CB Financial Services, Inc. Agrees to Sell Insurance Agency Subsidiary

CB Financial Services, Inc. (“CB” or the “Company”) (NASDAQGM: CBFV), the holding company of Community Bank (the “Bank”) and Exchange Underwriters, Inc. (“Exchange Underwriters”), the full-service independent insurance agency subsidiary of the Bank announced today that the Bank and Exchange Underwriters have entered into an Asset Purchase Agreement (the “Purchase Agreement”) with World Insurance Associates, LLC (“World”) for a $30.5 million cash purchase price plus possible additional revenue-based earn-out payments. The transaction is subject to customary closing conditions and is anticipated to be completed in the fourth quarter of 2023.

Key Highlights:

• CBs’ growth of Exchange Underwriters over the years culminates with the capture of a valuation premium, providing capital to strategically redeploy across the core banking franchise.
• Purchase price represents approximately 5.11x LTM Insurance Agency Revenue and approximately 26.08x September 30, 2023 LTM Insurance Agency Earnings.
• The net gain on sale, on an after-tax basis, is expected to be approximately $16.4 million.
• Eliminates $821,000 of other intangibles.
• Transaction is financially compelling with approximate expected pro forma impact to capital, prior to potential deployment of proceeds:
  • TCE / TA: Improves by 114 basis points to 8.56%
  • Tier 1 Leverage: Improves by 105 basis points to 10.42%
  • Total Risk Based Capital: Improves by 160 basis points to 15.51%
  • Tangible Book Value Per Share: Improves by 16.8% to $23.47
• Transaction proceeds provide potential net income and earnings per share enhancements as generated capital is deployed through strategic and franchise growth initiatives over time.

John Montgomery, President and CEO of CB, stated, “The insurance business has been an integral part of Community Bank. After extensive diligence, we believe World is the right partner, providing optimal benefit for all stakeholders, and assuring our associates and clients are well taken care of. This transaction realizes a significant valuation premium and is immediately accretive to capital, tangible book value, and liquidity. The additional capital provides flexibility to evaluate and pursue various strategic initiatives to redeploy capital in support of our core banking business with a focus on continuing to enhance long-term shareholder value.”