Premises and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

PREMISES AND EQUIPMENT

Major classifications of premises and equipment are summarized as follows:


	2022		2021
(Dollars in Thousands)

Land	$	2,344	$	2,380
Building	19,374		19,475
Leasehold Improvements	749		730
Furniture, Fixtures, and Equipment	10,201		10,283
Fixed Assets in Process	1,645		1,417
Total Premises and Equipment	34,313		34,285
Less: Accumulated Depreciation and Amortization	(16,469)		(15,886)
Premises and Equipment, Net	$	17,844	$	18,399

Depreciation and amortization expense on premises and equipment was $1.0 million and $950,000 for the years ended December 31, 2022 and 2021, respectively.

Branch Optimization and Operational Efficiency Initiatives and Impairment of Long-Lived Assets

In 2021, the Company announced the implementation of branch optimization and operational efficiency strategic initiatives to improve the Bank’s financial performance and operations in order to position the Bank for continued profitable growth through the optimization of its branch network while expanding technology and infrastructure investments in its remaining locations. The decision was the result of a comprehensive internal study that measured branch performance by comparing financial and non-financial indicators to growth opportunities, while evolving changes in consumer preferences, largely driven by the global pandemic, led to an acceleration of branch optimization efforts. The Bank also completed a comprehensive review of its branch network and operating environment to identify solutions to improve operating performance. This review prioritized profitability, efficiency, infrastructure and client experience improvements, automation in operations, and digital marketing and technology investments and the Bank is in process of implementing operational efficiencies related to individualized processes within its branch network and operating environment.

The Bank has substantially completed these initiatives through the consolidation of six branches that was completed on June 30, 2021. In addition, CB Financial, Community Bank, and Citizens Bank of West Virginia, Inc. (“Citizens Bank”) executed a Purchase and Assumption Agreement (the “Agreement”) pursuant to which Citizens Bank agreed to purchase certain loans and other assets, and assume certain deposits and other liabilities, of the branch offices of Community Bank located in Buckhannon, West Virginia, and New Martinsville, West Virginia. The divestiture of two branches in December 2021 resulted in the sale of $102.8 million of deposits, $6.1 million of loans and $795,000 of premises and equipment and the recognition of a $5.2 million pre-tax gain on sale from a 5.0% premium paid by Citizens Bank on the assumed deposits. The branch optimization initiative reduced the Bank's branch network to 14 branches as of December 31, 2021.

As a result of the events and changes in circumstances associated with the branch optimization initiatives whereby six branches were consolidated and two others were divested, the Company performed assessments of the recoverability of long-lived assets to determine whether their carrying values may not be recoverable. Utilizing guidance in ASC 360, the Company performed the three step process to identify, recognize and measure the impairment of the long-lived assets.

•For the six locations that were consolidated:

◦Three locations were written down to the fair value of the land based on the appraised value due to plans to raze the buildings.

◦Two locations were marketed for sale and were written down to fair value based on the appraised value. One of these locations was subsequently donated resulting in a $230,000 charitable donation.

◦One location was leased. Refer to Note 14 for further discussion of the impairment of the right of use asset associated with the operating lease.

•For the two branches that were divested, the fair value of the premises and equipment was determined using the contractual terms of the Agreement, whereby the premises and equipment were purchased at the acquisition date for $795,000 based on the Company's net book value, net of a $338,000 contractual discount.

For the year ended December 31, 2021, the Company recognized $2.3 million in charges on the premises and equipment as a Writedown on Premises and Equipment in the Consolidated Statements of Income.

The branch optimization and operational efficiency initiatives resulted in $7.5 million of restructuring-related and other expenses for the year ended December 31, 2021. The expenses include the aforementioned $2.3 million writedown on premises and equipment and $1.2 million impairment of intangible assets associated with the branch sales (refer to Note 6 for further information), as well as $4.1 million of expenses related to contracted services, employee severance costs, branch lease impairment (refer to Note 14 for further information), professional fees, data processing fees, charitable donations, legal and other expenses for the year ended December 31, 2021.