CB Financial experiences 87.4% increase.

JACKSON, Mich.--(BUSINESS WIRE)--Oct. 21, 1996--CB Financial Corporation experienced an increase of 87.4 percent in net income for the three months ended September 30, 1996. Net income was $1.9 million, as compared to $1.0 million, after a restructuring charge, for the same period last year. The continued increase in earnings and increased efficiencies was a direct result of the strategic initiatives implemented during the past twelve months.

Core earnings for the three months ended September 30, 1996 and 1995, equaled $1.9 million and $1.7 million, respectively. Core earnings for the nine months ended September 30, 1996 and 1995, equaled $5.3 million and $4.5 million, respectively, an increase of $816,000 or 18.2 percent, which reflects a $623,000 reduction of FDIC premiums in 1996.

Average loans outstanding during the three month period increased $152.2 million, or 38.0 percent, to $552.9 million, over the same period in 1995. For the same two periods, average deposits increased $70.7 million, or 11.7 percent, to $674.6 million. Excluding the restructuring charge in the third quarter of 1995, operating expenses for the three month period were higher in 1996 due to an increase in the loan loss provision of $408,000 and other non-interest expenses of $204,000.

Brian D. Bell, Chairman and Chief Executive Officer, stated, "CB Financial Corporation's deposits grew as a result of aggressive advertising of core deposits and special term certificate of deposits, each attracting new customers. The deposit growth was used to lower higher cost federal funds purchased and allow for the increase in loan volumes."

Corporate loans continued a strong growth pattern through the third quarter of 1996. Corporate loans increased $3.3 million, or 1.5 percent, to $218.8 million, at September 30, 1996, compared to $3.1 million, or 1.9 percent, to $184.4 million, for the same period last year. For the nine month period ended September 30, 1996, corporate loans grew $26.6 million, or 13.8 percent. The growth in corporate loans can be attributed to an increased focus on business development targeted at the small business market.

Residential mortgage loans grew $22.4 million, or 13.7 percent, to $185.9 million, for the three months ended September 30, 1996, compared to $8.8 million, or 8.4 percent, to $113.7 million, for the same period in 1995. For the nine month period ended September 30, 1996, residential mortgage loans increased $59.8 million, or 47.5 percent, over the same period in 1995. The continued increase in residential mortgage loans can be attributed to customer confidence in their economic future, the continued low interest rate environment, increased construction mortgage demand and an expanded Realtor(R) referral network.

Consumer loans grew by $18.4 million, or 12.2 percent, to $169.6 million, for the three months ended September 30, 1996, compared to $5.8 million, or 5.3 percent, to $113.9 million, for the same period in 1995. For the nine month period ended September 30, 1996, consumer loans increased $48.9 million, or 40.6 percent, over the same period in 1995. The increased volume was due to strong demand for new automobiles and the entry of CB North into the indirect auto financing market.

CB Financial has traditionally maintained a below industry level of consumer loan delinquency, which was a direct result of a below industry level of consumer loan growth. In 1995, consumer loan growth increased at higher levels than previous periods. Much of the consumer loan growth was attributed to indirect auto financing which provides increased profit opportunities, along with the potential for increased delinquencies and charge-offs.

"The banking industry, as a whole, is experiencing an acceleration of delinquency and loss within the consumer loan categories," commented Steven W. Seely, President and Chief Operating Officer. "This trend created a higher than historical loan delinquency at all three CB banks. CB Financial's loan delinquency is higher than previous periods, but remains consistent with Michigan banks. Steps have been taken to balance consumer loan growth with high credit standards. Operational efficiencies have been gained through centralized loan services, the installation of automated credit scoring to assist in lending decisions, aggressive adjustment practices and increased underwriting standards."

Steven W. Seely went on to say, "CB Financial's allowance for loan loss reserve is evaluated monthly for proper coverage. A new software package is in use to analyze coverage by specific loan types. Given the historical and projected performance within the loan portfolio and planned additions to the loan loss reserve, the allowance is adequate. When loan portfolios are compared, much of the growth experienced over the past years has come from residential real estate mortgages, many of which are being packaged for sale to the secondary market, eliminating the need for reserves. Also, this portfolio has a history of nearly zero losses which further negates the need for a reserve. Many industry peer banks are actively engaged in the sale of mortgage loans which allows their reserve to be allocated to higher risk loans, and at seemingly higher percentages of allocations."

For the past twelve months, under the direction of Steven W. Seely, the corporation has engaged in an extensive study of its retail delivery system. As a result of the market study, management has made decisions regarding a long term view of increasing the productivity of the traditional delivery system to a level commensurate with peer group performance. Consequently, the greater Lansing delivery system network has experienced two financial center closings (Bath and Capitol), three consolidations (Delta Money Mart into the West Saginaw Financial Center, Lake Lansing Money Mart into the Carriage Hills Financial Center, and the Holmes Money Mart into area financial centers), and one relocation (the Okemos Money Mart to the new Okemos Financial Center).

During the third quarter two new services were introduced to enhance customer service capabilities. The first was "CB TeleBanc", a 24-hour automated phone system which allows customers to perform select transactions and inquiries on their accounts. The second was the "CB InfoCenter", an area staffed with well trained, consumer oriented representatives ready to assist customers through the convenience of a telephone. The "InfoCenter" will evolve from an information center dedicated to supporting traditional customer inquiries, to an inbound sales center for new account and loan requests, and eventually outbound sales activities.

The company's quarterly dividend of $.30 per share, payable on October 20, 1996, represents the 241st consecutive dividend paid by CB Financial Corporation and its predecessor, City Bank and Trust Company.

CB Financial Corporation, with assets of $784.3 million, as of September 30, 1996, is the parent holding company for City Bank and Trust Company in Jackson, City Bank in Lansing/St. Johns and CB North in Charlevoix. CB Financial Corporation and its subsidiaries have 39 financial centers providing commercial, trust, and personal banking services in northwest and central Michigan.

CB Financial Corporation maintains a site on Business Wire's "Corporate News on the Net" service, providing detailed information on the corporation and its subsidiaries. The site name is CB Financial Corporation at http://www.businesswire.com on the World Wide Web. -0-

                                 CONSOLIDATED FINANCIAL HIGHLIGHTS

                               Nine Months Ended   Nine Months Ended
                                  September 30        September 30

(Dollars in Thousands Except
Per Share Data - Unaudited
                                1996       1995     1996       1995
EARNINGS
Net Income before
 Restructuring
 Charge                        $1,895     $1,658   $5,306     $4,491
Net Income                      1,895      1,011    4,579      3,843
Per Share:
   Net Income before
   Restructuring Charge           .67        .59     1.89       1.60
   Net Income                     .67        .36     1.63       1.37
   Cash Dividend Declared         .30        .30      .90        .90

PERFORMANCE RATIOS
Profitability:
   Return on Average Assets(1)    .98%      .95%      .95%       .87%
   Return on Average Equity(1)   9.86      8.51      9.19       7.86
   Net Interest Margin           4.76      4.86      4.81       4.98
   Efficiency Ratio(1)          64.00     67.16     66.27      69.62
Capital:
   Average Equity to Average
    Assets                       9.89     11.12     10.36      11.01
   Average Primary Capital to
    Average Assets              10.36     11.63     10.83      11.51
Book Value Per Share           $27.44    $27.30    $27.44     $27.30
Market Price Per Share
 (Ending Bid)                   30.50     33.50     30.50      33.50

AVERAGE BALANCES
Assets                       $770,765  $695,258  $744,742   $693,881
Deposits                      674,643   603,984   647,884    596,337
Loans                         552,888   400,706   505,245    395,288
Earning Assets                705,781   629,946   679,652    626,927
Shareholders' Equity           76,243    77,284    77,144     76,370
Weighted Average Shares     2,802,810 2,804,671 2,803,028  2,803,132

AT PERIOD END
Assets                                           $784,333   $700,379
Deposits                                          680,201    608,855
Loans                                             574,208    412,027
Earning Assets                                    722,579    632,229
Shareholders' Equity                               76,849     76,464

ASSET QUALITY
Allowance for Loan Losses                          $4,240     $4,021
Non-Performing Assets                               1,556      1,602
Net Loan Charge-Offs                                1,112        352

(1) Financial ratios calculated before restructuring charge.

                                 CONSOLIDATED FINANCIAL HIGHLIGHTS

                                              Year Ended
                                              December 31
(Dollars in Thousands Except
Per Share Data - Unaudited
                                        1995      1994      1993
EARNINGS
Net Income before Restructuring        $6,250    $6,594    $7,338
Net Income                              4,616     6,594     7,338
Per Share:
   Net Income before Restructuring
    Charge                               2.23      2.35      2.62
   Net Income                            1.65      2.35      2.62
   Cash Dividend Declared                1.20      1.20      1.18

PERFORMANCE RATIOS
Profitability:
   Return on Average Assets(1)            .90%      .98%     1.08%
   Return on Average Equity(1)           8.16      8.78     10.59
   Net Interest Margin                   4.94      4.99      5.12
   Efficiency Ratio(1)                  69.20     70.99     67.79
Capital:
   Average Equity to Average Assets     10.99     11.16     10.23
   Average Primary Capital to
     Average Assets                     11.49     11.62     10.72
Book Value Per Share                   $27.65    $26.42    $25.46
Market Price Per Share (Ending Bid)     33.50     29.50     33.00

AVERAGE BALANCES
Assets                               $697,286  $672,656  $677,348
Deposits                              600,389   578,712   584,873
Loans                                 404,379   344,952   333,682
Earning Assets                        631,292   607,860   609,337
Shareholders' Equity                   76,627    75,067    69,322
Weighted Average Shares             2,803,437 2,803,158 2,803,300

AT PERIOD END
Assets                               $719,883  $720,264  $670,891
Deposits                              622,460   620,649   583,546
Loans                                 438,883   393,119   335,498
Earning Assets                        652,418   645,552   608,303
Shareholders' Equity                   77,458    74,009    71,323

ASSET QUALITY
Allowance for Loan Losses              $3,934    $3,865    $3,617
Non-Performing Assets                   1,697     1,400     2,099
Net Loan Charge-Offs                      603       575       289

(1) Financial ratios calculated before restructuring charge.

CONTACT: CB Financial Corp.

C. Sue Barron, 517/788-2760