CLEARFIELD, Pa., July 20, 2018 (GLOBE NEWSWIRE) -- CNB Financial Corporation (“CNB”) (NASDAQ:CCNE), the parent company of CNB Bank, today announced its earnings for the second quarter and first six months of 2018. Highlights include the following:

  • Net income of $8.4 million, or $0.55 per share, in the second quarter of 2018, compared to net income of $6.7 million, or $0.44 per share, in the second quarter of 2017. Pre-tax income in the second quarter of 2018 was $10.0 million compared to $8.5 million in the second quarter of 2017 excluding securities gains of $155 thousand and a gain on sale of a branch of $536 thousand, an increase of 18.1%.
  • Net income of $15.5 million, or $1.02 per share, during the six months ended June 30, 2018, compared to net income of $13.2 million, or $0.87 per share, during the six months ended June 30, 2017. Pre-tax income for the six months ended June 30, 2018 was $18.2 million compared to $16.0 million for the same period in 2017 excluding securities gains of $1.5 million and a gain on sale of a branch of $536 thousand, an increase of 13.8%.
  • Annualized returns on average assets and equity of 1.07% and 12.62%, respectively, for the six months ended June 30, 2018, compared to 1.00% and 11.28%, respectively, for the six months ended June 30, 2017. The annualized return on average tangible equity was 15.08% and 13.70% during the six months June 30, 2018 and 2017, respectively.
  • Net interest margin on a fully tax-equivalent basis of 3.73% and 3.77% for the six months ended June 30, 2018 and 2017, respectively.
  • Loans of $2.34 billion as of June 30, 2018, compared to loans of $2.02 billion as of June 30, 2017, representing organic loan growth of 15.6%.
  • Deposits of $2.40 billion as of June 30, 2018, compared to deposits of $2.08 billion as of June 30, 2017, representing organic deposit growth of 15.6%.
  • Book value per share of $16.35 as of June 30, 2018 increased 2.3% compared to book value per share of $15.98 as of December 31, 2017 and tangible book value per share of $13.74 as of June 30, 2018 increased 3.0% compared to tangible book value per share of $13.33 as of December 31, 2017.
  • Book value per share of $16.35 as of June 30, 2018 increased 4.0% compared to book value per share of $15.72 as of June 30, 2017, and tangible book value per share of $13.74 as of June 30, 2018 increased 5.3% compared to tangible book value per share of $13.04 as of June 30, 2017.
  • Non-performing assets of $25.0 million, or 0.83% of total assets as of June 30, 2018, compared to $20.4 million, or 0.74% of total assets, as of December 31, 2017, and $21.2 million, or 0.79% of total assets, as of June 30, 2017.

Joseph B. Bower, Jr., President and CEO, stated, "Our performance for the quarter is a credit to the hard work and diligence of our team. Strong double-digit organic loan and deposit growth reflect the momentum and demand for our community banking model by customers in both our legacy and newer markets."

Net Interest Margin

Net interest margin on a fully tax equivalent basis was 3.73% and 3.77% for the six months ended June 30, 2018 and 2017, respectively. The yield on earning assets increased 17 basis points to 4.59% for the six months ended June 30, 2018 from 4.42% for the six months ended June 30, 2017. The cost of interest-bearing liabilities increased 24 basis points to 1.00% for the six months ended June 30, 2018 from 0.76% for the six months ended June 30, 2017.

Total interest and dividend income increased by 18.0% to $61.5 million for the six months ended June 30, 2018 from $52.1 million for the six months ended June 30, 2017. Net interest income increased by 13.0% to $49.9 million for the six months ended June 30, 2018 from $44.2 million for the six months ended June 30, 2017.

Asset Quality

During the three and six months ended June 30, 2018, CNB recorded a provision for loan losses of $1.9 million and $3.5 million, as compared to a provision for loan losses of $1.1 million and $2.2 million for the three and six months ended June 30, 2017. Net chargeoffs during the three and six months ended June 30, 2018 were $538 thousand and $1.1 million, compared to net chargeoffs of $411 thousand and $1.2 million for the three and six months ended June 30, 2017. CNB Bank net chargeoffs totaled $139 thousand and $58 thousand during the six months ended June 30, 2018 and 2017, or 0.01% and 0.01%, respectively, of average CNB Bank loans. Holiday Financial Services Corporation is CNB’s consumer discount company and recorded net chargeoffs totaling $968 thousand and $1.2 million during the six months ended June 30, 2018 and 2017, respectively.

In the second quarter of 2018, CNB identified a commercial and industrial relationship that, while performing in accordance with its contractual terms and current with scheduled principal and interest payments, filed for bankruptcy. As of June 30, 2018, the outstanding principal balance of the relationship is $5.5 million, and the specific loan loss reserve recorded during the quarter is $758 thousand.

Non-Interest Income

Net realized gains on available-for-sale securities were $0 for the six months ended June 30, 2018, compared to $1.5 million during the six months ended June 30, 2017. In addition, CNB realized a gain on the sale of a branch in the second quarter of 2017 of $536 thousand. Excluding the effects of these gains associated with the branch sale and the sale of available for sale securities in 2017, non-interest income for the six months ended June 30, 2018 and 2017 was $10.4 million and $8.8 million, respectively.

As a result of CNB’s continued focus on growing its Private Client Solutions division, wealth and asset management revenues were $2.1 million for the first six months of 2018, an increase of 16.3% from $1.8 million in the first six months of 2017. In addition, as a result of its continued organic growth, CNB experienced an increase in service charges in deposit accounts of $263 thousand, or 11.7%, in the first six months of 2018 compared to the first six months of 2017. Similarly, other service charges and fees increased $253 thousand, or 23.3%, in the first six months of 2018 compared to the first six months of 2017. Income from investments in Small Business Investment Companies was $340 thousand in the first six months of 2018 compared to $37 thousand in the first six months of 2017, which is reported as a component of other non-interest income.

Non-Interest Expenses

Total non-interest expenses were $19.5 million and $38.5 million during the three and six months ended June 30, 2018, compared to $17.8 million and $34.8 million during the three and six months ended June 30, 2017. Salaries and benefits expense increased $1.8 million, or 9.8%, during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. As of June 30, 2018, CNB had 539 full-time equivalent staff, compared to 493 full-time equivalent staff as of June 30, 2017, an increase of 9.3%. The remainder of the increase in non-interest expenses was primarily a result CNB’s continued growth and the servicing of a larger customer base. Total households serviced at June 30, 2018 were 61,354, compared to 57,808 households at June 30, 2017, an increase of 6.1%.

Income Tax Expense

As a result of the enactment of the Tax Cuts and Jobs Act in the fourth quarter of 2017, income tax expense decreased $2.2 million, or 45.7%, during the six months ended June 30, 2018 compared to the six months ended June 30, 2017. CNB’s effective tax rate was 14.6% in the first six months of 2018 compared to 27.2% in the first six of 2017.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $3.0 billion that conducts business primarily through CNB Bank, CNB Financial Corporation’s principal subsidiary. CNB Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. CNB Bank operations include a private banking division and 42 full-service offices in Pennsylvania, Ohio, and New York. CNB Bank’s divisions include ERIEBANK, based in Erie, Pennsylvania with offices in northwest Pennsylvania and northeast Ohio; FCBank, based in Worthington, Ohio with offices in central Ohio; and BankOnBuffalo, based in Buffalo, New York with offices in northwest New York. CNB Bank is headquartered in Clearfield, Pennsylvania with offices in central and north central Pennsylvania. More information about CNB Financial Corporation and CNB Bank may be found on the Internet at www.cnbbank.bank.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to CNB’s financial condition, liquidity, results of operations, future performance and business. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond CNB’s control). Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” CNB’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. For more information about factors that could cause actual results to differ from those discussed in the forward-looking statements, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of and the forward-looking statement disclaimers in CNB’s annual and quarterly reports.

The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this press release. CNB undertakes no obligation to publicly update or revise any forward-looking statements included in this press release or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur and you should not put undue reliance on any forward-looking statements.

Financial Tables

The following tables supplement the financial highlights described previously for CNB Financial Corporation. All dollars are stated in thousands, except share and per share data.

   (unaudited) (unaudited)
   Three Months Ended Six Months Ended
   June 30, June 30,
          
     %   %
   20182017change 20182017change
Income Statement       
Interest income$32,099 $27,003 18.9% $61,486 $52,107 18.0%
Interest expense6,273 4,014 56.3% 11,560 7,916 46.0%
Net interest income25,826 22,989 12.3% 49,926 44,191 13.0%
Provision for loan losses1,905 1,134 68.0% 3,536 2,150 64.5%
Net interest income after provision for loan losses23,921 21,855 9.5% 46,390 42,041 10.3%
          
Non-interest income       
Service charges on deposit accounts1,271 1,165 9.1% 2,518 2,255 11.7%
Other service charges and fees723 559 29.3% 1,341 1,088 23.3%
Wealth and asset management fees1,090 952 14.5% 2,120 1,823 16.3%
Net realized gains on available-for-sale securities 155 NA   1,538 NA 
Net realized and unrealized gains on trading securities237 127 86.6% 251 315 (20.3)%
Mortgage banking310 247 25.5% 518 431 20.2%
Bank owned life insurance339 364 (6.9)% 739 716 3.2%
Card processing and interchange income1,103 970 13.7% 2,074 1,848 12.2%
Gain on sale of branch 536 NA   536 NA 
Other533 14 NA  796 312 155.1%
Total non-interest income5,606 5,089 10.2% 10,357 10,862 (4.6)%
          
Non-interest expenses       
Salaries and benefits10,131 8,902 13.8% 19,666 17,907 9.8%
Net occupancy expense of premises2,634 2,257 16.7% 5,130 4,797 6.9%
FDIC insurance premiums378 370 2.2% 676 574 17.8%
Core Deposit Intangible amortization248 331 (25.1)% 496 662 (25.1)%
Card processing and interchange expenses638 614 3.9% 1,372 1,036 32.4%
Other5,514 5,323 3.6% 11,202 9,855 13.7%
Total non-interest expenses19,543 17,797 9.8% 38,542 34,831 10.7%
          
Income before income taxes9,984 9,147 9.2% 18,205 18,072 0.7%
Income tax expense1,543 2,464 (37.4)% 2,667 4,909 (45.7)%
Net income8,441 6,683 26.3% 15,538 13,163 18.0%
          
Average diluted shares outstanding15,216,310 15,206,161   15,208,687 15,050,719  
          
Diluted earnings per share0.55 0.44 25.0% 1.02 0.87 17.2%
Cash dividends per share0.165 0.165 % 0.33 0.33 %
          
Payout ratio30%38%  32%38% 
          
Average Balances       
Loans, net of unearned income2,308,261 1,993,287   2,255,721 1,951,035  
Investment securities491,078 495,335   453,588 480,238  
Total earning assets2,799,339 2,488,622   2,709,309 2,431,273  
Total assets2,956,577 2,659,761   2,891,824 2,625,727  
Non interest-bearing deposits310,069 301,154   310,800 290,696  
Interest-bearing deposits1,978,740 1,756,011   1,923,370 1,736,909  
Shareholders' equity247,607 239,347   246,194 233,445  
Tangible shareholders' equity (*)207,585 198,208   206,050 192,141  
          
Average Yields       
Loans, net of unearned income5.05%4.87%  4.95%4.77% 
Investment securities2.70%2.87%  2.81%2.99% 
Total earning assets4.64%4.47%  4.59%4.42% 
Interest-bearing deposits0.75%0.51%  0.69%0.50% 
Interest-bearing liabilities1.09%0.70%  1.00%0.76% 
          
Performance Ratios (annualized)       
Return on average assets1.14%1.01%  1.07%1.00% 
Return on average equity13.64%11.17%  12.62%11.28% 
Return on average tangible equity (*)16.27%13.49%  15.08%13.70% 
Net interest margin (FTE)3.74%3.73%  3.73%3.77% 
          
Loan Charge-Offs       
Net loan charge-offs538 411   1,107 1,211  
Net loan charge-offs / average loans0.09%0.08%  0.10%0.12% 
          
The following is a non-GAAP disclosure of pre-tax net income excluding the effects of net realized gains on the sale of available for sale securities and the gain on the sale of a branch:
          
   (unaudited) (unaudited)
   Three Months Ended Six Months Ended
   June 30, June 30,
          
     %   %
   20182017change 20182017change
          
Pre-tax net income, GAAP basis9,984 9,147 9.2 % 18,205 18,072 0.7 %
Net realized gains on available-for-sale securities (155)NA   (1,538)NA 
Gain on sale of branch (536)NA   (536)NA 
Pre-tax net income, non-GAAP9,984 8,456 18.1 % 18,205 15,998 13.8 %
 


 (unaudited) (unaudited)   
 June 30,December 31,June 30, % change versus
 201820172017 12/31/176/30/17
     
Ending Balance Sheet      
Loans, net of unearned income$2,335,292 $2,145,959 $2,020,829  8.8%15.6%
Loans held for sale1,661 852 1,652  95.0%0.5%
Investment securities458,440 416,859 458,816  10.0%(0.1)%
FHLB and other equity interests22,689 21,517 23,298  5.4%(2.6)%
Other earning assets2,786 2,199 1,756  26.7%58.7%
  Total earning assets2,820,868 2,587,386 2,506,351  9.0%12.5%
       
Allowance for loan losses(22,122)(19,693)(17,269) 12.3%28.1%
Goodwill38,730 38,730 38,730  %%
Core deposit intangible1,129 1,625 2,192  (30.5)%(48.5)%
Other assets171,024 160,725 148,905  6.4%14.9%
  Total assets$3,009,629 $2,768,773 $2,678,909  8.7%12.3%
       
Non interest-bearing deposits$314,906 $321,858 $313,871  (2.2)%0.3%
Interest-bearing deposits2,086,659 1,845,957 1,762,918  13.0%18.4%
  Total deposits2,401,565 2,167,815 2,076,789  10.8%15.6%
       
Borrowings257,812 257,359 262,940  0.2%(2.0)%
Subordinated debt70,620 70,620 70,620  %%
Other liabilities29,739 29,069 28,268  2.3%5.2%
       
Common stock    NA NA 
Additional paid in capital97,059 97,042 96,490  %0.6%
Retained earnings158,790 148,298 142,409  7.1%11.5%
Treasury stock(608)(1,087)(541) (44.1)%12.4%
Accumulated other comprehensive income (loss)(5,348)(343)1,934  NA NA 
  Total shareholders' equity249,893 243,910 240,292  2.5%4.0%
       
  Total liabilities and shareholders' equity$3,009,629 $2,768,773 $2,678,909  5.1%8.6%
       
Ending shares outstanding15,285,430 15,264,740 15,285,371    
       
Book value per share$16.35 $15.98 $15.72  2.3%4.0%
Tangible book value per share (*)$13.74 $13.33 $13.04  3.0%5.3%
       
Capital Ratios      
Tangible common equity / tangible assets (*)7.07%7.46%7.56%   
Tier 1 leverage ratio8.14%8.45%8.45%   
Common equity tier 1 ratio9.61%10.00%10.27%   
Tier 1 risk based ratio10.49%10.97%11.29%   
Total risk based ratio13.67%14.32%14.71%   
       
Asset Quality      
Non-accrual loans$24,318 $19,232 $19,995    
Loans 90+ days past due and accruing311 477 314    
  Total non-performing loans24,629 19,709 20,309    
Other real estate owned418 710 889    
  Total non-performing assets$25,047 $20,419 $21,198    
       
Loans modified in a troubled debt restructuring (TDR):      
  Performing TDR loans$7,912 $8,344 $8,253    
  Non-performing TDR loans **9,388 8,959 2,935    
  Total TDR loans$17,300 $17,303 $11,188    
       
Non-performing assets / Loans + OREO1.07%0.95%1.05%   
Non-performing assets / Total assets0.83%0.74%0.79%   
Allowance for loan losses / Loans0.95%0.92%0.85%   
       
* - Tangible common equity, tangible assets and tangible book value per share are non-GAAP financial measures calculated using GAAP amounts.  Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of stockholders’ equity.  Tangible assets is calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets.  Return on average tangible equity is calculated by dividing annualized net income by average tangible assets.  Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding. CNB believes that these non-GAAP financial measures provide information to investors that is useful in understanding its financial condition.  Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies.  A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).  
** - Nonperforming TDR loans are also included in the balance of non-accrual loans in the previous table.  
       
 (unaudited) (unaudited)   
 June 30,December 31,June 30,   
 201820172017   
       
Shareholders' equity$249,893 $243,910 $240,292    
  Less goodwill38,730 38,730 38,730    
  Less core deposit intangible1,129 1,625 2,192    
Tangible common equity$210,034 $203,555 $199,370    
       
Total assets$3,009,629 $2,768,773 $2,678,909    
  Less goodwill38,730 38,730 38,730    
  Less core deposit intangible1,129 1,625 2,192    
Tangible assets$2,969,770 $2,728,418 $2,637,987    
       
Ending shares outstanding15,285,430 15,264,740 15,285,371    
       
Tangible book value per share$13.74 $13.33 $13.04    
Tangible common equity/Tangible assets7.07%7.46%7.56%   


   
  Contact:  Brian W. Wingard
  Treasurer
  (814) 765-9621
   

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