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CNB FINANCIAL CORP/PA

CCNE
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Business Summary

CNB Financial Corporation operates as a financial holding company registered under the Bank Holding Company Act of 1956, with its primary subsidiary, CNB Bank, a Pennsylvania state-chartered bank. The financial services industry in the Corporation’s service area continues to be extremely competitive, both among commercial banks and with other financial service providers such as consumer finance companies, thrifts, investment firms, mutual funds, and credit unions. The increased competition has resulted from changes in legal and regulatory guidelines as well as from economic conditions. Mortgage banking firms, leasing companies, financial affiliates of industrial companies, brokerage firms, retirement fund management firms, and even government agencies provide additional competition for loans and other financial services. Some of the financial service providers operating in the Corporation’s market area operate on a large-scale regional or national basis and possess greater resources than those of the Corporation. The Corporation is generally competitive with all competing financial institutions in its service area with respect to interest rates paid on time and savings deposits, service charges on deposit accounts, and interest rates charged on loans.

The Corporation faces strong competition from nationwide banks, as well as local institutions, in its markets. Many regional, national, and international competitors have far greater assets and capitalization than the Corporation has and greater resources to invest in technology and access to capital markets and can consequently offer a broader array of financial services than the Corporation can. The Corporation’s competitive positioning is supported by its diversified market presence across multiple states and its focus on relationship-based community banking through its various divisions, including CNB Bank, ERIEBANK, FCBank, BankOnBuffalo, Ridge View Bank, ESSA Bank, and Impressia Bank.

The Corporation generates revenue primarily through a full range of banking activities and services for individual, business, governmental and institutional customers. These activities and services principally include checking, savings, and time deposit accounts; real estate, commercial, industrial, residential and consumer loans; and a variety of other specialized financial services. The Bank’s Private Client Solutions division offers a full range of client services, including private banking and wealth and asset management. The Corporation also has four other subsidiaries: CNB Securities Corporation maintains investments in debt and equity securities; CNB Insurance Agency provides for the sale of nonproprietary annuities and other insurance products; CNB Risk Management, Inc. is a captive insurance company; and Holiday Financial Services Corporation offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics. The Corporation’s revenue mix is primarily driven by net interest income, which was $242.0 million for the year ended December 31, 2025, compared to $187.5 million for the year ended December 31, 2024.

The Corporation’s loan portfolio is diversified across several major categories. At December 31, 2025, total loans were $6.4 billion , excluding $70.8 million of syndicated loans. The largest loan categories included Residential Mortgages secured by first liens at $1,763,071 thousand , Non-owner occupied, nonfarm nonresidential properties at $1,419,643 thousand , Commercial and Industrial loans at $778,978 thousand , Multifamily residential properties at $709,832 thousand , and Owner-occupied, nonfarm nonresidential properties at $636,444 thousand . The Corporation also maintains a securities portfolio, with available-for-sale debt securities and equity securities totaling $595.2 million and held-to-maturity securities totaling $242.1 million at December 31, 2025. The securities portfolio includes U.S. Government Sponsored Entities, State and Political Subdivisions, Residential and multi-family mortgage-backed securities, Corporate notes and bonds, and Pooled SBA securities.

The Corporation’s deposit base is a primary funding source, with total deposits of $7.0 billion at December 31, 2025, reflecting an increase of $1.7 billion , or 30.8% , from December 31, 2024. The deposit mix includes Noninterest-bearing demand deposits of $1,092,076 thousand , Interest-bearing demand deposits of $1,014,606 thousand , Savings deposits of $3,822,639 thousand , and Certificates of deposit of $1,097,788 thousand . The Corporation also has a syndicated loan portfolio totaling $70.8 million , or 1.09% of total loans, at December 31, 2025. The Corporation’s non-interest income was $40.2 million for the year ended December 31, 2025, compared to $39.1 million for the year ended December 31, 2024.

On July 23, 2025, the Corporation completed its previously announced acquisition of ESSA Bancorp, Inc. and its subsidiary bank, ESSA Bank & Trust Company. The total consideration paid to ESSA shareholders was approximately $202.6 million , comprised of approximately 8,359,430 shares of the Corporation's common stock, valued at approximately $202.5 million based on the July 23, 2025 closing price of $24.23 per share of the Corporation's common stock, and $21 thousand in cash in lieu of fractional shares. The ESSA acquisition extended CNB Bank’s branch network into the Northeastern Region including the Lehigh Valley of Pennsylvania through the addition of ESSA’s 20 community offices. During the year ended December 31, 2025, the Corporation invested $6.3 million in its physical infrastructure through the purchase of land, buildings, and equipment. The Corporation also had a 2025 Common Share Repurchase Program authorizing the repurchase of up to 500,000 shares of common stock, provided that the aggregate purchase price does not exceed $15,000,000 . As of December 31, 2025, there were 500,000 shares remaining for repurchase under the Plan.

Net income available to common shareholders was $61.8 million , or $2.49 per diluted share, for the year ended December 31, 2025. Excluding after-tax merger transaction related expenses, adjusted earnings were $73.4 million , or $2.95 per diluted share, for the year ended December 31, 2025, reflecting an increase of $23.2 million , or 46.06% , and $0.56 per diluted share, or 23.43% , compared to earnings of $50.3 million , or $2.39 per diluted share, for the year ended December 31, 2024. Net interest income was $242.0 million for the year ended December 31, 2025 compared to $187.5 million for the year ended December 31, 2024. Net interest margin was 3.65% and 3.41% for the years ended December 31, 2025 and 2024, respectively. Return on average equity was 9.14% for the year ended December 31, 2025. Total assets were $8,396.4 million at December 31, 2025, compared to $6,192.0 million at December 31, 2024.

Business Outlook

A primary growth vector is the expansion of the Corporation’s branch network and market presence through acquisitions, most notably the July 23, 2025 acquisition of ESSA Bancorp, Inc., which added 20 community offices in the Northeastern Region including the Lehigh Valley of Pennsylvania. The Corporation also continues to grow organically, with organic loan growth for the full year of 2025, excluding $1.7 billion in loans acquired in the ESSA acquisition, of $218.8 million , or an increase of 4.83% , compared to December 31, 2024. The full-year increase in loans was primarily driven by growth in the Ridge View Bank, BankOnBuffalo, and legacy CNB Bank and ERIEBANK markets and loan activity in CNB Bank's Private Banking division.

Another growth vector is the continued development of specialized banking divisions. In 2023, the Bank launched Impressia Bank, a full-service banking division dedicated to the professional and financial development and advancement of women business owners and women leaders. This women-focused commercial bank operates within the existing geographic footprint of each of CNB Bank’s other divisions and also has an online presence. Additionally, the Corporation launched the Open Your Door Program in 2025, designed to help more individuals and families achieve the goal of homeownership by providing meaningful financial advantages including low down payment options, flexible underwriting criteria, no private mortgage insurance requirements, waived processing and application fees, and a no-closing-cost option.

The Corporation’s efficiency ratio was 67.64% for the year ended December 31, 2025, and 66.35% on a fully tax-equivalent basis. Excluding merger and integration costs, the efficiency ratio on a fully tax-equivalent basis was 61.49% for the year ended December 31, 2025, compared to 65.47% for the year ended December 31, 2024. The year-over-year decrease was primarily driven by higher net interest income, partially offset by higher non-interest expense, and also reflected the anticipated economies-of-scale operational efficiencies resulting from the ESSA acquisition. Excluding merger and integration costs, total non-interest expense was $177.1 million compared to $150.0 million for the year ended December 31, 2024.

As of December 31, 2025, the Corporation had a total of 950 employees, of which 917 were full time and 33 were part time. The Corporation invested $6.3 million in its physical infrastructure through the purchase of land, buildings, and equipment during the year ended December 31, 2025. The Corporation continues to enhance its data security systems, technology platforms, employee education and risk management processes. The Corporation’s cybersecurity program is based on the Federal Financial Institutions Examination Council framework which tailors the National Institute of Standards and Technology Cybersecurity Framework to be more financial services focused.

The Corporation’s 2025 Common Share Repurchase Program authorizes the repurchase from time to time of up to 500,000 shares of the Corporation's common stock, provided that the aggregate purchase price of shares of common stock repurchased does not exceed $15,000,000 . Repurchases are authorized during the period beginning on June 23, 2025 through and including June 10, 2026. The Corporation also has outstanding $85.0 million aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031. The Corporation raised $57.8 million , net of issuance costs, from the issuance of depositary shares, each representing a 1/40th ownership interest in a share of the Corporation's 7.125% Series A fixed rate non-cumulative perpetual preferred stock.

The Corporation faces structural headwinds from the interest rate environment, as its earnings largely depend on the relationship between the yield on its earning assets and the cost of funds. Interest rates remain elevated compared to recent years and may increase. As interest rates rise, the Corporation experiences competitive pressures to increase the rates it pays on deposits, which may decrease its net interest income. Furthermore, elevated interest rates increase the cost of new debt or preferred capital. The Corporation also faces headwinds from economic conditions, as periods of high inflation since the start of 2021 have led to increased costs for businesses and consumers, and international trade disputes, including threatened or implemented tariffs, could result in further inflationary pressures.

The Corporation identified several execution risks, including the risks presented by acquisitions, such as the ability to realize anticipated cost savings, the difficulty of integrating operations and personnel, and the potential disruption of ongoing business. The Corporation also faces risks related to its concentration in certain geographic markets, as its success is dependent to a significant extent upon general economic conditions in the United States and, in particular, the local economies in Central, Northeast and Northwest Pennsylvania, Central and Northeast Ohio, Western New York and Southwest Virginia. Additionally, the Corporation is subject to extensive government regulation and supervision, and changes to statutes, regulations or regulatory policies could affect the Corporation in substantial and unpredictable ways.

Risk Factors

The Corporation’s allowance for credit losses may not be adequate to cover loan losses, as the determination of the appropriate level involves a high degree of subjectivity and requires significant estimates of current credit risks and future trends. The CECL methodology may create more volatility in the level of the allowance from quarter to quarter, dependent upon macroeconomic forecasts and conditions. Interest rate volatility could significantly reduce profitability, as the Corporation’s earnings largely depend on the net interest margin, which is susceptible to fluctuation from economic and competitive factors. The Bank’s loans are principally concentrated in certain areas of Pennsylvania, Ohio, New York and Virginia, and adverse economic conditions in those markets could adversely affect the Corporation’s business. The Corporation faces risks from its acquisition of ESSA, including the difficulty of integrating operations and personnel, and the potential disruption of ongoing business. The Corporation is subject to extensive government regulation and supervision, and changes to statutes, regulations or regulatory policies could affect the Corporation in substantial and unpredictable ways. As a result of the merger with ESSA, the Bank agreed to and assumed all obligations under the ESSA Consent Order, which required ESSA Bank to invest a minimum of $2.92 million in a loan subsidy fund and devote a minimum of $125,000 on community partnerships and $250,000 toward advertising, outreach, consumer financial education, and credit counseling.

Management Priorities

Management’s discussion and analysis emphasizes the Corporation’s financial performance for the year ended December 31, 2025, highlighting net income available to common shareholders of $61.8 million , or $2.49 per diluted share, and adjusted earnings of $73.4 million , or $2.95 per diluted share, excluding after-tax merger transaction related expenses. The tone is focused on the positive impact of the ESSA acquisition, which contributed to a 29.11% increase in net interest income, and the achievement of economies-of-scale operational efficiencies. Key strategic priorities emphasized include the successful integration of the ESSA acquisition, organic loan growth of $218.8 million or 4.83% , and the continued expansion of specialized banking divisions such as Impressia Bank and the Open Your Door Program. Management also highlights the Corporation’s strong capital position, with all capital ratios exceeding regulatory well-capitalized levels, and the maintenance of a robust liquidity position with total available liquidity sources approximately 5.2 times the estimated amount of adjusted uninsured deposit balances.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Results of Operations
  2. [2] Item 7, MD&A — Results of Operations
  3. [3] Item 7, MD&A — Financial Condition
  4. [4] Item 7, MD&A — Loans Receivable
  5. [5] Item 7, MD&A — Allowance for Credit Losses
  6. [6] Item 7, MD&A — Allowance for Credit Losses
  7. [7] Item 7, MD&A — Allowance for Credit Losses
  8. [8] Item 7, MD&A — Allowance for Credit Losses
  9. [9] Item 7, MD&A — Allowance for Credit Losses
  10. [10] Item 7, MD&A — Financial Condition
  11. [11] Item 7, MD&A — Financial Condition
  12. [12] Item 7, MD&A — Funding Sources
  13. [13] Item 7, MD&A — Funding Sources
  14. [14] Item 7, MD&A — Funding Sources
  15. [15] Item 7, MD&A — Funding Sources
  16. [16] Item 7, MD&A — Funding Sources
  17. [17] Item 7, MD&A — Funding Sources
  18. [18] Item 7, MD&A — Funding Sources
  19. [19] Item 7, MD&A — Loans Receivable
  20. [20] Item 7, MD&A — Loans Receivable
  21. [21] Item 7, MD&A — Results of Operations
  22. [22] Item 7, MD&A — Results of Operations
  23. [23] Item 1, Business — Merger with ESSA Bancorp, Inc.
  24. [24] Item 1, Business — Merger with ESSA Bancorp, Inc.
  25. [25] Item 1, Business — Merger with ESSA Bancorp, Inc.
  26. [26] Item 1, Business — Merger with ESSA Bancorp, Inc.
  27. [27] Item 1, Business — Merger with ESSA Bancorp, Inc.
  28. [28] Item 1, Business — CNB Bank
  29. [29] Item 7, MD&A — Premises and Equipment
  30. [30] Item 5, Market for Registrant’s Common Equity
  31. [31] Item 5, Market for Registrant’s Common Equity
  32. [32] Item 5, Market for Registrant’s Common Equity
  33. [33] Item 7, MD&A — Results of Operations
  34. [34] Item 7, MD&A — Results of Operations
  35. [35] Item 7, MD&A — Results of Operations
  36. [36] Item 7, MD&A — Results of Operations
  37. [37] Item 7, MD&A — Results of Operations
  38. [38] Item 7, MD&A — Results of Operations
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  43. [43] Item 7, MD&A — Results of Operations
  44. [44] Item 7, MD&A — Results of Operations
  45. [45] Item 7, MD&A — Results of Operations
  46. [46] Item 7, MD&A — Results of Operations
  47. [47] Item 7, MD&A — Results of Operations
  48. [48] Item 7, MD&A — Financial Condition
  49. [49] Item 7, MD&A — Financial Condition
  50. [50] Item 1, Business — CNB Bank
  51. [51] Item 7, MD&A — Loans Receivable
  52. [52] Item 7, MD&A — Loans Receivable
  53. [53] Item 7, MD&A — Loans Receivable
  54. [54] Item 7, MD&A — Results of Operations
  55. [55] Item 7, MD&A — Non-GAAP Financial Measures
  56. [56] Item 7, MD&A — Non-GAAP Financial Measures
  57. [57] Item 7, MD&A — Non-GAAP Financial Measures
  58. [58] Item 7, MD&A — Results of Operations
  59. [59] Item 7, MD&A — Results of Operations
  60. [60] Item 1, Business — Human Capital
  61. [61] Item 1, Business — Human Capital
  62. [62] Item 1, Business — Human Capital
  63. [63] Item 7, MD&A — Premises and Equipment
  64. [64] Item 5, Market for Registrant’s Common Equity
  65. [65] Item 5, Market for Registrant’s Common Equity
  66. [66] Item 7, MD&A — Borrowings
  67. [67] Item 7, MD&A — Borrowings
  68. [68] Item 7, MD&A — Shareholders’ Equity
  69. [69] Item 7, MD&A — Shareholders’ Equity
  70. [70] Item 1, Business — Supervision and Regulation
  71. [71] Item 1, Business — Supervision and Regulation
  72. [72] Item 1, Business — Supervision and Regulation
  73. [73] Item 7, MD&A — Results of Operations
  74. [74] Item 7, MD&A — Results of Operations
  75. [75] Item 7, MD&A — Results of Operations
  76. [76] Item 7, MD&A — Results of Operations
  77. [77] Item 7, MD&A — Results of Operations
  78. [78] Item 7, MD&A — Loans Receivable
  79. [79] Item 7, MD&A — Loans Receivable
  80. [80] Item 7, MD&A — Liquidity and Capital Resources
  81. [81] Item 7, MD&A — Results of Operations
  82. [82] Item 7, MD&A — Results of Operations
  83. [83] Item 7, MD&A — Results of Operations
  84. [84] Item 7, MD&A — Results of Operations
  85. [85] Item 7, MD&A — Results of Operations
  86. [86] Item 7, MD&A — Results of Operations
  87. [87] Item 7, MD&A — Results of Operations
  88. [88] Item 7, MD&A — Results of Operations
  89. [89] Item 7, MD&A — Results of Operations
  90. [90] Item 7, MD&A — Results of Operations
  91. [91] Item 7, MD&A — Results of Operations
  92. [92] Item 7, MD&A — Results of Operations
  93. [93] Item 7, MD&A — Results of Operations
  94. [94] Item 7, MD&A — Results of Operations
  95. [95] Item 7, MD&A — Results of Operations
  96. [96] Item 7, MD&A — Results of Operations
  97. [97] Item 7, MD&A — Results of Operations
  98. [98] Item 7, MD&A — Results of Operations
  99. [99] Item 7, MD&A — Results of Operations
  100. [100] Item 7, MD&A — Results of Operations
  101. [101] Item 7, MD&A — Results of Operations
  102. [102] Item 7, MD&A — Financial Condition
  103. [103] Item 7, MD&A — Financial Condition
  104. [104] Item 7, MD&A — Shareholders’ Equity
  105. [105] Item 7, MD&A — Shareholders’ Equity
  106. [106] Item 7, MD&A — Allowance for Credit Losses
  107. [107] Item 7, MD&A — Allowance for Credit Losses
  108. [108] Item 7, MD&A — Allowance for Credit Losses
  109. [109] Item 7, MD&A — Allowance for Credit Losses
  110. [110] Item 7, MD&A — Non-GAAP Financial Measures
  111. [111] Item 7, MD&A — Capital Ratios and Metrics
  112. [112] Item 7, MD&A — Capital Ratios and Metrics

Analysis on 6/21/2026