CB Financial Services, Inc. Announces Fourth Quarter and Full Year 2025 Financial Results and Declares Quarterly Cash Dividend Increase of 8%

CB Financial Services, Inc. ("CB" or the "Company") (NASDAQGM:CBFV), the holding company of Community Bank (the "Bank"), today announced its fourth quarter and 2025 financial results.

2025 Fourth Quarter Financial Highlights

• Total assets were $1.55 billion at December 31, 2025, an increase of $2.2 million from September 30, 2025. Cash balances and an increase in deposits funded strong commercial and industrial, commercial real estate and construction loan production and investment security purchases. The Bank continues to focus efforts on repositioning the balance sheet to maximize earnings while maintaining its historic risk profile. These strategic movements include:
  • Effectively managing cash and liquidity.
  • Redeploying repayments of indirect automobile and residential mortgage loans into higher-yielding commercial loan products. Commercial loans totaled 61.3% of the Bank's loan portfolio at December 31, 2025 compared to 54.7% at December 31, 2024.
  • Changing the Bank's deposit mix by focusing on growth in lower cost core deposit relationships and reducing reliance on higher priced funding.
• Net interest margin (NIM) improved to 3.76% for the three months ended December 31, 2025 compared to 3.64% for the three months ended September 30, 2025. Main factors impacting the improved NIM included:
  • An increase in the yield on earning assets to 5.48% from 5.41%. This was primarily due to the Bank implementing a balance sheet repositioning strategy of its portfolio of available-for-sale investment securities during the quarter ended September 30, 2025, in which $129.6 million in book value of lower-yielding investment securities with an average yield of 2.87% were sold for an $11.8 million loss ($9.3 million after-tax). Investment securities sold included $121.1 million of mortgage-backed securities/collateralized mortgage obligations issued by the U.S. government-sponsored agencies, $5.0 million of U.S. government agency securities and $3.5 million of municipal securities. The Bank then purchased $117.8 million of higher-yielding mortgage-backed securities/collateralized mortgage obligations issued by U.S government-sponsored agencies, municipal securities, subordinated debt investments and non-agency guaranteed securitizations with an expected tax-equivalent yield of approximately 5.43%. This strategy is expected to add nearly 19 basis points to net interest margin and approximately $0.40 to annual earnings per share. The positive impact of the balance sheet repositioning strategies have offset the effect of recent target federal funds rate cuts on asset repricing.
  • A reduction in the cost of funds to 1.78% from 1.86% resulting from the favorable change in the Bank's deposit mix coupled with disciplined deposit pricing and the recent reductions in the target federal funds rate.
• Noninterest expenses increased $740,000 to $9.9 million for the three months ended December 31, 2025 compared to $9.2 million for the three months ended September 30, 2025. This increase was driven by increases in salaries and employee benefits resulting primarily from additions to the Bank's Treasury personnel, contracted services due to compensation consulting and loan review services and data processing due to the implementation of enhanced treasury and commercial banking platforms.
• Asset quality remains strong as nonperforming loans to total loans was 0.46% at December 31, 2025.
• Book value per share and tangible book value per share (Non-GAAP) was $31.28 and $29.35, respectively at December 31, 2025. The improvements since year-end 2024 resulted from increased equity due to the decrease in accumulated other comprehensive losses resulting from the securities repositioning strategy and current period net income, partially offset by treasury shares repurchased under the Company's stock repurchase program and the payment of dividends.
• The Bank remains well-capitalized and is positioned for future growth.

Management Commentary

President and CEO John H. Montgomery commented, "We delivered solid fourth quarter results, benefiting from net interest margin expansion and the balance sheet optimization efforts completed in the prior quarter. Our loan portfolio expanded with strong growth in relationship-driven commercial lending, while we achieved healthy deposit growth and an improved deposit mix through our continued focus on building strong core banking relationships. Net interest margin expansion was driven primarily by a reduced cost of funds, reflecting a more favorable deposit mix, disciplined deposit pricing and recent federal funds rate cuts. Additionally, the yield on earning assets increased, supported by our balance sheet repositioning, which effectively mitigated the effects of rate reductions on asset repricing.

Given economic uncertainties, we remain committed to prudent financial management through a cautious approach to our balance sheet and rigorous oversight of our lending operations. Since year-end 2024, total loans have increased by $69.6 million, or 6.4%, with commercial real estate and commercial and industrial loans as the main drivers of expansion. This growth is somewhat tempered by reductions in consumer, construction and residential real estate lending segments. The uptick in borrowing activity we observed during the quarter was promising, with loan production totaling $204.6 million against $97.6 million in payoffs over the past year. Our asset quality continues to be strong, with nonperforming loans representing 0.46% of total loans and allowance for credit losses covering 190.5% of nonperforming assets at quarter-end. These results reflect our ongoing commitment to stringent risk assessment and high lending standards.

During the fourth quarter, we completed the build out of our Specialty Treasury Payments & Services program, a key pillar of our long-term strategy to drive sustainable revenue growth and expand our core deposit base. With the necessary treasury products, talent, and technology infrastructure now in place, the program is fully deployed. While onboarding new customers will take time, we anticipate meaningful progress during the first quarter. We view this as a high-value investment that we expect will enhance our franchise's strength, efficiency and scalability while generating significant revenue growth over time.

As part of our growth strategy for 2026, we're investing in building out our mortgage lending group to capture greater market share in this important product category. Expanding our mortgage capabilities in our primary market will enhance customer relationships, diversify our revenue streams and create new cross-selling opportunities. We are committed to becoming a leader in the mortgage market, and this initiative aligns with our relationship-banking model and extends our core deposit and lending capabilities.

As we look ahead to 2026, we remain confident in our strategic direction and believe we are well-positioned to sustain momentum and drive continued earnings growth."

Dividend Declaration

The Company's Board of Directors has approved a 7.7% increase in the regular quarterly dividend by declaring a $0.28 quarterly cash dividend per outstanding share of common stock, payable on or about February 27, 2026, to stockholders of record as of the close of business on February 13, 2026.

2025 Fourth Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income increased $2.3 million, or 19.9%, to $13.8 million for the three months ended December 31, 2025 compared to $11.5 million for the three months ended December 31, 2024.

• Net Interest Margin (NIM) (GAAP) increased to 3.76% for the three months ended December 31, 2025 compared to 3.12% for the three months ended December 31, 2024. Fully tax equivalent (FTE) NIM (Non-GAAP) increased 67 basis points ("bps") to 3.80% for the three months ended December 31, 2025 compared to 3.13% for the three months ended December 31, 2024.
• Interest and dividend income increased $561,000, or 2.9%, to $20.0 million for the three months ended December 31, 2025 compared to $19.4 million for the three months ended December 31, 2024.
  • Interest income on loans increased $1.1 million, or 7.7%, to $16.1 million for the three months ended December 31, 2025 compared to $14.9 million for the three months ended December 31, 2024. The average balance of loans increased $72.4 million to $1.14 billion from $1.07 billion, causing an $1.1 million increase in interest income on loans. Additionally, the average yield on loans increased 3 bps to 5.62% from 5.59% despite a 100 bp reduction in the federal funds rate since December 2024. While this led to the downward repricing of adjustable rate loans, the impact was 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 $81,000 increase in interest income on loans.
  • Interest income on investment securities increased $354,000, or 11.4%, to $3.5 million for the three months ended December 31, 2025 compared to $3.1 million for the three months ended December 31, 2024 driven by a 79 bp increase in average yields, partially offset by a $7.3 million decrease in average balances. These changes were primarily due to the securities repositioning strategy.
  • Interest income on interest-earning deposits at other banks decreased $954,000 to $384,000 for the three months ended December 31, 2025 compared to $1.3 million for the three months ended December 31, 2024 driven by a 95 bp decrease in the average yield and a $73.0 million decrease in average balances. The decrease in the yield was directly related to the Federal Reserve's reductions in the target federal funds rate while the decrease in the volume was due to the funding of loans.
• Interest expense decreased $1.7 million, or 21.9%, to $6.2 million for the three months ended December 31, 2025 compared to $7.9 million for the three months ended December 31, 2024.
  • Interest expense on deposits decreased $1.7 million, or 22.6%, to $5.8 million for the three months ended December 31, 2025 compared to $7.5 million for the three months ended December 31, 2024. The cost of interest-bearing deposits declined 61 bps to 2.18% for the three months ended December 31, 2025 from 2.79% for the three months ended December 31, 2024 due to the change in the deposit mix and the recent Federal Reserve federal funds target rate decreases. The decrease in the cost of interest-bearing deposits accounted for a $1.6 million decrease in interest expense. Average interest-bearing deposit balances decreased $13.2 million, or 1.2%, to $1.05 billion as of December 31, 2025 compared to $1.07 billion as of December 31, 2024, primarily as the Bank strategically reduced time deposit only relationships. The decrease in average balances accounted for a $67,000 decrease in interest expense.

Provision for Credit Losses

A provision for credit losses of $362,000 was recorded for the three months ended December 31, 2025. The provision for credit losses on loans was $265,000 and was primarily due to additional reserves required for overall loan growth and charge-offs, partially offset by favorable changes in maximum loss rates utilized in the allowance model. Additionally, the provision for credit losses on unfunded commitments was $97,000 and was due to an increase in unfunded commitments. This compared to a provision for credit losses of $683,000 recorded for the three months ended December 31, 2024 as the provision for credit losses on loans was $483,000 primarily due to loan growth, increases in the loss rate and qualitative adjustments on construction and land development loans and an increase in qualitative adjustments on residential real estate loans, partially offset by a payoff of an impaired loan, and the provision for credit losses on unfunded commitments was $200,000 due to an increase in the loss rate on construction loans.

Noninterest Income

Noninterest income increased $74,000, or 4.5%, to $1.73 million for the three months ended December 31, 2025, compared to $1.66 million for the three months ended December 31, 2024 primarily due to a $125,000 increase in service fees related to corporate deposit and Individual Covered Health Reimbursement Arrangement accounts and a $40,000 gain on the sale of assets related to the sale of a Bank storage facility recognized during the three months ended December 31, 2025, partially offset by a $94,000 decrease in other income related to hedge fees.

Noninterest Expense

Noninterest expense increased $470,000, or 5.0%, to $9.9 million for the three months ended December 31, 2025 compared to $9.5 million for the three months ended December 31, 2024. Salaries and benefits increased $584,000, or 11.1%, to $5.8 million primarily due to revenue producing staff additions, merit increases and higher incentive compensation costs, partially offset by savings realized due to the reduction in force implemented earlier this year. Other noninterest expense increased $85,000 due to increases in travel, conference and entertainment expenses related to sales activities and an increase in check fraud losses. Equipment expense increased $69,000 due to higher depreciation and maintenance expenses associated with interactive teller machines, security system upgrades and other equipment placed into service in late 2024. These increases were partially offset as intangible amortization decreased $88,000 as the Bank's core deposit intangibles were fully amortized in 2024. Occupancy expense decreased $79,000 due to certain property management cost savings initiatives implemented in 2025. Data processing expense decreased $42,000 due to costs associated with the implementation of a new loan origination system and financial dashboard platform during mid-2024.

Statement of Financial Condition Review

Assets

Total assets increased $66.1 million, or 4.5%, to $1.55 billion at December 31, 2025, compared to $1.48 billion at December 31, 2024.

• Cash and due from banks decreased $17.9 million, or 36.1%, to $31.7 million at December 31, 2025, compared to $49.6 million at December 31, 2024, due to funding loan growth.
• Securities increased $17.7 million, or 6.8%, to $279.9 million at December 31, 2025, compared to $262.2 million at December 31, 2024. This was primarily due to the Bank implementing a balance sheet repositioning strategy of its portfolio of available-for-sale investment securities during the quarter ended September 30, 2025, in which $129.6 million in book value of lower-yielding investment securities with an average yield of 2.87% were sold for an $11.8 million loss ($9.3 million after-tax). Investment securities sold included $121.1 million of mortgage-backed securities/collateralized mortgage obligations issued by the U.S. government-sponsored agencies, $5.0 million of U.S. government agency securities and $3.5 million of municipal securities. The Bank then purchased $117.8 million of higher-yielding mortgage-backed securities/collateralized mortgage obligations issued by U.S government-sponsored agencies, municipal securities, subordinated debt investments and non-agency guaranteed securitizations with an expected tax-equivalent yield of approximately 5.43%. This strategy is expected to add nearly 19 basis points to net interest margin and approximately $0.40 to annual earnings per share.

Loans and Credit Quality

• Total loans increased $69.6 million, or 6.4%, to $1.2 billion compared to $1.1 billion, and included increases in commercial real estate and commercial and industrial loans of $66.7 million and $49.0 million, respectively, partially offset by decreases in consumer, construction and residential real estate loans of $27.6 million, $9.3 million and $8.8 million, respectively. The decrease in consumer loans resulted from a reduction in indirect automobile loan production due to the discontinuation of this product offering as of June 30, 2023. This portfolio is expected to continue to decline as resources are allocated and production efforts are focused on more profitable commercial products. Excluding the $29.6 million decrease in indirect automobile loans, total loans increased $99.3 million, or 9.6%. Loan production totaled $204.6 million while $97.6 million of loans were paid off since December 31, 2024.
• Nonperforming loans, which include nonaccrual loans and accruing loans past due 90 days or more, were $5.3 million at December 31, 2025 and $1.8 million at December 31, 2024. Nonperforming loans to total loans ratio was 0.46% at December 31, 2025 and 0.16% at December 31, 2024. The increase in nonperforming loans was due to the addition of two loan relationships to nonaccrual status during the year. The first relationship consists of three residential real estate loans totaling $2.1 million which are well-secured with first liens on multiple rental properties. The Bank has executed assignments of rents and leases, is in the process of foreclosure on the properties and currently does not expect to incur losses on the loans. The second is a $2.0 million commercial real estate loan fully secured by an owner-occupied distribution warehouse, which is currently under a sales agreement, and other assets of the borrower. The Bank is currently working with the borrower to achieve a successful resolution and expects to be repaid in full in 2026.
• The allowance for credit losses (ACL) was $10.1 million at December 31, 2025 and $9.8 million at December 31, 2024. As a result, the ACL to total loans was 0.87% at December 31, 2025 and 0.90% at December 31, 2024. During the current year, the Company recorded a net provision for credit losses of $589,000. The ACL to nonperforming assets was 190.5% at December 31, 2025 and 548.1% at December 31, 2024.
• Net charge-offs for the three months ended December 31, 2025 were $295,000, or 0.10% of average loans on an annualized basis. Net charge-offs for the three months ended December 31, 2024 were $157,000, or 0.06% of average loans on an annualized basis. Net charge-offs for the year ended December 31, 2025 were $223,000. Net charge-offs for the year ended December 31, 2024 were $281,000.

Liabilities

Total liabilities increased $56.0 million, or 4.2%, to $1.4 billion at December 31, 2025 compared to $1.3 billion at December 31, 2024.

Deposits

• Total deposits increased $56.3 million, or 4.4%, to $1.34 billion as of December 31, 2025 compared to $1.28 billion at December 31, 2024. Interest-bearing demand, non interest-bearing demand and time deposits increased $40.4 million, $23.8 million and $15.6 million, respectively, while money market and savings deposits decreased $22.3 million and $1.2 million, respectively. This favorable change in the deposit mix occurred as the Bank continues to focus on building core banking relationships while strategically reducing higher priced funding. Brokered time deposits totaled $98.5 million as of December 31, 2025 and $39.0 million as of December 31, 2024, all of which mature within three months and were utilized to fund the purchase of floating rate CLO securities. At December 31, 2025, FDIC insured deposits totaled approximately 59.5% of total deposits while an additional 15.7% of total deposits were collateralized with investment securities.

Stockholders' Equity

Stockholders' equity increased $10.2 million, or 6.9%, to $157.5 million at December 31, 2025, compared to $147.4 million at December 31, 2024. The key factors positively impacting stockholders' equity was a $13.8 million decrease in accumulated other comprehensive loss resulting primarily from the securities repositioning strategy, $2.6 million of shares issued as a result of stock option exercises and $4.9 million of net income for the current year, partially offset by $6.8 million of treasury shares purchased under the stock repurchase program and the payment of $5.1 million in dividends since December 31, 2024.

Book value per share

Book value per common share was $31.28 at December 31, 2025 compared to $28.71 at December 31, 2024, an increase of $2.57.

Tangible book value per common share (Non-GAAP) was $29.35 at December 31, 2025, compared to $26.82 at December 31, 2024, an increase of $2.53.

Refer to "Explanation of Use of Non-GAAP Financial Measures" at the end of this Press Release.

About CB Financial Services, Inc.

CB Financial Services, Inc. is the bank holding company for Community Bank, a Pennsylvania-chartered commercial bank. Community Bank operates its branch network in southwestern Pennsylvania and West Virginia. Community Bank offers a broad array of retail and commercial lending and deposit services.

For more information about CB Financial Services, Inc. and Community Bank, visit our website at www.cb.bank.

Statement About Forward-Looking Statements

Statements contained in this press release that are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and such forward-looking statements are subject to significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Act. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, 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 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 that may be 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.