CB Financial Services posts $5.33M Q3 2026 profit
Net cash provided by operating activities was $8.729 million for the first nine months, versus $12.780 million a year earlier.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Rhea-AI Filing Summary
CB Financial Services, Inc. reported third-quarter net income of $5.327 million, compared with a $5.696 million net loss in the same quarter of 2025. Diluted earnings per share were $0.99 versus a $1.07 loss, while net interest and dividend income was $14.998 million versus $13.099 million. Net loss on investment securities was $35,000 in the 2026 quarter, compared with $11.752 million in the prior-year quarter. For the first nine months, net income was $13.497 million, compared with $164,000, and diluted earnings per share were $2.53 versus $0.03.
At September 30, 2026, total assets were $1.628 billion, including $343.988 million of securities and $1.152 billion of net loans; deposits were $1.341 billion. At December 31, 2025, assets were $1.548 billion, securities were $279.895 million, net loans were $1.152 billion and deposits were $1.340 billion. Nonaccrual loans were $3.205 million, compared with $5.310 million at December 31, 2025. The company paid dividends of $0.28 per share in the quarter, versus $0.26 in the 2025 quarter.
2 points · 0 major0 major · 1 point
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net income was $5.327 million, versus a $5.696 million loss.
- Moderate pointNet interest and dividend income was $14.998 million, up from $13.099 million.
Negative
- Moderate pointNine-month operating cash flow was $8.729 million, versus $12.780 million.
Filing Explained
The reported change is in funding: short-term borrowings are on the balance sheet, while unused credit commitments are capacity, not funded debt.
Form 10-Q is the unaudited quarterly report; at
That makes short-term borrowing a reported balance-sheet liability in the funding mix, while deposits were
The company also reported
At September 30, accumulated other comprehensive loss was
Key Figures
Net income (loss): $5.327 million; $5.696 million net loss in the prior-year quarter
Net interest and dividend income: $14.998 million versus $13.099 million
Diluted earnings per share: $0.99 versus a $1.07 loss
+3 more
6 metrics
Net income (loss)
$5.327 million; $5.696 million net loss in the prior-year quarter
Three months ended September 30, 2026; compared with 2025
Net interest and dividend income
$14.998 million versus $13.099 million
Three months ended September 30, 2026 and 2025
Diluted earnings per share
$0.99 versus a $1.07 loss
Three months ended September 30, 2026 and 2025
Total assets
$1.628 billion versus $1.548 billion
September 30, 2026 versus December 31, 2025
Total deposits
$1.341 billion versus $1.340 billion
September 30, 2026 versus December 31, 2025
Net cash provided by operating activities
$8.729 million versus $12.780 million
Nine months ended September 30, 2026 and 2025
Key Terms
Allowance for Credit Losses (ACL), Fully tax-equivalent (FTE) basis, Nonaccrual loans, Collateral-dependent loans, +1 more
5 terms
Allowance for Credit Losses (ACL) financial
"the ACL represents the estimated amount considered necessary to cover lifetime expected credit losses"
Allowance for credit losses (ACL) is an accounting reserve banks and lenders set aside to cover loans and other receivables that may not be repaid. Think of it as a cushion or rainy-day fund that reduces reported assets to reflect expected losses; when the cushion grows, it can signal rising borrower trouble or more conservative accounting, and when it shrinks, it may boost reported profits and capital. Investors watch ACL to judge a lender’s risk exposure, earnings quality, and capital strength.
Fully tax-equivalent (FTE) basis financial
"The interest income on interest-earning assets, net interest rate spread and net interest margin are presented on a fully tax-equivalent (FTE) basis"
Nonaccrual loans financial
"Total Nonaccrual Loans"
Nonaccrual loans are loans a lender has stopped counting toward interest income because the borrower is overdue or unlikely to pay; the lender only records cash payments received and may set aside extra funds to cover potential losses. For investors, a rising number or amount of nonaccrual loans signals weaker credit quality, lower future interest revenue and larger potential write-downs — similar to pausing expected subscription income when many customers stop paying.
Collateral-dependent loans financial
"Collateral-dependent loans are evaluated and valued at the time the loan is identified"
Risk participation agreements financial
"The Company has six risk participation agreements with financial institution counterparties"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was CBFV's net income in the third quarter of 2026?
CBFV reported $5.327 million in net income for the three months ended September 30, 2026, compared with a $5.696 million net loss in the same 2025 quarter. Diluted earnings per share were $0.99 versus a $1.07 loss.
How much net interest income did CBFV report in Q3 2026?
Net interest and dividend income was $14.998 million for the three months ended September 30, 2026, compared with $13.099 million in the same 2025 quarter. Total interest and dividend income was $21.593 million in the 2026 quarter.
How much operating cash flow did CBFV report for the first nine months of 2026?
Net cash provided by operating activities was $8.729 million for the nine months ended September 30, 2026, compared with $12.780 million in 2025. Investing activities used $85.789 million, while financing activities provided $76.197 million.
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended September 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from __________ to __________
Commission file number: 001-36706
| (Exact name of registrant as specified in its charter) | ||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
( | ||||||||
| (Registrant’s telephone number, including area code) | ||||||||
| N/A | ||||||||
| (Former name, former address and former fiscal year, if changed since last report) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| (Title of each class) | (Trading symbol) | (Name of each exchange on which registered) | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | ||||||||||
Smaller reporting company | |||||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 5, 2026, the number of shares outstanding of the Registrant’s Common Stock was 5,095,773 .
Table of Contents
FORM 10-Q
INDEX
Page | |||||
PART I – CONDENSED FINANCIAL INFORMATION | |||||
Item 1. Financial Statements (Unaudited) | 1 | ||||
Consolidated Statements of Financial Condition | 1 | ||||
Consolidated Statements of Income | 2 | ||||
Consolidated Statements of Comprehensive (Loss) Income | 3 | ||||
Consolidated Statements of Changes In Stockholders’ Equity | 4 | ||||
Consolidated Statements of Cash Flows | 6 | ||||
Notes to the Consolidated Financial Statements (Unaudited) | 8 | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 34 | ||||
Item 3. Quantitative and Qualitative Disclosure about Market Risk. | 48 | ||||
Item 4. Controls and Procedures. | 49 | ||||
PART II - OTHER INFORMATION | |||||
Item 1. Legal Proceedings. | 50 | ||||
Item 1A. Risk Factors. | 50 | ||||
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities. | 50 | ||||
Item 3. Defaults Upon Senior Securities. | 50 | ||||
Item 4. Mine Safety Disclosures. | 50 | ||||
Item 5. Other Information. | 50 | ||||
Item 6. Exhibits | 51 | ||||
SIGNATURES | 52 | ||||
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| (Unaudited) September 30, 2026 | December 31, 2025 | ||||||||||
| (Dollars in Thousands, except per share and share data) | |||||||||||
ASSETS | |||||||||||
Cash and Due From Banks: | |||||||||||
| Interest-Earning | $ | $ | |||||||||
| Noninterest-Earning | |||||||||||
| Total Cash and Due From Banks | |||||||||||
| Securities: | |||||||||||
| Available-for-Sale Debt Securities, at Fair Value | |||||||||||
| Equity Securities, at Fair Value | |||||||||||
| Total Securities | |||||||||||
Loans, Net of Allowance for Credit Losses of $ | |||||||||||
Premises and Equipment, Net | |||||||||||
Bank-Owned Life Insurance | |||||||||||
Goodwill | |||||||||||
| Accrued Interest Receivable and Other Assets | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES | |||||||||||
Deposits: | |||||||||||
| Noninterest-Bearing Demand Accounts | $ | $ | |||||||||
| Interest-Bearing Demand Accounts | |||||||||||
| Money Market Accounts | |||||||||||
| Savings Accounts | |||||||||||
| Time Deposits | |||||||||||
| Brokered Deposits | |||||||||||
| Total Deposits | |||||||||||
Short-Term Borrowings | |||||||||||
Other Borrowings | |||||||||||
| Accrued Interest Payable and Other Liabilities | |||||||||||
TOTAL LIABILITIES | |||||||||||
STOCKHOLDERS' EQUITY | |||||||||||
Common Stock, $ | |||||||||||
Capital Surplus | |||||||||||
Retained Earnings | |||||||||||
Treasury Stock, at Cost ( | ( | ( | |||||||||
| Accumulated Other Comprehensive Loss | ( | ( | |||||||||
TOTAL STOCKHOLDERS' EQUITY | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements
1
Table of Contents
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in Thousands, except share and per share data) | |||||||||||||||||||||||
| INTEREST AND DIVIDEND INCOME | |||||||||||||||||||||||
| Loans, Including Fees | $ | $ | $ | $ | |||||||||||||||||||
| Investment Securities: | |||||||||||||||||||||||
| Taxable | |||||||||||||||||||||||
| Tax-Exempt | |||||||||||||||||||||||
| Dividends | |||||||||||||||||||||||
| Other Interest and Dividend Income | |||||||||||||||||||||||
| TOTAL INTEREST AND DIVIDEND INCOME | |||||||||||||||||||||||
| INTEREST EXPENSE | |||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||
| Short-Term Borrowings | |||||||||||||||||||||||
| Other Borrowings | |||||||||||||||||||||||
| TOTAL INTEREST EXPENSE | |||||||||||||||||||||||
| NET INTEREST AND DIVIDEND INCOME | |||||||||||||||||||||||
| (Recovery) Provision for Credit Losses - Loans | ( | ( | |||||||||||||||||||||
| Provision (Recovery) for Credit Losses - Unfunded Commitments | ( | ( | |||||||||||||||||||||
| NET INTEREST AND DIVIDEND INCOME AFTER NET (RECOVERY) PROVISION FOR CREDIT LOSSES | |||||||||||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||||||
| Service Fees | |||||||||||||||||||||||
| Commissions | |||||||||||||||||||||||
| Net Gain on Sale of Loans | |||||||||||||||||||||||
| Net Loss on Investment Securities | ( | ( | ( | ( | |||||||||||||||||||
| Net Gain on Purchased Tax Credits | |||||||||||||||||||||||
| Income from Bank-Owned Life Insurance | |||||||||||||||||||||||
| Other Income | |||||||||||||||||||||||
| TOTAL NONINTEREST INCOME (LOSS) | ( | ( | |||||||||||||||||||||
| NONINTEREST EXPENSE | |||||||||||||||||||||||
| Salaries and Employee Benefits | |||||||||||||||||||||||
| Occupancy | |||||||||||||||||||||||
| Equipment | |||||||||||||||||||||||
| Data Processing | |||||||||||||||||||||||
| Federal Deposit Insurance Corporation Assessment | |||||||||||||||||||||||
| Pennsylvania Shares Tax | |||||||||||||||||||||||
| Contracted Services | |||||||||||||||||||||||
| Legal and Professional Fees | |||||||||||||||||||||||
| Advertising | |||||||||||||||||||||||
| Other Real Estate Owned | |||||||||||||||||||||||
| Other Expense | |||||||||||||||||||||||
| TOTAL NONINTEREST EXPENSE | |||||||||||||||||||||||
Income Before Income Tax Expense (Benefit) | ( | ||||||||||||||||||||||
| Income Tax Expense (Benefit) | ( | ( | |||||||||||||||||||||
| Net Income (Loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| EARNINGS (LOSS) PER SHARE | |||||||||||||||||||||||
| Basic | $ | $ | ( | $ | $ | ||||||||||||||||||
| Diluted | ( | ||||||||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
2
Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||
| Net Income (Loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Other Comprehensive (Loss) Income: | |||||||||||||||||||||||
| Change in Unrealized (Loss) Gain on Available-for-Sale Debt Securities | ( | ( | |||||||||||||||||||||
| Income Tax Effect | ( | ( | |||||||||||||||||||||
Reclassification Adjustment for Loss on Sale of Securities Included in Net Income (1) | |||||||||||||||||||||||
Income Tax Effect (2) | ( | ( | |||||||||||||||||||||
Other Comprehensive (Loss) Income, Net of Income Tax Effect | ( | ( | |||||||||||||||||||||
| Total Comprehensive (Loss) Income | $ | ( | $ | $ | $ | ||||||||||||||||||
(1) Reported in Net Loss on Investment Securities on the Consolidated Statements of Income.
(2) Reported in Income Tax Expense (Benefit) on the Consolidated Statements of Income.
The accompanying notes are an integral part of these consolidated financial statements
3
Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
| Three Months Ended September 30, 2026 | Shares Issued | Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | ||||||||||||||||
| (Dollars in Thousands, except share and per share data) | |||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Comprehensive Loss: | |||||||||||||||||||||||
| Net Income | — | — | — | — | — | ||||||||||||||||||
| Other Comprehensive Loss | — | — | — | — | — | ( | ( | ||||||||||||||||
| Stock-Based Compensation Expense | — | — | — | — | — | ||||||||||||||||||
| Exercise of Stock Options | — | — | |||||||||||||||||||||
Treasury stock purchased, at cost ( | — | — | — | — | ( | — | ( | ||||||||||||||||
Dividends Paid ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
| September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Three Months Ended September 30, 2025 | Shares Issued | Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | ||||||||||||||||
| (Dollars in Thousands, except share and per share data) | |||||||||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Comprehensive Income: | |||||||||||||||||||||||
| Net Loss | — | — | — | ( | — | — | ( | ||||||||||||||||
| Other Comprehensive Income | — | — | — | — | — | ||||||||||||||||||
| Stock-Based Compensation Expense | — | — | — | — | — | ||||||||||||||||||
| Exercise of Stock Options | — | — | |||||||||||||||||||||
Treasury Stock Purchased, at cost ( | — | — | — | — | ( | — | ( | ||||||||||||||||
Dividends Paid ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
| September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
4
Table of Contents
| Nine Months Ended September 30, 2026 | Shares Issued | Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | ||||||||||||||||
| (Dollars in thousands, except share and per share data) | |||||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Comprehensive Income: | |||||||||||||||||||||||
| Net Income | — | — | — | — | — | ||||||||||||||||||
| Other Comprehensive Loss | — | — | — | — | — | ( | ( | ||||||||||||||||
| Restricted Stock Awards Granted | ( | — | — | — | |||||||||||||||||||
| Stock-Based Compensation Expense | — | — | — | — | — | ||||||||||||||||||
| Exercise of Stock Options | — | — | |||||||||||||||||||||
Treasury stock purchased, at cost ( | — | — | — | ( | — | ( | |||||||||||||||||
Dividends Paid ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
| September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Nine Months Ended September 30, 2025 | Shares Issued | Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stockholders' Equity | ||||||||||||||||
| (Dollars in thousands, except share and per share data) | |||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
| Comprehensive Income: | |||||||||||||||||||||||
| Net Income | — | — | — | — | — | ||||||||||||||||||
| Other Comprehensive Income | — | — | — | — | — | ||||||||||||||||||
| Restricted Stock Awards Forfeited | ( | — | — | ( | — | ||||||||||||||||||
| Restricted Stock Awards Granted | ( | — | — | — | |||||||||||||||||||
| Stock-Based Compensation Expense | — | — | — | — | — | ||||||||||||||||||
| Exercise of Stock Options | — | — | |||||||||||||||||||||
Treasury Stock Purchased, at cost ( | — | — | ( | — | ( | — | ( | ||||||||||||||||
Dividends Paid ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
| September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements
5
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended September 30, | 2026 | 2025 | |||||||||
| (Dollars in Thousands) | |||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net Income | $ | $ | |||||||||
| Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities | |||||||||||
| Net Accretion on Securities | ( | ( | |||||||||
| Depreciation and Amortization | |||||||||||
| (Recovery) Provision for Credit Losses - Loans | ( | ||||||||||
| Provision (Recovery) for Credit Losses - Unfunded Commitments | ( | ||||||||||
| Net Loss on Sale of Debt Securities | |||||||||||
| Net Loss on Sale of Equity Securities | |||||||||||
| Net Unrealized Loss Recognized on Equity Securities | |||||||||||
| Gain on Purchased Tax Credits | ( | ( | |||||||||
| Income from Bank-Owned Life Insurance | ( | ( | |||||||||
| Proceeds From Mortgage Loans Sold | |||||||||||
| Originations of Mortgage Loans for Sale | ( | ( | |||||||||
| Net Gain on Sale of Loans | ( | ( | |||||||||
| Noncash Expense for Stock-Based Compensation | |||||||||||
| Increase in Accrued Interest Receivable | ( | ( | |||||||||
| (Benefit) Provision in Deferred Income Tax | ( | ||||||||||
| Decrease in Taxes Payable | ( | ( | |||||||||
| Decrease in Accrued Interest Payable | ( | ( | |||||||||
| Other, Net | ( | ||||||||||
| Net Cash Provided by Operating Activities | |||||||||||
| INVESTING ACTIVITIES | |||||||||||
| Investment Securities Available for Sale: | |||||||||||
| Proceeds From Principal Repayments and Maturities | |||||||||||
| Purchases of Securities | ( | ( | |||||||||
| Proceeds from Sale of Securities | |||||||||||
| Proceeds from Sale of Equity Securities | |||||||||||
| Net Decrease (Increase) in Loans | ( | ||||||||||
| Purchase of Premises and Equipment | ( | ( | |||||||||
| Investment in Low Income Housing Tax Credit | ( | ( | |||||||||
| Investment in Historical Tax Credit | ( | ||||||||||
| Purchase of Restricted Equity Securities | ( | ( | |||||||||
| Redemption of Restricted Equity Securities | |||||||||||
| Net Cash Used in Investing Activities | ( | ( | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Net Increase in Deposits | |||||||||||
| Net Increase in Short-Term Borrowings | |||||||||||
| Principal Payments on Other Borrowed Funds | ( | ||||||||||
| Proceeds From Other Borrowed Funds | |||||||||||
| Cash Dividends Paid | ( | ( | |||||||||
| Treasury Stock, Purchases at Cost | ( | ( | |||||||||
| Exercise of Stock Options | |||||||||||
| Net Cash Provided by Financing Activities | |||||||||||
| (Decrease) Increase in Cash and Due from Banks | ( | ||||||||||
| CASH AND DUE FROM BANKS AT BEGINNING OF YEAR | |||||||||||
| CASH AND DUE FROM BANKS AT END OF PERIOD | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements
6
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Nine Months Ended September 30, | 2026 | 2025 | |||||||||
| (Dollars in Thousands) | |||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||||
| Cash Paid For: | |||||||||||
Interest on Deposits and Borrowings (Including Interest Credited to Deposits of $ | $ | $ | |||||||||
| Income Taxes | |||||||||||
| SUPPLEMENTAL NONCASH DISCLOSURE: | |||||||||||
| Transfer of Loans from Loans Held for Sale to Portfolio | |||||||||||
| Other Real Estate Acquired in Settlement of Loans | |||||||||||
| Securities Purchased Not Settled | |||||||||||
| Syndicated Loans Purchased and Sold Not Settled, net | |||||||||||
| Right of Use Asset Recognized | |||||||||||
| Unfunded Commitment in Low Income Housing Tax Credit | |||||||||||
| Unfunded Commitment in Historical Tax Credits | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements
7
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The accompanying consolidated financial statements include the accounts of CB Financial Services, Inc. (“CB Financial”) and its wholly owned subsidiary, Community Bank (the “Bank”), and the Bank’s wholly owned subsidiary, Exchange Underwriters, Inc. (“Exchange Underwriters” or "EU"). CB Financial, the Bank and Exchange Underwriters are collectively referred to as the “Company”. Effective September 29, 2025, EU merged with and into the Bank, with the Bank as the surviving institution. All intercompany transactions and balances have been eliminated in consolidation.
The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with general practice within the banking industry. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading in any material respect. In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and income and expenses for the reporting period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for credit losses on loans, goodwill and intangible assets impairment, and the valuation of deferred tax assets.
In the opinion of management, the accompanying unaudited interim financial statements include all adjustments considered necessary for a fair presentation of the Company’s financial position and results of operations at the dates and for the periods presented. All these adjustments are of a normal, recurring nature, and they are the only adjustments included in the accompanying unaudited interim consolidated financial statements. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Interim results are not necessarily indicative of results for a full year.
Nature of Operations
Operating Segments
An operating segment is defined as a component of an enterprise that engages in business activities which generate revenue and incur expense, and the operating results of which are reviewed by management. The Company has evaluated the provisions of ASC Topic 280, Segment Reporting, and determined that at September 30, 2026 and December 31, 2025, the Company had one
Critical Accounting Policies; Use of Critical Accounting Estimates
The disclosures below supplement the accounting policies disclosed in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.
Allowance for Credit Losses (ACL)
The ACL represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The measurement of expected credit losses is applicable to loans receivable and securities measured at amortized cost. It also applies to off-balance sheet credit exposures such as loan commitments and unused lines of credit. The ACL is established through a provision for credit losses that is charged against income. The methodology for determining the ACL is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded ACL. The ACL is reported separately as a contra-asset account on the Consolidated Statement of Financial Condition. The expected credit loss for unfunded loan commitments is reported on the Consolidated Statement of Financial Condition in other liabilities while the provision for credit losses related to unfunded commitments is reported in provision for credit losses - unfunded commitments in the Consolidated Statements of Income.
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ACL on Loans Receivable
The ACL on loans is deducted from the amortized cost basis of the loan to present the net amount expected to be collected. Expected losses are evaluated and calculated on a collective, or pooled, basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether loans within a pool continue to exhibit similar risk characteristics. If the risk characteristics of a loan change, such that they are no longer similar to other loans in the pool, the Company will evaluate the loan with a different pool of loans that share similar risk characteristics. If the loan does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. The Company evaluates the pooling methodology at least annually. Loans are charged off against the ACL when the Company believes the balances to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off or expected to be charged off.
The Company has chosen to segment its portfolio consistent with the manner in which it manages credit risk. Such segments include residential mortgage, commercial real estate mortgages, construction, commercial business, consumer and other. For most segments, the Company calculates estimated credit losses using a probability of default and loss given default methodology, the results of which are applied to the aggregated discounted cash flow of each individual loan within the segment. The point in time probability of default and loss given default are then conditioned by macroeconomic scenarios to incorporate reasonable and supportable forecasts that affect the collectability of the reported amount.
The Company estimates the ACL on loans via a quantitative analysis which considers relevant available information from internal and external sources related to past events and current conditions, as well as the incorporation of reasonable and supportable forecasts. The Company evaluates a variety of factors including third party economic forecasts, industry trends and other available published economic information in arriving at its forecasts. After the reasonable and supportable forecast period, the Company reverts, on a straight-line basis, to average historical losses. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a restructuring will be executed with an individual borrower or the renewal option is included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.
Also included in the ACL on loans are qualitative reserves to cover losses that are expected but, in the Company’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above. Factors that the Company considers include changes in lending policies and procedures, business conditions, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due loans and nonaccrual loans, and the effect of external factors such as competition, legal and regulatory requirements, among others. Furthermore, the Company considers the inherent uncertainty in quantitative models that are built upon historical data.
Individually Evaluated Loans
On a case-by-case basis, the Company may conclude that a loan should be evaluated on an individual basis based on its disparate risk characteristics. When the Company determines that a loan no longer shares similar risk characteristics with other loans in the portfolio, the ACL will be determined on an individual basis using the present value of expected cash flows or, for collateral-dependent loans, the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves.
ACL on Off-Balance Sheet Unfunded Commitments
The Company is required to include unfunded commitments that are expected to be funded in the future within the ACL calculation, other than those that are unconditionally cancellable. To arrive at that reserve, the reserve percentage for each applicable segment is applied to the unused portion of the expected commitment balance and is multiplied by the expected funding rate. To determine the expected funding rate, the Company uses a historical utilization rate for each segment. As noted above, the ACL on unfunded loan commitments is included in other liabilities on the Consolidated Statement of Financial Condition and the related credit expense is recorded in provision for credit losses - unfunded commitments in the Consolidated Statements of Income.
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ACL on Available-for-Sale Securities
For available-for-sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities available-for-sale that do not meet the above criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating by a rating agency, and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost. Any impairment that has not been recorded through an ACL is recognized in other comprehensive income (loss), net of tax. The Company elected the practical expedient of zero loss estimates for securities issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major agencies and have a long history of no credit losses.
Changes in the ACL are recorded as provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Accrued Interest Receivable
The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans and available-for-sale securities. Accrued interest receivable on loans is reported as a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $4.4 million at September 30, 2026 and $4.4 million at December 31, 2025 and is excluded from the estimate of credit losses. Accrued interest receivable on available-for-sale securities, also a component of accrued interest receivable and other assets on the Consolidated Statement of Financial Condition, totaled $2.1 million at September 30, 2026 and $2.0 million at December 31, 2025 and is excluded from the estimate of credit losses.
Recent Accounting Standards
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE); this ASU was then superseded by ASU 2025-01, Clarifying the Effective Date, to clarify the effective date for interim reporting. Collectively, these ASU's require that public entities on an annual and interim basis disclose specific natural expenses contained within each relevant income statement expense caption. These specified natural expenses are: purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation, depletion and amortization recognized as part of oil- and gas- producing activities (DD&A). This ASU is effective for public entities for annual periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this update on its disclosures, however does not expect the adoption of this update to have a material effect on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments — Credit Losses (Topic 326): Purchased Loans. The update expands the population of acquired financial assets subject to the gross-up approach in Topic 326 to include acquired seasoned loans without credit deterioration (excluding credit cards). This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods with early adoption permitted. The amendments in this update are to be applied prospectively to loans that are acquired on or after the initial application date. The Company adopted this update January 1, 2026 and will implement the guidance upon the occurrence of a future acquisition transaction.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The update clarifies hedge accounting guidance and addresses issues arising from the global reference rate reform initiative. There are five issues addressed: 1) expanding risks permitted to be aggregated for cash flow hedges to include those having a similar risk exposure; 2) provide cash flow accounting guidance on choose-your-rate debt instruments; 3) expand hedge accounting for forecasted purchases and sales of nonfinancial assets; 4) update guidance on net written options as hedging instruments; 5) refine foreign-currency-denominated debt instrument as hedging instrument and hedged item (dual hedge). This ASU is effective for annual periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The amendments in this update are to be applied on a prospective basis. The Company does not expect the adoption of the ASU to have a material effect on its consolidated financial statements.
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In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The update provides a comprehensive list of interim disclosures that are required by GAAP to provide clarity about the current requirements. The update also includes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this update can be applied prospectively or retrospectively. The Company does not expect the adoption of the ASU to have a material impact on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments in this update represent changes that (1) clarify, (2) correct errors or (3) make minor improvements to the Codification. The amendments are intended to make the Codification easier to understand and apply. The amendments in this update are varied in nature and may affect the application of guidance in cases in which the original guidance may have been unclear. The amendments in this update are effective for all entities for annual reporting beginning after December 15, 2026, and interim reporting for periods within those annual reporting periods. Early adoption is permitted in amendments on an issue-by-issue basis. The Company is currently evaluating the impact of the update on its financial disclosures, however does not expect the adoption of this update to have a material impact on its consolidated financial statements.
Note 2. Earnings Per Share
There are no convertible securities which would affect the numerator in calculating basic and diluted earnings per share; therefore, net income as presented on the Consolidated Statements of Income is used as the numerator.
The following table sets forth the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computation:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| (Dollars in Thousands, except share and per share data) | |||||||||||||||||
| Net Income (Loss) | $ | $ | ( | $ | $ | ||||||||||||
Weighted-Average Basic Common Shares Outstanding | |||||||||||||||||
Dilutive Effect of Common Stock Equivalents (Stock Options and Restricted Stock) | |||||||||||||||||
Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding | |||||||||||||||||
| Earnings (Loss) Per Share: | |||||||||||||||||
Basic | $ | $ | ( | $ | $ | ||||||||||||
Diluted | ( | ||||||||||||||||
The dilutive effect on weighted average diluted common shares outstanding is the result of outstanding stock options and nonvested restricted stock. The following table presents for the periods indicated (a) options to purchase shares of common stock that were outstanding but not included in the computation of earnings per share because the options’ exercise price was greater than the average market price of the common shares for the period, and (b) shares of restricted stock awards that were not included in the computation of diluted earnings per share because the hypothetical repurchase of shares under the treasury stock method exceeded the weighted average nonvested restricted awards, therefore the effects would be anti-dilutive.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Stock Options | |||||||||||||||||
| Restricted Stock | |||||||||||||||||
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Note 3. Securities
The following tables present the amortized cost and fair value of securities available-for-sale at the dates indicated:
| September 30, 2026 | ||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Available-for-Sale Debt Securities: | ||||||||||||||
U.S. Government Agencies | $ | $ | $ | ( | $ | |||||||||
Obligations of States and Political Subdivisions | ( | |||||||||||||
Mortgage-Backed Securities - Government-Sponsored Enterprises | ( | |||||||||||||
| Collateralized Mortgage Obligations - Government-Sponsored Enterprises | ( | |||||||||||||
| Collateralized Mortgage Obligations - Non-Agency | ( | |||||||||||||
| Collateralized Loan Obligations | ( | |||||||||||||
| Corporate Debt | ( | |||||||||||||
| Total Available-for-Sale Debt Securities | $ | $ | $ | ( | $ | |||||||||
| Equity Securities: | ||||||||||||||
Mutual Funds | ||||||||||||||
| Total Equity Securities | ||||||||||||||
| Total Securities | $ | |||||||||||||
| December 31, 2025 | ||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Available-for-Sale Debt Securities: | ||||||||||||||
Obligations of States and Political Subdivisions | $ | $ | $ | $ | ||||||||||
Mortgage-Backed Securities - Government-Sponsored Enterprises | ||||||||||||||
| Collateralized Mortgage Obligations - Government-Sponsored Enterprises | ( | |||||||||||||
| Collateralized Mortgage Obligations - Non-Agency | ( | |||||||||||||
| Collateralized Loan Obligations | ( | |||||||||||||
| Corporate Debt | ( | |||||||||||||
| Total Available-for-Sale Debt Securities | $ | $ | $ | ( | $ | |||||||||
| Equity Securities: | ||||||||||||||
Mutual Funds | ||||||||||||||
| Total Equity Securities | ||||||||||||||
| Total Securities | $ | |||||||||||||
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The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at the dates indicated:
| September 30, 2026 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||||
Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
U.S. Government Agencies | $ | $ | ( | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
Obligations of States and Political Subdivisions | ( | ( | |||||||||||||||||||||||||||||||||
| Mortgage Backed Securities- Government-Sponsored Enterprises | ( | ( | |||||||||||||||||||||||||||||||||
| Collateralized Mortgage Obligations - Government-Sponsored Enterprises | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Collateralized Mortgage Obligations - Non-Agency | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Collateralized Loan Obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate Debt | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
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| December 31, 2025 | |||||||||||||||||||||||||||||||||||
Less than 12 months | 12 Months or Greater | Total | |||||||||||||||||||||||||||||||||
Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | Number of Securities | Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||||||||||||
| Mortgage Backed Securities- Government-Sponsored Enterprises | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Collateralized Mortgage Obligations - Government-Sponsored Enterprises | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Collateralized Mortgage Obligations - Non-Agency | ( | ( | |||||||||||||||||||||||||||||||||
| Collateralized Loan Obligations | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Corporate Debt | ( | ( | ( | ||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||
For debt securities, the Company does not believe that any individual unrealized loss as of September 30, 2026 or December 31, 2025, represents a credit related impairment. The Company performs a review of the entire securities portfolio on a quarterly basis to identify securities that may indicate a credit related impairment. The unrealized losses on securities at September 30, 2026 and December 31, 2025 relate principally to changes in market interest rates subsequent to the acquisition of the specific securities. The Company does not intend to sell, and it is not more likely than not that it will be required to sell any of the securities in an unrealized loss position before recovery of its amortized cost or maturity of the security.
Total securities available to be pledged have a fair value of $319.1 million at September 30, 2026 and $256.7 million at December 31, 2025 of which securities with a fair value of $182.6 million and $172.6 million at September 30, 2026 and December 31, 2025, respectively, were pledged to secure uninsured public deposits, borrowings or for other purposes as required or permitted by law.
The scheduled maturities of securities available-for-sale are summarized as follows. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay debt obligations with or without prepayment penalties. Mortgage-backed securities, collateralized mortgage obligations and collateralized loan obligations are classified in the table below based on their contractual maturity date; however, regular principal payments and prepayments of principal are received on a monthly basis.
| September 30, 2026 | ||||||||
| Amortized Cost | Fair Value | |||||||
| (Dollars in Thousands) | ||||||||
| Due in One Year or Less | $ | $ | ||||||
| Due after One Year through Five Years | ||||||||
| Due after Five Years through Ten Years | ||||||||
| Due after Ten Years | ||||||||
| Total | $ | $ | ||||||
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The following table presents the gross realized gain and loss on sales of debt securities, as well as gain and loss on equity securities from both realized sales and unrealized market adjustments for the periods indicated. All gains and losses presented in the table below are reported in Net Loss on Investment Securities on the Consolidated Statements of Income.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Debt Securities | |||||||||||||||||
| Gross Realized Gain | $ | $ | $ | $ | |||||||||||||
| Gross Realized Loss | ( | ( | |||||||||||||||
| Net Loss on Debt Securities | $ | $ | ( | $ | $ | ( | |||||||||||
| Equity Securities | |||||||||||||||||
| Net Unrealized (Loss) Gain Recognized on Securities Held | $ | ( | $ | $ | ( | $ | ( | ||||||||||
| Net Realized Loss Recognized on Securities Sold | ( | ||||||||||||||||
| Net (Loss) Gain on Equity Securities | $ | ( | $ | $ | ( | $ | ( | ||||||||||
| Net Loss on Investment Securities | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||
Note 4. Loans and Allowance for Credit Losses
The Company’s loan portfolio is segmented to enable management to monitor risk and performance. Real estate loans are further segregated into three classes. Residential mortgages include those secured by residential properties and include home equity loans, while commercial mortgages consist of loans to commercial borrowers secured by commercial real estate. Construction loans typically consist of loans to build commercial buildings and acquire and develop residential real estate. The commercial and industrial segment consists of loans to finance the activities of commercial customers. The consumer segment consists primarily of indirect auto loans as well as personal installment loans and personal or overdraft lines of credit. The other segments consists primarily of loans to municipal borrowers that are secured by improved property or other business asset.
Residential mortgage loans are typically longer-term loans and, therefore, generally present greater interest rate risk than the consumer and commercial loans. Under certain economic conditions, housing values may decline, which may increase the risk that the collateral values are not sufficient.
Commercial real estate loans generally present a higher level of credit risk than loans secured by residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effect of general economic conditions on income-producing properties, and the increased difficulty in evaluating and monitoring these types of loans. Furthermore, the repayment of commercial real estate loans is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed, a bankruptcy court modifies a lease term, or a major tenant is unable to fulfill its lease obligations), the borrower’s ability to repay the loan may be impaired.
Construction loans are originated to individuals to finance the construction of residential dwellings and are also originated for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses. Construction loans generally provide for the payment of interest only during the construction phase, which is usually 12 to 18 months. At the end of the construction phase, the loan generally converts to a permanent residential or commercial mortgage loan. Construction loan risks include overfunding in comparison to the plans, untimely completion of work, and leasing and stabilization after project completion.
Commercial and industrial loans are generally secured by inventories, accounts receivable, and other business assets, which present collateral risk.
Consumer loans generally have higher interest rates and shorter terms than residential mortgage loans; however, they have additional credit risk due to the type of collateral securing the loan.
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The following table presents the classifications of loans as of the dates indicated:
| September 30, 2026 | December 31, 2025 | |||||||
| (Dollars in Thousands) | ||||||||
Real Estate: | ||||||||
Residential | $ | $ | ||||||
Commercial | ||||||||
Construction | ||||||||
Commercial and Industrial | ||||||||
Consumer | ||||||||
Other | ||||||||
Total Loans | ||||||||
| Allowance for Credit Losses | ( | ( | ||||||
Loans, Net | $ | $ | ||||||
Included in total loans above are unamortized net deferred loan fees of $590 ,000 and $830 ,000 at September 30, 2026 and December 31, 2025, respectively.
The Company uses a nine-point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first five categories are not considered criticized and are aggregated as “pass” rated. The criticized rating categories used by management generally follow bank regulatory definitions. The special mention category includes assets that are currently protected but are below average quality, resulting in an undue credit risk, but not to the point of justifying a substandard classification. Loans in the substandard category have well-defined weaknesses that jeopardize the liquidation of the debt and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. Loans classified as doubtful have all the weaknesses inherent in loans classified as substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as loss are considered uncollectible and of such little value that continuance as an asset is not warranted.
The following tables present the Company’s loans by year of origination, loan segmentation, risk indicator summarized by the aggregate Pass and the criticized categories of Special Mention and Substandard and gross charge-offs for the nine months ended September 30, 2026 and year ended December 31, 2025. The Company did not have any loans classified as Doubtful or Loss as of the dates indicated.
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Classified Loans by Origination Year (as of September 30, 2026) | ||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Revolving Loans Amortized Cost Basis | Total | |||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||
| Real Estate: | ||||||||||||||||||||||||||
| Residential | ||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Construction | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Commercial and Industrial | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Total Loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Real Estate: | ||||||||||||||||||||||||||
| Residential | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||
| Construction | ||||||||||||||||||||||||||
| Total Real Estate | ||||||||||||||||||||||||||
Commercial and Industrial | ||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total Gross Charge Offs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
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Classified Loans by Origination Year (as of December 31, 2025) | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans Amortized Cost Basis | Total | |||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||
| Real Estate: | ||||||||||||||||||||||||||
| Residential | ||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Construction | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Commercial and Industrial | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Pass | ||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||
| Total Loans | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Real Estate: | ||||||||||||||||||||||||||
| Residential | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||
| Construction | ||||||||||||||||||||||||||
| Total Real Estate | ||||||||||||||||||||||||||
Commercial and Industrial | ||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Total Gross Charge Offs | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
18
Table of Contents
The following tables present the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of the dates indicated:
| September 30, 2026 | |||||||||||||||||||||||
Loans Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days Or More Past Due | Total Past Due | Non- Accrual | Total Loans | |||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||
Residential | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Commercial | |||||||||||||||||||||||
Construction | |||||||||||||||||||||||
Commercial and Industrial | |||||||||||||||||||||||
Consumer | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total Loans | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
Loans Current | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days Or More Past Due | Total Past Due | Non- Accrual | Total Loans | |||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||
Residential | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Commercial | |||||||||||||||||||||||
Construction | |||||||||||||||||||||||
Commercial and Industrial | |||||||||||||||||||||||
Consumer | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total Loans | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Additional interest income that would have been recorded if the loans that were on nonaccrual status at September 30, 2026 were current was $21,000 and $73,000 for the three and nine months ended September 30, 2026, respectively, and $20,000 and $101,000 for the three and nine months ended September 30, 2025, respectively.
The following table sets forth the amounts for amortized cost basis of loans on nonaccrual status, loans past due 90 days still accruing, and categories of nonperforming assets at the dates indicated.
19
Table of Contents
| September 30, 2026 | ||||||||||||||
| Nonaccrual With No ACL | Nonaccrual With ACL | Loans Past Due 90 Days Still Accruing | Total Nonperforming Assets | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
Nonaccrual Loans: | ||||||||||||||
Real Estate: | ||||||||||||||
Residential | $ | $ | $ | $ | ||||||||||
Commercial | ||||||||||||||
| Construction | ||||||||||||||
Consumer | ||||||||||||||
Total Nonaccrual Loans | $ | $ | $ | |||||||||||
Other Real Estate Owned | ||||||||||||||
Total Nonperforming Assets | $ | |||||||||||||
| December 31, 2025 | ||||||||||||||
| Nonaccrual With No ACL | Nonaccrual With ACL | Loans Past Due 90 Days Still Accruing | Total Nonperforming Assets | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
Nonaccrual Loans: | ||||||||||||||
Real Estate: | ||||||||||||||
Residential | $ | $ | $ | $ | ||||||||||
Commercial | ||||||||||||||
| Construction | ||||||||||||||
Consumer | ||||||||||||||
Total Nonaccrual Loans | $ | $ | $ | |||||||||||
Other Real Estate Owned | ||||||||||||||
Total Nonperforming Assets | $ | |||||||||||||
No interest income on nonaccrual loans was recognized during the three and nine months ended September 30, 2026 and September 30, 2025.
All modifications and refinancing, including those with borrowers that are experiencing financial difficulty are subject to the modification guidance in ASC 310-20. Loan modifications could meet the definition of a new loan if certain terms of the loan are modified to the benefit of the lender and the modification to the terms of the loan are more than minor. Both of these criteria have to be met to define the modification as a new loan. If a loan modification meets the criteria of new loan, then the new loan should include the remaining net investment in the original loan, additional funds advanced, fees received, and direct loan origination costs with the refinancing or restructuring. Additionally, the effective interest rate should be recalculated based on the amortized cost basis of the new loan and a reassessment of contractual cash flow.
20
Table of Contents
Modifications to Borrowers Experiencing Financial Difficulty
The following tables present the amortized cost of loans to borrowers experiencing financial difficulty by portfolio segment and type of modification during the periods presented:
| Three Months Ended September 30, 2026 | |||||||||||||||||
| Term Extension | Payment Delay | Interest Rate Reduction | Total | % of Portfolio Segment | |||||||||||||
| (Dollars in Thousands) | |||||||||||||||||
| Real Estate: | |||||||||||||||||
| Commercial | $ | $ | $ | $ | % | ||||||||||||
Total(1) | $ | $ | $ | $ | % | ||||||||||||
(1) Excludes loans that were fully paid off or fully charged off by period end
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||
| Term Extension | Payment Delay | Interest Rate Reduction | Term Extension and Payment Delay | Total | % of Portfolio Segment | |||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||
| Real Estate: | ||||||||||||||||||||
| Residential | $ | — | $ | — | $ | $ | $ | % | ||||||||||||
| Commercial | — | — | % | |||||||||||||||||
Total(1) | $ | — | $ | — | $ | $ | $ | % | ||||||||||||
(1) Excludes loans that were fully paid off or fully charged off by period end
Three and Nine Months Ended September 30, 2025 | ||||||||||||||||||||
| Term Extension | Payment Delay | Interest Rate Reduction | Term Extension and Interest Rate Reduction | Total | % of Portfolio Segment | |||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||
| Real Estate: | ||||||||||||||||||||
| Residential | $ | $ | $ | $ | $ | % | ||||||||||||||
| Construction | % | |||||||||||||||||||
Total(1) | $ | $ | $ | $ | $ | % | ||||||||||||||
(1) Excludes loans that were fully paid off or fully charged off by period end.
The following table describes the effect of loan modifications made to borrowers experiencing financial difficulty during the periods presented.
| Three Months Ended September 30, 2026 | |||||||||||
| Weighted Average Term Extension (in months) | Weighted Average Payment Delay (in months) | Weighted Average Interest Rate Reduction | |||||||||
| Real Estate: | |||||||||||
| Commercial | % | ||||||||||
21
Table of Contents
Nine Months Ended September 30, 2026 | |||||||||||
| Weighted Average Term Extension (in months) | Weighted Average Payment Delay (in months) | Weighted Average Interest Rate Reduction | |||||||||
| Real Estate: | |||||||||||
| Residential | % | ||||||||||
| Commercial | % | ||||||||||
Three and Nine Months Ended September 30, 2025 | |||||||||||
| Weighted Average Term Extension (in months) | Weighted Average Payment Delay (in months) | Weighted Average Interest Rate Reduction | |||||||||
| Real Estate: | |||||||||||
| Residential | — | % | |||||||||
| Construction | — | — | % | ||||||||
No modifications involved forgiveness of principal. There were no commitments to lend additional funds to borrowers experiencing difficulty whose terms have been restructured as of September 30, 2026, and $155 ,000 as of September 30, 2025.
The recorded investment of residential real estate loans for which formal foreclosure proceedings were in process according to applicable requirements of the local jurisdiction was $783 ,000 and $892 ,000 at September 30, 2026 and December 31, 2025, respectively.
The activity in the ACL - Loans is summarized below by primary segments for the periods indicated:
Real Estate Residential | Real Estate Commercial | Real Estate Construction | Commercial and Industrial | Consumer | Other | Total | |||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||
| June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Charge-offs | ( | ( | |||||||||||||||||||||
Recoveries | |||||||||||||||||||||||
| (Recovery) Provision for Credit Losses - Loans | ( | ( | ( | ( | ( | ( | |||||||||||||||||
| September 30, 2026 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Real Estate Residential | Real Estate Commercial | Real Estate Construction | Commercial and Industrial | Consumer | Other | Total | |||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||
| June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
| Charge-offs | ( | ( | |||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||
| Provision (Recovery) for Credit Losses - Loans | ( | ||||||||||||||||||||||
| September 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
22
Table of Contents
Real Estate Residential | Real Estate Commercial | Real Estate Construction | Commercial and Industrial | Consumer | Other | Total | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Charge-offs | ( | ( | |||||||||||||||||||||
Recoveries | |||||||||||||||||||||||
| (Recovery) Provision for Credit Losses - Loans | ( | ( | ( | ( | ( | ||||||||||||||||||
| September 30, 2026 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Real Estate Residential | Real Estate Commercial | Real Estate Construction | Commercial and Industrial | Consumer | Other | Total | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Charge-offs | ( | ( | ( | ( | |||||||||||||||||||
Recoveries | |||||||||||||||||||||||
| (Recovery) Provision for Credit Losses - Loans | ( | ( | ( | ||||||||||||||||||||
| September 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||
Loans that do not share risk characteristics are evaluated on an individual basis. For loans that are individually evaluated and collateral dependent, financial loans where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the ACL - Loans is measured based on the difference between the fair value of the collateral and the amortized cost basis of the asset as of the measurement date. As of September 30, 2026, there were $1.8 million of loans that required specific valuation allowances of $306 ,000. This included residential real estate loans for $1.1 million with a valuation allowance of $99 ,000, a construction loan for $415 ,000 with a valuation allowance of $154 ,000, and commercial and industrial loans for $293 ,000 with a valuation allowance of $53 ,000. As of December 31, 2025, there were $970,000 of loans that required specific valuation allowances of $165,000 . This included residential real estate loans for $556,000 with a valuation allowance of $35,000 , and a construction real estate loan for $414,000 with a valuation allowance of $130,000 .
The following tables present the amortized cost basis of collateral-dependent loans by class of loans as of the dates indicated.
| September 30, 2026 | |||||||||||||||||
Primary Type of Collateral | |||||||||||||||||
Real Estate | Business Assets | Total | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Real Estate: | |||||||||||||||||
| Residential | $ | $ | $ | ||||||||||||||
| Commercial | |||||||||||||||||
| Construction | |||||||||||||||||
| Commercial and Industrial | |||||||||||||||||
| Total Loans | $ | $ | $ | ||||||||||||||
23
Table of Contents
| December 31, 2025 | |||||
Primary Type of Collateral | |||||
Real Estate | |||||
| (Dollars in thousands) | |||||
| Real Estate: | |||||
| Residential | $ | ||||
| Commercial | |||||
| Construction | |||||
| Total Loans | $ | ||||
The Company’s ACL on unfunded commitments is recognized as a liability (accrued interest payable and other liabilities on the Consolidated Statement of Financial Condition), with adjustments to the reserve recognized in provision for credit losses - unfunded commitments on the Consolidated Statement of Income. The Company’s activity in the ACL on unfunded commitments for the periods indicated was as follows:
| Allowance for Credit Losses | |||||
| (Dollars in Thousands) | |||||
Balance at June 30, 2026 | $ | ||||
| Provision for Credit Losses - Unfunded Commitments | |||||
| Balance at September 30, 2026 | $ | ||||
| Allowance for Credit Losses | |||||
| (Dollars in Thousands) | |||||
| Balance at June 30, 2025 | $ | ||||
| Recovery for Credit Losses - Unfunded Commitments | ( | ||||
| Balance at September 30, 2025 | $ | ||||
| Allowance for Credit Losses | |||||
| (Dollars in Thousands) | |||||
| Balance at December 31, 2025 | $ | ||||
| Provision for Credit Losses - Unfunded Commitments | |||||
| Balance at September 30, 2026 | $ | ||||
| Allowance for Credit Losses | |||||
| (Dollars in Thousands) | |||||
| Balance at December 31, 2024 | $ | ||||
| Recovery for Credit Losses - Unfunded Commitments | ( | ||||
| Balance at September 30, 2025 | $ | ||||
24
Table of Contents
Note 5. Derivatives and Hedging Activities
Derivatives Not Designated as Hedging Instruments
Interest Rate Swaps
The Company enters into interest rate swap agreements to meet the financing and interest rate management needs of qualifying commercial loan customers. The Company simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of the offsetting customer and dealer counterparty swap agreements is that the customer pays a fixed rate of interest and the Company receives a floating rate. The credit risk associated with derivatives executed with customers is essentially the same as that involved in extending loans and is subject to normal credit policies and monitoring. Swap derivative transactions with customers are not subject to enforceable master netting arrangements and are generally secured by rights to non-financial collateral, such as real and personal property.
Risk Participation Agreements
The Company has six risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which it is a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution.
Derivatives Designated as Hedging Instruments
In October 2023, the Company entered into an interest rate swap contract that is designated as a fair value hedge to mitigate the risk of interest rate increases and the subsequent impact on the associated fixed rate mortgages. This contract matures on October 17, 2026, has a notional amount of $75.0 million and is benchmarked to SOFR. The Company expects the hedge to remain effective during the remaining term of the swap.
The following table depicts the credit value and fair value adjustments recorded related to the notional amount of derivatives outstanding and interest rate swaps and risk participation agreements with other financial institutions. These adjustments are included in Accrued Interest Payable and Other Liabilities and Accrued Interest Receivable and Other Assets on the Company's Consolidated Statement of Financial Condition.
| September 30, 2026 | ||||||||||||||
| Derivative Assets | Derivative Liabilities | |||||||||||||
| Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Derivatives Designated as Hedging Instruments | ||||||||||||||
| Interest Rate Swap Contracts | $ | $ | $ | $ | ||||||||||
| Total Derivatives Designated as Hedging Instruments | ||||||||||||||
| Derivatives Not Designated as Hedging Instruments | ||||||||||||||
| Interest Rate Swap Contracts - Commercial Loans | ||||||||||||||
| Risk Participation Agreements | ||||||||||||||
| Total Derivatives Not Designated as Hedging Instruments | ||||||||||||||
| Total Derivatives | $ | $ | $ | $ | ||||||||||
25
Table of Contents
| December 31, 2025 | ||||||||||||||
| Derivative Assets | Derivative Liabilities | |||||||||||||
| Notional Amount | Fair Value | Notional Amount | Fair Value | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Derivatives Designated as Hedging Instruments | ||||||||||||||
| Interest Rate Swap Contracts | $ | $ | $ | $ | ||||||||||
| Total Derivatives Designated as Hedging Instruments | ||||||||||||||
| Derivatives Not Designated as Hedging Instruments | ||||||||||||||
| Interest Rate Swap Contracts - Commercial Loans | ||||||||||||||
| Risk Participation Agreements | ||||||||||||||
| Total Derivatives Not Designated as Hedging Instruments | ||||||||||||||
| Total Derivatives | $ | $ | $ | $ | ||||||||||
Note 6. Fair Value Disclosure
ASC Topic 820 “Fair Value Measurement” defines fair value and provides the framework for measuring fair value and required disclosures about fair value measurements. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability at the transaction date. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in valuation methods to determine fair value.
The three levels of fair value hierarchy are as follows:
Level 1 – Fair value is based on unadjusted quoted prices in active markets that are accessible to the Company for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.
Level 2 – Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets, and other observable inputs.
Level 3 – Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows, and other similar techniques.
This hierarchy requires the use of observable market data when available. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.
The majority of the Company’s securities are included in Level 2 of the fair value hierarchy. Fair values for Level 2 securities were primarily determined by a third-party pricing service using both quoted prices for similar assets, when available, and model-based valuation techniques that derive fair value based on market-corroborated data, such as instruments with similar prepayment speeds and default interest rates. The standard inputs that are normally used include benchmark yields of like securities, reportable trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.
The Company uses derivative instruments, including interest rate swaps and risk participation agreements, and the fair value of such instruments are calculated using accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative, considering the contractual terms of each derivative, and uses observable market-based inputs, such as interest rate curves and implied volatilities. Credit valuation adjustments are incorporated to appropriately reflect nonperformance risk and the respective counterparties' nonperformance risk in calculating fair value measurements. These instruments are classified as Level 2.
There were no transfers into or out of Level 3 during the nine months ended September 30, 2026 or year ended December 31, 2025.
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Table of Contents
The following table presents the financial assets measured at fair value on a recurring basis and reported on the Consolidated Statements of Financial Condition as of the dates indicated, by level within the fair value hierarchy:
Fair Value Hierarchy | September 30, 2026 | December 31, 2025 | |||||||||
| (Dollars in Thousands) | |||||||||||
| ASSETS | |||||||||||
| Available-for-Sale Debt Securities | |||||||||||
| U.S. Government Agencies | Level 2 | $ | $ | ||||||||
| Obligations of States and Political Subdivisions | Level 2 | ||||||||||
| Mortgage-Backed Securities - Government-Sponsored Enterprises | Level 2 | ||||||||||
| Collateralized Mortgage Obligations - Government Sponsored Enterprises | Level 2 | ||||||||||
| Collateralized Mortgage Obligations - Non-Agency | Level 2 | ||||||||||
| Collateralized Loan Obligations | Level 2 | ||||||||||
| Corporate Debt | Level 2 | ||||||||||
| Total Available-for-Sale Debt Securities | |||||||||||
| Equity Securities | |||||||||||
| Mutual Funds | Level 1 | ||||||||||
| Total Equity Securities | |||||||||||
| Total Securities | |||||||||||
| Derivative Financial Assets | |||||||||||
| Interest Rate Swaps - Commercial Loans | Level 2 | ||||||||||
| Total Assets | $ | $ | |||||||||
| LIABILITIES | |||||||||||
| Derivative Financial Liabilities | |||||||||||
| Interest Rate Swaps | Level 2 | $ | $ | ||||||||
| Interest Rate Swaps - Commercial Loans | Level 2 | ||||||||||
| Risk Participation Agreements | Level 2 | ||||||||||
| Total Liabilities | $ | $ | |||||||||
The following table presents the financial assets on the Consolidated Statements of Financial Condition measured at fair value on a nonrecurring basis as of the dates indicated by level within the fair value hierarchy for only those nonrecurring assets that had a fair value below the carrying amount. The table also presents the significant unobservable inputs used in the fair value measurements.
| Financial Asset | Fair Value Hierarchy | September 30, 2026 | Valuation Techniques | Significant Unobservable Inputs | Range | Weighted Average | ||||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||
| Collateral-Dependent Loans Individually Assessed | Level 3 | $ | Appraisal of Collateral (1) | Appraisal Adjustments (2) | % | to | % | |||||||||||||||||||
| Financial Asset | Fair Value Hierarchy | December 31, 2025 | Valuation Techniques | Significant Unobservable Inputs | Range | Weighted Average | ||||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||
| Collateral-Dependent Loans Individually Assessed | Level 3 | $ | Appraisal of Collateral (1) | Appraisal Adjustments (2) | % | to | % | |||||||||||||||||||
(1)Fair value is generally determined through independent appraisals of the underlying collateral, which may include various Level 3 inputs, which are not identifiable.
(2)Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of appraisal adjustments and liquidation expense are presented as a percent of the appraisal.
27
Table of Contents
Collateral-dependent loans are evaluated and valued at the time the loan is identified as collateral-dependent, at the lower of cost or fair value. Fair value is measured based on the value of the collateral securing the loans and is classified as Level 3 in the fair value hierarchy. At September 30, 2026, the fair value of these loans consisted of loan balances of $1.8 million less specific valuation allowances of $306 ,000. At December 31, 2025, the fair value of these loans consisted of loan balances of $970 ,000 less specific valuation allowances of $165 ,000.
Financial instruments are defined as cash, evidence of an ownership in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from/to a second entity on potentially favorable or unfavorable terms.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. If no readily available market exists, the fair value estimates for financial instruments should be based upon management’s judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses and other factors, as determined through various option pricing formulas or simulation modeling. As many of these assumptions result from judgments made by management based upon estimates which are inherently uncertain, the resulting estimated fair values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in the assumptions on which the estimated fair values are based may have significant impact on the resulting estimated fair values.
As certain assets such as deferred tax assets and premises and equipment are not considered financial instruments, the estimated fair value of financial instruments would not represent the full value of the Company.
The following table presents the estimated fair values of the Company’s financial instruments at the dates indicated.
| September 30, 2026 | December 31, 2025 | |||||||||||||||||||
Fair Value Hierarchy | Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||
Cash and Due From Banks: | ||||||||||||||||||||
| Interest-Earning | Level 1 | $ | $ | $ | $ | |||||||||||||||
| Noninterest-Earning | Level 1 | |||||||||||||||||||
| Securities | See Above | |||||||||||||||||||
Loans, Net | Level 3 | |||||||||||||||||||
Restricted Stock | Level 2 | |||||||||||||||||||
| Mortgage Servicing Rights | Level 3 | |||||||||||||||||||
| Derivative Assets | Level 2 | |||||||||||||||||||
Accrued Interest Receivable | Level 2 | |||||||||||||||||||
Financial Liabilities: | ||||||||||||||||||||
Deposits | Level 2 | |||||||||||||||||||
| Short-Term Borrowings | Level 2 | |||||||||||||||||||
Other Borrowed Funds | ||||||||||||||||||||
| FHLB Borrowings | Level 2 | |||||||||||||||||||
| Subordinated Debt | Level 2 | |||||||||||||||||||
| Derivative Liabilities | Level 2 | |||||||||||||||||||
Accrued Interest Payable | Level 2 | |||||||||||||||||||
Note 7. Commitments and Contingent Liabilities
Periodically, there have been various claims and lawsuits against the Company, such as claims to enforce liens, claims seeking damages for improper collection procedures or misrepresentations, condemnation proceedings on properties in which the Company holds security interests, claims involving the making and servicing of real property loans and other issues incident to our business. The Company is not a party to any other pending legal proceedings that would have a material adverse effect on its consolidated financial condition, results of operations or cash flows.
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The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business primarily to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby and performance letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Statements of Financial Condition. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.
The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby and performance letters of credit written is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.
The Company maintains an ACL on unfunded commitments to provide for the risk of loss inherent in these arrangements. The Company is required to include unfunded commitments that are expected to be funded in the future within the allowance calculation, other than those that are unconditionally cancellable. To arrive at that reserve, the reserve percentage for each applicable segment is applied to the unused portion of the expected commitment balance and is multiplied by the expected funding rate. To determine the expected funding rate, the Company uses a historical utilization rate for each segment. The ACL on unfunded loan commitments is included in other liabilities on the Consolidated Statement of Financial Condition and the related expense is recorded in provision for credit losses - unfunded commitments in the Consolidated Statement of Income.
The following table presents the unused and available credit balances of financial instruments whose contracts represent credit risk at the dates indicated:
| September 30, 2026 | December 31, 2025 | |||||||
| (Dollars in Thousands) | ||||||||
Standby Letters of Credit | $ | $ | ||||||
Performance Letters of Credit | ||||||||
Construction Loans | ||||||||
Personal Lines of Credit | ||||||||
Overdraft Protection Lines | ||||||||
Home Equity Lines of Credit | ||||||||
Commercial Lines of Credit | ||||||||
Total Commitments | $ | $ | ||||||
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the customer. Because many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.
Performance letters of credit represent conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments are issued primarily to support bid or performance-related contracts. The coverage period for these instruments is typically a one-year period with an annual renewal option subject to prior approval by management. Fees earned from the issuance of these letters are recognized upon expiration of the letter. For secured letters of credit, the collateral is typically Company deposit instruments or customer business assets. The Company recorded no liability associated with standby letters of credit as of September 30, 2026 and December 31, 2025.
Note 8. Leases
The Company evaluates all contracts at commencement to determine if a lease is present. In accordance with ASC Topic 842, leases are defined as either operating or finance leases. The Company’s lease contracts are all classified as operating leases and create operating right-of-use (“ROU”) assets and corresponding lease liabilities on the Consolidated Statements of Financial Condition. The leases are primarily ROU assets of land and building for branch and loan production locations. ROU assets are reported in and the related lease liabilities in on the Consolidated Statements of Financial Condition.
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The following tables present the lease expense, ROU assets, weighted average term, discount rate and maturity analysis of lease liabilities for operating leases for the periods and dates indicated.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Operating Lease Expense | $ | $ | $ | $ | ||||||||||
| Variable Lease Expense | ||||||||||||||
| Total Lease Expense | $ | $ | $ | $ | ||||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| (Dollars in Thousands) | ||||||||
| Operating Leases: | ||||||||
| ROU Assets | $ | $ | ||||||
| Weighted Average Lease Term in Years | ||||||||
| Weighted Average Discount Rate | % | % | ||||||
| September 30, 2026 | |||||
| (Dollars in Thousands) | |||||
| Maturity Analysis: | |||||
| Due in One Year | $ | ||||
| Due After One Year to Two Years | |||||
| Due After Two Years to Three Years | |||||
| Due After Three Years to Four Years | |||||
| Due After Four to Five Years | |||||
| Due After Five Years | |||||
| Total | $ | ||||
| Less: Present Value Discount | |||||
| Lease Liabilities | $ | ||||
During the nine months ended September 30, 2026, the Bank entered into a lease agreement under which the Bank leased office space located in Canonsburg, Pennsylvania. The lease agreement is for an initial term of three years with specific renewal options. The lease agreement includes a 2.5 % annual rent escalation during the initial term and renewal terms, if exercised. The Bank recorded an operating lease ROU asset and corresponding lease liability of $495,000
Also during the nine months ended September 30, 2026, the Bank entered into a lease agreement under which the Bank leased office space located in Uniontown, Pennsylvania. The lease agreement is for an initial term of five years with specified renewal options. The lease agreement includes a fixed annual rent amount during the initial term and a 2.0 % annual rent escalation during the renewal terms, if exercised. The Bank recorded an operating lease ROU asset and corresponding lease liability of $429,000
Note 9. Segment and Related Information
Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing performance. The Company's President and Chief Executive Officer functions as its CODM. At September 30, 2026 and December 31, 2025, the Company had one
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The CODM uses net interest income, noninterest income and net income to evaluate income generated from segment assets in deciding whether to reinvest profits into the Company, pursue acquisitions or pay out dividends. Net income is used to monitor budget versus actual results. These metrics and the Company's significant expense categories are disclosed on the Company's Consolidated Statements of Income.
Note 10. Stock Based Compensation
The following table presents stock option information for the period and at the dates indicated:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | |||||||||
| Outstanding Options at December 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Exercised | ( | ||||||||||
| Forfeited | |||||||||||
| Outstanding Options at September 30, 2026 | $ | ||||||||||
| Exercisable Options at September 30, 2026 | $ | ||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Service Period in Years | |||||||||
| Nonvested Options at September 30, 2026 | $ | ||||||||||
The following table presents restricted stock award information for the period indicated:
| Number of Shares | Weighted Average Grant Date Fair Value Price | Weighted Average Remaining Service Period in Years | |||||||||
| Nonvested Restricted Stock at December 31, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | |||||||||||
| Nonvested Restricted Stock at September 30, 2026 | $ | ||||||||||
The Company recognizes expense over a five-year vesting period for the restricted stock awards and stock options. Stock-based compensation expense related to restricted stock awards and stock options was $265,000 and $195,000 for the three months ended September 30, 2026 and 2025, respectively. Stock-based compensation was $739,000 and $610,000 for the nine months ended September 30, 2026 and 2025, respectively.
As of September 30, 2026 and December 31, 2025, total unrecognized compensation expense was $261,000 and $397 ,000, respectively, related to stock options, and $1.8 million and $1.3 million, respectively, related to restricted stock awards.
Intrinsic value represents the amount by which the fair value of the underlying stock at September 30, 2026 and December 31, 2025 exceeds the exercise price of the stock options. The intrinsic value of stock options was $2.5 million and $2.4 million at September 30, 2026 and December 31, 2025, respectively.
At September 30, 2026 and December 31, 2025, there were 231,840 and 262,265 shares of common stock available and reserved under the 2024 Plan to be issued as restricted stock awards or units based on the terms of the Plan. At September 30, 2026, 55,660 shares have been granted under the 2024 Plan. The 2021 Plan shall remain in effect as long as any awards are outstanding, but as a result of the approval of the 2024 Plan, no more awards can be granted under the 2021 Plan.
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Note 11. Variable Interest Entities
The Company has investment interests in the following non-consolidated entities that meet the definition of variable interest entities ("VIEs").
The Company's funding requirements are limited to its invested capital and any additional unfunded commitments for future equity contributions. The Company's maximum exposure to loss as a result of its involvement is limited to the carrying amounts of the investments, including the unfunded commitments. The investments in these partnerships are included in Accrued Interest Receivable and Other Assets and unfunded commitments are included in Accrued Interest Payable and Other Liabilities on the Consolidated Statements of Financial Condition. The Company currently expects to fund these commitments by the end of 2037.
The Company accounts for qualifying investments under the proportional amortization method. Under this method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance as a component of income tax expense.
Low Income Housing Tax Credit Investments
The Company makes equity investments in an entity that sponsors affordable housing and other community development projects that qualify for the Low Income Housing Tax Credit ("LIHTC") program pursuant to Section 42 of the Internal Revenue Code. The purpose of these investments are not only to assist the Bank in meeting its responsibilities under the Community Reinvestment Act, but also to provide an investment return, primarily through the realization of tax benefits. The LIHTC partnerships are managed by unrelated general partners that have the power to direct the activities which most significantly affect the performance of the partnerships. The Company is therefore not the primary beneficiary of the LIHTC partnerships and accordingly, does not consolidate this VIE.
The following table presents the balances of the Company's LIHTC investments and related unfunded commitments:
| September 30, 2026 | December 31, 2025 | |||||||
| (Dollars in thousands) | ||||||||
| Low Income Housing Tax Credit Investments | $ | $ | ||||||
| Less: Amortization | ( | ( | ||||||
| Net Low Income Housing Tax Credit Investments | $ | $ | ||||||
| Unfunded Commitments | $ | $ | ||||||
Historical Tax Credit Investments
The Company makes equity investments in an entity that sponsors rehabilitation projects that qualify for the Historical Tax Credit ("HTC") program pursuant to Section 47 of the Internal Revenue Code. The purpose of this investment is to provide an investment return, primarily through the realization of tax benefits. The HTC partnership is managed by unrelated general partners that have the power to direct the activities which most significantly affect the performance of the partnership. The Company is therefore not the primary beneficiary of the HTC partnership and accordingly, does not consolidate this VIE.
The following table presents the balances of the Company's HTC investments and related unfunded commitments:
| September 30, 2026 | December 31, 2025 | |||||||
| (Dollars in thousands) | ||||||||
| Historical Tax Credit Investments | $ | $ | ||||||
| Less: Amortization | ( | |||||||
| Net Historical Tax Credit Investments | $ | $ | ||||||
| Unfunded Commitments | $ | $ | ||||||
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The following table presents other information related to the Company's tax credit investments:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| (dollars in thousands) | ||||||||||||||
| Tax Credits and Other Tax Benefits Recognized: | ||||||||||||||
| LIHTC | $ | $ | $ | $ | ||||||||||
| HTC | ||||||||||||||
| Proportional Amortization Expense Included in Provision for Income Taxes: | ||||||||||||||
| LIHTC | $ | $ | $ | $ | ||||||||||
| HTC | ||||||||||||||
Note 12. Subsequent Events
The Company evaluated subsequent events through the date the consolidated financial statements were filed with the SEC and incorporated into the consolidated financial statements the effect of all material known events determined by Accounting Standards Codification ("ASC") 855, Subsequent Events, to be recognizable events.
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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, 2025.
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 loan production office and 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, 2026, compared to the consolidated financial condition as of December 31, 2025 and the consolidated results of operations for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025.
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.
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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 and securities 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 September 30, | Nine Months Ended September 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Interest Income (GAAP) | $ | 21,593 | $ | 19,341 | $ | 62,152 | $ | 55,947 | ||||||
Adjustment to FTE Basis | 169 | 100 | 525 | 213 | ||||||||||
Interest Income (FTE) (Non-GAAP) | 21,762 | 19,441 | 62,677 | 56,160 | ||||||||||
| Interest Expense (GAAP) | 6,595 | 6,242 | 18,747 | 18,998 | ||||||||||
Net Interest Income (FTE) (Non-GAAP) | $ | 15,167 | $ | 13,199 | $ | 43,930 | $ | 37,162 | ||||||
Net Interest Rate Spread (GAAP) | 3.22 | % | 3.05 | % | 3.22 | % | 2.86 | % | ||||||
Adjustment to FTE Basis | 0.04 | 0.03 | 0.05 | 0.02 | ||||||||||
Net Interest Rate Spread (FTE) (Non-GAAP) | 3.26 | % | 3.08 | % | 3.27 | % | 2.88 | % | ||||||
Net Interest Margin (GAAP) | 3.75 | % | 3.64 | % | 3.76 | % | 3.49 | % | ||||||
Adjustment to FTE Basis | 0.04 | 0.03 | 0.04 | 0.02 | ||||||||||
Net Interest Margin (FTE) (Non-GAAP) | 3.79 | % | 3.67 | % | 3.80 | % | 3.51 | % | ||||||
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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, 2026 | December 31, 2025 | ||||||||||
| (Dollars in Thousands, except share and per share data) | |||||||||||
| Stockholders' Equity (GAAP) | $ | 155,973 | $ | 157,537 | |||||||
| Goodwill and Other Intangible Assets, Net | (9,732) | (9,732) | |||||||||
| Tangible Common Equity or Tangible Book Value (Non-GAAP) (Numerator) | $ | 146,241 | $ | 147,805 | |||||||
| Common Shares Outstanding (Denominator) | 5,084,720 | 5,036,509 | |||||||||
| Book Value per Common Share (GAAP) | $ | 30.67 | $ | 31.28 | |||||||
| Tangible Book Value per Common Share (Non-GAAP) | $ | 28.76 | $ | 29.35 | |||||||
Consolidated Statements of Financial Condition Analysis
Assets
Total assets increased $80.3 million, or 5.2%, to $1.63 billion at September 30, 2026 compared to $1.55 billion at December 31, 2025.
Cash and Securities
•Cash and due from banks decreased $0.9 million, or 2.7%, to $30.8 million at September 30, 2026, compared to $31.7 million at December 31, 2025.
•Securities increased $64.1 million, or 22.9%, to $344.0 million at September 30, 2026, compared to $279.9 million at December 31, 2025. This was primarily due to $134.7 million of security purchases, partially offset by $56.5 million of maturities and repayments on amortizing securities and a $15.1 million increase in unrealized losses on the portfolio as a result of recent increases in market interest rates.
Loans, Allowance for Credit Losses (ACL) and Credit Quality
•Total loans remained stable at $1.16 billion for both September 30, 2026 and December 31, 2025, and included increases in commercial real estate and construction loans of $46.8 million and $6.9 million, respectively, partially offset by decreases in commercial and industrial, consumer, other and residential real estate loans of $25.5 million, $15.4 million, $7.3 million and $5.8 million, respectively. The decrease in commercial and industrial loans resulted from the payoff of a large line of credit due to the sale of the business while the decrease in consumer loans resulted from the continued reduction in indirect automobile loan production since 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 $15.5 million decrease in indirect automobile loans, total loans increased $15.1 million, or 1.3%. Loan production totaled $135.0 million while $107.5 million of loans were paid off since December 31, 2025.
•The allowance for credit losses (ACL) was $10.0 million at September 30, 2026 and $10.1 million at December 31, 2025. As a result, the ACL to total loans was 0.86% at September 30, 2026 and 0.87% at December 31, 2025. During the nine months ended September 30, 2026, the Company recorded a net provision for credit losses of $190,000 including a provision for credit losses on unfunded commitments of $204,000 and a recovery of provision for credit losses on loans of $14,000.
•Net charge-offs for the nine months ended September 30, 2026 were $109,000, or 0.01% of average loans on an annualized basis, compared to net recoveries for the nine months ended September 30, 2025 of $72,000, or 0.01% of average loans on an annualized basis.
•Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $3.2 million at September 30, 2026 and $5.3 million at December 31, 2025. Nonperforming loans to total loans ratio was 0.28% at September 30, 2026 and 0.46% at December 31, 2025. The decrease in nonperforming loans was due to the full repayment of a $2.0 million commercial real estate loan which was placed on nonaccrual status in the fourth quarter of 2025.
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Other
•Accrued interest and other assets increased $16.8 million or 56.4%, to $46.6 million at September 30, 2026, compared to $29.8 million at December 31, 2025 due to the purchase of a $7.7 million renewable energy tax credit, a $4.0 million increase in required FHLB stock as a result of increased borrowing activity, a $3.3 million investment in a low-income housing tax credit project and a $3.2 million increase in deferred income taxes.
Liabilities
Total liabilities increased $81.8 million, or 5.9%, to $1.47 billion at September 30, 2026 compared to $1.39 billion at December 31, 2025.
Deposits
•Excluding brokered funding, deposits increased $89.6 million, or 7.2%, to $1.33 billion as of September 30, 2026 compared to $1.24 billion at December 31, 2025. Interest-bearing demand and money market deposits increased $73.7 million and $27.7 million, respectively, while time and savings deposits decreased $10.4 million and $2.1 million, respectively. This growth has occurred as the Bank began onboarding Specialty Treasury clients during the first quarter of 2026. The Bank continues to focus on building core banking relationships while seeking opportunities to strategically reduce higher priced funding.
•Brokered deposits decreased $88.5 million, or 89.8%, to $10.0 million as of September 30, 2026 compared to $98.5 million at December 31, 2025, as the Bank elected to utilize lower cost FHLB borrowings instead.
•At September 30, 2026, FDIC insured deposits totaled approximately 54.7% of total deposits while an additional 19.5% of total deposits were collateralized with investment securities.
Borrowed Funds
•Short-term borrowings increased $79.0 million to $79.0 million as of September 30, 2026 as the Bank replaced maturing brokered deposits with lower cost FHLB borrowings.
Stockholders’ Equity
Stockholders’ equity decreased $1.6 million, or 1.0%, to $156.0 million at September 30, 2026, compared to $157.5 million at December 31, 2025, primarily due to a $11.9 million increase in accumulated other comprehensive loss resulting from recent market interest rate increases, the payment of $4.3 million in dividends and $315,000 of treasury shares purchased since December 31, 2025, partially offset by $13.5 million of net income for the current year and $667,000 of shares issued as a result of stock option exercises.
Book value per common share (GAAP) was $30.67 at September 30, 2026 compared to $31.28 at December 31, 2025, a decrease of $0.61. Tangible book value per common share (Non-GAAP) was $28.76 at September 30, 2026 compared to $29.35 at December 31, 2025, a decrease of $0.59.
Consolidated Results of Operations for the Three Months Ended September 30, 2026 and 2025
Net income was $5.3 million for the three months ended September 30, 2026, an increase of $11.0 million compared to a net loss of $5.7 million for the three months ended September 30, 2025.
Net Interest And Dividend Income
Net interest and dividend income increased $1.9 million, or 14.5%, to $15.0 million for the three months ended September 30, 2026 compared to $13.1 million for the three months ended September 30, 2025. Net interest margin (GAAP) increased 11 basis points (bps) to 3.75% for the three months ended September 30, 2026 compared to 3.64% for the three months ended September 30, 2025. Fully Tax Equivalent (FTE) net interest margin (Non-GAAP) increased 12 bps to 3.79% for the three months ended September 30, 2026 compared to 3.67% for the three months ended September 30, 2025.
Interest and Dividend Income
Interest and dividend income increased $2.3 million, or 11.6%, to $21.6 million for the three months ended September 30, 2026 compared to $19.3 million for the three months ended September 30, 2025.
•Interest income on loans increased $579,000, or 3.6%, to $16.6 million for the three months ended September 30, 2026 compared to $16.0 million for the three months ended September 30, 2025. The average balance of loans increased $37.8 million to $1.16 billion from $1.12 billion, causing a $535,000 increase in interest income on loans. Additionally, the average yield on loans increased 1 bp to 5.69% from 5.68% despite a 50 bp reduction in the federal funds target rate since September 2025. While this led to the downward repricing of variable and adjustable rate loans, the impact was mostly 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 $28,000 increase in interest income on loans.
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•Interest income on investment securities increased $1.1 million, or 38.0%, to $4.1 million for the three months ended September 30, 2026 compared to $3.0 million for the three months ended September 30, 2025 driven by a 48 bp increase in the average yield, coupled with a $72.6 million increase in average balances. The increase in yield was primarily due to the third quarter 2025 implementation of a balance sheet repositioning strategy of the Bank’s 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%. The increase in the average balance resulted from current year purchases.
•Interest income on interest-earning deposits at other banks increased $505,000 to $798,000 for the three months ended September 30, 2026 compared to $293,000 for the three months ended September 30, 2025 driven by a $50.2 million increase in average balances and a 5 bp increase in the average yield. The increase in the volume was due to deposit growth.
Interest Expense
Interest expense increased $353,000, or 5.7%, to $6.6 million for the three months ended September 30, 2026 compared to $6.2 million for the three months ended September 30, 2025.
•Interest expense on deposits increased $82,000, or 1.4%, to $5.9 million for the three months ended September 30, 2026 compared to $5.8 million for the three months ended September 30, 2025. Average interest-bearing deposit balances increased $113.5 million, or 11.1%, to $1.13 billion as of September 30, 2026 compared to $1.02 billion as of September 30, 2025, primarily as the Bank grew core banking relationships and onboarded Specialty Treasury clients. The increase in average balances accounted for a $622,000 increase in interest expense. This was partially offset as the cost of interest-bearing deposits decreased 20 bps to 2.06% for the three months ended September 30, 2026 from 2.26% for the three months ended September 30, 2025 due to the Federal Reserve federal funds target rate decreases since September 2025. The decrease in the cost of interest-bearing deposits accounted for a $540,000 decrease in interest expense.
•Interest expense on borrowed funds increased $271,000, or 62.7%, to $703,000 for the three months ended September 30, 2026 compared to $432,000 for the three months ended September 30, 2025. Average balances increased $27.2 million as short-term borrowings were utilized to replace maturing brokered deposits.
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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, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| 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) | $ | 1,157,873 | $ | 16,597 | 5.69 | % | $ | 1,120,036 | $ | 16,034 | 5.68 | % | |||||||||||
| Debt Securities | |||||||||||||||||||||||
| Taxable | 304,562 | 3,667 | 4.82 | 259,196 | 2,848 | 4.40 | |||||||||||||||||
| Exempt From Federal Tax | 39,651 | 589 | 5.94 | 12,461 | 185 | 5.94 | |||||||||||||||||
| Equity Securities | 1,000 | 7 | 2.80 | 1,000 | 7 | 2.80 | |||||||||||||||||
| Interest-Earning Deposits at Banks | 79,880 | 798 | 4.00 | 29,682 | 293 | 3.95 | |||||||||||||||||
| Other Interest-Earning Assets | 4,602 | 104 | 8.97 | 3,972 | 74 | 7.39 | |||||||||||||||||
| Total Interest-Earning Assets | 1,587,568 | 21,762 | 5.44 | 1,426,347 | 19,441 | 5.41 | |||||||||||||||||
| Noninterest-Earning Assets | 83,677 | 75,480 | |||||||||||||||||||||
| Total Assets | $ | 1,671,245 | $ | 1,501,827 | |||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||
| Interest-Bearing Demand Deposits | $ | 513,745 | 2,885 | 2.23 | % | $ | 350,232 | 1,835 | 2.08 | % | |||||||||||||
| Money Market Accounts | 229,488 | 1,281 | 2.21 | 211,660 | 1,401 | 2.63 | |||||||||||||||||
| Savings Accounts | 168,653 | 53 | 0.12 | 171,188 | 43 | 0.10 | |||||||||||||||||
| Time Deposits | 208,197 | 1,538 | 2.93 | 201,651 | 1,587 | 3.12 | |||||||||||||||||
| Brokered Deposits | 14,130 | 135 | 3.79 | 85,995 | 944 | 4.36 | |||||||||||||||||
| Total Interest-Bearing Deposits | 1,134,213 | 5,892 | 2.06 | 1,020,726 | 5,810 | 2.26 | |||||||||||||||||
| Short-Term Borrowings | 32,808 | 339 | 4.10 | 5,655 | 68 | 4.77 | |||||||||||||||||
| Other Borrowings | 34,783 | 364 | 4.15 | 34,743 | 364 | 4.16 | |||||||||||||||||
| Total Interest-Bearing Liabilities | 1,201,804 | 6,595 | 2.18 | 1,061,124 | 6,242 | 2.33 | |||||||||||||||||
| Noninterest-Bearing Demand Deposits | 294,833 | 271,462 | |||||||||||||||||||||
| Total Funding and Cost of Funds | 1,496,637 | 1.75 | 1,332,586 | 1.86 | |||||||||||||||||||
| Other Liabilities | 13,050 | 20,120 | |||||||||||||||||||||
| Total Liabilities | 1,509,687 | 1,352,706 | |||||||||||||||||||||
| Stockholders' Equity | 161,558 | 149,121 | |||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,671,245 | $ | 1,501,827 | |||||||||||||||||||
Net Interest Income (FTE) (Non-GAAP) (3) | $ | 15,167 | $ | 13,199 | |||||||||||||||||||
Net Interest-Earning Assets (4) | $ | 385,764 | $ | 365,223 | |||||||||||||||||||
Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5) | 3.26 | % | 3.08 | % | |||||||||||||||||||
Net Interest Margin (GAAP) (6) | 3.75 | 3.64 | |||||||||||||||||||||
Net Interest Margin (FTE) (Non-GAAP) (3)(6) | 3.79 | 3.67 | |||||||||||||||||||||
Return on Average Assets (1) | 1.26 | (1.50) | |||||||||||||||||||||
Return on Average Equity (1) | 13.08 | (15.15) | |||||||||||||||||||||
| Average Equity to Average Assets | 9.67 | 9.93 | |||||||||||||||||||||
| Average Interest-Earning Assets to Average Interest-Bearing Liabilities | 132.10 | 134.42 | |||||||||||||||||||||
(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.
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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, 2026 Compared to Three Months Ended September 30, 2025 | |||||||||||
| Increase (Decrease) Due to | |||||||||||
| Volume | Rate | Total | |||||||||
| (Dollars in Thousands) (Unaudited) | |||||||||||
| Interest and Dividend Income: | |||||||||||
| Loans, net | $ | 535 | $ | 28 | $ | 563 | |||||
| Debt Securities: | |||||||||||
| Taxable | 530 | 289 | 819 | ||||||||
| Exempt From Federal Tax | 404 | — | 404 | ||||||||
| Cash at Other Banks | 501 | 4 | 505 | ||||||||
| Other Interest-Earning Assets | 12 | 18 | 30 | ||||||||
| Total Interest-Earning Assets | 1,982 | 339 | 2,321 | ||||||||
| Interest Expense: | |||||||||||
| Deposits | 622 | (540) | 82 | ||||||||
| Short-Term Borrowings | 282 | (11) | 271 | ||||||||
| Other Borrowings | 1 | (1) | — | ||||||||
| Total Interest-Bearing Liabilities | 905 | (552) | 353 | ||||||||
| Change in Net Interest and Dividend Income | $ | 1,077 | $ | 891 | $ | 1,968 | |||||
Provision For Credit Losses
A recovery of provision for credit losses of $69,000 was recorded for the three months ended September 30, 2026. The Company recorded a $399,000 recovery of provision for credit losses on loans primarily due to a decline in loan principal of $17.8 million and favorable changes in portfolio concentrations and improvement for individually assessed loans. This was partially offset as the provision for credit losses on unfunded commitments was $330,000 and was primarily due to a $10.8 million increase in unfunded commitments and an increase in the loss rate for construction and land development unfunded commitments. This compared to a provision for credit losses of $259,000 recorded for the three months ended September 30, 2025 as 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.
Noninterest Income
Noninterest income increased $11.7 million to $1.0 million for the three months ended September 30, 2026, compared to a loss of $10.7 million for the three months ended September 30, 2025 as a result of $11.8 million in losses on the sale of securities from a securities repositioning strategy executed during the three months ended September 30, 2025.
Noninterest Expense
Noninterest expense increased $1.1 million, or 11.8%, to $10.3 million for the three months ended September 30, 2026 compared to $9.2 million for the three months ended September 30, 2025. Salaries and benefits increased $604,000 primarily due to revenue producing treasury and commercial banking personnel additions, merit increases and higher benefit compensation costs. Data processing expense increased $345,000 due to the implementation of enhanced treasury and commercial banking platforms in late 2025 and early 2026. Contracted services increased $127,000 due to outsourced information security and treasury consulting services.
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Income Taxes
Income tax expense was $497,000 for the three months ended September 30, 2026 compared to a $1.3 million tax benefit for the three months ended September 30, 2025. This change was driven by an increase in pre-tax income to $5.8 million for the three months ended September 30, 2026 compared to a $7.0 million loss for the three months ended September 30, 2025. The effective tax rate for the three months ended September 30, 2026 was 8.5%. The minimal effective tax rate resulted primarily from a $462,000 federal income tax benefit related to the purchase during the third quarter of a $7.7 million 2025 renewable energy tax credit and an increase in low-income housing tax credits. This compared to an effective tax benefit rate of 18.9% for the three months ended September 30, 2025 due to the prior period loss on the sale of securities as part of the Company’s balance sheet repositioning strategy.
Results of Operations for the Nine Months Ended September 30, 2026 and 2025
Net income was $13.5 million for the nine months ended September 30, 2026, an increase of $13.3 million compared to $164,000 for the nine months ended September 30, 2025.
Net Interest And Dividend Income
Net interest and dividend income increased $6.5 million, or 17.5%, to $43.4 million for the nine months ended September 30, 2026 compared to $36.9 million for the nine months ended September 30, 2025. Net interest margin (GAAP) increased to 3.76% for the nine months ended September 30, 2026 compared to 3.49% for the nine months ended September 30, 2025. Net interest margin (FTE) (Non-GAAP) increased 29 bps to 3.80% for the nine months ended September 30, 2026 compared to 3.51% the nine months ended September 30, 2025.
Interest and Dividend Income
Interest and dividend income increased $6.2 million, or 11.1%, to $62.2 million for the nine months ended September 30, 2026 compared to $55.9 million for the nine months ended September 30, 2025.
•Interest income on loans increased $2.7 million, or 5.9%, to $48.7 million during the nine months ended September 30, 2026 compared to $46.0 million for the nine months ended September 30, 2025. The average balance of loans increased $56.3 million to $1.15 billion for the nine months ended September 30, 2026 compared to $1.10 billion for the nine months ended September 30, 2025 resulting in a $2.4 million increase in interest income on loans. Additionally, the average yield on loans increased 4 bps to 5.66% for the nine months ended September 30, 2026 compared to 5.62% for the nine months ended September 30, 2025 resulting in a $331,000 increase in interest income on loans. The increase in the loan yield is despite a 50bp reduction in the federal funds rate since September 2025. 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 $2.7 million, or 31.5%, to $11.4 million during the nine months ended September 30, 2026 compared to $8.6 million for the nine months ended September 30, 2025 driven by a $40.4 million increase in average balances and a 74 bp increase in the average yield. The increase in yield was primarily due to the third quarter 2025 balance sheet repositioning strategy and resulted in a $1.3 million increase in interest income while the increase in the volume resulted from current year purchases and resulted in a $1.7 million increase in interest income.
•Interest income on interest-earning deposits at other banks increased $761,000, to $1.8 million for the nine months ended September 30, 2026 compared to $1.1 million for the nine months ended September 30, 2025 as average balances increased $30.7 million, partially offset as the average yield decreased 33 bps. The volume increased due to deposit growth while the average yield decrease resulted from reductions in the federal funds rate since September 2025.
Interest Expense
Interest expense decreased $251,000, or 1.3%, to $18.7 million for the nine months ended September 30, 2026 compared to $19.0 million for the nine months ended September 30, 2025.
•Interest expense on deposits decreased $579,000, or 3.3%, to $17.1 million for the nine months ended September 30, 2026 compared to $17.6 million for the nine months ended September 30, 2025. Declining market interest rates led to the repricing of interest-bearing demand, money market and time deposits and resulted in a 27 bp decrease in the average cost of interest-bearing deposits compared to the nine months ended September 30, 2025. This accounted for a $2.1 million decrease in interest expense. Partially offsetting this decrease, the average balance of interest-bearing deposits increased $97.1 million resulting in a $1.6 million increase in interest expense.
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•Interest expense on borrowed funds increased $328,000, or 24.2%, to $1.7 million for the nine months ended September 30, 2026 compared to $1.4 million for the nine months ended September 30, 2025. The average balance of borrowed funds increased $14.1 million due to FHLB short-term advances utilized during the nine months ended September 30, 2026. The increase in the average balance accounted for a $434,000 increase in interest expense. Partially offsetting this increase, the average cost of borrowed funds decreased 36 bps primarily as $20.0 million of long-term borrowings matured in June 2025 and were replaced at then current market rates. The decrease in the cost accounted for a $106,000 decrease in interest expense.
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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, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| 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) | $ | 1,154,395 | $ | 48,857 | 5.66 | % | $ | 1,098,105 | $ | 46,167 | 5.62 | % | |||||||||||
| Debt Securities | |||||||||||||||||||||||
| Taxable | 280,697 | 10,018 | 4.76 | 273,949 | 8,485 | 4.13 | |||||||||||||||||
| Tax Exempt | 37,815 | 1,687 | 5.95 | 4,199 | 185 | 5.87 | |||||||||||||||||
| Equity Securities | 1,000 | 21 | 2.80 | 1,552 | 44 | 3.78 | |||||||||||||||||
| Interest-Earning Deposits at Banks | 66,734 | 1,844 | 3.68 | 36,044 | 1,083 | 4.01 | |||||||||||||||||
| Other Interest-Earning Assets | 3,920 | 250 | 8.53 | 3,648 | 196 | 7.18 | |||||||||||||||||
| Total Interest-Earning Assets | 1,544,561 | 62,677 | 5.43 | 1,417,497 | 56,160 | 5.30 | |||||||||||||||||
| Noninterest-Earning Assets | 85,685 | 69,034 | |||||||||||||||||||||
| Total Assets | $ | 1,630,246 | $ | 1,486,531 | |||||||||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||
| Interest-Bearing Demand Deposits | $ | 446,498 | 6,855 | 2.05 | % | $ | 334,380 | 5,039 | 2.01 | % | |||||||||||||
| Savings Accounts | 169,496 | 144 | 0.11 | 172,517 | 126 | 0.10 | |||||||||||||||||
| Money Market Accounts | 219,985 | 3,585 | 2.18 | 226,760 | 4,874 | 2.87 | |||||||||||||||||
| Time Deposits | 210,679 | 4,708 | 2.99 | 219,552 | 5,713 | 3.48 | |||||||||||||||||
| Brokered Deposits | 61,505 | 1,772 | 3.85 | 57,872 | 1,891 | 4.37 | |||||||||||||||||
| Total Interest-Bearing Deposits | 1,108,163 | 17,064 | 2.06 | 1,011,081 | 17,643 | 2.33 | |||||||||||||||||
| Short-Term Borrowings | 19,680 | 598 | 4.06 | 5,607 | 199 | 4.75 | |||||||||||||||||
| Other Borrowings | 34,774 | 1,085 | 4.17 | 34,733 | 1,156 | 4.45 | |||||||||||||||||
| Total Interest-Bearing Liabilities | 1,162,617 | 18,747 | 2.16 | 1,051,421 | 18,998 | 2.42 | |||||||||||||||||
| Noninterest-Bearing Demand Deposits | 293,454 | 269,259 | |||||||||||||||||||||
| Total Funding and Cost of Funds | 1,456,071 | 1.72 | 1,320,680 | 1.92 | |||||||||||||||||||
| Other Liabilities | 13,739 | 17,812 | |||||||||||||||||||||
| Total Liabilities | 1,469,810 | 1,338,492 | |||||||||||||||||||||
| Stockholders' Equity | 160,436 | 148,039 | |||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,630,246 | $ | 1,486,531 | |||||||||||||||||||
Net Interest Income (FTE) (Non-GAAP) (3) | $ | 43,930 | $ | 37,162 | |||||||||||||||||||
Net Interest-Earning Assets (4) | $ | 381,944 | $ | 366,076 | |||||||||||||||||||
Net Interest Rate Spread (FTE) (Non-GAAP) (3)(5) | 3.27 | % | 2.88 | % | |||||||||||||||||||
Net Interest Margin (GAAP) (6) | 3.76 | 3.49 | |||||||||||||||||||||
Net Interest Margin (FTE) (Non-GAAP) (3)(6) | 3.80 | 3.51 | |||||||||||||||||||||
Return on Average Assets (1) | 1.11 | 0.01 | |||||||||||||||||||||
Return on Average Equity (1) | 11.25 | 0.15 | |||||||||||||||||||||
| Average Equity to Average Assets | 9.84 | 9.96 | |||||||||||||||||||||
| Average Interest-Earning Assets to Average Interest-Bearing Liabilities | 132.85 | 134.82 | |||||||||||||||||||||
(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.
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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, 2026 Compared to Nine Months Ended September 30, 2025 | |||||||||||
| Increase (Decrease) Due to | |||||||||||
| Volume | Rate | Total | |||||||||
| (Dollars in thousands) (Unaudited) | |||||||||||
| Interest and Dividend Income: | |||||||||||
| Loans, net | $ | 2,359 | $ | 331 | $ | 2,690 | |||||
| Debt Securities: | |||||||||||
| Taxable | 211 | 1,322 | 1,533 | ||||||||
| Exempt From Federal Tax | 1,499 | 3 | 1,502 | ||||||||
| Equity Securities | (14) | (9) | (23) | ||||||||
| Cash at Other Banks | 857 | (96) | 761 | ||||||||
| Other Interest-Earning Assets | 15 | 39 | 54 | ||||||||
| Total Interest-Earning Assets | 4,927 | 1,590 | 6,517 | ||||||||
| Interest Expense: | |||||||||||
| Deposits | 1,570 | (2,149) | (579) | ||||||||
| Short-Term Borrowings | 432 | (33) | 399 | ||||||||
| Other Borrowings | 2 | (73) | (71) | ||||||||
| Total Interest-Bearing Liabilities | 2,004 | (2,255) | (251) | ||||||||
| Change in Net Interest and Dividend Income | $ | 2,923 | $ | 3,845 | $ | 6,768 | |||||
Provision For Credit Losses
The provision for credit losses was $190,000 for the nine months ended September 30, 2026. The provision for credit losses for unfunded commitments was $204,000, partially offset by a recovery for credit losses for loans of $14,000. The provision for credit losses for unfunded commitments was primarily related to increases in the calculated loss rate for construction and land development loans and the balance of unfunded commitments. The recovery for credit losses for loans was due to changes in loan concentrations, mainly offset by loan originations, an increase in qualitative factors and individually analyzed loans that required specific provision. This compared to a provision for credit losses of $227,000 for the nine months ended September 30, 2025. The prior period provision for credit losses was comprised of a provision of $269,000 for loans partially offset by a recovery of $42,000 for unfunded commitments. The prior period provision for credit losses on 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 prior period recovery for unfunded commitments was due to a decline in the unfunded commitment balance.
Noninterest Income
Noninterest income increased $11.9 million, or 133.0%, to $3.0 million for the nine months ended September 30, 2026, compared to a $9.0 million loss for the nine months ended September 30, 2025 as a result of $11.8 million in losses on the sale of securities from a securities repositioning strategy executed during the nine months ended September 30, 2025. Additionally, service fees increased $130,000 primarily related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts.
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Noninterest Expense
Noninterest expense increased $2.9 million, or 10.6%, to $30.7 million for the nine months ended September 30, 2026 compared to $27.7 million for the nine months ended September 30, 2025. Salaries and benefits increased $1.6 million primarily due to revenue producing treasury and commercial banking personnel additions, merit increases and higher benefit compensation costs, partially offset 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. Additionally, data processing expense increased $869,000 due to the implementation of enhanced treasury and commercial banking platforms in late 2025 and early 2026, contracted services increased $276,000 due to costs associated with outsourced information technology services, treasury consulting and robotic process automation projects, and Pennsylvania shares tax expense increased $178,000 due to $242,000 of refunds received during the nine months ended September 30, 2025 as a result of amended prior year returns.
Income Taxes
Income tax expense increased $2.1 million to $2.0 million for the nine months ended September 30, 2026 compared to a $131,000 benefit for the nine months ended September 30, 2025. The change between the periods was primarily driven by an increase in pre-tax income to $15.5 million for the nine months ended September 30, 2026 compared to $33,000 for the nine months ended September 30, 2025. The current period increase in pre-tax income was due to the prior period recognition of the securities repositioning transaction. In addition, a $462,000 federal income tax benefit related to the purchase during the current year of a $7.7 million 2025 renewable energy tax credit.
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, 2026 and December 31, 2025.
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, 2026 to satisfy its short- and long-term liquidity needs.
The Company’s most liquid assets are cash and due from banks, which totaled $30.8 million at September 30, 2026. 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 $161.4 million at September 30, 2026. In addition, at September 30, 2026, the Company had the ability to borrow up to $546.3 million from the FHLB of Pittsburgh, of which $445.4 million was available. The Company also has the ability to borrow up to $68.8 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 $55.0 million; currently these credit arrangements remain unused.
At September 30, 2026, $161.8 million, or 79.5% 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, 2026, the Bank's current deposit portfolio is 54.7% insured by the FDIC, and with additional coverage of 19.5% from the Bank's investment securities; of the total deposits held at the Bank only 25.8% 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.
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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, 2026, CB Financial (on an unconsolidated, stand-alone basis) had liquid assets of $4.9 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, 2026 and December 31, 2025, 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, 2026 | December 31, 2025 | |||||||||||||
| Amount | Ratio | Amount | Ratio | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Common Equity Tier 1 (to risk weighted assets) | ||||||||||||||
| Actual | $ | 170,361 | 14.10 | % | $ | 156,459 | 13.92 | % | ||||||
| For Capital Adequacy Purposes | 54,375 | 4.50 | 50,583 | 4.50 | ||||||||||
| To Be Well Capitalized | 78,542 | 6.50 | 73,064 | 6.50 | ||||||||||
| Tier 1 Capital (to risk weighted assets) | ||||||||||||||
| Actual | 170,361 | 14.10 | 156,459 | 13.92 | ||||||||||
| For Capital Adequacy Purposes | 72,501 | 6.00 | 67,444 | 6.00 | ||||||||||
| To Be Well Capitalized | 96,668 | 8.00 | 89,925 | 8.00 | ||||||||||
| Total Capital (to risk weighted assets) | ||||||||||||||
| Actual | 181,304 | 15.00 | 167,321 | 14.89 | ||||||||||
| For Capital Adequacy Purposes | 96,668 | 8.00 | 89,925 | 8.00 | ||||||||||
| To Be Well Capitalized | 120,834 | 10.00 | 112,407 | 10.00 | ||||||||||
| Tier 1 Leverage (to adjusted total assets) | ||||||||||||||
| Actual | 170,361 | 10.20 | 156,459 | 10.15 | ||||||||||
| For Capital Adequacy Purposes | 66,817 | 4.00 | 61,674 | 4.00 | ||||||||||
| To Be Well Capitalized | 83,522 | 5.00 | 77,093 | 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, 2025 for a description of each loan portfolio segment.
At September 30, 2026, the Company's loans totaled $1.16 billion, representing a $378,000 decrease compared to $1.16 billion at December 31, 2025.
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The table below provides the composition of the loan portfolio:
| September 30, 2026 | December 31, 2025 | |||||||||||||
| (Dollars in Thousands) | ||||||||||||||
Real Estate: | ||||||||||||||
Residential | $ | 323,465 | 27.8 | % | $ | 329,237 | 28.3 | % | ||||||
Commercial | 598,955 | 51.5 | 552,180 | 47.5 | ||||||||||
Construction | 52,299 | 4.5 | 45,419 | 3.9 | ||||||||||
Commercial and Industrial | 135,544 | 11.7 | 161,081 | 13.9 | ||||||||||
Consumer | 27,498 | 2.4 | 42,876 | 3.7 | ||||||||||
Other | 24,121 | 2.1 | 31,467 | 2.7 | ||||||||||
| Total Loans | $ | 1,161,882 | 100.0 | % | $ | 1,162,260 | 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. As of September 30, 2026, there were 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 $599.0 million at September 30, 2026, an increase of $46.8 million, or 8.5%, compared to December 31, 2025. 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, 2026:
| CRE Nonowner Occupied Loans | ||||||||||||||
| Outstanding Balance | Percent | Average Loan Size | Average LTV (1) | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Multifamily | $ | 112,372 | 23.68 | % | $ | 1,102 | 58.97 | % | ||||||
| Retail Space | 111,174 | 23.43 | 1,463 | 60.05 | ||||||||||
| Warehouse Space | 81,763 | 17.23 | 2,044 | 53.37 | ||||||||||
| Office Space | 63,799 | 13.45 | 1,302 | 59.34 | ||||||||||
| Manufacturing | 30,729 | 6.48 | 2,794 | 45.91 | ||||||||||
| Medical | 17,327 | 3.65 | 1,155 | 52.87 | ||||||||||
| Hotels | 15,116 | 3.19 | 2,159 | 61.45 | ||||||||||
| Vacant Land | 13,181 | 2.78 | 2,197 | 43.06 | ||||||||||
| Oil and Gas | 4,570 | 0.96 | 1,523 | 56.68 | ||||||||||
| Other | 24,434 | 5.15 | 977 | 57.72 | ||||||||||
| Total Nonowner Occupied CRE | $ | 474,465 | 100.00 | % | $ | 1,421 | 56.79 | % | ||||||
(1) Based on collateral value at the time of loan origination.
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| CRE Owner Occupied Loans | ||||||||||||||
| Outstanding Balance | Percent | Average Loan Size | Average LTV (1) | |||||||||||
| (Dollars in Thousands) | ||||||||||||||
| Retail Space | 31,814 | 25.56 | 776 | 56.21 | ||||||||||
| Warehouse Space | 18,259 | 14.67 | 730 | 40.03 | ||||||||||
| Office Space | 9,106 | 7.31 | 479 | 71.75 | ||||||||||
| Medical | 8,914 | 7.16 | 637 | 62.25 | ||||||||||
| Oil & Gas | 5,052 | 4.06 | 631 | 66.57 | ||||||||||
| Manufacturing | 3,067 | 2.46 | 307 | 58.74 | ||||||||||
| Vacant Land | 2,356 | 1.89 | 157 | 45.78 | ||||||||||
| Other | $ | 45,922 | 36.89 | % | $ | 696 | 53.79 | % | ||||||
| Total Owner Occupied CRE | $ | 124,490 | 100.00 | % | $ | 629 | 54.80 | % | ||||||
(1) Based on collateral value at the time of loan origination.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
Management Of Interest Rate Risk
The majority of the Company’s assets and liabilities are monetary in nature. Consequently, the Company’s most significant form of market risk is interest rate risk and a principal part of its business strategy is to manage interest rate risk by reducing the exposure of net interest income to changes in market interest rates. Accordingly, the Company’s Board has established an Asset/Liability Management Committee, which is responsible for evaluating the interest rate risk inherent in the Company’s assets and liabilities, for determining the level of risk that is appropriate given the Company’s business strategy, operating environment, capital, liquidity and performance objectives; and for managing this risk consistent with the guidelines approved by the Board. Senior management monitors the level of interest rate risk and the Asset/Liability Management Committee meets on a quarterly basis to review its asset/liability policies and position and interest rate risk position, and to discuss and implement interest rate risk strategies.
The Company monitors interest rate risk through the use of a simulation model. The quarterly reports developed in the simulation model assist the Company in identifying, measuring, monitoring and controlling interest rate risk to ensure compliance within the Company’s policy guidelines. This quantitative analysis measures interest rate risk from both a capital and earnings perspective. With regard to earnings, movements in interest rates and the shape of the yield curve significantly influence the amount of net interest income that is recognized. Movements in market interest rates significantly influence the spread between the interest earned on our interest-earning assets and the interest paid on our interest-bearing liabilities. Our internal interest rate risk analysis calculates the sensitivity of our projected net interest income over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into similar instruments. Product pricing and earning asset prepayment speeds are adjusted for each rate scenario.
With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our economic value of equity (“EVE”) ratio to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities. EVE attempts to quantify our economic value using a discounted cash flow methodology while the EVE ratio reflects that value as a form of capital ratio. The degree to which the EVE ratio changes for any hypothetical interest rate scenario from its base case measurement is a reflection of an institution’s sensitivity to interest rate risk.
For both net interest income and capital at risk, our interest rate risk analysis calculates a base case scenario that assumes no change in interest rates. The model then measures changes throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve up and down 100, 200, 300 and 400 basis points with additional scenarios modeled where appropriate. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain falling rate scenarios.
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The table below sets forth, as of September 30, 2026, the estimated changes in EVE and net interest income at risk that would result from the designated instantaneous changes in market interest rates. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results. Changes presented in the table below are within the policy limits approved by the Board of Directors.
| EVE | EVE as a Percent of Portfolio Value of Assets | Net Interest Earnings at Risk | ||||||||||||||||||||||||||||||||||||
| Change in Interest Rates in Basis Points | Dollar Amount | Dollar Change | Percent Change | NPV Ratio | Basis Point Change | Dollar Amount | Dollar Change | Percent Change | ||||||||||||||||||||||||||||||
| (Dollars in Thousands) | ||||||||||||||||||||||||||||||||||||||
| +400 | $ | 237,957 | $ | (66,284) | (21.8) | % | 16.48 | % | (261) | $ | 60,076 | $ | (1,749) | (2.8) | % | |||||||||||||||||||||||
| +300 | 256,195 | (48,046) | (15.8) | 17.29 | (180) | 60,735 | (1,090) | (1.8) | ||||||||||||||||||||||||||||||
| +200 | 273,589 | (30,652) | (10.1) | 18.01 | (108) | 61,227 | (598) | (1.0) | ||||||||||||||||||||||||||||||
| +100 | 289,637 | (14,604) | (4.8) | 18.61 | (48) | 61,572 | (253) | (0.4) | ||||||||||||||||||||||||||||||
| Flat | 304,241 | — | — | 19.09 | — | 61,825 | — | — | ||||||||||||||||||||||||||||||
| (100) | 316,784 | 12,543 | 4.1 | 19.42 | 33 | 61,955 | 130 | 0.2 | ||||||||||||||||||||||||||||||
| (200) | 325,975 | 21,734 | 7.1 | 19.55 | 46 | 61,709 | (116) | (0.2) | ||||||||||||||||||||||||||||||
| (300) | 332,034 | 27,793 | 9.1 | 19.50 | 41 | 61,772 | (53) | (0.1) | ||||||||||||||||||||||||||||||
| (400) | 331,882 | 27,641 | 9.1 | 19.09 | — | 61,287 | (538) | (0.9) | ||||||||||||||||||||||||||||||
Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in EVE and net interest income require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the table presented assumes that the composition of the Company’s interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured, and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the table provides an indication of the Company’s interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on EVE and net interest income and will differ from actual results. EVE calculations also may not reflect the fair values of financial instruments. For example, changes in market interest rates can increase the fair values of the Company’s loans, deposits and borrowings.
Item 4. Controls and Procedures.
(a)Evaluation Of Disclosure Controls And Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2026. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.
Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to our management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures.
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(b)Changes In Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, claims seeking damages for improper collection procedures or misrepresentations, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any other pending legal proceedings that we believe would have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Item 1A. Risk Factors.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition or future results. The risks described in such Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.
The Company made the following purchases of its common stock during the three months ended September 30, 2026.
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of the Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program(2) | ||||||||||||||||||||||
| July 1 through 31, 2026 | — | $ | — | — | $ | 1,250,000 | ||||||||||||||||||||
| August 1 through 31, 2026 | — | — | — | 1,250,000 | ||||||||||||||||||||||
| September 1 through 30, 2026 | — | — | — | 4,717,000 | ||||||||||||||||||||||
Total | — | $ | — | — | ||||||||||||||||||||||
(1) On September 4, 2025, the Company announced that it had approved a program to repurchase up to $5.0 million of its then outstanding common stock based on the closing price on September 3, 2025. In connection with the program, the Company has purchased a total of 8,352 shares of the Company's common stock at an average price of $33.89 per share.
(2) On September 16, 2026, the Company announced that it had approved to extend the repurchase program under its original terms through August 31, 2027.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the three months ended September 30, 2026, none of the Company's directors or executive officers adopted terminated
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Item 6. Exhibits
| 3.1 | Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-4 filed on June 13, 2014 (File No. 333-196749)) | |||||||
| 3.2 | Bylaws, as amended (incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed on May 20, 2020) | |||||||
| 10.1 | Employment Agreement Between Community Bank and John H. Montgomery (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 25, 2026) | |||||||
| 10.2 | Employment Agreement Between Community Bank and Bruce A. Sharp (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on August 25, 2026) | |||||||
| 10.3 | Split Dollar Insurance Agreement Between Community Bank and John H. Montgomery (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on August 25, 2026) | |||||||
| 31.1 | Rule 13a-14(a) / 15d-14(a) Certification (Chief Executive Officer) | |||||||
| 31.2 | Rule 13a-14(a) / 15d-14(a) Certification (Chief Financial Officer) | |||||||
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||||
| 101 | The following materials for the quarter ended September 30, 2026, formatted in XBRL (Extensible Business Reporting Language); the (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements (Unaudited) | |||||||
| 104 | Cover Page Interactive Data File (Embedded within Inline XBRL contained in Exhibit 101) | |||||||
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CB FINANCIAL SERVICES, INC. | |||||||||||
(Registrant) | |||||||||||
Date: | November 9, 2026 | /s/ John H. Montgomery | |||||||||
| John H. Montgomery | |||||||||||
President and Chief Executive Officer | |||||||||||
Date: | November 9, 2026 | /s/ Amanda L. Engles | |||||||||
| Amanda L. Engles | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
(Principal Financial Officer and Chief Accounting Officer) | |||||||||||
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