $39.3 million at December 31, 2021, compared to $41.1 million at December 31, 2020. At December 31, 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. * Other borrowed funds increased $9.6 million to $17.6 million at December 31, 2021 due to the issuance of subordinated debt in December 2021 with net proceeds of $14.6 million partially offset by $5.0 million of Federal Home Loan Bank borrowings that matured in the current period. The Company intends to utilize the subordinated debt proceeds to continue to proactively repurchase shares or for other general corporate matters.

Stockholders' Equity

Stockholders' equity decreased $1.4 million, or 1.0%, to $133.1 million at December 31, 2021, compared to $134.5 million at December 31, 2020. The Company paid $5.2 million in dividends and repurchased $4.1 million of its common stock as part of its stock repurchase program. In addition, accumulated other comprehensive income decreased $4.3 million primarily due to the effect of market interest rate conditions on the Bank's debt securities. This was partially offset by $11.6 million of net income.

Book value per share

Book value per common share was $25.31 at December 31, 2021 compared to $24.76 at December 31, 2020, an increase of $0.55. Book value per share increased $0.74 compared to $24.57 at September 30, 2021.

Tangible book value per common share (Non-GAAP) was $22.45 at December 31, 2021, compared to $21.42 at December 31, 2020, an increase of $1.03. Tangible book value per share increased $0.78 compared to $21.67 at September 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 12/31/21 9/30/21 6/30/21 3/31/21 12/31/20ConditionData

ASSETS

Cash and Due $ 119,674 $ 173,523 $ 172,010 $ 230,000 $ 160,911 From Banks

Securities 224,974 221,351 208,472 142,156 145,400

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

Loans

Real Estate:

Residential 320,798 317,373 322,480 339,596 344,142

Commercial 392,124 379,621 360,518 370,118 373,555

Construction 85,028 78,075 85,187 77,714 72,600

Commercialand Industrial

Commercialand 64,487 69,657 70,666 68,551 71,717 Industrial

PPP 24,523 32,703 49,525 60,380 55,096

Consumer 122,152 112,087 106,404 111,650 113,854

Other 11,684 12,083 12,666 13,688 13,789

Total Loans 1,020,796 1,001,599 1,007,446 1,041,697 1,044,753

Allowance for (11,582 ) (11,581 ) (11,544 ) (12,725 ) (12,771 )Loan Losses

Loans, Net 1,009,214 990,018 995,902 1,028,972 1,031,982

Premises andEquipment - 795 795 - - Held for Sale

Premises andEquipment, 18,399 18,502 18,682 20,240 20,302 Net

Bank-OwnedLife 25,332 25,190 25,052 24,916 24,779 Insurance

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

Intangible 5,295 5,740 6,186 7,867 8,399 Assets, Net

AccruedInterest and 12,859 12,560 13,373 12,938 15,215 Other Assets

Total Assets $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720





LIABILITIES

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

Deposits

Non-InterestBearing 385,775 373,320 368,452 377,137 340,569 DemandDeposits

InterestBearing 272,518 244,004 246,920 280,929 259,870 DemandAccounts

Money Market 192,125 190,426 176,824 198,975 199,029 Accounts

Savings 239,482 232,679 226,639 246,725 235,088 Accounts

Time Deposits 136,713 144,727 154,718 180,697 190,013

Total 1,226,613 1,185,156 1,173,553 1,284,463 1,224,569 Deposits



Short-Term 39,266 42,623 39,054 45,352 41,055 Borrowings

Other 17,601 6,000 6,000 6,000 8,000 Borrowings

AccruedInterest and 8,875 7,405 7,913 7,230 8,566 OtherLiabilities

Total 1,292,355 1,343,831 1,329,077 1,343,045 1,282,190 Liabilities



STOCKHOLDERS' $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 EQUITY

Three Months Ended

Year Ended

Selected Operating Data

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

12/31/21

12/31/20

Interest and Dividend Income

Loans, Including Fees

$

9,904

$

9,718

$

9,936

$

10,146

$

10,833

$

39,704

$

42,883

Securities:

Taxable

866

843

635

646

725

2,990

3,619

Tax-Exempt

66

71

74

78

78

289

369

Dividends

21

19

24

20

20

84

79

Other Interest and Dividend Income

106

135

151

98

99

490

517

Total Interest and Dividend Income

10,963

10,786

10,820

10,988

11,755

43,557

47,467

Interest Expense

Deposits

636

715

827

947

1,036

3,125

5,172

Short-Term Borrowings

26

25

24

23

25

98

137

Other Borrowings

70

36

35

41

60

182

254

Total Interest Expense

732

776

886

1,011

1,121

3,405

5,563

Net Interest and Dividend Income

10,231

10,010

9,934

9,977

10,634

40,152

41,904

Provision (Recovery) for Loan Losses

75

-

(1,200

)

-

-

(1,125

)

4,000

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

10,156

10,010

11,134

9,977

10,634

41,277

37,904

Noninterest Income:

Service Fees

569

602

614

546

560

2,331

2,206

Insurance Commissions

1,618

1,194

1,209

1,595

1,403

5,616

4,878

Other Commissions

90

93

173

165

105

521

479

Net Gain on Sales of Loans

977

49

31

86

388

1,143

1,391

Net Gain on Securities

44

24

11

447

213

526

233

Net Gain on Purchased Tax Credits

17

18

17

18

16

70

62

Gain on Sale of Branches

5,203

-

-

-

-

5,203

-

Net Loss on Disposal of Fixed Assets

-

-

(3

)

-

(13

)

(3

)

(61

)

Income from Bank-Owned Life Insurance

142

138

136

137

140

553

557

Other Income (Loss)

29

80

31

180

(34

)

320

(274

)

Total Noninterest Income

8,689

2,198

2,219

3,174

2,778

16,280

9,471

Noninterest Expense:

Salaries and Employee Benefits

5,181

4,787

5,076

4,894

5,126

19,938

19,809

Occupancy

619

615

1,024

710

606

2,968

2,797

Equipment

252

205

311

266

234

1,034

935

Data Processing

488

541

607

518

476

2,154

1,843

FDIC Assessment

222

293

249

250

344

1,014

837

PA Shares Tax

173

224

225

265

350

887

1,313

Contracted Services

1,133

1,441

750

687

577

4,011

2,048

Legal and Professional Fees

206

180

419

189

185

994

752

Advertising

191

225

193

140

178

749

664

Other Real Estate Owned (Income)

(30

)

(89

)

(26

)

(38

)

(39

)

(183

)

(69

)

Amortization of Intangible Assets

445

446

503

532

532

1,926

2,128

Intangible Assets and Goodwill Impairment

-

-

1,178

-

-

1,178

18,693

Writedown of Fixed Assets

23

2

2,268

-

240

2,293

1,124

Other

1,069

903

945

982

916

3,899

3,893

Total Noninterest Expense

9,972

9,773

13,722

9,395

9,725

42,862

56,767

Income (Loss) Before Income Tax Expense (Benefit)

8,873

2,435

(369

)

3,756

3,687

14,695

(9,392

)

Income Tax Expense (Benefit)

1,908

452

(146

)

911

608

3,125

1,248

Net Income (Loss)

$

6,965

$

1,983

$

(223

)

$

2,845

$

3,079

$

11,570

$

(10,640

)

Three Months Ended Year Ended

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

Interest andDividend Income

Loans,Including $ 9,904 $ 9,718 $ 9,936 $ 10,146 $ 10,833 $ 39,704 $ 42,883 Fees

Securities:

Taxable 866 843 635 646 725 2,990 3,619

Tax-Exempt 66 71 74 78 78 289 369

Dividends 21 19 24 20 20 84 79

OtherInterest and 106 135 151 98 99 490 517 DividendIncome

TotalInterest and 10,963 10,786 10,820 10,988 11,755 43,557 47,467 DividendIncome

Interest Expense

Deposits 636 715 827 947 1,036 3,125 5,172

Short-Term 26 25 24 23 25 98 137 Borrowings

Other 70 36 35 41 60 182 254 Borrowings

TotalInterest 732 776 886 1,011 1,121 3,405 5,563 Expense

Net Interestand Dividend 10,231 10,010 9,934 9,977 10,634 40,152 41,904 Income

Provision(Recovery) 75 - (1,200 ) - - (1,125 ) 4,000 for LoanLosses

Net Interestand DividendIncome AfterProvision 10,156 10,010 11,134 9,977 10,634 41,277 37,904 (Recovery)for LoanLosses

Noninterest Income:

Service Fees 569 602 614 546 560 2,331 2,206

Insurance 1,618 1,194 1,209 1,595 1,403 5,616 4,878 Commissions

Other 90 93 173 165 105 521 479 Commissions

Net Gain onSales of 977 49 31 86 388 1,143 1,391 Loans

Net Gain on 44 24 11 447 213 526 233 Securities

Net Gain onPurchased 17 18 17 18 16 70 62 Tax Credits

Gain on Sale 5,203 - - - - 5,203 - of Branches

Net Loss onDisposal of - - (3 ) - (13 ) (3 ) (61 )Fixed Assets

Income fromBank-Owned 142 138 136 137 140 553 557 LifeInsurance

Other Income 29 80 31 180 (34 ) 320 (274 )(Loss)

TotalNoninterest 8,689 2,198 2,219 3,174 2,778 16,280 9,471 Income

Noninterest Expense:

Salaries andEmployee 5,181 4,787 5,076 4,894 5,126 19,938 19,809 Benefits

Occupancy 619 615 1,024 710 606 2,968 2,797

Equipment 252 205 311 266 234 1,034 935

Data 488 541 607 518 476 2,154 1,843 Processing

FDIC 222 293 249 250 344 1,014 837 Assessment

PA Shares 173 224 225 265 350 887 1,313 Tax

Contracted 1,133 1,441 750 687 577 4,011 2,048 Services

Legal andProfessional 206 180 419 189 185 994 752 Fees

Advertising 191 225 193 140 178 749 664

Other RealEstate Owned (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 )(Income)

Amortizationof 445 446 503 532 532 1,926 2,128 IntangibleAssets

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

Writedown of 23 2 2,268 - 240 2,293 1,124 Fixed Assets

Other 1,069 903 945 982 916 3,899 3,893

TotalNoninterest 9,972 9,773 13,722 9,395 9,725 42,862 56,767 Expense

Income(Loss)Before 8,873 2,435 (369 ) 3,756 3,687 14,695 (9,392 )Income TaxExpense(Benefit)

Income TaxExpense 1,908 452 (146 ) 911 608 3,125 1,248 (Benefit)

Net Income $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 )(Loss)

Three Months Ended

Year Ended

Per Common Share Data

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

12/31/21

12/31/20

Dividends Per Common Share

$

0.24

$

0.24

$

0.24

$

0.24

$

0.24

$

0.96

$

0.96

Earnings (Loss) Per Common Share - Basic

1.32

0.37

(0.04

)

0.52

0.57

2.15

(1.97

)

Earnings (Loss) Per Common Share - Diluted

1.31

0.37

(0.04

)

0.52

0.57

2.15

(1.97

)

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

0.53

0.36

0.59

0.46

0.58

1.95

1.61

Weighted Average Common Shares Outstanding - Basic

5,291,795

5,373,032

5,432,234

5,434,374

5,404,874

5,382,441

5,406,290

Weighted Average Common Shares Outstanding - Diluted

5,314,537

5,390,128

5,432,234

5,436,881

5,406,068

5,392,729

5,406,290

Three Months Ended Year Ended

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

DividendsPer Common $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.96 $ 0.96 Share

Earnings(Loss) PerCommon 1.32 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 )Share -Basic

Earnings(Loss) PerCommon 1.31 0.37 (0.04 ) 0.52 0.57 2.15 (1.97 )Share -Diluted

AdjustedEarningsPer CommonShare - 0.53 0.36 0.59 0.46 0.58 1.95 1.61 Diluted(Non-GAAP)^(1)



WeightedAverageCommon 5,291,795 5,373,032 5,432,234 5,434,374 5,404,874 5,382,441 5,406,290 SharesOutstanding- Basic

WeightedAverageCommon 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 SharesOutstanding- Diluted

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Common Shares Outstanding

5,260,672

5,330,401

5,409,077

5,434,374

5,434,374

Book Value Per Common Share

$

25.31

$

24.57

$

24.50

$

24.62

$

24.76

Tangible Book Value per Common Share (1)

22.45

21.67

21.56

21.38

21.42

Stockholders' Equity to Assets

9.3

%

8.9

%

9.1

%

9.1

%

9.5

%

Tangible Common Equity to Tangible Assets (1)

8.4

7.9

8.1

8.0

8.3

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

Common Shares 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 Outstanding

Book ValuePer Common $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Share

Tangible BookValue per 22.45 21.67 21.56 21.38 21.42 Common Share^(1)

Stockholders'Equity to 9.3 % 8.9 % 9.1 % 9.1 % 9.5 %Assets

TangibleCommon Equity 8.4 7.9 8.1 8.0 8.3 to TangibleAssets ^(1)

Three Months Ended

Year Ended

Selected Financial Ratios (2)

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

12/31/21

12/31/20

Return on Average Assets

1.87

%

0.54

%

(0.06

) %

0.81

%

0.87

%

0.79

%

(0.77

) %

Adjusted Return on Average Assets (1)

0.76

0.53

0.87

0.71

0.88

0.72

0.63

Return on Average Equity

20.95

5.93

(0.66

)

8.54

9.13

8.66

(7.18

)

Adjusted Return on Average Equity (1)

8.55

5.88

9.57

7.48

9.25

7.87

5.88

Average Interest-Earning Assets to Average Interest-Bearing Liabilities

145.09

146.78

146.82

142.98

141.58

145.44

139.89

Average Equity to Average Assets

8.93

9.03

9.08

9.48

9.49

9.12

10.75

Net Interest Rate Spread

2.85

2.77

2.72

2.91

3.07

2.81

3.13

Net Interest Rate Spread (FTE) (1)

2.86

2.78

2.74

2.92

3.08

2.82

3.15

Net Interest Margin

2.95

2.88

2.84

3.04

3.21

2.92

3.30

Net Interest Margin (FTE) (1)

2.96

2.89

2.85

3.05

3.22

2.94

3.32

Net Charge-offs (Recoveries) to Average Loans

0.03

(0.01

)

(0.01

)

0.02

0.39

0.01

0.11

Efficiency Ratio

52.71

80.05

112.91

71.44

72.51

75.95

110.50

Adjusted Efficiency Ratio (1)

69.73

77.27

80.68

70.06

68.06

74.25

68.14

Three Months Ended Year Ended

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

Return on 1.87 % 0.54 % (0.06 ) 0.81 % 0.87 % 0.79 % (0.77 )Average Assets % %

Adjusted Returnon Average 0.76 0.53 0.87 0.71 0.88 0.72 0.63 Assets ^(1)

Return on 20.95 5.93 (0.66 ) 8.54 9.13 8.66 (7.18 )Average Equity

Adjusted Returnon Average 8.55 5.88 9.57 7.48 9.25 7.87 5.88 Equity ^(1)

AverageInterest-EarningAssets to 145.09 146.78 146.82 142.98 141.58 145.44 139.89 AverageInterest-BearingLiabilities

Average Equityto Average 8.93 9.03 9.08 9.48 9.49 9.12 10.75 Assets

Net Interest 2.85 2.77 2.72 2.91 3.07 2.81 3.13 Rate Spread

Net InterestRate Spread 2.86 2.78 2.74 2.92 3.08 2.82 3.15 (FTE) ^(1)

Net Interest 2.95 2.88 2.84 3.04 3.21 2.92 3.30 Margin

Net InterestMargin (FTE) ^ 2.96 2.89 2.85 3.05 3.22 2.94 3.32 (1)

Net Charge-offs(Recoveries) to 0.03 (0.01 ) (0.01 ) 0.02 0.39 0.01 0.11 Average Loans

Efficiency Ratio 52.71 80.05 112.91 71.44 72.51 75.95 110.50

AdjustedEfficiency Ratio 69.73 77.27 80.68 70.06 68.06 74.25 68.14 ^(1)

Asset Quality Ratios

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Allowance for Loan Losses to Total Loans

1.13

%

1.16

%

1.15

%

1.22

%

1.22

%

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

1.16

1.20

1.21

1.30

1.29

Allowance for Loan Losses to Nonperforming Loans (3)

159.40

106.18

74.92

89.29

88.15

Allowance for Loan Losses to Noncurrent Loans (4)

233.37

135.37

90.83

118.08

117.20

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

0.78

0.97

1.37

1.18

1.50

Nonperforming Loans to Total Loans (3)

0.71

1.09

1.53

1.37

1.39

Noncurrent Loans to Total Loans (4)

0.49

0.85

1.26

1.03

1.04

Nonperforming Assets to Total Assets (6)

0.51

0.74

1.07

0.98

1.04

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

Allowance for Loan Losses to 1.13 % 1.16 % 1.15 % 1.22 % 1.22 %Total Loans

Allowance for Loan Losses toTotal Loans, Excluding PPP 1.16 1.20 1.21 1.30 1.29 Loans (Non-GAAP) ^(1)

Allowance for Loan Losses to 159.40 106.18 74.92 89.29 88.15 Nonperforming Loans ^(3)

Allowance for Loan Losses to 233.37 135.37 90.83 118.08 117.20 Noncurrent Loans ^(4)

Delinquent and Nonaccrual 0.78 0.97 1.37 1.18 1.50 Loans to Total Loans ^(4) (5)

Nonperforming Loans to Total 0.71 1.09 1.53 1.37 1.39 Loans ^(3)

Noncurrent Loans to Total 0.49 0.85 1.26 1.03 1.04 Loans ^(4)

Nonperforming Assets to Total 0.51 0.74 1.07 0.98 1.04 Assets ^(6)

Capital Ratios (7)

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

Common Equity Tier 1 Capital (to Risk Weighted Assets)

11.95 %

11.53 %

11.67 %

11.85 %

11.79 %

Tier 1 Capital (to Risk Weighted Assets)

11.95

11.53

11.67

11.85

11.79

Total Capital (to Risk Weighted Assets)

13.18

12.77

12.92

13.10

13.04

Tier 1 Leverage (to Adjusted Total Assets)

7.76

7.38

7.23

7.87

7.81

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

Common Equity Tier 1 Capital (to Risk 11.95 11.53 11.67 11.85 11.79Weighted Assets) % % % % %

Tier 1 Capital (to Risk Weighted Assets) 11.95 11.53 11.67 11.85 11.79

Total Capital (to Risk Weighted Assets) 13.18 12.77 12.92 13.10 13.04

Tier 1 Leverage (to Adjusted Total 7.76 7.38 7.23 7.87 7.81Assets)

(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.

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

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

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

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

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

December 31, 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)

$

1,004,827

$

9,927

3.92

%

$

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

%

Debt Securities

Taxable

205,328

866

1.69

197,763

843

1.71

124,685

635

2.04

122,883

646

2.10

133,026

725

2.18

Exempt From Federal Tax

10,477

84

3.21

11,647

90

3.09

12,276

94

3.06

12,943

96

2.97

13,006

96

2.95

Equity Securities

2,693

21

3.12

2,655

19

2.86

2,649

24

3.62

2,632

20

3.04

2,612

20

3.06

Other Interest-Earning Assets

153,577

106

0.27

164,447

135

0.33

246,392

151

0.25

161,871

98

0.25

137,000

99

0.29

Total Interest-Earning Assets

1,376,902

11,004

3.17

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

Noninterest-Earning Assets

100,607

88,291

82,794

92,550

94,262

Total Assets

$

1,477,509

$

1,469,277

$

1,485,664

$

1,424,732

$

1,412,848

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits (3)

$

278,546

51

0.07

%

$

275,411

48

0.07

%

$

275,752

55

0.08

$

259,065

77

0.12

$

252,521

83

0.13

%

Savings (3)

252,387

20

0.03

251,801

21

0.03

247,238

25

0.04

239,850

32

0.05

232,647

32

0.05

Money Market (3)

209,572

57

0.11

198,167

55

0.11

199,652

71

0.14

197,395

98

0.20

198,983

131

0.26

Time Deposits (3)

154,342

508

1.31

168,654

591

1.39

177,506

676

1.53

187,114

740

1.60

193,194

790

1.63

Total Interest-Bearing Deposits (3)

894,847

636

0.28

894,033

715

0.32

900,148

827

0.37

883,424

947

0.43

877,345

1,036

0.47

Short-Term Borrowings

Securities Sold Under Agreements to Repurchase

44,709

26

0.23

40,818

25

0.24

49,325

24

0.20

41,094

23

0.23

43,468

25

0.23

Other Borrowings

9,474

70

2.93

6,000

36

2.38

6,000

35

2.34

7,200

41

2.31

10,543

60

2.26

Total Interest-Bearing Liabilities

949,030

732

0.31

940,851

776

0.33

955,473

886

0.37

931,718

1,011

0.44

931,356

1,121

0.48

Noninterest-Bearing Demand Deposits

388,787

387,746

387,317

349,108

338,223

Other Liabilities

7,800

8,019

7,999

8,869

9,176

Total Liabilities

1,345,617

1,336,616

1,350,789

1,289,695

1,278,755

Stockholders' Equity

131,892

132,661

134,875

135,037

134,093

Total Liabilities and Stockholders' Equity

$

1,477,509

$

1,469,277

$

1,485,664

$

1,424,732

$

1,412,848

Net Interest Income (FTE)

(Non-GAAP) (4)

10,272

10,051

9,977

10,017

10,679

Net Interest-Earning Assets (5)

427,872

440,135

447,397

400,464

387,230

Net Interest Rate Spread (FTE)

(Non-GAAP) (4) (6)

2.86

%

2.78

%

2.74

2.92

3.08

%

Net Interest Margin (FTE)

(Non-GAAP) (4)(7)

2.96

2.89

2.85

3.05

3.22

PPP Loans

29,067

391

5.34

40,313

484

4.76

57,661

636

4.42

56,945

676

4.81

64,914

768

4.71

AVERAGE BALANCES AND YIELDS



Three Months Ended

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

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

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net ^(2) $ 1,004,827 $ 9,927 3.92 % $ 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 %

Debt Securities

Taxable 205,328 866 1.69 197,763 843 1.71 124,685 635 2.04 122,883 646 2.10 133,026 725 2.18

Exempt From Federal Tax 10,477 84 3.21 11,647 90 3.09 12,276 94 3.06 12,943 96 2.97 13,006 96 2.95

Equity Securities 2,693 21 3.12 2,655 19 2.86 2,649 24 3.62 2,632 20 3.04 2,612 20 3.06

Other Interest-Earning Assets 153,577 106 0.27 164,447 135 0.33 246,392 151 0.25 161,871 98 0.25 137,000 99 0.29

Total Interest-Earning Assets 1,376,902 11,004 3.17 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

Noninterest-Earning Assets 100,607 88,291 82,794 92,550 94,262

Total Assets $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits ^ $ 278,546 51 0.07 % $ 275,411 48 0.07 % $ 275,752 55 0.08 $ 259,065 77 0.12 $ 252,521 83 0.13 %(3)

Savings ^(3) 252,387 20 0.03 251,801 21 0.03 247,238 25 0.04 239,850 32 0.05 232,647 32 0.05

Money Market ^(3) 209,572 57 0.11 198,167 55 0.11 199,652 71 0.14 197,395 98 0.20 198,983 131 0.26

Time Deposits ^(3) 154,342 508 1.31 168,654 591 1.39 177,506 676 1.53 187,114 740 1.60 193,194 790 1.63

Total Interest-Bearing Deposits^ 894,847 636 0.28 894,033 715 0.32 900,148 827 0.37 883,424 947 0.43 877,345 1,036 0.47 (3)

Short-Term Borrowings

Securities Sold Under Agreements 44,709 26 0.23 40,818 25 0.24 49,325 24 0.20 41,094 23 0.23 43,468 25 0.23 to Repurchase

Other Borrowings 9,474 70 2.93 6,000 36 2.38 6,000 35 2.34 7,200 41 2.31 10,543 60 2.26

Total Interest-Bearing Liabilities 949,030 732 0.31 940,851 776 0.33 955,473 886 0.37 931,718 1,011 0.44 931,356 1,121 0.48

Noninterest-Bearing Demand 388,787 387,746 387,317 349,108 338,223 Deposits

Other Liabilities 7,800 8,019 7,999 8,869 9,176

Total Liabilities 1,345,617 1,336,616 1,350,789 1,289,695 1,278,755

Stockholders' Equity 131,892 132,661 134,875 135,037 134,093

Total Liabilities and $ 1,477,509 $ 1,469,277 $ 1,485,664 $ 1,424,732 $ 1,412,848 Stockholders' Equity

Net Interest Income (FTE) 10,272 10,051 9,977 10,017 10,679 (Non-GAAP) ^(4)

Net Interest-Earning Assets ^(5) 427,872 440,135 447,397 400,464 387,230

Net Interest Rate Spread (FTE) 2.86 % 2.78 % 2.74 2.92 3.08 %(Non-GAAP) ^(4) (6)

Net Interest Margin (FTE) 2.96 2.89 2.85 3.05 3.22 (Non-GAAP)^ (4)(7)

PPP Loans 29,067 391 5.34 40,313 484 4.76 57,661 636 4.42 56,945 676 4.81 64,914 768 4.71

(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 that were sold in December 2021.

(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.

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

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

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.

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

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

AVERAGE BALANCES AND YIELDS

Year Ended

December 31, 2021

December 31, 2020

Average Balance

Interest and Dividends

Yield / Cost

Average Balance

Interest and Dividends

Yield / Cost

(Dollars in thousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net (1)

$

1,014,405

$

39,799

3.92

%

$

1,008,401

$

43,013

4.27

%

Debt Securities

Taxable

162,987

2,990

1.83

138,015

3,619

2.62

Exempt From Federal Tax

11,829

366

3.09

14,244

450

3.16

Marketable Equity Securities

2,657

84

3.16

2,585

79

3.06

Other Interest-Earning Assets

181,502

490

0.27

105,588

517

0.49

Total Interest-Earning Assets

1,373,380

43,729

3.18

1,268,833

47,678

3.76

Noninterest-Earning Assets

91,075

109,241

Total Assets

$

1,464,455

$

1,378,074

Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing Demand Deposits (2)

$

272,256

232

0.09

%

$

240,372

590

0.25

%

Savings (2)

247,864

98

0.04

227,277

188

0.08

Money Market (2)

201,222

281

0.14

187,095

708

0.38

Time Deposits (2)

171,805

2,514

1.46

203,128

3,686

1.81

Total Interest-Bearing Deposits (2)

893,147

3,125

0.35

857,872

5,172

0.60

Short-Term Borrowings

Securities Sold Under Agreements to Repurchase

43,988

98

0.22

37,819

137

0.36

Other Borrowings

7,172

182

2.54

11,328

254

2.24

Total Interest-Bearing Liabilities

944,307

3,405

0.36

907,019

5,563

0.61

Noninterest-Bearing Demand Deposits

378,374

313,858

Other Liabilities

8,168

9,065

Total Liabilities

1,330,849

1,229,942

Stockholders' Equity

133,605

148,132

Total Liabilities and Stockholders' Equity

$

1,464,454

$

1,378,074

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

40,324

42,115

Net Interest-Earning Assets (3)(4)

429,073

361,814

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

2.82

%

3.15

%

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

2.94

3.32

PPP Loans

45,905

2,189

4.77

45,694

1,537

3.36

AVERAGE BALANCES AND YIELDS



Year Ended

December 31, 2021 December 31, 2020

Average Interest Yield Average Interest Yield Balance and / Balance and / Dividends Cost Dividends Cost

(Dollars inthousands) (Unaudited)

Assets:

Interest-Earning Assets:

Loans, Net ^(1) $ 1,014,405 $ 39,799 3.92 % $ 1,008,401 $ 43,013 4.27 %

Debt Securities

Taxable 162,987 2,990 1.83 138,015 3,619 2.62

Exempt From Federal 11,829 366 3.09 14,244 450 3.16 Tax

Marketable Equity 2,657 84 3.16 2,585 79 3.06 Securities

OtherInterest-Earning 181,502 490 0.27 105,588 517 0.49 Assets

TotalInterest-Earning 1,373,380 43,729 3.18 1,268,833 47,678 3.76 Assets

Noninterest-Earning 91,075 109,241 Assets

Total Assets $ 1,464,455 $ 1,378,074



Liabilities and Stockholders' Equity

Interest-Bearing Liabilities:

Interest-Bearing $ 272,256 232 0.09 % $ 240,372 590 0.25 %Demand Deposits ^(2)

Savings ^(2) 247,864 98 0.04 227,277 188 0.08

Money Market ^(2) 201,222 281 0.14 187,095 708 0.38

Time Deposits ^(2) 171,805 2,514 1.46 203,128 3,686 1.81

TotalInterest-Bearing 893,147 3,125 0.35 857,872 5,172 0.60 Deposits ^(2)

Short-Term Borrowings

Securities SoldUnder Agreements to 43,988 98 0.22 37,819 137 0.36 Repurchase

Other Borrowings 7,172 182 2.54 11,328 254 2.24

TotalInterest-Bearing 944,307 3,405 0.36 907,019 5,563 0.61 Liabilities

Noninterest-Bearing 378,374 313,858 Demand Deposits

Other Liabilities 8,168 9,065

Total Liabilities 1,330,849 1,229,942

Stockholders' Equity 133,605 148,132

Total Liabilitiesand Stockholders' $ 1,464,454 $ 1,378,074 Equity

Net Interest Income(FTE) (Non-GAAP) ^ 40,324 42,115 (3)

Net Interest-Earning 429,073 361,814 Assets ^(3)(4)

Net Interest RateSpread (FTE) 2.82 % 3.15 %(Non-GAAP) ^(3)(5)

Net Interest Margin(FTE) (Non-GAAP)^ 2.94 3.32 (3)(6)

PPP Loans 45,905 2,189 4.77 45,694 1,537 3.36

(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 that were sold in December 2021.

(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.

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

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

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.

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

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

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 Year Ended

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

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



Net Income (Loss) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 )(GAAP)



Adjustments

Gain on Securities (44 ) (24 ) (11 ) (447 ) (213 ) (526 ) (233 )

Gain on Sale of (5,203 ) - - - - (5,203 ) - Branches

Loss on Disposal - - 3 - 13 3 61 of Fixed Assets

Tax effect 1,102 5 2 94 42 1,202 36



Non-Cash Charges:

Intangible Assetsand Goodwill - - 1,178 - - 1,178 18,693 Impairment

Writedown on Fixed 23 2 2,268 - 240 2,293 1,124 Assets

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

Adjusted Net $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 Income (Non-GAAP)



Weighted-AverageDiluted CommonShares and Common 5,314,537 5,390,128 5,432,234 5,436,881 5,406,068 5,392,729 5,406,290 Stock EquivalentsOutstanding



Earnings (Loss)per Common Share - $ 1.31 $ 0.37 $ (0.04 ) $ 0.52 $ 0.57 $ 2.15 $ (1.97 )Diluted (GAAP)



Adjusted Earningsper Common Share - $ 0.53 $ 0.36 $ 0.59 $ 0.46 $ 0.58 $ 1.95 $ 1.61 Diluted (Non-GAAP)



Net Income (Loss) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 )(GAAP) (Numerator)



Annualization 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Factor



Average Assets 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 (Denominator)



Return on Average 1.87 % 0.54 % (0.06 ) 0.81 % 0.87 % 0.79 % (0.77 )Assets (GAAP) % %



Adjusted NetIncome (Non-GAAP) $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 (Numerator)



Annualization 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Factor



Average Assets 1,477,509 1,469,277 1,485,664 1,424,732 1,412,848 1,464,455 1,378,074 (Denominator)



Adjusted Return onAverage Assets 0.76 % 0.53 % 0.87 % 0.71 % 0.88 % 0.72 % 0.63 %(Non-GAAP)

Three Months Ended

Year Ended

12/31/21

9/30/21

6/30/21

3/31/21

12/31/20

12/31/21

12/31/20

(Dollars in thousands) (Unaudited)

Net Income (Loss) (GAAP) (Numerator)

$

6,965

$

1,983

$

(223

)

$

2,845

$

3,079

$

11,570

$

(10,640

)

Annualization Factor

3.97

3.97

4.01

4.06

3.98

1.00

1.00

Average Equity (Denominator) (GAAP)

131,892

132,661

134,875

135,037

134,093

133,605

148,132

Return on Average Equity (GAAP)

20.95

%

5.93

%

(0.66

) %

8.54

%

9.13

%

8.66

%

(7.18

) %

Adjusted Net Income (Non-GAAP) (Numerator)

$

2,843

$

1,966

$

3,217

$

2,492

$

3,119

$

10,517

$

8,703

Annualization Factor

3.97

3.97

4.01

4.06

3.98

1.00

1.00

Average Equity (Denominator) (GAAP)

131,892

132,661

134,875

135,037

134,093

133,605

148,132

Adjusted Return on Average Equity (Non-GAAP)

8.55

%

5.88

%

9.57

%

7.48

%

9.25

%

7.87

%

5.88

%

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 Year Ended

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

(Dollars inthousands) (Unaudited)



Net Income(Loss) (GAAP) $ 6,965 $ 1,983 $ (223 ) $ 2,845 $ 3,079 $ 11,570 $ (10,640 )(Numerator)



Annualization 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Factor



Average Equity(Denominator) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 (GAAP)



Return on ) )Average Equity 20.95 % 5.93 % (0.66 % 8.54 % 9.13 % 8.66 % (7.18 %(GAAP)



Adjusted NetIncome $ 2,843 $ 1,966 $ 3,217 $ 2,492 $ 3,119 $ 10,517 $ 8,703 (Non-GAAP)(Numerator)



Annualization 3.97 3.97 4.01 4.06 3.98 1.00 1.00 Factor



Average Equity(Denominator) 131,892 132,661 134,875 135,037 134,093 133,605 148,132 (GAAP)



AdjustedReturn on 8.55 % 5.88 % 9.57 % 7.48 % 9.25 % 7.87 % 5.88 %Average 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.

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

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



Assets (GAAP) $ 1,425,479 $ 1,474,818 $ 1,461,613 $ 1,476,821 $ 1,416,720

Goodwill andIntangible (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 )Assets, Net

TangibleAssets $ 1,410,452 $ 1,459,346 $ 1,445,695 $ 1,459,222 $ 1,398,589 (Non-GAAP)(Numerator)



Stockholders' $ 133,124 $ 130,987 $ 132,536 $ 133,776 $ 134,530 Equity (GAAP)

Goodwill andIntangible (15,027 ) (15,472 ) (15,918 ) (17,599 ) (18,131 )Assets, Net

TangibleCommon Equityor Tangible $ 118,097 $ 115,515 $ 116,618 $ 116,177 $ 116,399 Book Value(Non-GAAP)(Denominator)



Stockholders'Equity to 9.3 % 8.9 % 9.1 % 9.1 % 9.5 %Assets (GAAP)

TangibleCommon Equityto Tangible 8.4 % 7.9 % 8.1 % 8.0 % 8.3 %Assets(Non-GAAP)



Common SharesOutstanding 5,260,672 5,330,401 5,409,077 5,434,374 5,434,374 (Denominator)



Book Valueper Common $ 25.31 $ 24.57 $ 24.50 $ 24.62 $ 24.76 Share (GAAP)

Tangible BookValue per $ 22.45 $ 21.67 $ 21.56 $ 21.38 $ 21.42 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 Year Ended

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

(Dollars inthousands) (Unaudited)



Interest Income $ 10,963 $ 10,786 $ 10,820 $ 10,988 $ 11,755 $ 43,557 $ 47,467 (GAAP)

Adjustment to FTE 41 41 43 40 45 172 211 Basis

Interest Income 11,004 10,827 10,863 11,028 11,800 43,729 47,678 (FTE) (Non-GAAP)

Interest Expense 732 776 886 1,011 1,121 3,405 5,563 (GAAP)

Net Interest Income $ 10,272 $ 10,051 $ 9,977 $ 10,017 $ 10,679 $ 40,324 $ 42,115 (FTE) (Non-GAAP)



Net Interest Rate 2.85 % 2.77 % 2.72 % 2.91 % 3.07 % 2.81 % 3.13 %Spread (GAAP)

Adjustment to FTE 0.01 0.01 0.02 0.01 0.01 0.01 0.02 Basis

Net Interest RateSpread (FTE) 2.86 2.78 2.74 2.92 3.08 2.82 3.15 (Non-GAAP)



Net Interest Margin 2.95 % 2.88 % 2.84 % 3.04 % 3.21 % 2.92 % 3.30 %(GAAP)

Adjustment to FTE 0.01 0.01 0.01 0.01 0.01 0.02 0.02 Basis

Net Interest Margin 2.96 2.89 2.85 3.05 3.22 2.94 3.32 (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 Year Ended

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

(Dollars inthousands) (Unaudited)



Noninterest Expense $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 (GAAP)



Net Interest andDividend Income 10,231 10,010 9,934 9,977 10,634 40,152 41,904 (GAAP)



Noninterest Income 8,689 2,198 2,219 3,174 2,778 16,280 9,471 (GAAP)

Operating Revenue 18,920 12,208 12,153 13,151 13,412 56,432 51,375 (GAAP)

Efficiency Ratio 52.71 % 80.05 % 112.91 % 71.44 % 72.51 % 75.95 % 110.50 %(GAAP)



Noninterest Expense $ 9,972 $ 9,773 $ 13,722 $ 9,395 $ 9,725 $ 42,862 $ 56,767 (GAAP)

Less:

Other Real Estate (30 ) (89 ) (26 ) (38 ) (39 ) (183 ) (69 )Owned (Income)

Amortization of 445 446 503 532 532 1,926 2,128 Intangible Assets

Intangible Assetsand Goodwill - - 1,178 - - 1,178 18,693 Impairment

Writedown on Fixed 23 2 2,268 - 240 2,293 1,124 Assets

Adjusted Noninterest $ 9,534 $ 9,414 $ 9,799 $ 8,901 $ 8,992 $ 37,648 $ 34,891 Expense (Non-GAAP)



Net Interest andDividend Income 10,231 10,010 9,934 9,977 10,634 40,152 41,904 (GAAP)

Noninterest Income 8,689 2,198 2,219 3,174 2,778 16,280 9,471 (GAAP)

Less:

Net Gain on 44 24 11 447 213 526 233 Securities

Gain on Sale of 5,203 - - - - 5,203 - Branches

Net Loss on Disposal - - (3 ) - (13 ) (3 ) (61 )of Fixed Assets

Adjusted Noninterest 3,442 2,174 2,211 2,727 2,578 10,554 9,299 Income (Non-GAAP)

Adjusted Operating 13,673 12,184 12,145 12,704 13,212 50,706 51,203 Revenue (Non-GAAP)

Adjusted Efficiency 69.73 % 77.27 % 80.68 % 70.06 % 68.06 % 74.25 % 68.14 %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.

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

(Dollars inthousands) (Unaudited)



Allowancefor Loan $ 11,582 $ 11,581 $ 11,544 $ 12,725 $ 12,771 Losses



Total Loans 1,020,796 $ 1,001,599 1,007,446 $ 1,041,697 $ 1,044,753

PPP Loans (24,523 ) (32,703 ) (49,525 ) (60,380 ) (55,096 )

TotalLoans,Excluding $ 996,273 $ 968,896 $ 957,921 $ 981,317 $ 989,657 PPP Loans(Non-GAAP)



Allowancefor LoanLosses toTotalLoans, 1.16 % 1.20 % 1.21 % 1.30 % 1.29 %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: Jeremy Hellman, Vice President The Equity Group Inc. Phone: (212) 836-9626 Email: jhellman@equityny.com