CB Financial Services, Inc.

Management did not report quarterly operating results; the call focused on the announced transaction with First West Virginia/Progressive Bank. The deal was described as $49 million in value, with consideration of 80% stock and 20% cash, at 1.53x tangible book value, and First West Virginia shareholders expected to own about 24% of the combined company. Management said the transaction should be about 0.5% EPS accretive in 2018 and about 15% accretive in 2019, with about 12% tangible book value dilution, a 4.5-year earnback, an internal rate of return of 25% including loan leverage and 15% excluding it. They also said the pro forma tangible common equity to tangible assets ratio would be about 8.1%, and the combined company would be about $1.25 billion with 24 offices in three states.

Barron McCune said the deal fits Community Bank’s long-standing strategy as a locally managed commercial bank and gives it a strong foothold in a market he views as poised for economic improvement. He highlighted the Ohio Valley, Marcellus and Utica shale development, and future industrial projects as reasons the geography and deposit base are attractive. His tone was upbeat and confident, emphasizing cultural fit, shared community ties, and the opportunity to redeploy low-cost deposits into lending.

Kevin Lemley mostly addressed modeling and funding assumptions. He said the firm used First West Virginia’s internal budget projections for the 15% accretion estimate and that the company has sufficient cash on hand to fund the 20% cash portion of the purchase price. He also said redeploying the acquired deposits would be slow over the next two to three years, implying some initial margin pressure from the larger investment portfolio.

Analysts focused on share count dilution, how the cash portion would be funded, and whether the transaction assumptions included upside from the insurance business. Management confirmed the stock issuance math, said cash on hand would fund the cash consideration, and said the stock component would be about 25% dilutive to the current share count. On insurance, Pat O’Brien said Exchange Underwriters would be extended into the new market, but meaningful insurance revenue was not included in the merger model, suggesting potential upside not reflected in the base case. Questions also touched on capital and margins, with management saying the deal should leave TCE around 8.1% and that lending deployment would take time.