CB Financial Services, Inc. ("CB") (Nasdaq:CBFV), the holding
company of Community Bank (the "Bank"), today announced net income
of $1.7 million for the three months ended December 31, 2014
compared to net income of $1.2 million for the three months ended
December 31, 2013, an increase of $518,000 or 42.6%. Diluted
earnings per share was $0.50 for the three months ended December
31, 2014 compared to $0.49 for the three months ended December 31,
2013. CB reported net income of $4.3 million for the year ended
December 31, 2014 which was comparable to the year ended December
31, 2013. Diluted earnings per share was $1.63 for the year ended
December 31, 2014 compared to $1.72 for the year ended December 31,
2013, a decrease of $0.09 per share. The quarter and year-to-date
results were largely impacted by the merger of FedFirst Financial
Corporation, the Monessen, Pennsylvania based holding company for
First Federal Savings Bank ("FFSB"), with CB effective on October
31, 2014. In addition, the Bank sold a real estate owned property
in the fourth quarter that resulted in an $840,000 gain.
"I am pleased to report to our shareholders on an excellent
quarter and an excellent year at CB Financial Services, Inc. and
our subsidiary Community Bank," said Barron P. McCune, Jr.,
President and Chief Executive Officer. "In the fourth quarter, we
completed the merger with FedFirst Financial Corporation and its
subsidiary First Federal Savings Bank. This transaction has
improved Community Bank in many ways, and has greatly increased our
earning assets and our net interest margin, as well as our
non-interest income. Our quarterly and annual performance was
substantially impacted by the one-time merger-related expenses, but
the company still had an excellent year. We are well positioned to
grow and enhance shareholder value."
Fourth Quarter Results
Net interest income for the three months ended December 31, 2014
increased $2.3 million, or 55.6%, to $6.4 million compared to $4.1
million for the three months ended December 31, 2013. Interest
income on loans increased $2.4 million, or 60.1%, to $6.4 million
and interest expense on deposits increased $80,000, or 16.9%, to
$553,000 for the three months ended December 31, 2014 primarily
driven by growth in average loans and deposits from the merger.
Interest expense on deposits was also impacted by the repricing of
maturing certificates of deposit to lower rates. In addition,
interest income on tax exempt securities declined $65,000 due to
deploying security calls and maturities into loans. Other interest
and dividend income increased $21,000 primarily due to an increase
in FHLB stock dividends.
No provision for loan losses was made for the three months ended
December 31, 2014 and December 31, 2013. Management periodically
reviews the allowance for loan losses and based on the credit
quality of the loan portfolio, no provision was deemed necessary
for each respective quarter end.
Noninterest income increased $580,000, or 65.5%, to $1.5 million
for the three months ended December 31, 2014 compared to $885,000
for the three months ended December 31, 2013. The acquisition of
Exchange Underwriters, Inc., the Bank's insurance agency
subsidiary, as part of the merger resulted in a $431,000 increase
in commissions. Additionally, gains on the sales of loans increased
$74,000 and a gain of $25,000 was recognized in the current period
on the sales of available for sale securities. Bank owned life
insurance income increased $38,000 due to the acquisition of
policies from the merger.
Noninterest expense increased $1.8 million, or 54.0%, to $5.3
million for the three months ended December 31, 2014 compared to
$3.4 million for the three months ended December 31, 2013 primarily
due to $946,000 of merger-related expenses. Merger-related expenses
included $877,000 in professional fees related to investment
banker, legal and audit services. Salaries and benefits increased
$828,000, primarily related to employees retained from the merger.
Occupancy and equipment expense increased $155,000 primarily due to
the acquisition of FFSB branches and costs associated with the
upgrade of the data processing system to accommodate additional
account activity. Advertising increased $100,000 related to a
branding and imaging campaign to promote the Bank as well as a
cooperative marketing agreement utilized by Exchange Underwriters.
Contracted services increased $87,000 primarily due to costs
associated with becoming a registrant with the Securities and
Exchange Commission. Other noninterest expense increased $382,000
primarily due to increases in the amortization on the core deposit
intangible, office supplies and charitable donations. Other real
estate owned expense decreased $737,000 primarily due to an
$840,000 gain on the sale of a real estate owned property in the
current period partially offset by $141,000 of net gains on sales
recognized in the prior period.
Year-to-Date Results
Net interest income for the year ended December 31, 2014
increased $3.2 million, or 20.5%, to $18.9 million compared to
$15.7 million for the year ended December 31, 2013. Interest income
on loans increased $3.0 million, or 19.2%, to $18.5 million
primarily driven by growth in average loans throughout the year and
from the merger. In addition, despite an increase in the average
balance of interest-bearing deposits, interest expense on deposits
decreased $193,000, or 9.8%, to $1.8 million due to the repricing
of maturing certificates of deposit to lower rates. Other interest
and dividend income increased $85,000 primarily due to increased
FHLB stock dividends. Interest expense on other borrowed funds
decreased $71,000 due to the decrease in the average cost on
outstanding average FHLB debt. These benefits to net interest
income were partially offset by a decrease of $166,000 on interest
income on tax exempt securities due to a decrease in average
balances of securities from utilizing calls and maturities to fund
loans.
There was no provision for loan losses for the year ended
December 31, 2014, compared to $100,000 for the year ended December
31, 2013. Net charge-offs for the year ended December 31, 2014 were
$187,000 compared to $621,000 for the year ended December 31,
2013.
Noninterest income increased $613,000, or 19.1%, to $3.8 million
for the year ended December 31, 2014 compared to $3.2 million for
the year ended December 31, 2013. The acquisition of Exchange
Underwriters, Inc. as part of the merger resulted in a $470,000
increase in commissions. Service fees on deposit accounts increased
$66,000 primarily from check card interchange fee
income. Mortgage backed securities and equities were sold in
the current period resulting in a $60,000 gain. Bank owned life
insurance income increased $30,000 due to the acquisition of
policies from the merger.
Noninterest expense increased $3.4 million, or 25.8%, to $16.8
million for the year ended December 31, 2014 compared to $13.4
million for the year ended December 31, 2013 primarily due to $2.0
million of merger-related expenses. Merger-related expenses
included $1.8 million in professional fees related to investment
banker, legal and audit services. Compensation and employee
benefits expense increased $1.0 million primarily due to employees
retained as a result of the merger as well as normal salary
increases and overtime related to a loan document scanning project.
Occupancy and equipment costs increased $270,000 primarily due to
the acquisition of FFSB branches, branch maintenance, and increased
costs associated with the upgrade of the data processing system to
accommodate additional account activity. Advertising costs
increased $167,000 due to several advertising initiatives
undertaken to increase market share and to promote the community
identity of the Bank as well as a cooperative marketing agreement
utilized by Exchange Underwriters. Contracted services increased
$119,000 primarily due to costs associated with becoming a
registrant with the Securities and Exchange Commission. Other
noninterest expense increased $398,000 primarily due to increases
in the amortization on the core deposit intangible, office supplies
and charitable donations. Other real estate owned expense decreased
$588,000 primarily due to an $840,000 gain on the sale of a real
estate owned property in the current period partially offset by
$211,000 of net gains recognized in the prior period.
Balance Sheet Review
Total assets at December 31, 2014 were $846.3 million, an
increase of $299.8 million, or 54.9%, from total assets of $546.5
million at December 31, 2013. Net loans increased $306.7 million,
or 82.1%, to $680.5 million primarily due to the loan portfolio
acquired as part of the merger. Bank-owned life insurance increased
$9.0 million due to the policies acquired through the
merger. Goodwill increased $3.5 million due to the merger and
the related core deposit intangible was $4.9 million.
Available-for-sale securities decreased $28.4 million primarily
from not reinvesting maturities and calls in new securities.
Security purchases were minimal in 2014 due to a concerted effort
to fund loan growth and increase liquid funds in anticipation of
funding the merger.
Total deposits increased $217.2 million, or 45.2%, to $697.5
million primarily related to the deposits acquired through the
merger. Short-term borrowings and other borrowed funds increased
$31.3 million and $11.1 million, respectively, due to Federal Home
Loan Bank borrowings assumed as part of the merger.
Stockholders' equity increased $36.9 million, or 82.0%, to $81.9
million at December 31, 2014 compared to $45.0 million at December
31, 2013 primarily due to the merger. The Company issued 1.7
million shares of common stock as part of the merger. In addition,
CB recorded $4.3 million of net income for the year ended December
31, 2014 and a $1.3 million increase in accumulated other
comprehensive income as a result of an increase in the unrealized
gain position of the securities portfolio. This was partially
offset by the payment of $2.3 million in dividends to stockholders
and the repurchase of 133,000 shares of CB common stock for $2.9
million.
About CB Financial Services, Inc
CB Financial Services, Inc. is the bank holding company for
Community Bank, a Pennsylvania-chartered commercial bank. Community
Bank operates 16 offices in Greene, Allegheny, Washington, Fayette,
and Westmoreland Counties in southwestern Pennsylvania. Community
Bank offers a broad array of retail and commercial lending and
deposit services and provides commercial and personal insurance
services through Exchange Underwriters, Inc., its wholly owned
subsidiary. Financial highlights of the Company are attached.
Statements contained in this news release that are not
historical facts may constitute forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of
1995 and such forward-looking statements are subject to significant
risks and uncertainties. The Company intends such forward-looking
statements to be covered by the safe harbor provisions contained in
the Act. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect
on the operations and future prospects of the Company and its
subsidiaries include, but are not limited to, changes in market
interest rates, general economic conditions, changes in federal and
state regulation, actions by our competitors, loan delinquency
rates and our ability to control costs and expenses and other
factors that may be described 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 statement except as may be required by applicable
law or regulation.
CB FINANCIAL SERVICES,
INC. |
SELECTED FINANCIAL
INFORMATION |
|
|
|
|
|
|
(Unaudited) |
|
|
|
(Dollars in thousands, except share and per
share data) |
December 31,
2014 |
December 31,
2013 |
|
|
Selected Financial Condition
Data: |
|
|
|
|
Assets |
$ 846,314 |
$ 546,486 |
|
|
Cash and cash equivalents |
11,751 |
16,417 |
|
|
Securities available-for-sale |
105,449 |
133,810 |
|
|
Securities held-to-maturity |
504 |
1,006 |
|
|
Loans receivable, net |
680,451 |
373,764 |
|
|
Deposits |
697,494 |
480,335 |
|
|
Borrowings |
61,820 |
19,384 |
|
|
Stockholders' equity |
81,912 |
45,005 |
|
|
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
Three Months Ended
December 31, |
Year Ended December
31, |
|
2014 |
2013 |
2014 |
2013 |
Selected Operations
Data: |
|
|
|
|
Interest and dividend income |
$ 7,025 |
$ 4,634 |
$ 20,841 |
$ 17,905 |
Interest expense |
620 |
518 |
1,960 |
2,236 |
Net interest income |
6,405 |
4,116 |
18,881 |
15,669 |
Provision for loan losses |
-- |
-- |
-- |
100 |
Net interest income after provision for loan
losses |
6,405 |
4,116 |
18,881 |
15,569 |
Noninterest income |
1,465 |
885 |
3,818 |
3,205 |
Noninterest expense - merger-related |
946 |
-- |
1,979 |
-- |
Noninterest expense |
4,314 |
3,416 |
14,819 |
13,358 |
Income before income taxes |
2,610 |
1,585 |
5,901 |
5,416 |
Income taxes |
875 |
368 |
1,609 |
1,160 |
Net income |
$ 1,735 |
$ 1,217 |
$ 4,292 |
$ 4,256 |
|
|
|
|
|
Dividends per share - regular |
$ 0.21 |
$ 0.21 |
$ 0.84 |
$ 0.84 |
Earnings per share - basic |
0.50 |
0.49 |
1.63 |
1.73 |
Earnings per share - diluted |
0.50 |
0.49 |
1.63 |
1.72 |
|
|
|
|
|
Weighted average shares outstanding -
basic |
2,238,632 |
2,467,860 |
2,233,033 |
2,463,571 |
Weighted average shares outstanding -
diluted |
2,306,897 |
2,471,800 |
2,294,504 |
2,478,086 |
|
|
|
|
|
|
Three Months Ended
December 31, |
Year Ended December
31, |
|
2014 |
2013 |
2014 |
2013 |
Selected Financial
Ratios(1): |
|
|
|
|
Return on average assets |
0.91 % |
0.88 % |
0.72 % |
0.79 % |
Return on average equity |
10.32 |
10.58 |
8.60 |
9.43 |
Average interest-earning assets to average
interest-bearing liabilities |
134.74 |
136.47 |
137.33 |
134.56 |
Average equity to average assets |
8.81 |
8.31 |
8.36 |
8.37 |
Net interest rate spread |
3.54 |
3.13 |
3.34 |
3.08 |
Net interest margin |
3.65 |
3.28 |
3.47 |
3.23 |
Net (charge-offs) recoveries to average
loans |
(0.10) |
0.01 |
(0.04) |
(0.17) |
|
|
|
|
|
|
Period
Ended |
|
|
|
December 31,
2014 |
December 31,
2013 |
|
|
Allowance for loan losses to total loans |
0.76 % |
1.42 % |
|
|
Allowance for loan losses to nonperforming
loans |
78.13 |
136.98 |
|
|
Nonperforming loans and troubled debt
restructurings to total loans |
0.97 |
1.04 |
|
|
Nonperforming assets and troubled debt
restructurings to total assets |
0.82 |
0.78 |
|
|
Tier I capital (to adjusted total assets)
(2) |
9.33 |
7.70 |
|
|
Tier I capital (to risk weighted assets)
(2) |
11.63 |
11.73 |
|
|
Total capital (to risk weighted assets)
(2) |
12.50 |
12.98 |
|
|
Tier I capital (to adjusted total assets)
(3) |
9.48 |
7.96 |
|
|
Tier I capital (to risk weighted assets)
(3) |
11.82 |
12.12 |
|
|
Total capital (to risk weighted assets)
(3) |
13.06 |
13.38 |
|
|
Book value per share |
$ 20.12 |
$ 18.24 |
|
|
Outstanding shares |
4,071,462 |
2,467,980 |
|
|
|
|
|
|
|
(1)
Ratios are calculated on an annualized basis for the three months
ended December 31, 2014. |
|
|
|
|
(2)
Capital ratios are for Community Bank only. |
|
|
|
|
(3)
Capital ratios are for CB Financial Services, Inc. |
|
|
|
|
|
|
|
|
|
Note: |
|
|
|
|
Certain items
previously reported may have been reclassified to conform with the
current reporting period's format. |
CONTACT: CB Financial Services, Inc.
Barron P. "Pat" McCune, Jr.
Vice Chairman, President and Chief Executive Officer
Telephone: (724) 225-2400
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