About CB Financial Services
CB Financial Services, Inc. operates as the bank holding company for Community Bank that provides various commercial banking services. The company derives substantially all its income from banking and bank-related services which include interest income on commercial, commercial mortgage, residential real estate and consumer loan financing, as well as interest and dividend income on securities, insurance commissions, and fees generated from deposit services to its customers. The company provides banking services through its subsidiary, Community Bank, a Pennsylvania-chartered commercial bank headquartered in Carmichaels, Pennsylvania. The bank 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. After the consolidation of one branch in 2022, and consolidation of six and sale of two branches in 2021, the bank operates from offices in Greene, Allegheny, Washington, Fayette and Westmoreland counties in southwestern Pennsylvania; and offices in Marshall and Ohio counties in West Virginia. Property and casualty, commercial liability, surety and other insurance products are offered through Exchange Underwriters, a full-service, independent insurance agency. 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. The bank is the sole shareholder of Exchange Underwriters, Inc. (‘Exchange Underwriters’ or ‘EU’), a wholly-owned subsidiary located in Washington County that is a full-service, independent insurance agency that offers property and casualty, commercial liability, surety and other insurance products. Exchange Underwriters' independent insurance agents shop from over 50 of the nation’s leading insurance providers to find the policy that fits their client's needs. The bank is a member of the Federal Home Loan Bank (‘FHLB’) System. The company’s deposits are insured by the Federal Deposit Insurance Corporation (‘FDIC’). Business Strategy The company’s business strategies are to create a sales and service culture to build full relationships with the company’s customers and utilize technology investments to enhance speed of process to improve the company’s customer experience; evolve toward more electronic/digital products and processes driving greater efficiency and expand the company’s brand awareness in the company’s market; enhance profitability and efficiency while continuing to invest for future growth; continue the company’s track record of opportunistic growth in the robust Pittsburgh metropolitan area and across the company’s footprint; leverage the company’s credit culture and strong loan underwriting to uphold the company’s asset quality metrics; and increase fee and other non-interest income, primarily through the company’s insurance operations, as well as mortgage banking and small business lending. Market Area The company’s southwestern Pennsylvania market area consists of Allegheny, Fayette, Greene, Washington, and Westmoreland counties. The company’s offices located in Allegheny, Washington, Fayette, and Westmoreland counties are in the southern suburban area of metropolitan Pittsburgh. Lending Activities The company’s principal lending activity has been the origination in the company’s local market area of residential one- to four-family, commercial real estate, construction, commercial and industrial, and consumer loans. Residential Real Estate Loans: Residential real estate loans comprised loans secured by one- to four-family residential properties. Included in residential real estate loans are traditional one- to four-family mortgage loans, home equity installment loans, and home equity lines of credit. The company generates loans through its marketing efforts, existing customers and referrals, real estate brokers, builders and local businesses. One- to Four-Family Mortgage Loans: One of the company’s primary lending activities is the origination of fixed-rate, one- to four-family, owner-occupied, residential mortgage loans with terms up to 30 years secured by property located in the company’s market area. The company’s one- to four-family residential mortgage loans are generally conforming loans, underwritten according to secondary market guidelines. The company generally originates mortgage loans in amounts up to the maximum conforming loan limits established by the Federal Housing Finance Agency. The company’s one- to four-family mortgage loans customarily include due-on-sale clauses, which give the company the right to declare a loan immediately due and payable in the event, among other things, that the borrower sells or otherwise disposes of the underlying real property serving as collateral for the loan. The company does not offer an ‘interest only’ mortgage loan product on one- to four-family residential properties (where the borrower pays interest for an initial period, after which the loan converts to a fully amortizing loan). The company also does not offer loans that provide for negative amortization of principal, such as ‘Option ARM’ loans, where the borrower can pay less than the interest owed on the loan, resulting in an increased principal balance during the life of the loan. The company does not offer a ‘subprime loan’ program (loans that generally target borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (traditionally defined as loans having less than full documentation). The company may originate loans to consumers with a credit score below 660. Home Equity Loans: The company’s home equity loans and lines of credit are generally secured by the borrower’s principal residence. The company primarily originates home equity loans secured by first lien mortgages. Commercial Real Estate Loans: The company originates commercial real estate loans that are secured primarily by improved properties, such as retail facilities, office buildings and other non-residential buildings, as well as multifamily properties. The bank requires property and casualty insurance and flood insurance if the property is in a flood zone area. The company underwrites commercial real estate loan participations to the same standards as loans originated by it. Construction Loans: The company originates construction loans to individuals to finance the construction of residential dwellings and also originates loans for the construction of commercial properties, including hotels, apartment buildings, housing developments, and owner-occupied properties used for businesses. The company’s construction loans generally provide for the payment of interest only during the construction phase, which is usually 12 to 18 months. Commercial and Industrial Loans: The company originates commercial and industrial loans and lines of credit to borrowers located in the company’s market area that are generally secured by collateral other than real estate, such as equipment, accounts receivable, inventory, and other business assets. Consumer Loans: The company originates consumer loans that primarily consist of indirect auto loans and, to a lesser extent, secured and unsecured loans and lines of credit. Consumer loans are generally offered on a fixed-rate basis. Indirect auto loans are loans that are sold by auto dealerships to third parties, such as banks or other types of lenders. The company works with various auto dealers throughout its lending area. Consumer loans entail greater risks than one- to four-family residential mortgage loans, particularly consumer loans secured by rapidly depreciating assets, such as automobiles, or loans that are unsecured. Investment Activities The company invests in mortgage-backed (‘MBS’) and collateralized mortgage obligation (‘CMO’) securities insured or guaranteed by the United States government or government-sponsored enterprises. These securities consist of MBS’s issued by Ginnie Mae, Fannie Mae and Freddie Mac. The company also invests in equity securities, which consist primarily of mutual funds and a portfolio of bank stocks. Deposits Deposits are generated primarily from residents within the company’s market area. The company offers a variety of deposit accounts. The company typically secures advances from the FHLB with one- to four-family residential mortgage and commercial real estate loans. Subsidiary Activities Community Bank is the only subsidiary of the company. The bank wholly-owns Exchange Underwriters, Inc., a full-service, independent insurance agency. Regulation and Supervision The company is a bank holding company within the meaning of the bank Holding Company Act of 1956, as amended. As such, it is registered with, subject to examination and supervision by, and otherwise required to comply with the rules and regulations of the Federal Reserve Board. The bank is a Pennsylvania-chartered commercial bank subject to extensive regulation by the Pennsylvania Department of Banking and Securities and the FDIC. The bank’s deposit accounts are insured up to applicable limits by the FDIC. The bank must file reports with the Pennsylvania Department of Banking and Securities and the FDIC concerning its activities and financial condition, in addition to obtaining regulatory approvals prior to entering into certain transactions, such as mergers or acquisitions with other depository institutions. There are periodic examinations of the bank by the Pennsylvania Department of Banking and Securities and the FDIC to review the bank’s compliance with various regulatory requirements. The bank is also subject to certain reserve requirements established by the Federal Reserve Board. The Consumer Financial Protection Bureau has broad rule-making authority for a wide range of consumer protection laws that apply to all banks, such as the bank, including the authority to prohibit ‘unfair, deceptive or abusive’ acts and practices. The Dodd Frank Act has resulted in an increased regulatory burden and compliance, operating and interest expense for the company and the bank. The FDIC is required to assess the bank’s record of compliance with the Community Reinvestment Act. The bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons, is governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve. The Pennsylvania Department of Banking maintains enforcement authority over the bank, including the power to issue cease and desist orders and civil money penalties and to remove directors, officers or employees. The Deposit Insurance Fund (‘DIF’) of the FDIC insures deposits at FDIC-insured financial institutions, such as the bank. The bank is a member of the FHLB System. As a member of the FHLB of Pittsburgh, the bank is required to acquire and hold shares of capital stock in the FHLB. The bank’s operations are also subject to federal and state laws applicable to credit transactions, such as the: Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; Truth in Savings Act; and Rules and regulations of the various federal and state agencies charged with the responsibility of implementing such laws. The operations of the bank also are subject to the: Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; Check Clearing for the 21st Century Act (also known as ‘Check 21’), which gives ‘substitute checks,’ such as digital check images and copies made from that image, the same legal standing as the original paper check; The USA PATRIOT Act, which requires banks operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the bank Secrecy Act and the Office of Foreign Assets Control regulations; and The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to ‘opt out’ of the sharing of certain personal financial information with unaffiliated third parties. The company’s common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. As a result, the company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934. The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the federal securities laws. The company has policies, procedures and systems designed to comply with these regulations, and the company reviews and documents these policies, procedures and systems to ensure continued compliance with these regulations. History CB Financial Services, Inc. was founded in 1901.
