Item 2. 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, 2015.
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 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;
|
|
·
|
Our ability to manage the risks involved in our business;
|
|
·
|
Our ability to integrate the operations of businesses we acquire;
|
|
·
|
Inflation, market and monetary fluctuations;
|
|
·
|
Our ability to control costs and expenses; and
|
|
·
|
Changes in federal and state legislation and regulation (i.e. the effect of new capital standards imposed by banking regulators
and the implementation of the Dodd-Frank Act).
|
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, Inc. (“CB Financial”) is a bank holding company established
in 2006. CB Financial’s business activity is conducted through its wholly owned banking subsidiary Community Bank (“the
Bank”). CB Financial and the Bank are collectively referred to as the “Company.” All significant intercompany
transactions have been eliminated.
The Bank is a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania.
The Bank operates from 16 offices in Greene, Allegheny, Washington, Fayette and Westmoreland Counties in southwestern 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. Property and casualty,
commercial liability, surety and other insurance products are offered through Exchange Underwriters, Inc the Bank’s wholly-owned
subsidiary that is a full-service, independent insurance agency.
On October 31, 2014, the Company completed its merger with FedFirst Financial
Corporation (“FedFirst” or the “merger”), the holding company for First Federal Savings Bank, a community
bank based in Monessen, Pennsylvania. The merger resulted in the addition of five branches and expanded the Company’s reach
into Fayette and Westmoreland counties in southwestern Pennsylvania.
The Bank’s website address is www.communitybank.tv. Information
on the website is not and should not be considered a part of this Form 10-Q.
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, 2016 compared to the financial condition as of December
31, 2015 and the consolidated results of operations for the three and nine months ended September 30, 2016 and 2015.
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 provisions for loan losses, noninterest income and noninterest
expense. Noninterest income consists primarily of fees and service charges on deposit accounts, fees and charges on loans, insurance
commissions, income from bank-owned life insurance and other income. Noninterest expense consists primarily of expenses related
to salaries and employee benefits, occupancy and equipment, contracted services, legal fees, other real estate owned, advertising
and promotion, stationery and supplies, 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 market area.
Statement of Financial Condition Analysis
Assets.
Total assets increased $2.9 million, or 0.3%, to $833.6 million
at September 30, 2016 compared to $830.7 million at December 31, 2015.
Investment securities classified as available-for-sale increased $610,000, or 0.6%, to
$96.5 million at September 30, 2016 compared to $95.9 million at December 31, 2015. This increase was primarily the result of new
security purchases to replace calls and maturities of U.S. government agencies and obligations of states and political subdivisions.
These security activities were mainly funded by calls, maturities and loan portfolio payoffs.
Loans, net, decreased $4.9 million, or 0.7%, to $671.9 million at September 30, 2016
compared to $676.9 million at December 31, 2015. This was primarily due to net paydowns of $11.4 million on construction loans
and $3.8 million on residential mortgage loans, partially offset by increases of $8.9 million in consumer loans (mainly indirect
auto loans) and $1.3 million in commercial real estate loans. The net loan payoffs were utilized to fund loan originations, deposit
runoff and security purchases during the current period.
Premises and equipment, net, increased $2.8 million, or 27.6%, to $13.1 million at September
30, 2016 compared to $10.3 million at December 31, 2015. This was mainly due to an other real estate owned property being reclassified
into fixed assets in process during the first quarter for future use in Bank operations.
Liabilities.
Total liabilities decreased $308,000, or 0.04%, to $743.5
million at September 30, 2016 compared to $743.8 million at December 31, 2015.
Total deposits decreased $951,000, or 0.1%, to $678.3 million at September 30, 2016 compared
to $679.3 million at December 31, 2015. There were decreases of $7.5 million in time deposits, $1.7 in brokered deposits and $152,000
in NOW accounts, partially offset by increases of $6.1 million in money market accounts, $1.8 million in demand deposits and $422,000
in savings accounts. The decrease in deposit balances is partly attributable to maturing time deposits seeking a higher renewal
rate outside of the Bank due to competition in the prevailing low interest rate environment and a decline in oil and gas industry-related
deposits. Due to the low interest rate environment, the Bank has been selective on offering promotional interest rates and has
concentrated its efforts on increasing noninterest-bearing accounts by building strong customer relationships. To stimulate deposit
growth and keep maturing certificates from leaving the Bank, the Chairman’s Challenge promotional deposit program was started
in the current period. In addition, school district and municipal deposits increased $9.5 million due to annual property taxes
being remitted to the taxing authorities.
Short-term borrowings increased $1.2, or 3.6%, to $33.6 million at September 30, 2016
compared to $32.4 million at December 31, 2015. Other borrowed funds remained constant at $28.0 million at September 30, 2016 and
December 31, 2015. At September 30, 2016, short-term borrowings were comprised of $30.1 million of securities sold under agreements
to repurchase compared to $23.1 million at December 31, 2015. The increase is related to business deposit customers whose funds,
above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities
from the Bank’s investment portfolio under an agreement to repurchase. In addition, other short-term borrowings decreased
by $5.9 million, to $3.5 million at September 30, 2016 compared to $9.4 million at December 31, 2015. In the prior year, a portion
of FHLB short-term borrowings were replaced with $28.0 million in long-term borrowings with laddered maturities designed to mitigate
the Company’s interest rate risk in the event of rising interest rates. Funds generated from security maturities and calls
and loans sales in the current period were utilized for loan funding and liquidity needs. As a result of prior year activity, the
weighted average interest rate on long-term borrowings remained constant at 1.80%.
Stockholders’ Equity.
Stockholders’ equity increased $3.2 million,
or 3.7%, to $90.1 million at September 30, 2016 compared to $86.9 million at December 31, 2015. During the period, net income was
$5.6 million and the Company paid $2.7 million in dividends to stockholders.
Results of Operations for the Three Months Ended September 30, 2016 and 2015
Overview.
Net income decreased $553,000, to $1.6 million, for the three
months ended September 30, 2016 compared to $2.1 million for the three months ended September 30, 2015. The quarterly results were
largely impacted by a decrease of $850,000 in pre-tax income, primarily related to a decrease in net interest income and increases
in non-interest expense.
Net Interest Income.
Net interest income decreased $311,000, or 4.3%, to
$7.0 million for the three months ended September 30, 2016 compared to $7.3 million for the three months ended September 30, 2015.
Interest and dividend income decreased $262,000, or 3.3%, to $7.7 million for the three
months ended September 30, 2016 compared to $7.9 million for the three months ended September 30, 2015. Interest income on loans
decreased $297,000 despite an increase in average loans outstanding of $9.4 million for the three months ended September 30, 2016
compared to the three months ended September 30, 2015. The increase in average loans was due to loan originations within the indirect
and commercial loan portfolios, partially offset by decreases in installment and mortgage loans mainly due to loan payoffs. Even
with the increase in average loans, there was a decrease of 23 basis points in yield on the loan portfolio. This is the direct
result of a historically low interest rate environment that drives an extremely competitive interest rate market. Attributing to
the yield decline this quarter was the accretion on the acquired loan portfolio credit mark. The impact as of the three months
ended September 30, 2016 was 5 basis points compared to 22 basis points for the three months ended September 30, 2015. The remaining
credit mark balance for acquired loans was $2.2 million as of September 30, 2016. Interest income on securities exempt from federal
tax decreased $17,000 due to deploying proceeds from security calls and maturities into purchasing securities exempt from federal
tax and satisfying liquidity needs in the current period. There was a decrease of $3.4 million in the average balance on securities
exempt from federal tax, yet there was an increase of 7 basis points in yield as a result of purchasing securities with slightly
higher yields. Despite a decrease of $3.7 million in the average balance, interest income on taxable securities increased $50,000
due to an increase of 51 basis points in yield from new purchases and from higher yields on the remaining securities in the portfolio.
In addition, calls on discounted agency securities resulted in accelerated discount accretion recognition into income in the current
period.
Interest expense increased $49,000, or 7.4%, to $708,000 for the three months ended September
30, 2016 compared to $659,000 for the three months ended September 30, 2015. Interest expense on other borrowed funds increased
$63,000 primarily due to an increase in long-term borrowings resulting from the Bank laddering $13.0 million of FHLB borrowings
in late 2015 to mitigate the Company’s interest rate risk in the event of rising interest rates. Interest expense on deposits
decreased $20,000 due to a decrease in average interest-bearing deposits of $19.6 million primarily due to time deposit and money
market accounts rate shopping in the current low interest rate market. Even though there were decreases in the average deposit
balances, the average cost of interest-bearing deposits increased 1 basis point collectively. This was primarily related to the
Bank’s recently announced promotional deposit program, the Chairman’s Challenge, which mainly increased new growth
and retained maturing certificates of deposit by 6 basis points to the promotional rate of 1.25% for a 25-month certificate of
deposit.
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. Tax-equivalent yield adjustments have been made for tax exempt loan and securities income utilizing
a marginal federal tax rate of 34%. As such, amounts will not agree to income as reported in the consolidated financial statements.
Average balances for loans are net of the allowance for loan losses, but include non-accrual loans.
The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities,
respectively, for the periods presented and are expressed in annualized rates.
|
|
(Dollars in thousands) (Unaudited)
|
|
|
Three Months Ended September 30,
|
|
|
2016
|
|
2015
|
|
|
|
|
Interest
|
|
|
|
|
|
Interest
|
|
|
|
|
Average
|
|
and
|
|
Yield/
|
|
Average
|
|
and
|
|
Yield/
|
|
|
Balance
|
|
Dividends
|
|
Cost
(1)
|
|
Balance
|
|
Dividends
|
|
Cost
(1)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, Net
|
|
$
|
671,346
|
|
|
$
|
7,120
|
|
|
|
4.22
|
%
|
|
$
|
661,977
|
|
|
$
|
7,418
|
|
|
|
4.45
|
%
|
Investment Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
51,460
|
|
|
|
287
|
|
|
|
2.23
|
|
|
|
55,136
|
|
|
|
237
|
|
|
|
1.72
|
|
Exempt From Federal Tax
|
|
|
39,428
|
|
|
|
388
|
|
|
|
3.94
|
|
|
|
42,795
|
|
|
|
414
|
|
|
|
3.87
|
|
Other Interest-Earning Assets
|
|
|
9,296
|
|
|
|
43
|
|
|
|
1.84
|
|
|
|
11,744
|
|
|
|
41
|
|
|
|
1.39
|
|
Total Interest-Earning Assets
|
|
|
771,530
|
|
|
|
7,838
|
|
|
|
4.04
|
|
|
|
771,652
|
|
|
|
8,110
|
|
|
|
4.17
|
|
Noninterest-Earning Assets
|
|
|
54,484
|
|
|
|
|
|
|
|
|
|
|
|
55,394
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
826,014
|
|
|
|
|
|
|
|
|
|
|
$
|
827,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Demand Deposits
|
|
$
|
112,679
|
|
|
|
49
|
|
|
|
0.17
|
%
|
|
$
|
103,917
|
|
|
|
41
|
|
|
|
0.16
|
%
|
Savings
|
|
|
121,439
|
|
|
|
56
|
|
|
|
0.18
|
|
|
|
123,727
|
|
|
|
57
|
|
|
|
0.18
|
|
Money Market
|
|
|
138,033
|
|
|
|
87
|
|
|
|
0.25
|
|
|
|
146,702
|
|
|
|
87
|
|
|
|
0.24
|
|
Time Deposits
|
|
|
136,258
|
|
|
|
365
|
|
|
|
1.07
|
|
|
|
153,698
|
|
|
|
392
|
|
|
|
1.01
|
|
Total Interest-Bearing Deposits
|
|
|
508,409
|
|
|
|
557
|
|
|
|
0.44
|
|
|
|
528,044
|
|
|
|
577
|
|
|
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
57,791
|
|
|
|
151
|
|
|
|
1.04
|
|
|
|
44,647
|
|
|
|
82
|
|
|
|
0.73
|
|
Total Interest-Bearing Liabilities
|
|
|
566,200
|
|
|
|
708
|
|
|
|
0.50
|
|
|
|
572,691
|
|
|
|
659
|
|
|
|
0.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-Bearing Demand Deposits
|
|
|
165,422
|
|
|
|
|
|
|
|
|
|
|
|
163,182
|
|
|
|
|
|
|
|
|
|
Other Liabilities
|
|
|
4,199
|
|
|
|
|
|
|
|
|
|
|
|
5,415
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
735,821
|
|
|
|
|
|
|
|
|
|
|
|
741,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
90,193
|
|
|
|
|
|
|
|
|
|
|
|
85,758
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
$
|
826,014
|
|
|
|
|
|
|
|
|
|
|
$
|
827,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
|
|
|
|
|
|
$
|
7,130
|
|
|
|
|
|
|
|
|
|
|
$
|
7,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Rate Spread
(2)
|
|
|
|
|
|
|
|
|
|
|
3.54
|
%
|
|
|
|
|
|
|
|
|
|
|
3.71
|
%
|
Net Interest-Earning Assets
(3)
|
|
$
|
205,330
|
|
|
|
|
|
|
|
|
|
|
$
|
198,961
|
|
|
|
|
|
|
|
|
|
Net Interest Margin
(4)
|
|
|
|
|
|
|
|
|
|
|
3.68
|
|
|
|
|
|
|
|
|
|
|
|
3.83
|
|
Return on Average Assets
|
|
|
|
|
|
|
|
|
|
|
0.76
|
|
|
|
|
|
|
|
|
|
|
|
1.02
|
|
Return on Average Equity
|
|
|
|
|
|
|
|
|
|
|
6.94
|
|
|
|
|
|
|
|
|
|
|
|
9.84
|
|
Average Equity to Average Assets
|
|
|
|
|
|
|
|
|
|
|
10.92
|
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
Average Interest-Earning Assets to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Bearing Liabilities
|
|
|
|
|
|
|
|
|
|
|
136.26
|
|
|
|
|
|
|
|
|
|
|
|
134.74
|
|
|
(2)
|
Net interest rate spread represents
the difference between the weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities.
|
|
(3)
|
Net interest-earning assets represent
total interest-earning assets less total interest-bearing liabilities.
|
|
(4)
|
Net interest margin represents net
interest income divided by average total interest-earning assets. Interest income and
yields are on a fully tax equivalent basis utilizing a marginal tax rate of 34%.
|
Rate/Volume Analysis
.
The following table presents the effects of changing
rates and volumes on our net interest income for the periods indicated. Tax-equivalent yield adjustments have been made for tax
exempt loan and securities income utilizing a marginal federal tax rate of 34%. 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.
|
|
(Dollars in thousands)
|
|
|
Three Months Ended September 30, 2016
|
|
|
Compared To
|
|
|
Three Months Ended September 30, 2015
|
|
|
Increase (Decrease) Due to
|
|
|
Volume
|
|
Rate
|
|
Total
|
|
|
|
|
|
|
|
Interest and Dividend Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net
|
|
$
|
89
|
|
|
$
|
(387
|
)
|
|
$
|
(298
|
)
|
Investment Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
(16
|
)
|
|
|
66
|
|
|
|
50
|
|
Exempt From Federal Tax
|
|
|
(33
|
)
|
|
|
7
|
|
|
|
(26
|
)
|
Other Interest-Earning Assets
|
|
|
(9
|
)
|
|
|
11
|
|
|
|
2
|
|
Total Interest-Earning Assets
|
|
|
31
|
|
|
|
(303
|
)
|
|
|
(272
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(33
|
)
|
|
|
13
|
|
|
|
(20
|
)
|
Borrowings
|
|
|
28
|
|
|
|
41
|
|
|
|
69
|
|
Total Interest-Bearing Liabilities
|
|
|
(5
|
)
|
|
|
54
|
|
|
|
49
|
|
Change in Net Interest Income
|
|
$
|
36
|
|
|
$
|
(357
|
)
|
|
$
|
(321
|
)
|
Provision for Loan Losses.
The provision for loan losses was $450,000 for
the three months ended September 30, 2016 compared to $300,000 for the three months ended September 30, 2015. Net charge-offs for
the three months ended September 30, 2016 were $175,000, which included $166,000 of charge-offs on automobile loans, compared to
$98,000 of net charge-offs for the three months ended September 30, 2015. Management analyzes the loan portfolio on a quarterly
basis to determine the adequacy of the allowance for loan losses and the need for additional provisions for loan losses. It was
determined that an increase in the current quarter provision was necessary for the three months ended September 30, 2016 compared
to the three months ended September 30, 2015. This was due to an increase of $6.3 million in special mention loans for the above
mentioned time period. Loan growth of $3.3 million in indirect auto loans and the $80,000 increase in quarterly auto loan net charge-offs
as compared to the prior quarter were the contributing factors in recording the additional provision.
Noninterest Income
.
Noninterest income decreased $84,000, or 4.4% to $1.8 million for the three months ended September 30, 2016 compared to $1.9 million
for the three months ended September 30, 2015, primarily due to a decrease of $96,000 in insurance commissions from Exchange Underwriters
due to a decline in commercial commission and fee income received in the current period. Other commissions decreased $30,000 due
to the prior period recognition of a state mutual thrift tax refund from the merger with FedFirst Financial Corporation (the “merger”).
Other miscellaneous income decreased $15,000 primarily due to a rise in amortization on mortgage servicing rights related to loans
sold to the FHLB as part of the Mortgage Partnership Finance® (“MPF®”) program. The MPF® program enables
member financial institutions to offer competitive interest rates for fixed-rate mortgage loans without assuming any of the interest
rate risk associated with a long-term asset. Service fees on deposit accounts decreased $13,000 primarily due to a decrease in
check card fees from deposit accounts compared to the prior period. There was an increase in the net gains on the sales of residential
mortgage loans of $44,000. The increase in gains was primarily due to an increase in the number of loans originated and subsequently
sold to the FHLB as part of the MPF® program. In addition, net gains on the sales of investments increased $22,000 due to the
sale of equity securities. These sales were transacted to recognize capital gains that will be offset by a capital loss carry forward
deferred tax asset that was acquired in the merger.
Noninterest Expense.
Noninterest expense increased $305,000, or 5.2%, to
$6.2 million for the three months ended September 30, 2016 compared to $5.9 million for the three months ended September 30, 2015.
Salaries and employee benefits increased $160,000 primarily due to additional employees, normal salary increases and employee stock
options and restricted stock awards expense. This increase was partially offset by decreases in retirement and incentive compensation.
Occupancy and equipment increased $116,000 and $52,000, respectively, primarily due accelerated depreciation taken on leasehold
improvements in the Bank’s current operation center that will not transfer over to the new Ralph J. Sommers Jr. Operations
Center (“Operations Center”) currently under construction for the Bank. Other increases for occupancy were related
to repairs and maintenance, real estate taxes and property insurance. Equipment expense increases were mainly due to maintenance
contracts from our core processing vendor and final copier/printer invoices from a discontinued contract. Other noninterest expense
increased $54,000 primarily due to current period expenses related to non-employee stock options and restricted stock awards, and
an increase in telephone expense. Legal and professional fees increased $22,000 mainly due to legal fees associated with problem
loan relationships, partially offset by decreases in consultation and audit fees. Advertising decreased $44,000 related to the
termination of a cooperative marketing agreement at Exchange Underwriters, partially offset by advertising initiatives to promote
the Bank. Other real estate owned expense decreased $28,000 primarily due to income from the sales of other real estate owned properties
in the current period. PA shares tax, which is calculated based on the Bank’s stockholders’ equity, decreased $27,000
due to the reversal of an anticipated rate increase by the Commonwealth of Pennsylvania. As of July 1, 2016, the PA shares tax
rate of 0.95% has been ratified by the state legislature, becoming effective for tax years starting January 1, 2017.
Income Tax Expense.
Income taxes decreased $297,000 to $607,000 for the
three months ended September 30, 2016 compared to $904,000 for the three months ended September 30, 2015. The effective tax rate
for the three months ended September 30, 2016 was 27.8% compared to 29.8% for the three months ended September 30, 2015. The decrease
in income taxes was due to a decrease of $850,000 in pre-tax income. The decrease in the effective tax rate was related to the
decrease in tax exempt income not being proportionate to the decline in pre-tax income in the current period.
Results of Operations for the Nine Months Ended September 30, 2016 and 2015
Overview.
Net income decreased $1.1 million, to $5.6 million, for the nine
months ended September 30, 2016 compared to $6.7 million for the nine months ended September 30, 2015.
Net Interest Income.
Net interest income decreased $368,000 , or 1.7%,
to $21.6 million for the nine months ended September 30, 2016 compared to $22.0 million for the nine months ended September 30,
2015.
Interest and dividend income decreased $304,000, or 1.3%, to $23.8 million for the nine
months ended September 30, 2016 compared to $24.1 million for the nine months ended September 30, 2015. Interest income on loans
decreased $343,000 despite an increase in average loans outstanding of $795,000. The slight increase in average loans was due to
loan originations within the indirect and commercial loan portfolios, partially offset by decreases in installment and mortgage
loans mainly due to loan payoffs. Even with the increase in average loans, there was a decrease of 8 basis points in yield on the
loan portfolio. This is the direct result of a historically low interest rate environment that drives an extremely competitive
interest rate market. Attributing to the yield decline was the accretion on the acquired loan portfolio credit mark. The impact
as of the nine months ended September 30, 2016 was 17 basis points and remained constant at 17 basis points for the nine months
ended September 30, 2015. Other interest and dividend income decreased $118,000 primarily due to a decrease in FHLB stock dividends
which included the payment of a special dividend in the first quarter of 2015 of $56,000. As a result of receiving no special dividend
in the current period and a decrease in short-term borrowings compared to the prior period, the Bank was required to hold less
FHLB stock. Interest income on securities exempt from federal tax decreased $61,000 due to deploying proceeds from security calls
and maturities into loan funding, purchasing securities exempt from federal tax and satisfying liquidity needs in the current period.
There was a decrease of $3.3 million in the average balance on securities exempt from federal tax, yet there was an increase of
3 basis points in yield as a result of purchasing securities with higher yields. Despite a decrease of $3.4 million in average
balance, interest income on taxable securities increased $214,000 due to an increase of 63 basis points in yield from new purchases
and from higher yields on the remaining securities in the portfolio. In addition, calls on discounted agency securities resulted
in accelerated discount accretion recognition into income in the current period.
Interest expense increased $64,000, or 3.1%, to $2.1 million for the nine months ended
September 30, 2016 compared to $2.0 million for the nine months ended September 30, 2015. Interest expense on other borrowed funds
increased $165,000 due to an increase in long-term borrowings. This was primarily due to the Bank laddering $15.0 million in short-term
borrowings in the first quarter of 2015 and $13.0 million in short-term borrowings in late 2015 into a series of long-term FHLB
borrowings to mitigate the Company’s interest rate risk in the event of rising interest rates. Interest expense on deposits
decreased $91,000 due to a decrease in average interest-bearing deposits of $12.2 million primarily due to time deposit and money
market accounts rate shopping in the current low interest rate market. The average cost of interest-bearing deposits decreased
1 basis point, primarily related to the repricing of maturing certificates of deposit to lower rates. This decrease was partially
offset by an increase of $26,000 for interest-bearing demand deposit interest expense. In addition, short-term borrowings decreased
$11,000 in the current period due to the laddering of FHLB long-term borrowings.
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. Tax-equivalent yield adjustments have been made for tax exempt loan and securities income utilizing
a marginal federal tax rate of 34%.
Average balances for loans are net of the allowance for loan losses,
but include non-accrual loans. The yields and costs for the periods indicated are derived by dividing income or expense by the
average balances of assets or liabilities, respectively, for the periods presented and are expressed in annualized rates.
|
|
(Dollars in thousands) (Unaudited)
|
|
|
Nine Months Ended September 30,
|
|
|
2016
|
|
2015
|
|
|
|
|
Interest
|
|
|
|
|
|
Interest
|
|
|
|
|
Average
|
|
and
|
|
Yield/
|
|
Average
|
|
and
|
|
Yield/
|
(Dollars in thousands)
|
|
Balance
|
|
Dividends
|
|
Cost
(1)
|
|
Balance
|
|
Dividends
|
|
Cost
(1)
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Earning Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, Net
|
|
$
|
673,451
|
|
|
$
|
21,998
|
|
|
|
4.36
|
%
|
|
$
|
672,656
|
|
|
$
|
22,335
|
|
|
|
4.44
|
%
|
Investment Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
53,580
|
|
|
|
918
|
|
|
|
2.28
|
|
|
|
57,025
|
|
|
|
704
|
|
|
|
1.65
|
|
Exempt From Federal Tax
|
|
|
38,902
|
|
|
|
1,172
|
|
|
|
4.02
|
|
|
|
42,217
|
|
|
|
1,264
|
|
|
|
3.99
|
|
Other Interest-Earning Assets
|
|
|
11,533
|
|
|
|
138
|
|
|
|
1.60
|
|
|
|
13,216
|
|
|
|
252
|
|
|
|
2.55
|
|
Total Interest-Earning Assets
|
|
|
777,466
|
|
|
|
24,226
|
|
|
|
4.16
|
|
|
|
785,114
|
|
|
|
24,555
|
|
|
|
4.18
|
|
Noninterest-Earning Assets
|
|
|
53,806
|
|
|
|
|
|
|
|
|
|
|
|
55,774
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
831,272
|
|
|
|
|
|
|
|
|
|
|
$
|
840,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-Bearing Demand Deposits
|
|
$
|
114,959
|
|
|
|
147
|
|
|
|
0.17
|
%
|
|
$
|
101,673
|
|
|
|
121
|
|
|
|
0.16
|
%
|
Savings
|
|
|
123,079
|
|
|
|
169
|
|
|
|
0.18
|
|
|
|
122,995
|
|
|
|
166
|
|
|
|
0.18
|
|
Money Market
|
|
|
142,820
|
|
|
|
268
|
|
|
|
0.25
|
|
|
|
154,441
|
|
|
|
268
|
|
|
|
0.23
|
|
Time Deposits
|
|
|
138,917
|
|
|
|
1,094
|
|
|
|
1.05
|
|
|
|
152,867
|
|
|
|
1,214
|
|
|
|
1.06
|
|
Total Interest-Bearing Deposits
|
|
|
519,775
|
|
|
|
1,678
|
|
|
|
0.43
|
|
|
|
531,976
|
|
|
|
1,769
|
|
|
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
54,533
|
|
|
|
435
|
|
|
|
1.07
|
|
|
|
53,789
|
|
|
|
280
|
|
|
|
0.70
|
|
Total Interest-Bearing Liabilities
|
|
|
574,308
|
|
|
|
2,113
|
|
|
|
0.49
|
|
|
|
585,765
|
|
|
|
2,049
|
|
|
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-Bearing Demand Deposits
|
|
|
163,815
|
|
|
|
|
|
|
|
|
|
|
|
164,663
|
|
|
|
|
|
|
|
|
|
Other Liabilities
|
|
|
4,086
|
|
|
|
|
|
|
|
|
|
|
|
5,972
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
742,209
|
|
|
|
|
|
|
|
|
|
|
|
756,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
89,063
|
|
|
|
|
|
|
|
|
|
|
|
84,488
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
$
|
831,272
|
|
|
|
|
|
|
|
|
|
|
$
|
840,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
$
|
22,113
|
|
|
|
|
|
|
|
|
|
|
$
|
22,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Rate Spread
(2)
|
|
|
|
|
|
|
|
|
|
|
3.67
|
%
|
|
|
|
|
|
|
|
|
|
|
3.71
|
%
|
Net Interest-Earning Assets
(3)
|
|
$
|
203,158
|
|
|
|
|
|
|
|
|
|
|
$
|
199,349
|
|
|
|
|
|
|
|
|
|
Net Interest Margin
(4)
|
|
|
|
|
|
|
|
|
|
|
3.80
|
|
|
|
|
|
|
|
|
|
|
|
3.83
|
|
Return on Average Assets
|
|
|
|
|
|
|
|
|
|
|
0.89
|
|
|
|
|
|
|
|
|
|
|
|
1.06
|
|
Return on Average Equity
|
|
|
|
|
|
|
|
|
|
|
8.33
|
|
|
|
|
|
|
|
|
|
|
|
10.54
|
|
Average Equity to Average Assets
|
|
|
|
|
|
|
|
|
|
|
10.71
|
|
|
|
|
|
|
|
|
|
|
|
10.05
|
|
Average Interest-Earning Assets to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Interest-Bearing Liabilities
|
|
|
|
|
|
|
|
|
|
|
135.37
|
|
|
|
|
|
|
|
|
|
|
|
134.03
|
|
|
(2)
|
Net interest rate spread represents
the difference between the weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities.
|
|
(3)
|
Net interest-earning assets represent
total interest-earning assets less total interest-bearing liabilities.
|
|
(4)
|
Net interest margin represents net
interest income divided by average total interest-earning assets. Interest income and
yields are on a fully tax equivalent basis utilizing a marginal tax rate of 34%.
|
Rate/Volume Analysis
.
The following table presents the effects of changing
rates and volumes on our net interest income for the periods indicated. 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.
|
|
(Dollars in thousands)
|
|
|
Nine Months Ended September 30, 2016
|
|
|
Compared To
|
|
|
Nine Months Ended September 30, 2015
|
|
|
Increase (Decrease) Due to
|
(Dollars in thousands)
|
|
Volume
|
|
Rate
|
|
Total
|
|
|
|
|
|
|
|
Interest and Dividend Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net
|
|
$
|
66
|
|
|
$
|
(403
|
)
|
|
$
|
(337
|
)
|
Investment Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
(41
|
)
|
|
|
255
|
|
|
|
214
|
|
Exempt From Federal Tax
|
|
|
(101
|
)
|
|
|
9
|
|
|
|
(92
|
)
|
Other Interest-Earning Assets
|
|
|
(29
|
)
|
|
|
(85
|
)
|
|
|
(114
|
)
|
Total Interest-Earning Assets
|
|
|
(105
|
)
|
|
|
(224
|
)
|
|
|
(329
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(51
|
)
|
|
|
(40
|
)
|
|
|
(91
|
)
|
Borrowings
|
|
|
4
|
|
|
|
151
|
|
|
|
155
|
|
Total Interest-Bearing Liabilities
|
|
|
(47
|
)
|
|
|
111
|
|
|
|
64
|
|
Change in Net Interest Income
|
|
$
|
(58
|
)
|
|
$
|
(335
|
)
|
|
$
|
(393
|
)
|
Provision for Loan Losses.
The provision for loan losses was $1.6 million
for the nine months ended September 30, 2016 compared to $975,000 provision for loan losses in the nine months ended September
30, 2015. Net charge-offs for the nine months ended September 30, 2016 were $624,000, which included $476,000 of charge-offs on
automobile loans, compared to net charge-offs of $282,000 for the nine months ended September 30, 2015. Management analyzes the
loan portfolio on a quarterly basis to determine the adequacy of the allowance for loan losses and the need for additional provisions
for loan losses and determined the additional current provision was necessary for the nine months ended September 30, 2016 compared
to the nine months ended September 30, 2015. This was due to an increase of $7.7 million in special mention loans year-to-date
as compared to the prior year-to-date. Loan growth of $14.0 million in indirect auto loans and approximately a $228,000 increase
in auto loan net charge-offs as compared to the prior year-to-date were the contributing factors in recording the additional provision.
In addition, as the acquired loan portfolio has loan payoffs, paydowns and the credit mark is being accreted; the need for additional
provision is required based on our loan loss analysis. The current year-to-date provision for loan losses recorded for the acquired
portfolio is $334,000 as compared to none for the prior year-to-date.
Noninterest Income
.
Noninterest income remained constant at $5.5 million
for the nine months ended September 30, 2016 and September 30, 2015. There was a $349,000 decrease in insurance commissions from
Exchange Underwriters due to a decline in commercial commission and fee income and reduced contingency fees received in the current
period. Contingency fees were $161,000 for the nine months ended September 30, 2016 compared to $340,000 for the nine months ended
September 30, 2015. Contingency fees are commissions that are contingent upon several factors including, but not limited to, eligible
written premiums, earned premiums, incurred losses and stop loss charges. Other commissions decreased $38,000 primarily due to
the prior period recognition of a state mutual thrift tax refund from the merger. Service fees on deposit accounts decreased $23,000
primarily due to a decrease in check card fees from deposit accounts acquired in the merger recognized in the prior period. This
was offset by an increase in the net gains on sales of residential mortgage loans of $311,000. The increase in gains was primarily
due to an increase in the number of loans originated and subsequently sold to the FHLB as part of the MPF® programs. In addition,
net gains on the sales of investments increased $80,000 due to the sale of equity securities. These sales were transacted to recognize
capital gains that will be offset by a capital loss carry forward deferred tax asset that was acquired in the merger. Other miscellaneous
income increased $11,000 primarily due to an increase in the servicing income received from mortgage loans sold to the FHLB as
part of the MPF® program, partially offset by an increase in amortization on mortgage servicing rights related to loans sold
to the FHLB.
Noninterest Expense.
Noninterest expense increased $625,000, or 3.6%, to
$17.8 million for the nine months ended September 30, 2016 compared to $17.1 million for the nine months ended September 30, 2015.
Salaries and employee benefits increased $479,000, primarily due to additional employees, normal salary increases and employee
stock options and restricted stock awards expense. Other noninterest expense increased $305,000 primarily due to an increase in
various miscellaneous expenses, such as non-employee stock options and restricted stock awards, supplies, telephone, other losses
attributable to debit card fraud losses and dues and subscriptions. Occupancy and equipment increased $130,000 and $102,000, respectively,
primarily due accelerated depreciation taken on leasehold improvements in the Bank’s current operation center that will not
transfer over to the new Operations Center currently under construction for the Bank. Other increases for occupancy were related
to real estate taxes and property insurance mainly from the other real estate owned property reclassified into fixed assets in
process during the first quarter. This property will undergo an extensive renovation and will subsequently be placed into Bank
operations within our Southwestern Pennsylvania market. Equipment expense increases were mainly due to maintenance contracts from
our core processing vendor and final copier/printer invoices from a discontinued contract. In addition, equipment depreciation
increased due to fixed asset acquisitions placed into service, primarily for the Uniontown Business Center that was opened during
the second quarter. PA shares tax, which is calculated based on the Bank’s stockholders’ equity, increased $30,000
due to the net income impact on stockholders’ equity. Other real estate owned income was $531,000 in the current period compared
to $210,000 in the prior period resulting in a decrease of $321,000 in expense. This change is primarily due to the $566,000 pre-tax
gain recognized due to the foreclosure procedures on two commercial real estate loans that moved into other real estate owned properties
in the first quarter of 2016. Advertising decreased $136,000 related to the termination of a cooperative marketing agreement at
Exchange Underwriters, partially offset by advertising initiatives to promote the Bank.
Income Tax Expense.
Income taxes decreased $513,000 to $2.3 million for
the nine months ended September 30, 2016 compared to $2.8 million for the nine months ended September 30, 2015. The effective tax
rate for the nine months ended September 30, 2016 was 28.9% compared to 29.4% for the nine months ended September 30, 2015. The
decrease in income taxes was due to a decrease of $1.6 million in pre-tax income. The decrease in the effective tax rate was related
to the decrease in tax exempt income not being proportionate to the decline in pre-tax income in the current period.
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 8 in the Notes to Consolidated Financial Statements for a summary of commitments outstanding
as of September 30, 2016.
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 predictable sources of funds, deposit flows and mortgage 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, 2016
to satisfy its short- and long-term liquidity needs at that date.
The Company’s most liquid assets are cash and due from banks, which totaled $14.9
million at September 30, 2016. 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 $3.6 million at September
30, 2016. In addition, at September 30, 2016, the Company had the ability to borrow up to $287.7 million from the FHLB of Pittsburgh,
of which $30.1 million was outstanding and $9.9 million was utilized toward a standby letter of credit. The Company also has the
ability to borrow up to $86.1 million from the Federal Reserve Bank through its Borrower-In-Custody line of credit agreement and
$40.0 million from multiple line of credit arrangements with various banks, none of which were outstanding.
At September 30, 2016, time deposits due within one year of that date totaled $52.2 million,
or 37.8% of total time deposits. 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 certificates of deposit. The Company believes, however, based on past experience that a significant
portion of its certificates of deposit will remain with it, either as certificates of deposit or as other deposit products. The
Company has the ability to attract and retain deposits by adjusting the interest rates offered.
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, 2016, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $1.2 million.
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 Federal Home Loan Bank, 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 Federal Home Loan Bank in the future.
Capital Management.
The Company and the Bank are 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 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. The capital conservation buffer, which is composed of common equity Tier
I capital, began on January 1, 2016 at the 0.625% level and will be phased in over a three year period (increasing by that amount
on each January 1, until it reaches 2.5% on January 1, 2019).
At September 30, 2016 and December 31, 2015, the Company 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.
|
|
(Dollars in thousands)
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
Common Equity Tier 1 (to risk weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
$
|
80,740
|
|
|
|
13.26
|
%
|
|
$
|
78,702
|
|
|
|
12.83
|
%
|
For Capital Adequacy Purposes
|
|
|
27,392
|
|
|
|
4.50
|
|
|
|
27,597
|
|
|
|
4.50
|
|
To Be Well Capitalized
|
|
|
39,566
|
|
|
|
6.50
|
|
|
|
39,862
|
|
|
|
6.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital (to risk weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
80,740
|
|
|
|
13.26
|
|
|
|
78,702
|
|
|
|
12.83
|
|
For Capital Adequacy Purposes
|
|
|
36,522
|
|
|
|
6.00
|
|
|
|
36,795
|
|
|
|
6.00
|
|
To Be Well Capitalized
|
|
|
48,696
|
|
|
|
8.00
|
|
|
|
49,060
|
|
|
|
8.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital (to risk weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
88,215
|
|
|
|
14.49
|
|
|
|
85,192
|
|
|
|
13.89
|
|
For Capital Adequacy Purposes
|
|
|
48,696
|
|
|
|
8.00
|
|
|
|
49,060
|
|
|
|
8.00
|
|
To Be Well Capitalized
|
|
|
60,870
|
|
|
|
10.00
|
|
|
|
61,326
|
|
|
|
10.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage (to adjusted total assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
|
80,740
|
|
|
|
9.87
|
|
|
|
78,702
|
|
|
|
9.60
|
|
For Capital Adequacy Purposes
|
|
|
32,737
|
|
|
|
4.00
|
|
|
|
32,777
|
|
|
|
4.00
|
|
To Be Well Capitalized
|
|
|
40,921
|
|
|
|
5.00
|
|
|
|
40,972
|
|
|
|
5.00
|
|