CB Financial Services Inc.

11/07/2025 | Press release | Distributed by Public on 11/07/2025 13:23

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
This discussion should be read in conjunction with the unaudited consolidated financial statements, notes and tables included in this report. For further information, refer to the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Forward-Looking Statements
This report contains certain "forward-looking statements" within the meaning of the federal securities laws. These statements are not historical facts, but rather statements based on the Company's current expectations regarding its business strategies, intended results and future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions. Management's ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors which could affect actual results include, but are not limited to, the following:
•General and local economic conditions;
•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 integrate the operations of businesses we acquire;
•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 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.
General
CB Financial Services is a bank holding company established in 2006 and headquartered in Carmichaels, Pennsylvania. CB Financial's business activity is conducted primarily through its wholly owned bank subsidiary, Community Bank.
The Bank is a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania. The Bank operates from nine branches in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern Pennsylvania and three offices in Marshall and Ohio Counties in West Virginia. The Bank also has a loan production office in Allegheny County, a corporate center in Washington County and an operations center in Greene County, all of which are in Pennsylvania. 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.
Overview
The following discussion and analysis is presented to assist in the understanding and evaluation of our consolidated financial condition and results of operations. It is intended to complement the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q and should be read in conjunction therewith. The detailed discussion focuses on our consolidated financial condition as of September 30, 2025, compared to the consolidated financial condition as of December 31, 2024 and the consolidated results of operations for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024.
Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. Our results of operations also are affected by our provision for credit losses, noninterest income and noninterest expense. Noninterest income consists primarily of fees and service charges on deposit accounts, income from bank-owned life insurance and other income. Noninterest expense consists primarily of expenses related to salaries and employee benefits, occupancy and equipment, data processing, contracted services, legal and professional fees, advertising, deposit and general insurance and other expenses.
Financial institutions like us, in general, are significantly affected by economic conditions, competition, and the monetary and fiscal policies of the federal government. Lending activities are influenced by the demand for and supply of housing, competition among lenders, interest rate conditions, and funds availability. Our operations and lending are principally concentrated in the southwestern Pennsylvania and Ohio Valley market areas.
Explanation of Use of Non-GAAP Financial Measures
In addition to financial measures presented in accordance with U.S. GAAP, we present 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 similar 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.
The 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 using the federal statutory income tax rate of 21.0%. We believe the presentation of net interest income on a FTE basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice.
The following table reconciles net interest income, net interest spread and net interest margin on a FTE basis for the periods indicated:
Three Months Ended
Nine Months Ended
September 30, September 30,
2025 2024 2025 2024
(Dollars in thousands)
Interest Income (GAAP) $ 19,341 $ 19,773 $ 55,947 $ 56,699
Adjustment to FTE Basis
100 42 213 118
Interest Income (FTE) (Non-GAAP)
19,441 19,815 56,160 56,817
Interest Expense (GAAP) 6,242 8,299 18,998 22,163
Net Interest Income (FTE) (Non-GAAP)
$ 13,199 $ 11,516 $ 37,162 $ 34,654
Net Interest Rate Spread (GAAP)
3.05 % 2.36 % 2.86 % 2.48 %
Adjustment to FTE Basis
0.03 0.02 0.02 0.02
Net Interest Rate Spread (FTE) (Non-GAAP)
3.08 % 2.38 % 2.88 % 2.50 %
Net Interest Margin (GAAP)
3.64 % 3.11 % 3.49 % 3.21 %
Adjustment to FTE Basis
0.03 0.01 0.02 0.01
Net Interest Margin (FTE) (Non-GAAP)
3.67 % 3.12 % 3.51 % 3.22 %
Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by period-end common shares outstanding. We believe this non-GAAP measure serves as a useful tool 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.
September 30,
2025 		December 31, 2024
(Dollars in thousands, except share and per share data)
Stockholders' Equity (GAAP) $ 152,465 $ 147,378
Goodwill and Other Intangible Assets, Net (9,732) (9,732)
Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator) $ 142,733 $ 137,646
Common Shares Outstanding (Denominator) 4,998,383 5,132,654
Book Value per Common Share (GAAP) $ 30.50 $ 28.71
Tangible Book Value per Common Share (Non-GAAP) $ 28.56 $ 26.82
Consolidated Statements of Financial Condition Analysis
Assets
Total assets increased $64.0 million, or 4.3%, to $1.55 billion at September 30, 2025 compared to $1.48 billion at December 31, 2024.
Cash and Securities
•Cash and due from banks increased $6.3 million, or 12.7%, to $55.9 million at September 30, 2025, compared to $49.6 million at December 31, 2024.
•Securities increased $10.4 million, or 4.0%, to $272.6 million at September 30, 2025, compared to $262.2 million at December 31, 2024. During the quarter ended September 30, 2025, the Bank implemented a balance sheet repositioning strategy of its portfolio of available-for-sale investment securities in which $129.6 million in book value of lower-yielding investment securities with an average yield of 2.87% were sold for an after-tax realized loss of $9.3 million. Investment securities sold included $121.1 million of mortgage-backed securities/collateralized mortgage obligations issued by the U.S. government-sponsored agencies, $5.0 million of U.S. government agency securities and $3.5 million of municipal securities. The Bank then purchased $117.8 million of higher-yielding mortgage-backed securities/collateralized mortgage obligations issued by U.S government-sponsored agencies, municipal securities, subordinated debt investments and non-agency guaranteed securitizations with an expected tax-equivalent yield of approximately 5.43%. This strategy is expected to add nearly 19 basis points to net interest margin ("NIM") and approximately $0.40 to annual earnings per share. The Company expects to recover the $9.3 million loss in approximately 4.2 years.
Loans, Allowance for Credit Losses (ACL) and Credit Quality
•Total loans increased $50.8 million, or 4.6%, to $1.14 billion compared to $1.09 billion, and included increases in commercial real estate, commercial and industrial and other loans of $53.9 million, $31.9 million and $6.3 million, respectively, partially offset by decreases in consumer, construction and residential real estate loans of $20.9 million, $15.8 million and $4.6 million, respectively. The decrease in consumer loans resulted from a reduction in indirect automobile loan production due to the discontinuation of this product offering as of June 30, 2023. This portfolio is expected to continue to decline as resources are allocated and production efforts are focused on more profitable commercial products. Excluding the $23.1 million decrease in indirect automobile loans, total loans increased $73.9 million, or 7.2%. Loan production totaled $163.3 million while $73.4 million of loans were paid off since December 31, 2024.
•The allowance for credit losses (ACL) was $10.1 million at September 30, 2025 and $9.8 million at December 31, 2024. As a result, the ACL to total loans was 0.89% at September 30, 2025 and 0.90% at December 31, 2024. During the nine months ended September 30, 2025, the Company recorded a net provision for credit losses of $227,000 including a provision for credit losses on loans of $269,000, partially offset by a recovery for credit loses on unfunded commitments of $42,000.
•Net recoveries for the nine months ended September 30, 2025 were $72,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the nine months ended September 30, 2024 were $123,000, or 0.02% of average loans on an annualized basis.
•Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $2.2 million at September 30, 2025 and $1.8 million at December 31, 2024. Nonperforming loans to total loans ratio was 0.19% at September 30, 2025 and 0.16% at December 31, 2024.
Liabilities
Total liabilities increased $58.9 million, or 4.4%, to $1.39 billion at September 30, 2025 compared to $1.33 billion at December 31, 2024.
Deposits
•Total deposits increased $50.9 million, or 4.0%, to $1.33 billion as of September 30, 2025 compared to $1.28 billion at December 31, 2024. Interest-bearing demand, non interest-bearing demand and time deposits increased $49.2 million, $24.0 million and $4.5 million, respectively, while money market and savings deposits decreased $25.3 million and $1.5 million, respectively. This favorable change in the deposit mix was the result of an increased focus on building core banking relationships while strategically reducing higher priced relationships. Brokered time deposits totaled $98.5 million as of September 30, 2025 and $39.0 million as of December 31, 2024, all of which mature within three months and were utilized to fund the purchase of floating rate CLO securities. At September 30, 2025, FDIC insured deposits
totaled approximately 59.6% of total deposits while an additional 16.3% of total deposits were collateralized with investment securities.
Accrued Interest Payable and Other Liabilities
•Accrued interest payable and other liabilities increased $7.9 million, or 49.5%, to $23.9 million at September 30, 2025, compared to $16.0 million at December 31, 2024 primarily due to $4.0 million of syndicated national credits purchased and not yet settled and $4.0 million of securities purchased and not yet settled.
Stockholders' Equity
Stockholders' equity increased $5.1 million, or 3.5%, to $152.5 million at September 30, 2025, compared to $147.4 million at December 31, 2024. The key factors positively impacting stockholders' equity was a $13.2 million decrease in accumulated other comprehensive loss resulting primarily from the securities repositioning strategy, $1.7 million of shares issued as a result of stock option exercises and $164,000 of net income for the current year, partially offset by $6.8 million of treasury shares purchased under the stock repurchase program and the payment of $3.8 million in dividends since December 31, 2024.
Book value per common share (GAAP) was $30.50 at September 30, 2025 compared to $28.71 at December 31, 2024, an increase of $1.79. Tangible book value per common share (Non-GAAP) increased $1.74, or 6.5%, to $28.56 compared to $26.82 at December 31, 2024.
Consolidated Results of Operations for the Three Months Ended September 30, 2025 and 2024
Overview.Net loss was $5.7 million for the three months ended September 30, 2025, a decrease of $8.9 million compared to net income of $3.2 million for the three months ended September 30, 2024.
Net Interest and Dividend Income.Net interest and dividend income increased $1.6 million, or 14.2%, to $13.1 million for the three months ended September 30, 2025 compared to $11.5 million for the three months ended September 30, 2024. Net interest margin (GAAP) increased 53 basis points (bps) to 3.64% for the three months ended September 30, 2025 compared to 3.11% for the three months ended September 30, 2024. Fully Tax Equivalent (FTE) net interest margin (Non-GAAP) increased 55 bps to 3.67% for the three months ended September 30, 2025 compared to 3.12% for the three months ended September 30, 2024.
Interest and Dividend Income
•Interest and dividend income decreased $432,000, or 2.2%, to $19.3 million for the three months ended September 30, 2025 compared to $19.8 million the three months ended September 30, 2024.
◦Interest income on loans increased $1.0 million, or 6.9%, to $16.0 million for the three months ended September 30, 2025 compared to $14.9 million for the three months ended September 30, 2024. The average balance of loans increased $56.1 million to $1.12 billion from $1.06 billion, causing an $830,000 increase in interest income on loans. Additionally, the average yield on loans increased 8 bps to 5.68% from 5.60% despite a 125bp reduction in the federal funds rate since September 2024. While this led to the downward repricing of variable and adjustable rate loans, the impact was partially negated by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products. The increase in the average yield caused a $217,000 increase in interest income on loans.
◦Interest income on investment securities decreased $295,000, or 9.0%, to $3.0 million for the three months ended September 30, 2025 compared to $3.3 million for the three months ended September 30, 2024 driven by a $16.6 million decrease in average balances and a 9 bp decrease in average yield. The decrease in volume was due to the timing of sales and subsequent repurchases in the securites repositioning strategy. The decrease in yield resulted from the reductions in the federal funds rate since September 2024.
◦Interest income on interest-earning deposits at other banks decreased $1.2 million to $293,000 for the three months ended September 30, 2025 compared to $1.4 million for the three months ended September 30, 2024 driven by a 126 bp decrease in the average yield and a $81.4 million decrease in average balances. The decrease in the yield was primarily related to the Federal Reserve's reductions in the federal funds rate while the decrease in the volume was due to the funding of loans and decrease in average deposits.
Interest Expense
•Interest expense decreased $2.1 million, or 24.8%, to $6.2 million for the three months ended September 30, 2025 compared to $8.3 million for the three months ended September 30, 2024.
◦Interest expense on deposits decreased $2.1 million, or 26.4%, to $5.8 million for the three months ended September 30, 2025 compared to $7.9 million for the three months ended September 30, 2024. The cost of interest-bearing deposits declined 68 bps to 2.26% for the three months ended September 30, 2025 from 2.94% for the three months ended September 30, 2024 due to the change in the deposit mix and the recent Federal Reserve federal funds rate decreases. The decrease in the cost of interest-bearing deposits accounted for a $1.8 million decrease in interest
expense. Average interest-bearing deposit balances decreased $47.0 million, or 4.4%, to $1.02 billion as of September 30, 2025 compared to $1.07 billion as of September 30, 2024, primarily as the Bank strategically reduced time deposit only relationships. The decrease in average balances accounted for a $320,000 decrease in interest expense.
Average Balances and Yields.The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan and security interest income utilizing a marginal federal income tax rate of 21.0% for the periods presented. As such, amounts will not agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.
Three Months Ended September 30,
2025 2024
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)
$ 1,120,036 $ 16,034 5.68 % $ 1,063,946 $ 14,987 5.60 %
Debt Securities
Taxable 259,196 2,848 4.40 288,208 3,289 4.56
Exempt From Federal Tax 12,461 185 5.94 - - -
Equity Securities 1,000 7 2.80 2,693 28 4.16
Interest-Earning Deposits at Banks 29,682 293 3.95 111,131 1,448 5.21
Other Interest-Earning Assets 3,972 74 7.39 3,108 63 8.06
Total Interest-Earning Assets 1,426,347 19,441 5.41 1,469,086 19,815 5.37
Noninterest-Earning Assets 75,480 57,602
Total Assets $ 1,501,827 $ 1,526,688
Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits $ 350,232 1,835 2.08 % $ 316,301 1,923 2.42 %
Money Market Accounts 211,660 1,401 2.63 217,148 1,726 3.16
Savings Accounts 171,188 43 0.10 175,753 46 0.10
Time Deposits 287,646 2,531 3.49 358,498 4,197 4.66
Total Interest-Bearing Deposits 1,020,726 5,810 2.26 1,067,700 7,892 2.94
Short-Term Borrowings 5,655 68 4.77 - - -
Other Borrowings 34,743 364 4.16 34,702 407 4.67
Total Interest-Bearing Liabilities 1,061,124 6,242 2.33 1,102,402 8,299 2.99
Noninterest-Bearing Demand Deposits 271,462 263,650
Total Funding and Cost of Funds 1,332,586 1.86 1,366,052 2.42
Other Liabilities 20,120 15,043
Total Liabilities 1,352,706 1,381,095
Stockholders' Equity 149,121 145,593
Total Liabilities and Stockholders' Equity $ 1,501,827 $ 1,526,688
Net Interest Income (FTE) (Non-GAAP) (3)
$ 13,199 $ 11,516
Net Interest-Earning Assets (4)
$ 365,223 $ 366,684
Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)
3.08 % 2.38 %
Net Interest Margin (GAAP) (6)
3.64 3.11
Net Interest Margin (FTE) (Non-GAAP) (3)(6)
3.67 3.12
Return on Average Assets (1)
(1.50) 0.84
Return on Average Equity (1)
(15.15) 8.80
Average Equity to Average Assets 9.93 9.54
Average Interest-Earning Assets to Average Interest-Bearing Liabilities 134.42 133.26
(1)Annualized based on three months ended results.
(2) Net of the allowance for credit losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.
(3) Refer to Explanation and Use of Non-GAAP Financial Measures in this filing 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 annualized net interest income divided by average total interest-earning assets.
Rate/Volume Analysis.The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan and security income utilizing a marginal federal income tax rate of 21.0%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.
Three Months Ended September 30, 2025
Compared to
Three Months Ended September 30, 2024
Increase (Decrease) Due to
Volume Rate Total
(Dollars in thousands) (Unaudited)
Interest and Dividend Income:
Loans, net $ 830 $ 217 $ 1,047
Debt Securities:
Taxable (329) (112) (441)
Exempt From Federal Tax 185 - 185
Equity Securities (14) (7) (21)
Cash at Other Banks (866) (289) (1,155)
Other Interest-Earning Assets 16 (5) 11
Total Interest-Earning Assets (178) (196) (374)
Interest Expense:
Deposits (320) (1,762) (2,082)
Short-Term Borrowings 68 - 68
Other Borrowings 2 (45) (43)
Total Interest-Bearing Liabilities (250) (1,807) (2,057)
Change in Net Interest and Dividend Income $ 72 $ 1,611 $ 1,683
Provision for Credit Losses. A provision for credit losses of $259,000 was recorded for the three months ended September 30, 2025. The provision for credit losses on loans was $336,000 and was primarily due to additional reserves required for overall loan growth, changes in qualitative factors and an addition to individually assessed loans requiring specific reserves, partially offset by favorable changes in portfolio concentrations and the calculated loss rate. This was partially offset by a $77,000 recovery for credit losses on unfunded commitments due to a decrease in unfunded commitments. This compared to a net recovery of $41,000 recorded for the three months ended September 30, 2024 as the recovery for credit losses on unfunded commitments was $66,000 due to a decreases in unfunded commitments and the loss rate on construction loans and the provision for credit losses on loans was $25,000 due to changes in qualitative factors partially offset by changes in loan portfolio concentrations and an improvement in loss rates.
Noninterest Income. Noninterest income decreased $11.9 million, or 965.9%, to a loss of $10.7 million for the three months ended September 30, 2025, compared to income of $1.2 million for the three months ended September 30, 2024 as a result of $11.8 million in losses on the sale of securities from the securities repositioning strategy. Excluding security gains and losses from both periods and a gain on the sale of a subsidiary recognized during the three months ended September 30, 2024, noninterest income increased $225,000, or 26.5%, to $1.1 million for the three months ended September 30, 2025, compared to $850,000 for the three months ended September 30, 2024. This resulted primarily from a $123,000 increase in service fees primarily related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts and a $112,000 increase in other income related to hedge fees.
Noninterest Expense.Noninterest expense increased $401,000, or 4.6%, to $9.2 million for the three months ended September 30, 2025 compared to $8.8 million for the three months ended September 30, 2024. Salaries and benefits increased $686,000, or 15.0%, to $5.2 million primarily due to merit increases, revenue producing staff additions and higher insurance benefit costs, partially offset by savings realized due to the reduction in force implemented earlier this year. Legal and professional fees increased $114,000 due to timing of internal and external audit services. Equipment expense increased $87,000 due to higher
depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service in 2024. These increases were partially offset as intangible amortization decreased $264,000 as the Bank's core deposit intangibles were fully amortized in 2024. Occupancy expense decreased $181,000 due to environmental remediation costs related to a construction project on one of the Bank's office locations recognized only in 2024 and certain property management cost savings initiatives implemented in 2025. Data processing expense decreased $64,000 due to costs associated with the implementation of a new loan origination system and financial dashboard platform during mid-2024.
Income Taxes.Income tax expense was a $1.3 million benefit for the three months ended September 30, 2025 compared to a $747,000 expense for the three months ended September 30, 2024. This change was primarily driven by a decrease in pre-tax income to a $7.0 million loss for the three months ended September 30, 2025 compared to $4.0 million of income for the three months ended September 30, 2024. This resulted from the loss recognized as a result of the securities repositioning strategy exectued during the three months ended September 30, 2025.
Results of Operations for the Nine Months Ended September 30, 2025 and 2024
Overview.Net income was $164,000 for the nine months ended September 30, 2025, a decrease of $9.9 million compared to $10.1 million for the nine months ended September 30, 2024.
Net Interest and Dividend Income.Net interest and dividend income increased $2.4 million, or 7.0%, to $36.9 million for the nine months ended September 30, 2025 compared to $34.5 million for the nine months ended September 30, 2024. Net interest margin (GAAP) increased to 3.49% for the nine months ended September 30, 2025 compared to 3.21% for the nine months ended September 30, 2024. Net interest margin (FTE) (Non-GAAP) increased 29 bps to 3.51% for the nine months ended September 30, 2025 compared to 3.22% the nine months ended September 30, 2024.
Interest and Dividend Income
•Interest and dividend income decreased $752,000, or 1.3%, to $55.9 million for the nine months ended September 30, 2025 compared to $56.7 million for the nine months ended September 30, 2024.
◦Interest income on loans increased $1.5 million, or 3.5%, to $46.0 million during the nine months ended September 30, 2025 compared to $44.5 million for the nine months ended September 30, 2024. The average balance of loans increased $22.1 million to $1.10 billion for the nine months ended September 30, 2025 compared to $1.08 billion for the nine months ended September 30, 2024 resulting in a $865,000 increase in interest income on loans. Additionally, the average yield on loans increased 9 bps to 5.62% for the nine months ended September 30, 2025 compared to 5.53% for the nine months ended September 30, 2024 resulting in a $731,000 increase in interest income on loans. The increase in the loan yield is despite a 125bp reduction in the federal funds rate since September 2024. While this led to the downward repricing of variable and adjustable rate loans, the impact was partially negated by a reduction in lower yielding consumer loans due to the discontinuation of the indirect automobile loan product with the redeployment of those funds into higher yielding commercial loan products.
◦Interest income on investment securities increased $194,000, or 2.3%, to $8.6 million during the nine months ended September 30, 2025 compared to $8.4 million for the nine months ended September 30, 2024 driven by a $14.7 million increase in average balances, partially offset by a 11 bp decrease in the average yield. The increase in volume and decrease in yield was driven by a $25.5 million increase in the average balance of CLO securities as the Company executed a leverage strategy to purchase these assets funded with brokered certificates of deposits. The increase in the volume resulted in a $515,000 increase in interest income. The decrease in the average yield resulted in a $282,000 decrease in interest income and was the result of reductions in the federal funds rates since September 2024.
◦Interest income on interest-earning deposits at other banks decreased $2.4 million, to $1.1 million for the nine months ended September 30, 2025 compared to $3.5 million for the nine months ended September 30, 2024 as average balances decreased $54.5 million and the average yield decreased 114 bps. The volume decreased as cash was utilized to fund security purchases and loan originations and cover deposit fluctuations while the average yield decrease resulted from reductions in the federal funds rate since September 2024.
Interest Expense
•Interest expense decreased $3.2 million, or 14.3%, to $19.0 million for the nine months ended September 30, 2025 compared to $22.2 million for the nine months ended September 30, 2024.
◦Interest expense on deposits decreased $3.3 million, or 15.8%, to $17.6 million for the nine months ended September 30, 2025 compared to $20.9 million for the nine months ended September 30, 2024. Declining market interest rates led to the repricing of interest-bearing demand, money market and time deposits and resulted in a 40 bp decrease in the average cost of interest-bearing deposits compared to the nine months ended September 30, 2024.
This accounted for a $3.0 million decrease in interest expense. Additionally, the average balance of interest-bearing deposits decreased $15.6 million resulting in a $276,000 decrease in interest expense.
◦Interest expense on borrowed funds increased $140,000, or 11.5%, to $1.4 million for the nine months ended September 30, 2025 compared to $1.2 million for the nine months ended September 30, 2024. The average balance of borrowed funds increased $5.6 million due to FHLB short-term advances utilized during the nine months ended September 30, 2025. The increase in the average balance accounted for a $200,000 increase in interest expense. Partially offsetting this increase, the average cost of borrowed funds decreased 19 bps as $20.0 million of long-term borrowings matured and were replaced at current market rates. The decrease in the cost accounted for a $60,000 decrease in interest expense.
Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting average yields and costs. Average balances are derived from daily balances over the periods indicated. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense. FTE yield adjustments have been made for tax exempt loan and security interest income utilizing a marginal federal income tax rate of 21% for the periods presented. As such, amounts will not agree to income as reported in the consolidated financial statements. The yields and costs for the periods indicated are derived by dividing annualized income or expense by the average balances of assets or liabilities, respectively, for the periods presented.
Nine Months Ended September 30,
2025 2024
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)
$ 1,098,105 $ 46,167 5.62 % $ 1,076,052 $ 44,571 5.53 %
Debt Securities
Taxable 273,949 8,485 4.13 263,433 8,437 4.27
Tax Exempt 4,199 185 5.87 - - -
Equity Securities 1,552 44 3.78 2,693 82 4.06
Interest-Earning Deposits at Banks 36,044 1,083 4.01 90,507 3,493 5.15
Other Interest-Earning Assets 3,648 196 7.18 3,166 234 9.87
Total Interest-Earning Assets 1,417,497 56,160 5.30 1,435,851 56,817 5.29
Noninterest-Earning Assets 69,034 55,366
Total Assets $ 1,486,531 $ 1,491,217
Liabilities and Stockholders' Equity:
Interest-Bearing Liabilities:
Interest-Bearing Demand Deposits $ 334,380 5,039 2.01 % $ 325,383 5,576 2.29 %
Savings Accounts 172,517 126 0.10 184,017 157 0.11
Money Market Accounts 226,760 4,874 2.87 211,921 4,885 3.08
Time Deposits 277,424 7,604 3.66 305,386 10,330 4.52
Total Interest-Bearing Deposits 1,011,081 17,643 2.33 1,026,707 20,948 2.73
Short-Term Borrowings 5,607 199 4.75 1 - -
Other Borrowings 34,733 1,156 4.45 34,692 1,215 4.68
Total Interest-Bearing Liabilities 1,051,421 18,998 2.42 1,061,400 22,163 2.79
Noninterest-Bearing Demand Deposits 269,259 271,511
Total Funding and Cost of Funds 1,320,680 1.92 1,332,911 2.22
Other Liabilities 17,812 16,045
Total Liabilities 1,338,492 1,348,956
Stockholders' Equity 148,039 142,261
Total Liabilities and Stockholders' Equity $ 1,486,531 $ 1,491,217
Net Interest Income (FTE) (Non-GAAP) (3)
$ 37,162 $ 34,654
Net Interest-Earning Assets (4)
$ 366,076 $ 374,451
Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5)
2.88 % 2.50 %
Net Interest Margin (GAAP) (6)
3.49 3.21
Net Interest Margin (FTE) (Non-GAAP) (3)(6)
3.51 3.22
Return on Average Assets (1)
0.01 0.90
Return on Average Equity (1)
0.15 9.45
Average Equity to Average Assets 9.96 9.54
Average Interest-Earning Assets to Average Interest-Bearing Liabilities 134.82 135.28
(1)Annualized based on nine months ended results.
(2) Net of the allowance for credit losses and includes nonaccrual loans with a zero yield and Loans Held for Sale if applicable.
(3) Refer to Explanation and Use of Non-GAAP Financial Measures in this filing 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 annualized net interest income divided by average total interest-earning assets.
Rate Volume Analysis.The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. FTE yield adjustments have been made for tax exempt loan and security income utilizing a marginal federal income tax rate of 21%. The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. The total column represents the sum of the prior columns.
Nine Months Ended September 30, 2025
Compared to
Nine Months Ended September 30, 2024
Increase (Decrease) Due to
Volume Rate Total
(Dollars in thousands) (Unaudited)
Interest and Dividend Income:
Loans, net $ 865 $ 731 $ 1,596
Debt Securities:
Taxable 330 (282) 48
Exempt From Federal Tax 185 - 185
Equity Securities (32) (6) (38)
Cash at Other Banks (1,761) (649) (2,410)
Other Interest-Earning Assets 32 (70) (38)
Total Interest-Earning Assets (381) (276) (657)
Interest Expense:
Deposits (276) (3,029) (3,305)
Short-Term Borrowings 199 - 199
Other Borrowings 1 (60) (59)
Total Interest-Bearing Liabilities (76) (3,089) (3,165)
Change in Net Interest and Dividend Income $ (305) $ 2,813 $ 2,508
Provision for Credit Losses.The net provision for credit losses was $227,000 for the nine months ended September 30, 2025. The provision for credit losses for loans was $269,000, partially offset by a recovery for credit losses for unfunded commitments of $42,000. The increase for provision for credit losses for loans was due to loan growth and increases in qualitative factors, partially offset by improvement of individually analyzed loans that required specific provision in prior periods and a decline in calculated loss rates. The recovery for unfunded commitments was due to a decline in the unfunded commitment balance. This compared to a recovery for credit losses of $114,000 for the nine months ended September 30, 2024 due to a decrease in loan balances. The prior period recovery for credit losses was comprised of $105,000 for loans and $9,000 for unfunded commitments.
Noninterest Income.Noninterest income decreased $12.8 million, or 333.3%, to a $9.0 million loss for the nine months ended September 30, 2025, compared to $3.8 million of income for the nine months ended September 30, 2024. This decrease was mainly due to loss on securities for the securities repositioning of $11.8 million and a $64,000 loss mainly related to the sale of equity securities for the nine months ended September 30, 2025 compared to a $49,000 loss for the nine months ended September 30, 2024 which was primarily due to changes in the market value of equity securities, comprised mainly of bank stocks. Net gain on bank-owned life insurance claims decreased as a $915,000 gain was realized for the nine months ended September 30, 2024 and net gain on disposal of premises and equipment decreased as a gain of $274,000 was realized during nine months ended September 30, 2024 from the sale of one branch office location.
Partially offsetting these decreases, service fees increased $375,000, or 30.7%, to $1.6 million for nine months ended September 30, 2025, compared to $1.2 million for the nine months ended September 30, 2024 primarily related to increases in fees related to corporate deposit accounts, Individual Covered Health Reimbursement Arrangement (ICHRA) accounts and check card activity.
Noninterest Expense.Noninterest expense increased $1.5 million, or 5.9%, to $27.7 million for the nine months ended September 30, 2025 compared to $26.2 million for the nine months ended September 30, 2024. Salaries and benefits increased $2.8 million primarily due to $1.0 million of one-time non-recurring expense recognized for the nine months ended September 30, 2025 associated with the previously announced reduction in force, merit increases, revenue producing staff additions and higher insurance and benefit costs. Additionally, equipment expense increased $228,000 due to higher depreciation expense associated with interactive teller machines, security system upgrades and other equipment placed into service during late 2024 and FDIC expense increased $85,000.
Partially offsetting these increases, amortization of intangible assets decreased $870,000 as the Bank's core deposit intangible was fully amortized in 2024, occupancy expense decreased $505,000 primarily due to environmental remediation costs recognized during the nine months ended September 30, 2024 related to a construction project on one of the Bank's office location and certain property management cost savings initiatives implemented during the nine months ended September 30, 2025, Pennsylvania shares tax expense decreased $154,000 due to $242,000 of refunds received during the nine months ended September 30, 2025 as a result of amended prior year returns, and data processing expense decreased $210,000 due to higher 2024 costs associated with the initial implementation of a new loan origination system.
Income Taxes.Income tax expense decreased $2.4 million to a $131,000 income tax benefit for the nine months ended September 30, 2025 compared to $2.2 million of income tax expense for the nine months ended September 30, 2024. The change between the periods was driven by a decrease in pre-tax income to $33,000 for the nine months ended September 30, 2025 compared to $12.3 million for the nine months ended September 30, 2024. The decrease in pre-tax income was mainly due to the securities repositioning in the current year.
Off-Balance Sheet Arrangements
Other than loan commitments and standby and performance letters of credit, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a significant current or future effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. Refer to Note 7 in the Notes to Consolidated Financial Statements of this report for a summary of commitments outstanding as of September 30, 2025 and December 31, 2024.
Liquidity and Capital Management
Liquidity.Liquidity is the ability to meet current and future financial obligations of a short-term nature. The Company's primary sources of funds consist of deposit inflows, loan repayments and maturities, calls and sales of securities. While maturities and scheduled amortization of loans and securities are typically predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition.
The Company regularly adjusts its investments in liquid assets based upon its assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, and the objectives of its asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits with other banks and short- and intermediate-term securities. The Company believes that it had sufficient liquidity at September 30, 2025 to satisfy its short- and long-term liquidity needs.
The Company's most liquid assets are cash and due from banks, which totaled $55.9 million at September 30, 2025. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. Unpledged securities, which provide an additional source of liquidity, totaled $93.2 million at September 30, 2025. In addition, at September 30, 2025, the Company had the ability to borrow up to $500.4 million from the FHLB of Pittsburgh, of which $478.6 million was available. The Company also has the ability to borrow up to $69.8 million from the FRB through its Borrower-In-Custody line of credit agreement and the Company also maintains multiple line of credit arrangements with various unaffiliated banks totaling $50.0 million as of both September 30, 2025 and December 31, 2024, currently these credit arrangements have remained unused.
At September 30, 2025, $264.9 million, or 87.9% of total time deposits mature within one year. If these time deposits do not remain with the Company, the Company will be required to seek other sources of funds. Depending on market conditions, the Company may be required to pay higher rates on such deposits or other borrowings than it currently pays on these time deposits. The Company believes, however, based on past experience that a significant portion of its time deposits will remain with it, either as time deposits or as other deposit products. The Company has the ability to attract and retain deposits by adjusting the interest rates offered. At September 30, 2025, the Bank's current deposit portfolio is 59.6% insured by the FDIC, and with additional coverage of 16.3% from the Bank's investment securities; of the total deposits held at the Bank only 24.1% are uninsured.
We are committed to maintaining a strong liquidity position; therefore, we monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. The marginal cost of new funding,
however, whether from deposits or borrowings from the FHLB, will be carefully considered as we monitor our liquidity needs. Therefore, in order to minimize our cost of funds, we may consider additional borrowings from the FHLB in the future.
CB Financial is a separate legal entity from the Bank and must provide for its own liquidity to pay any dividends to its shareholders and for other corporate purposes. Its primary source of liquidity is dividend payments it receives from the Bank. The Bank's ability to pay dividends to CB Financial is subject to regulatory limitations. At September 30, 2025, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $9.1 million. The ability to pay future dividends or conduct stock repurchases may be limited under applicable banking regulations and regulatory policies due to expected losses for future periods and/or the inability to upstream funds from the Bank to the Company as a result of lower income or regulatory capital levels.
Capital Management.The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, each must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Under the Regulatory Capital Rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier I capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets.
At September 30, 2025 and December 31, 2024, the Bank was categorized as "well capitalized" under the regulatory framework for prompt corrective action.
The following table presents the Bank's regulatory capital amounts and ratios, as well as the minimum amounts and ratios required to be well capitalized as of the dates indicated.
September 30, 2025 December 31, 2024
Amount Ratio Amount Ratio
(Dollars in thousands)
Common Equity Tier 1 (to risk weighted assets)
Actual $ 151,566 14.19 % $ 152,238 14.78 %
For Capital Adequacy Purposes 48,068 4.50 46,366 4.50
To Be Well Capitalized 69,431 6.50 66,973 6.50
Tier 1 Capital (to risk weighted assets)
Actual 151,566 14.19 152,238 14.78
For Capital Adequacy Purposes 64,090 6.00 61,821 6.00
To Be Well Capitalized 85,454 8.00 82,428 8.00
Total Capital (to risk weighted assets)
Actual 162,361 15.20 162,733 15.79
For Capital Adequacy Purposes 85,454 8.00 82,428 8.00
To Be Well Capitalized 106,817 10.00 103,035 10.00
Tier 1 Leverage (to adjusted total assets)
Actual 151,566 10.06 152,238 9.98
For Capital Adequacy Purposes 60,265 4.00 60,996 4.00
To Be Well Capitalized 75,332 5.00 76,245 5.00
Loan Credit Exposure
Refer to the "Lending Activities" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2024 for a description of each loan portfolio segment.
At September 30, 2025, the Company's loans totaled $1.14 billion, representing a $50.8 million, or 4.6%, increase compared to $1.09 billion at December 31, 2024.
The table below provides the composition of the loan portfolio:
September 30, 2025 December 31, 2024
(Dollars in thousands)
Real Estate:
Residential
$ 333,430 29.2 % $ 337,990 30.9 %
Commercial
539,395 47.2 485,513 44.4
Construction
38,905 3.4 54,705 5.0
Commercial and Industrial
143,919 12.6 112,047 10.3
Consumer
49,581 4.3 70,508 6.5
Other
38,156 3.3 31,863 2.9
Total Loans $ 1,143,386 100.0 % $ 1,092,626 100.0 %
The Company's loan portfolio is a mix of consumer and commercial credits. Overall credit exposure and portfolio compensation is managed via a credit concentration policy. The policy designates specific loan types, collateral types and loan structures to be formally tracked and assigned maximum exposure limits as a percentage of capital. Commercial lending by asset class, specific limits for Commercial Real Estate ("CRE") project types, loans secured by residential real estate, large dollar exposures and designated high risk loan categories represent examples of specifically tracked components of our concentration management process. There are no identified concentrations that exceed the assigned exposure limits. Our concentration management policy is approved by the Company's Board of Directors and is used to ensure a high-quality, well diversified portfolio that is consistent with our overall objective of maintaining an acceptable level of risk.
The Company's CRE portfolio totaled $539.4 million at September 30, 2025, an increase of $53.9 million, or 11.1%, compared to December 31, 2024. CRE loans are concentrated in the Pittsburgh metropolitan area.
The tables below provides further detail of the composition of the CRE portfolio as of September 30, 2025:
(Dollars in thousands) CRE Nonowner Occupied Loans
Outstanding Balance Percent Average Loan Size
Average LTV (1)
Retail Space $ 102,067 24.10 % $ 1,501 62.80 %
Multifamily 98,239 23.20 973 61.38
Warehouse Space 74,770 17.65 1,968 55.22
Office Space 62,081 14.66 1,293 60.90
Manufacturing 21,640 5.11 2,164 43.27
Medical Facilities 18,355 4.33 1,224 56.39
Hotels 13,551 3.20 1,936 59.23
Vacant Land 5,043 1.19 1,261 44.60
Senior Housing 3,243 0.77 3,243 41.54
Other 24,515 5.79 943 61.08
Total Nonowner Occupied CRE $ 423,504 100.00 % $ 1,332 58.98 %
(1) Based on collateral value at the time of loan origination.
(Dollars in Thousands) CRE Owner Occupied Loans
Outstanding Balance Percent Average Loan Size
Average LTV (1)
Retail Space $ 26,348 22.74 % $ 712 51.90 %
Warehouse Space 20,480 17.67 788 48.42
Office Space 9,224 7.96 401 72.67
Medical Facilities 8,768 7.57 674 75.02
Senior Housing 5,867 5.06 1,956 27.00
Multifamily 3,726 3.22 3,726 70.56
Manufacturing 2,887 2.49 289 54.34
Vacant Land 2,126 1.83 125 42.70
Other 36,465 31.46 514 52.54
Total Owner Occupied CRE $ 115,891 100.00 % $ 577 54.10 %
(1) Based on collateral value at the time of loan origination.
CB Financial Services Inc. published this content on November 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 07, 2025 at 19:23 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]