Company Quick10K Filing
CB Financial Services
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 5 $126
10-Q 2019-11-06 Quarter: 2019-09-30
10-Q 2019-08-08 Quarter: 2019-06-30
10-Q 2019-05-15 Quarter: 2019-03-31
10-K 2019-03-18 Annual: 2018-12-31
10-Q 2018-11-09 Quarter: 2018-09-30
10-Q 2018-08-14 Quarter: 2018-06-30
10-Q 2018-05-10 Quarter: 2018-03-31
10-K 2018-03-28 Annual: 2017-12-31
10-Q 2017-11-08 Quarter: 2017-09-30
10-Q 2017-08-09 Quarter: 2017-06-30
10-Q 2017-05-08 Quarter: 2017-03-31
10-K 2017-03-13 Annual: 2016-12-31
10-Q 2016-11-07 Quarter: 2016-09-30
10-Q 2016-08-09 Quarter: 2016-06-30
10-Q 2016-05-11 Quarter: 2016-03-31
10-K 2016-03-14 Annual: 2015-12-31
10-Q 2015-11-09 Quarter: 2015-09-30
10-Q 2015-08-07 Quarter: 2015-06-30
10-Q 2015-05-15 Quarter: 2015-03-31
10-K 2015-03-26 Annual: 2014-12-31
10-Q 2014-11-14 Quarter: 2014-09-30
10-Q 2014-11-05 Quarter: 2014-06-30
8-K 2020-01-08 Officers, Other Events, Exhibits
8-K 2019-12-06 Regulation FD, Exhibits
8-K 2019-11-20 Other Events, Exhibits
8-K 2019-11-15 Regulation FD, Exhibits
8-K 2019-10-28 Earnings, Exhibits
8-K 2019-08-30 Officers, Exhibits
8-K 2019-08-21 Other Events, Exhibits
8-K 2019-07-29 Earnings, Exhibits
8-K 2019-07-29 Regulation FD, Exhibits
8-K 2019-05-22 Officers, Exhibits
8-K 2019-05-15 Shareholder Vote, Regulation FD, Other Events, Exhibits
8-K 2019-05-15 Other Events, Exhibits
8-K 2019-05-07 Regulation FD, Exhibits
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-02-20 Other Events, Exhibits
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-12-19 Officers, Exhibits
8-K 2018-11-21 Other Events, Exhibits
8-K 2018-10-31 Earnings, Exhibits
8-K 2018-08-15 Other Events, Exhibits
8-K 2018-07-30 Regulation FD, Exhibits
8-K 2018-07-30 Earnings, Exhibits
8-K 2018-07-30 Other Events, Exhibits
8-K 2018-06-20 Officers, Shareholder Vote, Regulation FD, Exhibits
8-K 2018-05-16 Other Events, Exhibits
8-K 2018-05-08 Regulation FD, Exhibits
8-K 2018-05-04 Other Events
8-K 2018-04-30 Other Events, Exhibits
8-K 2018-04-30 M&A, Officers, Exhibits
8-K 2018-04-27 Other Events, Exhibits
8-K 2018-04-27 Earnings, Exhibits
8-K 2018-04-12 Shareholder Vote, Other Events, Exhibits
8-K 2018-03-30 Other Events, Exhibits
8-K 2018-03-22 Other Events
8-K 2018-03-06 Other Events, Exhibits
8-K 2018-02-21 Other Events, Exhibits
8-K 2018-02-12 Earnings, Exhibits
8-K 2018-01-17 Officers
CBFV 2019-09-30
Part I - Financial Information
Item 1. Financial Statements.
Note 1. Summary of Significant Accounting Policies
Note 2. Earnings per Share
Note 3. Investment Securities
Note 4. Loans and Related Allowance for Loan Loss
Note 5. Leases
Note 6. Deposits
Note 7. Short-Term Borrowings
Note 8. Other Borrowed Funds
Note 9. Commitments and Contingent Liabilities
Note 10. Fair Value Disclosure
Note 11. Other Noninterest Expense
Note 12. Segment and Related Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits
EX-31.1 exh_311.htm
EX-31.2 exh_312.htm
EX-32.1 exh_321.htm
EX-32.2 exh_322.htm

CB Financial Services Earnings 2019-09-30

CBFV 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
FCCO 137 1,116 998 2 0 11 20 97 0% 5.0 1%
SSFN 134 964 880 0 0 7 20 122 6.1 1%
STND 132 990 849 0 0 0 13 235 18.2 0%
FUNC 130 1,406 1,279 5 0 11 25 195 0% 7.9 1%
HFBC 130 934 838 1 0 5 16 83 0% 5.2 1%
MBCN 129 1,288 1,154 0 0 13 28 -6 -0.2 1%
CBFV 126 1,305 1,160 25 0 11 24 82 0% 3.4 1%
BKJ 124 925 832 0 0 6 20 38 1.9 1%
OPOF 117 1,029 922 54 0 7 13 66 0% 5.0 1%
ICBK 114 1,485 1,322 0 0 14 45 -2 -0.0 1%

10-Q 1 f10q_110619p.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission file number: 001-36706

 

  CB FINANCIAL SERVICES, INC.  
  (Exact name of registrant as specified in its charter)  

 

Pennsylvania   51-0534721
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)

 

100 N. Market Street, Carmichaels, PA   15320
(Address of principal executive offices)   (Zip Code)

 

  (724) 966-5041  
  (Registrant’s telephone number, including area code)  

 

  N/A  
  (Former name, former address and former fiscal year, if changed since last report)  

 

Securities registered pursuant to Section 12(b) of the Act:

 

Common stock, par value $0.4167 per share   CBFV   The Nasdaq Stock Market, LLC
(Title of each class)   (Trading symbol)   (Name of each exchange on which registered)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐  Accelerated filer ☒
Non-accelerated filer ☐  Smaller reporting company ☒
Emerging growth company ☒   

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of November 6, 2019, the number of shares outstanding of the Registrant’s Common Stock was 5,433,489.

 

 

FORM 10-Q

 

INDEX

 

Page

PART I – FINANCIAL INFORMATION  
Item 1.  Financial Statements (Unaudited) 1
Consolidated Statement of Financial Condition 1
Consolidated Statement of Income 2
Consolidated Statement of Comprehensive Income 3
Consolidated Statements of Changes In Stockholders’ Equity 4
Consolidated Statement of Cash Flows 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 34
Item 3. Quantitative and Qualitative Disclosure about Market Risk. 44
Item 4. Controls and Procedures. 44
PART II - OTHER INFORMATION  
Item 1. Legal Proceedings. 46
Item 1A. Risk Factors. 46
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. 46
Item 3.  Defaults Upon Senior Securities. 46
Item 4. Mine Safety Disclosures. 46
Item 5. Other Information. 46
Item 6. Exhibits 46
SIGNATURES 47

 

 

 

 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

 

   (Unaudited)   
   September 30,  December 31,
(Dollars in thousands, except share data)  2019  2018
       
ASSETS          
Cash and Due From Banks:          
Interest Bearing  $71,267   $39,356 
Non-Interest Bearing   17,146    13,997 
Total Cash and Due From Banks   88,413    53,353 
           
Investment Securities:          
Available-for-Sale   217,545    225,409 
Loans, Net   922,448    903,314 
Premises and Equipment, Net   22,566    23,448 
Bank-Owned Life Insurance   24,080    22,922 
Goodwill   28,425    28,425 
Core Deposit Intangible, Net   9,480    10,934 
Accrued Interest and Other Assets   14,899    13,496 
TOTAL ASSETS  $1,327,856   $1,281,301 
           
LIABILITIES          
Deposits:          
Demand Deposits  $264,131   $253,201 
NOW Accounts   230,931    218,687 
Money Market Accounts   184,100    187,627 
Savings Accounts   214,883    209,985 
Time Deposits   224,857    214,891 
Brokered Deposits   7,006    2,267 
Total Deposits   1,125,908    1,086,658 
           
Short-Term Borrowings   29,118    30,979 
Other Borrowed Funds   17,000    20,000 
Accrued Interest and Other Liabilities   7,732    6,039 
TOTAL LIABILITIES   1,179,758    1,143,676 
           
STOCKHOLDERS' EQUITY          
Preferred Stock, No Par Value; 5,000,000 Shares Authorized   -    - 
Common Stock, $0.4167 Par Value; 35,000,000 Shares Authorized, 5,680,993 Shares Issued and 5,433,489 and 5,432,289 Shares Outstanding at September 30, 2019 and December 31, 2018, Respectively   2,367    2,367 
Capital Surplus   83,457    83,225 
Retained Earnings   63,582    57,843 
Treasury Stock, at Cost (247,504 and 248,704 Shares at September 30, 2019 and December 31, 2018, Respectively)   (4,350)   (4,370)
Accumulated Other Comprehensive Income (Loss)   3,042    (1,440)
TOTAL STOCKHOLDERS' EQUITY   148,098    137,625 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $1,327,856   $1,281,301 

 

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

1

CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

 

   Three Months Ended  Nine Months Ended
   September 30,  September 30,
(Dollars in thousands, except share and per share data)  2019  2018  2019  2018
             
INTEREST AND DIVIDEND INCOME                    
Loans, Including Fees  $10,984   $10,044   $32,090   $27,272 
Federal Funds Sold   156    53    435    113 
Investment Securities:                    
Taxable   1,505    1,202    4,159    2,624 
Tax-Exempt   204    318    717    857 
Other Interest and Dividend Income   249    147    662    295 
TOTAL INTEREST AND DIVIDEND INCOME   13,098    11,764    38,063    31,161 
                     
INTEREST EXPENSE                    
Deposits   1,864    1,398    5,407    3,372 
Federal Funds Purchased   -    -    -    1 
Short-Term Borrowings   47    68    143    473 
Other Borrowed Funds   91    128    278    364 
TOTAL INTEREST EXPENSE   2,002    1,594    5,828    4,210 
                     
NET INTEREST INCOME   11,096    10,170    32,235    26,951 
Provision For Loan Losses   175    25    550    2,125 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   10,921    10,145    31,685    24,826 
                     
NONINTEREST INCOME                    
Service Fees on Deposit Accounts   811    866    2,362    2,176 
Insurance Commissions   985    920    3,219    2,731 
Other Commissions   159    127    448    823 
Net Gain on Sales of Loans   48    52    190    106 
Net Gain (Loss) on Sales of Investment Securities   3    -    (50)   - 
Fair Value of Marketable Equity Securities   (25)   35    104    54 
Net Gain on Purchased Tax Credits   9    11    27    33 
Net (Loss) Gain on Disposal of Fixed Assets   -    (74)   2    (74)
Income from Bank-Owned Life Insurance   142    135    408    370 
Other   67    16    203    80 
TOTAL NONINTEREST INCOME   2,199    2,088    6,913    6,299 
                     
NONINTEREST EXPENSE                    
Salaries and Employee Benefits   4,628    4,708    14,271    13,268 
Occupancy   597    855    2,019    2,213 
Equipment   636    786    2,005    1,916 
FDIC Assessment   5    67    368    361 
PA Shares Tax   226    197    743    593 
Contracted Services   312    273    945    583 
Legal and Professional Fees   117    171    458    456 
Advertising   244    245    651    587 
Bankcard Processing   225    180    652    448 
Other Real Estate Owned (Income)   13    49    (81)   37 
Amortization of Core Deposit Intangible   484    452    1,454    986 
Merger-Related   -    61    -    854 
Other   1,003    1,321    3,117    3,224 
TOTAL NONINTEREST EXPENSE   8,490    9,365    26,602    25,526 
                     
Income Before Income Taxes   4,630    2,868    11,996    5,599 
Income Taxes   884    576    2,346    977 
NET INCOME  $3,746   $2,292   $9,650   $4,622 
                     
EARNINGS PER SHARE                    
Basic  $0.69   $0.42   $1.78   $0.96 
Diluted   0.69    0.42    1.77    0.95 
                     
WEIGHTED AVERAGE SHARES OUTSTANDING                    
Basic   5,433,289    5,414,299    5,433,296    4,834,948 
Diluted   5,458,723    5,476,792    5,451,705    4,889,553 

 

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

2

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 

   Three Months Ended  Nine Months Ended
   September 30,  September 30,
(Dollars in thousands)  2019  2018  2019  2018
             
Net Income  $3,746   $2,292   $9,650   $4,622 
                     
Other Comprehensive Income (Loss):                    
Unrealized Gains (Losses) on Available-for-Sale Securities Net of Income Tax Expense (Benefit) of $47 and ($325) for the Three Months Ended September 30, 2019 and 2018, Respectively, and $1,209 and ($734) for the Nine Months Ended September 30, 2019 and 2018, Respectively   74    (1,224)   4,443    (2,715)
                     
Reclassification Adjustment for (Gains) Losses on Securities: Included in Net Income, Net of Income Tax (Expense) Benefit of ($1) and $11 for the Three and Nine Months Ended September 30, 2019, Respectively (1)    (2)   -    39    - 
Other Comprehensive Income (Loss), Net of Income Tax Expense (Benefit)   72    (1,224)   4,482    (2,715)
Total Comprehensive Income  $3,818   $1,068   $14,132   $1,907 

 

(1)The gross amount of gains (losses) on securities of $3 and ($50) for the Three and Nine Months Ended September 30, 2019, respectively are reported as Net Gain (Loss) on Sales of Investment Securities on the Consolidated Statement of Income. The income tax expense (benefit) is included in Income Taxes on the Consolidated Statement of Income.

 

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

3

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

 

(Dollars in thousands, except share and per share data)  Shares Issued  Common Stock  Capital Surplus  Retained Earnings  Treasury Stock  Accumulated Other Comprehensive Income (Loss)  Total Stockholders' Equity
                      
December 31, 2018   5,680,993   $2,367   $83,225   $57,843   $(4,370)  $(1,440)  $137,625 
Comprehensive Income:                                   
Net Income   -    -    -    2,925    -    -    2,925 
Other Comprehensive Income   -    -    -    -    -    2,384    2,384 
Stock-Based Compensation Expense   -    -    77    -    -    -    77 
Exercise of Stock Options   -    -    5    -    36    -    41 
Treasury stock purchased, at cost (800 shares)   -    -    -    -    (19)   -    (19)
Dividends Paid ($0.24 Per Share)   -    -    -    (1,304)   -    -    (1,304)
March 31, 2019   5,680,993    2,367    83,307    59,464    (4,353)   944    141,729 
Comprehensive Income:                                   
Net Income   -    -    -    2,979    -    -    2,979 
Other Comprehensive Income   -    -    -    -    -    2,026    2,026 
Restricted Stock Awards Granted   -    -    (11)   -    11    -    - 
Restricted Stock Awards Forfeited   -    -    8    -    (8)   -    - 
Stock-Based Compensation Expense   -    -    76    -    -    -    76 
Dividends Paid ($0.24 Per Share)   -    -    -    (1,303)   -    -    (1,303)
June 30, 2019   5,680,993    2,367    83,380    61,140    (4,350)   2,970    145,507 
Comprehensive Income:                                   
Net Income   -    -    -    3,746    -    -    3,746 
Other Comprehensive Income   -    -    -    -    -    72    72 
Stock-Based Compensation Expense   -    -    77    -    -    -    77 
Dividends Paid ($0.24 Per Share)   -    -    -    (1,304)   -    -    (1,304)
September 30, 2019   5,680,993   $2,367   $83,457   $63,582   $(4,350)  $3,042   $148,098 

 

(Dollars in thousands, except share and per share data)  Shares Issued  Common Stock  Capital Surplus  Retained Earnings  Treasury Stock  Accumulated Other Comprehensive Loss  Total Stockholders' Equity
                      
December 31, 2017   4,363,346   $1,818   $42,089   $55,280   $(4,590)  $(1,341)  $93,256 
Comprehensive Income:                                   
Net Income   -      -      -      1,360    -      -      1,360 
Other Comprehensive Loss   -      -      -      -      -      (1,421)   (1,421)
Impact of change in method of accounting formarketable equity securities (1)   -      -      -      40    -      (40)   -   
Stock-Based Compensation Expense   -      -      119    -      -      -      119 
Exercise of Stock Options   -      -      3    -      29    -      32 
Treasury Stock Purchased, at cost (895 shares)   -      -      -      -      (27)   -      (27)
Dividends Paid ($0.22 Per Share)   -      -      -      (901)   -      -      (901)
March 31, 2018   4,363,346    1,818    42,211    55,779    (4,588)   (2,802)   92,418 
Comprehensive Income:                                   
Net Income   -      -      -      970    -      -      970 
Other Comprehensive Loss   -      -      -      -      -      (70)   (70)
Issuance of Common Stock                                   
(net of issuance expenses of $515)   1,317,647    549    40,978    -      -      -      41,527 
Stock-Based Compensation Expense   -      -      120    -      -      -      120 
Exercise of Stock Options   -      -      2    -      179    -      181 
Treasury Stock Purchased, at cost (7,729 shares)   -      -      -      -      (271)   -      (271)
Dividends Paid ($0.22 Per Share)   -      -      -      (1,191)   -      -      (1,191)
June 30, 2018   5,680,993    2,367    83,311    55,558    (4,680)   (2,872)   133,684 
Comprehensive Income:                                   
Net Income   -      -      -      2,292    -      -      2,292 
Other Comprehensive Loss   -      -      -      -      -      (1,224)   (1,224)
Stock-Based Compensation Expense   -      -      122    -      -      -      122 
Dividends Paid ($0.22 Per Share)   -      -      -      (1,191)   -      -      (1,191)
September 30, 2018   5,680,993   $2,367   $83,433   $56,659   $(4,680)  $(4,096)  $133,683 

 

(1)Reclassification due to the adoption of Accounting Standards Update (“ASU”) 2016-01.

 

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

4

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

 

   Nine Months Ended
   September 30,
(Dollars in thousands)  2019  2018
       
OPERATING ACTIVITIES          
Net Income  $9,650   $4,622 
Αdjustmеnts to Rеconcilе Net Income to Net Cash Provided By Operating Activities:          
Net (Accretion) Amortization on Investments   (145)   96 
Depreciation and Amortization   2,730    2,263 
Provision for Loan Losses   550    2,125 
Fair Value of Marketable Equity Securities   (104)   (54)
Net Gain on Purchased Tax Credits   (27)   (33)
Income from Bank-Owned Life Insurance   (408)   (370)
Proceeds From Mortgage Loans Sold   7,378    6,434 
Originations of Mortgage Loans for Sale   (7,188)   (6,328)
Net Gain on Sales of Loans   (190)   (106)
Net Loss on Sales of Investment Securities   50    -   
Net Loss (Gain) on Saless of Other Real Estate Owned and Repossessed Assets   6    (19)
Noncash Expense for Stock-Based Compensation   230    361 
Decrease (Increase) in Accrued Interest Receivable   33    (996)
Net (Gain) Loss on Disposal of Fixed Assets   (2)   74 
Increase (Decrease) in Taxes Payable   259    (954)
Increase in Accrued Interest Payable   331    191 
Net Payment of Federal/State Income Taxes   -      (850)
Other, Net   (448)   568 
NET CASH PROVIDED BY OPERATING ACTIVITIES   12,705    7,024 
           
INVESTING ACTIVITIES          
Investment Securities Available for Sale:          
Proceeds From Principal Repayments and Maturities   34,490    11,624 
Purchases of Securities   (50,185)   (1,069)
Proceeds from Sales of Securities   29,460    80,314 
Net Increase in Loans   (21,531)   (63,176)
Purchase of Premises and Equipment   (66)   (4,529)
Asset Acquisition of a Customer List   (900)   -   
Proceeds From a Claim on Bank-Owned Life Insurance   -      950 
Proceeds From Sales of Other Real Estate Owned and Repossessed Assets   1,123    214 
Decrease in Restricted Equity Securities   214    389 
Net Cash Received from Acquisition   -      20,632 
Acquisition of Bank-Owned Life Insurance   (750)   -   
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES   (8,145)   45,349 
           
FINANCING ACTIVITIES          
Net Increase (Decrease) in Deposits   39,250    7,927 
Net Decrease in Short-Term Borrowings   (1,861)   (28,056)
Principal Payments on Other Borrowed Funds   (3,000)   (3,541)
Cash Dividends Paid   (3,911)   (3,283)
Treasury Stock, Purchases at Cost   (19)   (298)
Exercise of Stock Options   41    213 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES   30,500    (27,038)
           
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   35,060    25,335 
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR   53,353    20,622 
CASH AND DUE FROM BANKS AT END OF PERIOD  $88,413   $45,957 
           
SUPPLEMENTAL CASH FLOW INFORMATION:          
Cash paid for:          
Interest on deposits and borrowings (including interest credited to deposit accounts of $3,543 and $3,372, respectively)  $5,497   $4,019 
Income taxes   2,260    850 
           
Real estate acquired in settlement of loans   427    46 
Non-cash transaction related to FWVB acquisition   -      41,527 
Non-cash transaction related to loan payoff receivable   1,644    -   
           
SUPPLEMENTAL NONCASH DISCLOSURE:          
Right of use asset recognized   1,707    -   
Lease liability recognized   1,712    -   

 

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

5

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1. Summary of Significant Accounting Policies

 

Principles of Consolidation and Basis of Presentation

 

The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters” or “EU”). CB Financial and the Bank are collectively referred to as the “Company”. All intercompany transactions and balances have been eliminated in consolidation.

 

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading in any material respect. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for losses on loans, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, evaluation of securities for other-than-temporary impairment including related cash flow projections, goodwill and intangible assets impairment, and the valuation of deferred tax assets.

 

In the opinion of management, the accompanying unaudited interim financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations at the dates and for the periods presented. All these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Interim results are not necessarily indicative of results for a full year.

 

The Company evaluated subsequent events through the date the consolidated financial statements were filed with the SEC and incorporated into the consolidated financial statements the effect of all material known events determined by Accounting Standards Codification ("ASC”) 855, Subsequent Events, to be recognizable events.

 

Nature of Operations

 

The Company derives substantially all its income from banking and bank-related services which include interest earnings on commercial, commercial mortgage, residential real estate and consumer loan financing, as well as interest earnings on investment securities and fees generated from deposit services to its customers. The Company provides banking services through its subsidiary, Community Bank, a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania. The Bank operates from twenty offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania, seven offices in Brooke, Marshall, Ohio, Upshur and Wetzel Counties in West Virginia, and one office in Belmont County in Ohio. The Bank is a community-oriented institution offering residential and commercial real estate loans, commercial and industrial loans, and consumer loans as well as a variety of deposit products for individuals and businesses in its market area. Property and casualty, commercial liability, surety and other insurance products are offered through Exchange Underwriters, a full-service, independent insurance agency.

 

Acquired Loans

 

Loans that were acquired in previous mergers were recorded at fair value with no carryover of the related allowance for credit losses. The fair value of the acquired loans was estimated by management with the assistance of a third-party valuation specialist.

 

For performing loans acquired in a merger, the excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. For purchased credit impaired loans acquired in a merger, the difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable discount. The nonaccretable discount represents estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows require an evaluation to determine the need for an allowance for loan losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable discount which is then reclassified as accretable discount that is recognized into interest income over the remaining life of the loan using the interest method. The evaluation of the amount of future cash flows that is expected to be collected is performed in a similar manner as that used to determine our allowance for credit losses. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable discount portion of the fair value adjustment.

 

6

Recognition of Prior Period Errors

 

In April 2018, the Company discovered an error with the collateral position on a commercial and industrial classified loan relationship that had occurred in April 2017. This error resulted in the loss of the Company’s first lien position, leaving the loan with insufficient collateral. The Company recognized the error by recording a specific reserve and recognizing an additional $300,000 (pre-tax) of provision for loan losses for the quarter-ended March 31, 2018. There was no financial statement impact for the three months ended September 30, 2018. The impact of the correction of the error resulted in a decrease of $300,000 in income before income taxes and a decrease of $63,000 in income taxes. This resulted in a decrease of $237,000 (after-tax) in net income ($0.05 per share) for the nine months ended September 30, 2018. As a result of this error, the Company’s 2017 results were overstated by $237,000 and the Company’s March 31, 2018 quarterly and nine months ended September 30, 2018 results were understated by the same amount. Management of the Company concluded the effect of the error was immaterial to the Company’s 2017 and 2018 results.

 

In March 2019, the Company discovered an error in loan classifications within the commercial and industrial segment of the loan portfolio. The loan reclassifications were due to term loans and revolving lines of credit that were classified as commercial and industrial loans but were partially or primarily secured by commercial and residential real estate. The error resulted in loan reclassifications of $21.7 million from commercial and industrial segment to commercial real estate and residential real estate segments as of and for the year ended December 31, 2018. In addition, as a result of the loan segment reclassifications, the allocated components of the allowance for loan losses were adjusted to reflect the revised loan balances with the residual of $257,000 added to the unallocated component of the allowance for loan loss as of December 31, 2018. Management of the Company has evaluated the loan reclassification error and determined that, based on quantitative and qualitative analysis, this error was not material to the December 31, 2018 consolidated financial statements as presented.

 

Reclassifications

 

Certain comparative amounts for the prior year have been reclassified to conform to the current year presentation. Such reclassifications did not affect net income or stockholders’ equity.

 

Recent Accounting Standards

 

In January 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-01, Leases (Topic 842), Land Easement Practical Expedient for Transition to Topic 842. ASU 2018-01 is intended to be effective with ASU 2016-02, as amended. The amendments in ASU 2018-01 are as follows: provide an optional transition practical expedient for the adoption of ASU 2016-02 that, if elected, would not require an organization to reconsider their accounting for existing land easements that are not currently accounted for under the old lease standards; and clarify that new or modified land easements should be evaluated under ASU 2016-02, once an entity has adopted the new standard. ASU 2016-02 will require lessees to recognize a right-of-use (ROU) asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation for leases with terms of more than twelve months. Both the ROU asset and lease liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend on the classification of the lease as either a finance or an operating lease. Accounting by lessors will remain largely unchanged from current U.S. GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. The Company adopted the provisions of ASU 2016-02 effective January 1, 2019, which increased assets and liabilities approximately $1.7 million at the time of adoption, as a result of reporting additional leases on the Company's consolidated statement of financial condition.

 

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 amendments simplify the accounting for certain financial instruments with down round features. The amendments require companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) data will adjust their basic EPS calculation for the effect of the feature when triggered and will also recognize the effect of the trigger within equity. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. The Company adopted the provisions of ASU 2017-11 effective January 1, 2019 and the adoption did not have a material impact on the Company's consolidated financial condition or results of operations.

 

In March 2017, the FASB issued ASU 2017-08, Receivables- Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchases of Callable Debt Securities. ASU 2017-08 amends guidance on the amortization period of premiums on certain purchases of callable debt securities. The amendments shorten the amortization period of premiums on certain purchases of callable debt securities to the earliest call date. ASU 2017-08 is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. The Company adopted the provisions of ASU 2017-08 effective January 1, 2019 and the adoption did not have a material impact on the Company's consolidated statement of financial condition or results of operations.

 

7

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the second step of the goodwill impairment test. Instead, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. ASU 2017-04 is effective for public business entities that are SEC filers for annual periods beginning after December 15, 2019, and interim periods within those annual periods, with early adoption permitted, and is to be applied on a prospective basis. The Company is currently evaluating the provisions of ASU 2017-04, but does not believe that its adoption will have a material impact on the Company's consolidated financial condition or results of operations.

 

In September 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, ASU 2016-13 eliminates the probable initial recognition threshold in current GAAP; and instead requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this ASU will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects companies holding financial assets and net investment in leases that are not accounted for at fair value through net income. The ASU 2016-13 amendments affect loans, debt securities, trade receivables, net investments in leases, off balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. ASU 2016-13 was originally effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. In October 2019, the FASB approved to delay the required implementation date of ASU 2016-13 for smaller reporting companies until January 1, 2023. Early adoption will continue to be permitted. The Company is evaluating the impact of this ASU and expects to recognize a one-time adjustment to the allowance for loan losses upon adoption, but we cannot yet determine the magnitude of the one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial condition or results of operation.

 

Note 2. Earnings Per Share

 

There are no convertible securities which would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statement of Income is used as the numerator.

 

The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation.

 

   Three Months Ended  Nine Months Ended
   September 30,  September 30,
   2019  2018  2019  2018
Weighted-Average Common Shares Outstanding   5,680,993    5,680,993    5,680,993    5,101,808 
Average Treasury Stock Shares   (247,704)   (266,694)   (247,697)   (266,860)
Weighted-Average Common Shares and Common Stock                    
Equivalents Used to Calculate Basic Earnings Per Share   5,433,289    5,414,299    5,433,296    4,834,948 
Additional Common Stock Equivalents (Stock Options and                    
Restricted Stock) Used to Calculate Diluted Earnings Per Share   25,434    62,493    18,409    54,605 
Weighted-Average Common Shares and Common Stock                    
Equivalents Used to Calculate Diluted Earnings Per Share   5,458,723    5,476,792    5,451,705    4,889,553 
                     
Earnings per share:                    
Basic  $0.69   $0.42   $1.78   $0.96 
Diluted   0.69    0.42    1.77    0.95 

  

8

Note 3. Investment Securities

 

The following table presents the amortized cost and fair value of investment securities available-for-sale at the dates indicated:

 

   (Dollars in thousands)
   September 30, 2019
      Gross  Gross   
   Amortized  Unrealized  Unrealized  Fair
   Cost  Gains  Losses  Value
Debt Securities                    
U.S. Government Agencies  $57,484   $348   $(117)  $57,715 
Obligations of States and Political Subdivisions   26,415    973    (4)   27,384 
Mortgage-Backed Securities - Government-Sponsored Enterprises   127,164    2,787    (112)   129,839 
Total Debt Securities  $211,063   $4,108   $(233)   214,938 
                     
Marketable Equity Securities                    
Mutual Funds                  1,006 
Other                  1,601 
Total Marketable Equity Securities                  2,607 
Total Available-for-Sale Securities                 $217,545 

 

   December 31, 2018
      Gross  Gross   
   Amortized  Unrealized  Unrealized  Fair
   Cost  Gains  Losses  Value
Debt Securities                    
U.S. Government Agencies  $82,506   $160   $(2,087)  $80,579 
Obligations of States and Political Subdivisions   44,737    230    (366)   44,601 
Mortgage-Backed Securities - Government-Sponsored Enterprises   97,535    582    (346)   97,771 
Total Debt Securities  $224,778   $972   $(2,799)   222,951 
                     
Marketable Equity Securities                    
Mutual Funds                  968 
Other                  1,490 
Total Marketable Equity Securities                  2,458 
Total Available-for-Sale Securities                 $225,409 

 

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at the dates indicated:

 

   (Dollars in thousands)
   September 30, 2019
   Less than 12 months  12 Months or Greater  Total
   Number     Gross  Number     Gross  Number     Gross
   of  Fair  Unrealized  of  Fair  Unrealized  of  Fair  Unrealized
   Securities  Value  Losses  Securities  Value  Losses  Securities  Value  Losses
U.S. Government Agencies   3   $7,173   $(26)   6   $13,928   $(91)   9   $21,101   $(117)
Obligations of States and                                             
Political Subdivisions   -    -    -    1    508    (4)   1    508    (4)
Mortgage-Backed Securities -                                             
Government Sponsored Enterprises   5    13,993    (96)   2    4,123    (16)   7    18,116    (112)
Total   8   $21,166   $(122)   9   $18,559   $(111)   17   $39,725   $(233)

 

9

   December 31, 2018
   Less than 12 months  12 Months or Greater  Total
   Number     Gross  Number     Gross  Number     Gross
   of  Fair  Unrealized  of  Fair  Unrealized  of  Fair  Unrealized
   Securities  Value  Losses  Securities  Value  Losses  Securities  Value  Losses
U.S. Government Agencies   -   $-   $-    23   $65,450   $(2,087)   23   $65,450   $(2,087)
Obligations of States and                                             
Political Subdivisions   24    13,212    (133)   25    11,918    (233)   49    25,130    (366)
Mortgage-Backed Securities -                                             
Government Sponsored Enterprises   -    -    -    9    13,874    (346)   9    13,874    (346)
Total   24   $13,212   $(133)   57   $91,242   $(2,666)   81   $104,454   $(2,799)

 

For debt securities, the Company does not believe that any individual unrealized loss as of September 30, 2019 or December 31, 2018, represents an other-than-temporary impairment. The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate an other-than-temporary impairment. The Company’s management considers the length of time and the extent to which the fair value has been less than cost, and the financial condition of the issuer. The securities that are temporarily impaired at September 30, 2019 and December 31, 2018 relate principally to changes in interest rates subsequent to the acquisition of the specific securities. The Company does not intend to sell, or it is not more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.

 

As a result of the adoption of ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10), effective January 1, 2018, marketable equity securities are measured at fair value with changes in fair value included in Fair Value of Marketable Equity Securities on the Consolidated Statement of Income. Realized gains and losses on sales of marketable equity securities would be included in Net Gain (Loss) on Sales of Investment Securities on the Consolidated Statement of Income. There were no sales of marketable equity securities for the three and nine months ended September 30, 2019 and 2018, respectively.

 

The following table presents the scheduled maturities of debt securities as of the date indicated:

 

   (Dollars in thousands)
   September 30, 2019
   Available-for-Sale
   Amortized  Fair
   Cost  Value
Due in One Year or Less  $3,412   $3,419 
Due after One Year through Five Years   52,039    52,258 
Due after Five Years through Ten Years   30,907    31,588 
Due after Ten Years   124,705    127,673 
Total  $211,063   $214,938 

 

10

Note 4. Loans and Related Allowance for Loan Loss

 

The Company’s loan portfolio consists of four classifications: real estate loans, commercial and industrial loans, consumer loans, and other loans. These segments are further segregated between loans accounted for under the amortized cost method (“Originated Loans”) and acquired loans that were originally recorded at fair value with no carryover of the related pre-merger allowance for loan losses (“Loans Acquired at Fair Value”). The following table presents the classifications of loans as of the dates indicated.

 

   (Dollars in thousands)
   September 30, 2019  December 31, 2018
   Amount  Percent  Amount  Percent
Originated Loans                    
Real Estate:                    
Residential  $260,245    33.8%  $235,492    32.6%
Commercial   250,064    32.5    229,455    31.8 
Construction   58,324    7.6    46,824    6.5 
Commercial and Industrial   78,588    10.2    78,466    10.9 
Consumer   110,624    14.4    119,731    16.6 
Other   11,763    1.5    11,623    1.6 
Total Originated Loans   769,608    100.0%   721,591    100.0%
Allowance for Loan Losses   (9,172)        (8,942)     
Loans, Net  $760,436        $712,649      
                     
Loans Acquired at Fair Value                    
Real Estate:                    
Residential  $78,877    48.5%  $91,277    47.7%
Commercial   64,113    39.4    77,609    40.6 
Construction   -    0.0    2,000    1.0 
Commercial and Industrial   13,546    8.3    12,997    6.8 
Consumer   1,564    1.0    2,510    1.3 
Other   4,490    2.8    4,888    2.6 
Total Loans Acquired at Fair Value   162,590    100.0%   191,281    100.0%
Allowance for Loan Losses   (578)        (616)     
Loans, Net  $162,012        $190,665      
                     
Total Loans                    
Real Estate:                    
Residential  $339,122    36.4%  $326,769    35.9%
Commercial   314,177    33.7    307,064    33.6 
Construction   58,324    6.3    48,824    5.3 
Commercial and Industrial   92,134    9.9    91,463    10.0 
Consumer   112,188    12.0    122,241    13.4 
Other   16,253    1.7    16,511    1.8 
Total Loans   932,198    100.0%   912,872    100.0%
Allowance for Loan Losses   (9,750)        (9,558)     
Loans, Net  $922,448        $903,314      

 

Total unamortized net deferred loan fees were $734,000 and $926,000 at September 30, 2019 and December 31, 2018, respectively.

 

Real estate loans serviced for others, which are not included in the Consolidated Statement of Financial Condition, totaled $99.9 million and $99.0 million at September 30, 2019 and December 31, 2018, respectively.

 

11

The following table presents loans summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard and Doubtful within the internal risk rating system as of the dates indicated. At September 30, 2019 and December 31, 2018, there were no loans in the criticized category of Loss within the internal risk rating system.

 

   (Dollars in thousands)
   September 30, 2019
      Special         
   Pass  Mention  Substandard  Doubtful  Total
Originated Loans                         
Real Estate:                         
Residential  $258,702   $1,021   $522   $-   $260,245 
Commercial   235,292    9,966    3,745    1,061    250,064 
Construction   58,044    -    280    -    58,324 
Commercial and Industrial   73,103    4,493    37    955    78,588 
Consumer   110,570    -    54    -    110,624 
Other   11,763    -    -    -    11,763 
Total Originated Loans  $747,474   $15,480   $4,638   $2,016   $769,608 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $77,791   $46   $1,040   $-   $78,877 
Commercial   57,452    6,159    502    -    64,113 
Commercial and Industrial   13,546    -    -    -    13,546 
Consumer   1,564    -    -    -    1,564 
Other   4,398    92    -    -    4,490 
Total Loans Acquired at Fair Value  $154,751   $6,297   $1,542   $-   $162,590 
                          
Total Loans                         
Real Estate:                         
Residential  $336,493   $1,067   $1,562   $-   $339,122 
Commercial   292,744    16,125    4,247    1,061    314,177 
Construction   58,044    -    280    -    58,324 
Commercial and Industrial   86,649    4,493    37    955    92,134 
Consumer   112,134    -    54    -    112,188 
Other   16,161    92    -    -    16,253 
Total Loans  $902,225   $21,777   $6,180   $2,016   $932,198 

 

The increase of $2.8 million in the substandard loan category as of September 30, 2019 was mainly due to a commercial real estate relationship that was placed on nonaccrual in the current period due to alleged fraudulent activity. The relationship has been assigned to a receiver to manage the property. Based on the most recent appraisal, the loan was not impaired and therefore, the Bank does not expect to incur a loss. At December 31, 2018, the loan was classified as special mention in the construction loan category.

 

12

   December 31, 2018
      Special         
   Pass  Mention  Substandard  Doubtful  Total
Originated Loans                         
Real Estate:                         
Residential  $233,872   $1,071   $549   $-   $235,492 
Commercial   222,279    5,301    704    1,171    229,455 
Construction   43,522    2,902    400    -    46,824 
Commercial and Industrial   68,553    8,618    228    1,067    78,466 
Consumer   119,648    -    83    -    119,731 
Other   11,623    -    -    -    11,623 
Total Originated Loans  $699,497   $17,892   $1,964   $2,238   $721,591 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $89,490   $851   $936   $-   $91,277 
Commercial   69,954    7,175    480    -    77,609 
Construction   2,000    -    -    -    2,000 
Commercial and Industrial   12,981    -    16    -    12,997 
Consumer   2,510    -    -    -    2,510 
Other   4,785    103    -    -    4,888 
Total Loans Acquired at Fair Value  $181,720   $8,129   $1,432   $-   $191,281 
                          
Total Loans                         
Real Estate:                         
Residential  $323,362   $1,922   $1,485   $-   $326,769 
Commercial   292,233    12,476    1,184    1,171    307,064 
Construction   45,522    2,902    400    -    48,824 
Commercial and Industrial   81,534    8,618    244    1,067    91,463 
Consumer   122,158    -    83    -    122,241 
Other   16,408    103    -    -    16,511 
Total Loans  $881,217   $26,021   $3,396   $2,238   $912,872 

 

13

The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated.

 

   (Dollars in thousands)
   September 30, 2019
      30-59  60-89  90 Days         
   Loans  Days  Days  Or More  Total  Non-  Total
   Current  Past Due  Past Due  Past Due  Past Due  Accrual  Loans
Originated Loans                                   
Real Estate:                                   
Residential  $259,502   $138   $64   $19   $221   $522   $260,245 
Commercial   246,934    -    28    -    28    3,102    250,064 
Construction   58,324    -    -    -    -    -    58,324 
Commercial and Industrial   77,822    -    -    -    -    766    78,588 
Consumer   109,563    949    11    47    1,007    54    110,624 
Other   11,763    -    -    -    -    -    11,763 
Total Originated Loans  $763,908   $1,087   $103   $66   $1,256   $4,444   $769,608 
                                    
Loans Acquired at Fair Value                                   
Real Estate:                                   
Residential  $77,098   $108   $267   $364   $739   $1,040   $78,877 
Commercial   64,039    -    74    -    74    -    64,113 
Construction   -    -    -    -    -    -    - 
Commercial and Industrial   13,546    -    -    -    -    -    13,546 
Consumer   1,564    -    -    -    -    -    1,564 
Other   4,490    -    -    -    -    -    4,490 
Total Loans Acquired at Fair Value  $160,737   $108   $341   $364   $813   $1,040   $162,590 
                                    
Total Loans                                   
Real Estate:                                   
Residential  $336,600   $246   $331   $383   $960   $1,562   $339,122 
Commercial   310,973    -    102    -    102    3,102    314,177 
Construction   58,324    -    -    -    -    -    58,324 
Commercial and Industrial   91,368    -    -    -    -    766    92,134 
Consumer   111,127    949    11    47    1,007    54    112,188 
Other   16,253    -    -    -    -    -    16,253 
Total Loans  $924,645   $1,195   $444   $430   $2,069   $5,484   $932,198 

 

14

   December 31, 2018
      30-59  60-89  90 Days         
   Loans  Days  Days  Or More  Total  Non-  Total
   Current  Past Due  Past Due  Past Due  Past Due  Accrual  Loans
Originated Loans                                   
Real Estate:                                   
Residential  $232,967   $1,374   $72   $324   $1,770   $755   $235,492 
Commercial   229,189    84    182    -    266    -    229,455 
Construction   46,824    -    -    -    -    -    46,824 
Commercial and Industrial   77,222    216    -    -    216    1,028    78,466 
Consumer   118,256    1,319    70    3    1,392    83    119,731 
Other   11,623    -    -    -    -    -    11,623 
Total Originated Loans  $716,081   $2,993   $324   $327   $3,644   $1,866   $721,591 
                                    
Loans Acquired at Fair Value                                   
Real Estate:                                   
Residential  $89,405   $408   $65   $-   $473   $1,399   $91,277 
Commercial   77,532    77    -    -    77    -    77,609 
Construction   2,000    -    -    -    -    -    2,000 
Commercial and Industrial   12,929    52    -    -    52    16    12,997 
Consumer   2,491    18    1    -    19    -    2,510 
Other   4,888    -    -    -    -    -    4,888 
Total Loans Acquired at Fair Value  $189,245   $555   $66   $-   $621   $1,415   $191,281 
                                    
Total Loans                                   
Real Estate:                                   
Residential  $322,372   $1,782   $137   $324   $2,243   $2,154   $326,769 
Commercial   306,721    161    182    -    343    -    307,064 
Construction   48,824    -    -    -    -    -    48,824 
Commercial and Industrial   90,151    268    -    -    268    1,044    91,463 
Consumer   120,747    1,337    71    3    1,411    83    122,241 
Other   16,511    -    -    -    -    -    16,511 
Total Loans  $905,326   $3,548   $390   $327   $4,265   $3,281   $912,872 

 

15

The following table sets forth the amounts and categories of our nonperforming assets at the dates indicated. Included in nonperforming loans and assets are troubled debt restructurings (“TDRs”), which are loans whose contractual terms have been restructured in a manner which grants a concession to a borrower experiencing financial difficulties. Nonaccrual TDRs are included in their specific loan category in the nonaccrual loans section.

 

   (Dollars in Thousands)
   September 30,  December 31,
   2019  2018
Nonaccrual Loans:          
Originated Loans:          
Real Estate:          
Residential  $522   $755 
Commercial   3,102    - 
Commercial and Industrial   766    1,028 
Consumer   54    83 
Total Originated Nonaccrual Loans   4,444    1,866 
           
Loans Acquired at Fair Value:          
Real Estate:          
Residential   1,040    1,399 
Commercial and Industrial   -    16 
Total Loans Acquired at Fair Value Nonaccrual Loans   1,040    1,415 
Total Nonaccrual Loans   5,484    3,281 
           
Accruing Loans Past Due 90 Days or More:          
Originated Loans:          
Real Estate:          
Residential   19    324 
Consumer   47    3 
Total Originated Accruing Loans Past Due 90 Days or More   66    327 
           
Loans Acquired at Fair Value:          
Real Estate:          
Residential   364    - 
Total Loans Acquired at Fair Value Accruing Loans          
Past Due 90 Days or More   364    - 
Total Accruing Loans Past Due 90 Days or More   430    327 
Total Nonaccrual Loans and Accruing Loans Past Due 90 Days or More   5,914    3,608 
           
Troubled Debt Restructurings, Accruing:          
Originated Loans:          
Real Estate          
Residential   70    26 
Commercial   1,059    980 
Commercial and Industrial   113    154 
Total Originated Loans   1,242    1,160 
Loans Acquired at Fair Value:          
Real Estate          
Residential   346    1,212 
Commercial   303    333 
Total Loans Acquired at Fair Value   649    1,545 
Total Troubled Debt Restructurings, Accruing   1,891    2,705 
           
Total Nonperforming Loans   7,805    6,313 
           
Real Estate Owned:          
Residential   41    46 
Commercial   174    871 
Total Real Estate Owned   215    917 
           
Total Nonperforming Assets  $8,020   $7,230 
           
Nonperforming Loans to Total Loans   0.84%   0.69%
Nonperforming Assets to Total Assets   0.60    0.56 

 

16

The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $1.1 million and $1.4 million at September 30, 2019 and December 31, 2018, respectively.

 

TDRs typically are the result of our loss mitigation activities whereby concessions are granted to minimize loss and avoid foreclosure or repossession of collateral. The concessions granted for the TDRs in the portfolio primarily consist of, but are not limited to, modification of payment or other terms, temporary rate modification and extension of maturity date. Loans classified as TDRs consisted of 14 loans totaling $2.6 million and 12 loans totaling $3.6 million at September 30, 2019 and December 31, 2018, respectively. Originated loans classified as TDRs consisted of nine loans totaling $2.0 million and six loans totaling $2.1 million at September 30, 2019 and December 31, 2018, respectively. Loans acquired at fair value classified as TDRs consisted of five loans totaling $649,000 and six loans totaling $1.5 million at September 30, 2019 and December 31, 2018, respectively.

 

For the three months ended September 30, 2019, one residential real estate loan modified in a TDR transaction by extending the term of the loan. For the nine months ended September 30, 2019, two residential real estate loans and one commercial real estate loan modified in TDR transactions by extending the term of the loan.

 

For the three months ended September 30, 2018, there were no loans modified in a TDR transaction. For the nine months ended September 30, 2018, one commercial and industrial loan modified in a TDR transaction and was termed-out due to declining financial information and one residential real estate loan acquired at fair value modified in a TDR transaction and was identified as part of the FWVB merger.

 

For the three months ended September 30, 2019, there were no TDRs that paid off. For the nine months ended September 30, 2019, one residential real estate TDR loan acquired at fair value paid off.

 

For the three months ended September 30, 2018, one commercial real estate TDR loan paid off. During the nine months ended September 30, 2018, one commercial and industrial TDR loan was fully charged-off due to declining financial information. In addition, a commercial real estate TDR loan and consumer TDR loan paid off in-full as well as a commercial real estate TDR loan acquired at fair value and commercial and industrial TDR loan acquired at fair value paid off in-full.

 

Other than the one commercial and industrial TDR loan that was fully charged-off due to declining financial information during the nine months ended September 30, 2018, no TDRs subsequently defaulted during the three and nine months ended September 30, 2019 and 2018, respectively.

 

17

The following table presents information at the time of modification related to loans modified in a TDR during the three months ended September 30, 2019 and 2018, and the nine months ended September 30, 2019. There were no loans modified in a TDR transaction during the quarter-ended September 30, 2018.

 

   (Dollars in thousands)
   Three Months Ended September 30, 2019
      Pre-  Post-   
      Modification  Modification   
   Number  Outstanding  Outstanding   
   of  Recorded  Recorded  Related
   Contracts  Investment  Investment  Allowance
Originated Loans                    
Real Estate                    
Residential   1   $10   $10   $- 

 

   Nine Months Ended September 30, 2019
      Pre-  Post-   
      Modification  Modification   
   Number  Outstanding  Outstanding   
   of  Recorded  Recorded  Related
   Contracts  Investment  Investment  Allowance
Originated Loans                    
Real Estate                    
Residential   2   $71   $71   $- 
Commercial   1    114    114    - 
Total   3   $185   $185   $- 

 

   Nine Months Ended September 30, 2018
      Pre-  Post-   
      Modification  Modification   
   Number  Outstanding  Outstanding   
   of  Recorded  Recorded  Related
   Contracts  Investment  Investment  Allowance
Originated Loans                    
Real Estate                    
Commercial and Industrial   1   $161   $161   $- 
Total   1   $161   $161   $- 
                     
Loans Acquired at Fair Value                    
Real Estate                    
Residential   1   $7   $7   $- 
Total   1   $7   $7   $- 

 

18

The following table presents a summary of the loans considered to be impaired as of the dates indicated.

 

   (Dollars in thousands)
   September 30, 2019
         Unpaid  Average  Interest
   Recorded  Related  Principal  Recorded  Income
   Investment  Allowance  Balance  Investment  Recognized
With No Related Allowance Recorded:                         
Originated Loans                         
Real Estate:                         
Residential  $153   $-   $158   $173   $3 
Commercial   3,573    -    3,625    3,633    70 
Construction   280    -    280    336    15 
Commercial and Industrial   149    -    151    166    5 
Total With No Related Allowance Recorded  $4,155   $-   $4,214   $4,308   $93 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $346   $-   $346   $353   $12 
Commercial   805    -    805    830    33 
Total With No Related Allowance Recorded  $1,151   $-   $1,151   $1,183   $45 
                          
Total Loans                         
Real Estate:                         
Residential  $499   $-   $504   $526   $15 
Commercial   4,378    -    4,430    4,463    103 
Construction   280    -    280    336    15 
Commercial and Industrial   149    -    151    166    5 
Total With No Related Allowance Recorded  $5,306   $-   $5,365   $5,491   $138 
                          
With A Related Allowance Recorded:                         
Originated Loans                         
Real Estate:                         
Commercial  $1,677   $300   $1,677   $1,716   $61 
Commercial and Industrial   955    503    1,095    1,011    11 
Total With A Related Allowance Recorded  $2,632   $803   $2,772   $2,727   $72 
                          
Total Impaired Loans:                         
Originated Loans                         
Real Estate:                         
Residential  $153   $-   $158   $173   $3 
Commercial   5,250    300    5,302    5,349    131 
Construction   280    -    280    336    15 
Commercial and Industrial   1,104    503    1,246    1,177    16 
Total Impaired Loans  $6,787   $803   $6,986   $7,035   $165 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $346   $-   $346   $353   $12 
Commercial   805    -    805    830    33 
Total Impaired Loans  $1,151   $-   $1,151   $1,183   $45 
                          
Total Loans                         
Real Estate:                         
Residential  $499   $-   $504   $526   $15 
Commercial   6,055    300    6,107    6,179    164 
Construction   280    -    280    336    15 
Commercial and Industrial   1,104    503    1,246    1,177    16 
Total Impaired Loans  $7,938   $803   $8,137   $8,218   $210 

 

19

 

   December 31, 2018
         Unpaid  Average  Interest
   Recorded  Related  Principal  Recorded  Income
   Investment  Allowance  Balance  Investment  Recognized
With No Related Allowance Recorded:                         
Originated Loans                         
Real Estate:                         
Residential  $71   $-   $74   $82   $4 
Commercial   1,550    -    1,550    1,626    74 
Construction   400    -    400    466    25 
Commercial and Industrial   382    -    394    403    5 
Total With No Related Allowance Recorded  $2,403   $-   $2,418   $2,577   $108 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $1,212   $-   $1,212   $1,234   $63 
Commercial   2,466    -    2,466    1,868    123 
Total With No Related Allowance Recorded  $3,678   $-   $3,678   $3,102   $186 
                          
Total Loans                         
Real Estate:                         
Residential  $1,283   $-   $1,286   $1,316   $67 
Commercial   4,016    -    4,016    3,494    197 
Construction   400    -    400    466    25 
Commercial and Industrial   382    -    394    403    5 
Total With No Related Allowance Recorded  $6,081   $-   $6,096   $5,679   $294 
                          
With A Related Allowance Recorded:                         
Originated Loans                         
Real Estate:                         
Commercial  $674   $211   $674   $716   $40 
Commercial and Industrial   1,066    787    1,171    1,193    63 
Total With A Related Allowance Recorded  $1,740   $998   $1,845   $1,909   $103 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Commercial  $44   $8   $44   $29   $3 
Commercial and Industrial   16    6    16    16    - 
Total With A Related Allowance Recorded  $60   $14   $60   $45   $3 
                          
Total Loans                         
Real Estate:                         
Commercial  $718   $219   $718   $745   $43 
Commercial and Industrial   1,082    793    1,187    1,209    63 
Total With A Related Allowance Recorded  $1,800   $1,012   $1,905   $1,954   $106 

 

20

   December 31, 2018 (cont.)
         Unpaid  Average  Interest
   Recorded  Related  Principal  Recorded  Income
   Investment  Allowance  Balance  Investment  Recognized
Total Impaired Loans                         
Originated Loans                         
Real Estate:                         
Residential  $71   $-   $74   $82   $4 
Commercial   2,224    211    2,224    2,342    114 
Construction   400    -    400    466    25 
Commercial and Industrial   1,448    787    1,565    1,596    68 
Total Impaired Loans  $4,143   $998   $4,263   $4,486   $211 
                          
Loans Acquired at Fair Value                         
Real Estate:                         
Residential  $1,212   $-   $1,212   $1,234   $63 
Commercial   2,510    8    2,510    1,897    126 
Commercial and Industrial   16    6    16    16    - 
Total Impaired Loans  $3,738   $14   $3,738   $3,147   $189 
                          
Total Loans                         
Real Estate:                         
Residential  $1,283   $-   $1,286   $1,316   $67 
Commercial   4,734    219    4,734    4,239    240 
Construction   400    -    400    466    25 
Commercial and Industrial   1,464    793    1,581    1,612    68 
Total Impaired Loans  $7,881   $1,012   $8,001   $7,633   $400 

 

21

The following table presents the activity in the allowance for loan losses summarized by major classifications and segregated into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for potential impairment at the dates and for the periods indicated.

 

   (Dollars in thousands)
   Real  Real  Real  Commercial            
   Estate  Estate  Estate  and            
   Residential  Commercial  Construction  Industrial  Consumer  Other  Unallocated  Total
Originated Loans                                        
June 30, 2019