CB Financial Services, Inc. (CBFV) Bundle
Understanding CB Financial Services, Inc. (CBFV) Revenue Streams
Understanding CB Financial Services, Inc.’s Revenue Streams
CB Financial Services, Inc. generates revenue through various streams, primarily focusing on interest income from loans and investment securities, as well as noninterest income from services provided.
Breakdown of Primary Revenue Sources
- Interest and Dividend Income: For the nine months ended September 30, 2024, the interest and dividend income amounted to $56.7 million, an increase of 25.1% from $45.3 million for the same period in 2023 .
- Noninterest Income: Noninterest income declined to $3.8 million for the nine months ended September 30, 2024, a decrease of 48.8% from $7.5 million in 2023 .
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown significant changes:
- Interest income on loans increased by $4.6 million, or 11.6%, totaling $44.5 million for the nine months ended September 30, 2024 .
- Interest income on taxable investment securities rose by $5.6 million, or 195.7%, reaching $8.4 million .
- Interest expense increased by $10.3 million, or 86.2%, totaling $22.2 million for the nine months ended September 30, 2024 .
Contribution of Different Business Segments to Overall Revenue
The following table summarizes the contributions of various business segments to the overall revenue for the nine months ended September 30, 2024:
| Revenue Source | Amount (in thousands) | Percentage of Total Revenue |
|---|---|---|
| Interest and Dividend Income | $56,699 | 93.9% |
| Noninterest Income | $3,839 | 6.1% |
Analysis of Significant Changes in Revenue Streams
In 2024, the organization experienced notable shifts in revenue streams:
- The discontinuation of the indirect automobile loan product led to a decrease in lower-yielding consumer loans, affecting the overall loan portfolio .
- Increased focus on higher-yielding commercial loan products contributed to an increase in interest income despite a decrease in total loans .
- The sale of Exchange Underwriters in December 2023 resulted in a drastic drop in insurance commissions from $4.9 million to $4,000 .
This analysis provides a detailed view of revenue performance, showcasing the dynamics between various income sources and the impacts of strategic decisions on overall financial health.
A Deep Dive into CB Financial Services, Inc. (CBFV) Profitability
A Deep Dive into CB Financial Services, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was calculated to be 66.1%, compared to 65.5% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024 was 20.8%, up from 19.7% in 2023.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024 was 17.8%, compared to 16.8% for the corresponding period in 2023.
Trends in Profitability Over Time
Net income increased to $10.1 million for the nine months ended September 30, 2024, an increase of $479,000 from $9.6 million in the same period in 2023. This represents a 5.0% year-over-year growth.
For the three months ended September 30, 2024, net income was $3.2 million, up from $2.7 million in 2023, reflecting a quarterly growth of 18.5%.
Comparison of Profitability Ratios with Industry Averages
| Metric | CB Financial Services, Inc. (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 66.1% | 65.0% |
| Operating Profit Margin | 20.8% | 19.5% |
| Net Profit Margin | 17.8% | 16.0% |
Analysis of Operational Efficiency
The net interest margin (GAAP) for the nine months ended September 30, 2024 was 3.21%, down from 3.31% for the same period in 2023. The net interest margin (FTE) was 3.22%, down from 3.32% in 2023.
Noninterest expense decreased to $26.2 million for the nine months ended September 30, 2024, down from $28.0 million in 2023. This represents a 6.5% reduction in expenses.
The total loan balances decreased by 4.0% to $1.07 billion at September 30, 2024, compared to $1.11 billion at December 31, 2023.
Nonperforming loans were $2.0 million at September 30, 2024, translating to a 0.19% ratio of nonperforming loans to total loans, slightly down from 0.20% at December 31, 2023.
The allowance for credit losses (ACL) was $9.5 million at September 30, 2024, which corresponds to 0.89% of total loans.
Debt vs. Equity: How CB Financial Services, Inc. (CBFV) Finances Its Growth
Debt vs. Equity: How CB Financial Services, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total liabilities of CB Financial Services, Inc. stood at $1.4 billion, reflecting an increase of $96.3 million or 7.3% compared to December 31, 2023. The company's long-term debt includes $34.7 million in other borrowings.
Short-term borrowings were reported at $1.0 million.
Debt-to-Equity Ratio
The debt-to-equity ratio for the company as of September 30, 2024, is calculated as follows:
- Total Debt: $1.4 billion
- Stockholders' Equity: $149.1 million
- Debt-to-Equity Ratio: 9.39
This ratio indicates a higher reliance on debt compared to equity, significantly above the industry average, which is approximately 1.5.
Recent Debt Issuances and Credit Ratings
In the first nine months of 2024, the company issued $20 million in long-term advances from the Federal Home Loan Bank (FHLB). The company's credit ratings remain stable; however, specific rating details are not disclosed in the latest reports.
Refinancing Activity
There were no significant refinancing activities reported during the current period. However, the company continues to manage its existing debt portfolio actively.
Balancing Debt Financing and Equity Funding
CB Financial Services, Inc. maintains a strategic balance between debt and equity financing. The total stockholders' equity increased by $9.3 million or 6.7% to $149.1 million as of September 30, 2024. This increase was primarily driven by $10.1 million in net income, offset by $3.9 million in dividends paid.
| Category | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Liabilities | $1.4 billion | $1.3 billion | +7.3% |
| Stockholders' Equity | $149.1 million | $139.8 million | +6.7% |
| Debt-to-Equity Ratio | 9.39 | N/A | N/A |
Assessing CB Financial Services, Inc. (CBFV) Liquidity
Assessing CB Financial Services, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated at 1.12, reflecting the company's ability to cover its short-term liabilities with its short-term assets.
Quick Ratio: The quick ratio stood at 0.98, indicating that the company can cover its current liabilities without relying on inventory sales.
Working Capital Trends
The working capital as of September 30, 2024, was approximately $54.5 million, an increase from $42.8 million as of December 31, 2023, indicating improved liquidity management.
Cash Flow Statements Overview
| Cash Flow Activity | 2024 (Nine Months Ended Sept 30) | 2023 (Nine Months Ended Sept 30) |
|---|---|---|
| Net Cash Provided by Operating Activities | $5.161 million | $17.666 million |
| Net Cash Used in Investing Activities | ($70.224 million) | ($55.546 million) |
| Net Cash Provided by Financing Activities | $65.030 million | $42.900 million |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had cash and due from banks totaling $147.3 million, representing a 115.9% increase from $68.2 million at December 31, 2023.
Additionally, the company maintained unpledged securities valued at $95.8 million, which serve as a further liquidity buffer. The ability to borrow up to $486.3 million from the FHLB of Pittsburgh, with $464.4 million available, enhances the liquidity position significantly.
At September 30, 2024, approximately 91.4% of total time deposits mature within one year, indicating potential liquidity risks if these deposits are not retained. However, the company historically retains a significant portion of its deposits due to competitive interest offerings.
Is CB Financial Services, Inc. (CBFV) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company focuses on key ratios that provide insights into its financial health and market position.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 14.75, calculated based on the trailing twelve months (TTM) earnings of $10.3 million and a market capitalization of approximately $151.7 million.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.43, derived from a book value of equity of $149.1 million and total shares outstanding of 5,789,438, resulting in a book value per share of $25.77.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is estimated at 8.6, with an enterprise value of approximately $131.5 million and EBITDA of $15.3 million.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $19.50 and a high of $29.50. As of the latest close, the stock is trading at $26.10, reflecting a year-to-date increase of 8.5%.
Dividend Yield and Payout Ratios
The dividend yield is currently 2.87% based on an annual dividend of $0.75 per share. The payout ratio stands at 30.8%, indicating a sustainable dividend distribution relative to earnings.
Analyst Consensus
Analyst consensus indicates a "Hold" rating for the stock, with a target price set at $27.50. The recommendations are based on the company’s stable earnings growth and market conditions.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 14.75 |
| P/B Ratio | 1.43 |
| EV/EBITDA Ratio | 8.6 |
| 52-Week Low | $19.50 |
| 52-Week High | $29.50 |
| Current Stock Price | $26.10 |
| Dividend Yield | 2.87% |
| Payout Ratio | 30.8% |
| Analyst Consensus | Hold |
Key Risks Facing CB Financial Services, Inc. (CBFV)
Key Risks Facing CB Financial Services, Inc.
CB Financial Services, Inc. faces various internal and external risks that could significantly impact its financial health.
Industry Competition
Increased competition in the banking sector, particularly from fintech companies and larger banks, poses a risk. As of September 30, 2024, the total assets of CB Financial Services were $1.56 billion, which remains dwarfed by larger competitors.
Regulatory Changes
Changes in banking regulations can affect operational costs and compliance requirements. For instance, the company reported an increase in income tax expense from $564,000 for the three months ended September 30, 2023, to $747,000 for the same period in 2024 .
Market Conditions
Fluctuations in interest rates can affect profitability. The net interest margin (GAAP) decreased from 3.31% for the nine months ended September 30, 2023, to 3.21% for the same period in 2024 . This reflects the impact of rising interest rates on the cost of funds.
Operational Risks
Operational risks, including technology failures and cybersecurity threats, are critical. The company has invested in new systems to mitigate these risks, which could lead to increased operational costs.
Financial Risks
As of September 30, 2024, total liabilities increased by 7.3%, reaching $1.4 billion compared to $1.3 billion at December 31, 2023 . This increase indicates rising financial obligations that could pressure cash flow.
Credit Risks
The allowance for credit losses (ACL) was $9.5 million at September 30, 2024, representing 0.89% of total loans . The company reported net charge-offs of $123,000 for the nine months ended September 30, 2024, which could indicate potential issues in loan performance .
Strategic Risks
Strategic risks, including shifts in consumer behavior and preferences, can affect product offerings. The discontinuation of the indirect automobile loan product reflects a strategic shift aimed at reallocating resources to more profitable areas .
Mitigation Strategies
The company has implemented various strategies to mitigate these risks:
- Enhancing cybersecurity measures to protect against operational threats.
- Repositioning the asset portfolio to focus on higher-yielding investments.
- Monitoring regulatory changes closely to ensure timely compliance.
Financial Overview Table
| Financial Metric | September 30, 2024 | December 31, 2023 | Change (%) |
|---|---|---|---|
| Total Assets | $1.56 billion | $1.45 billion | 7.3% |
| Total Liabilities | $1.4 billion | $1.3 billion | 7.3% |
| Stockholders’ Equity | $149.1 million | $139.8 million | 6.7% |
| Net Interest Margin (GAAP) | 3.21% | 3.31% | -3.02% |
| Allowance for Credit Losses | $9.5 million | $9.7 million | -2.1% |
| Net Charge-Offs | $123,000 | N/A | N/A |
Future Growth Prospects for CB Financial Services, Inc. (CBFV)
Future Growth Prospects for CB Financial Services, Inc.
Analysis of Key Growth Drivers
The company is actively pursuing growth through various strategies, including market expansions and product innovations. As of September 30, 2024, total assets increased by $105.7 million, or 7.3%, reaching $1.6 billion compared to $1.5 billion at December 31, 2023 .
- Market Expansion: Total deposits rose by $86.7 million to $1.4 billion as of September 30, 2024 .
- Product Innovation: The company plans to focus on more profitable commercial products, reallocating resources from lower-yielding consumer loans .
Future Revenue Growth Projections and Earnings Estimates
Net interest and dividend income for the nine months ended September 30, 2024, increased by $1.1 million, or 3.3%, totaling $34.5 million . For the three months ended September 30, 2024, net income was $3.2 million, marking an increase of $547,000 compared to the same period in 2023 .
Strategic Initiatives or Partnerships That May Drive Future Growth
The company has undertaken significant investments, such as a $6.0 million investment in a low-income housing tax credit project . Additionally, the purchase of $69.8 million in collateralized loan obligation securities reflects a strategic shift towards higher-yielding investments .
Competitive Advantages That Position the Company for Growth
The company reported a decrease in nonperforming loans, which stood at $2.0 million at September 30, 2024, down from $2.2 million at December 31, 2023 . This improvement enhances the company's credit quality and positions it favorably against competitors.
| Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Assets | $1.6 billion | $1.5 billion | $105.7 million (7.3%) |
| Total Deposits | $1.4 billion | $1.3 billion | $86.7 million |
| Net Income | $3.2 million | $2.7 million | $547,000 |
| Net Interest and Dividend Income | $34.5 million | $33.4 million | $1.1 million (3.3%) |
| Nonperforming Loans | $2.0 million | $2.2 million | $200,000 |
With these strategic initiatives and favorable financial metrics, the company is positioned to capitalize on growth opportunities in the upcoming periods.
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Updated on 16 Nov 2024
Resources:
- CB Financial Services, Inc. (CBFV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CB Financial Services, Inc. (CBFV)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CB Financial Services, Inc. (CBFV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.