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CNB FINANCIAL CORP/PA

CCNEP
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Business Summary

CNB Financial Corporation (the "Corporation") operates as a financial holding company, engaging in a full range of banking activities and services for individual, business, governmental, and institutional customers through its wholly-owned subsidiary, CNB Bank (the "Bank") . The Bank offers checking, savings, and time deposit accounts; real estate, commercial, industrial, residential, and consumer loans; and specialized financial services . The Corporation also has four other subsidiaries: CNB Securities Corporation, which invests in debt and equity securities; CNB Insurance Agency, which sells nonproprietary annuities and other insurance products; CNB Risk Management, Inc., a captive insurance company; and Holiday Financial Services Corporation ("Holiday"), which offers small balance unsecured and secured loans to borrowers with higher risk characteristics . Holiday currently operates nine offices within the Corporation’s market area . The Bank's Private Client Solutions division provides private banking, wealth, and asset management services .

The Corporation's core business model is centered on traditional banking services, generating revenue primarily through interest income from its loan and investment portfolios, and non-interest income from various financial and transactional services . The mix of income includes recurring interest income from loans and securities, and transactional income from service charges, wealth and asset management fees, and card processing . Primary customer segments include individuals, businesses, governmental, and institutional customers . The Bank operates through multiple divisions, including CNB Bank franchise, ERIEBANK, FCBank, BankOnBuffalo, Ridge View Bank, Impressia Bank, and ESSA Bank, each serving specific geographic regions .

The Bank operates 75 full-service branch offices, one loan production office, two drive-up offices, and one mobile office across its market areas as of December 31, 2025 . The CNB Bank franchise serves Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean counties in Pennsylvania . ERIEBANK operates in Crawford, Erie, and Warren counties in Pennsylvania, and Ashtabula, Cuyahoga, Geauga, Lake, and Lorain counties in Ohio . FCBank serves Crawford, Delaware, Franklin, Knox, Marion, Morrow, and Richland counties in Ohio . BankOnBuffalo operates in Erie, Niagara, and Ontario counties in New York . Ridge View Bank serves Botetourt, Craig, Franklin, New River Valley, and Roanoke counties in Virginia . ESSA Bank operates in Delaware, Chester, Lackawanna, Lehigh, Luzerne, Monroe, and Northampton counties in Pennsylvania . Impressia Bank, a women-focused commercial bank, operates within the existing geographic footprint of other divisions and has an online presence .

For the year ended December 31, 2025, net income available to common shareholders was $61.8 million, or $2.49 per diluted share . Total assets were $8.396 billion, an increase of 35.6% from $6.192 billion at December 31, 2024 . Total loans, net of allowance for credit losses, reached $6.427 billion, up 40.9% from $4.562 billion in the prior year . Total deposits increased by 30.8% to $7.027 billion from $5.371 billion . Total shareholders' equity grew by 42.8% to $872.1 million from $610.7 million . Cash and cash equivalents stood at $527.9 million . The allowance for credit losses on loans was $67.1 million, representing 1.03% of total loans .

Comparing 2025 to 2024, net income available to common shareholders increased by $11.556 million . Total assets increased by $2.204 billion . Total loans, net of allowance for credit losses, increased by $1.865 billion . Total deposits increased by $1.656 billion . Net interest income increased by $54.6 million, or 29.11%, to $242.0 million in 2025 from $187.5 million in 2024 . The net interest margin on a fully tax-equivalent basis was 3.65% in 2025, up from 3.39% in 2024 . Non-interest income increased to $40.2 million in 2025 from $39.1 million in 2024 . Total non-interest expense increased to $190.9 million in 2025 from $150.0 million in 2024 .

On July 23, 2025, the Corporation completed its acquisition of ESSA Bancorp, Inc. ("ESSA") and its subsidiary bank, ESSA Bank & Trust Company ("ESSA Bank"), in an all-stock transaction . The total consideration paid to ESSA shareholders was approximately $202.6 million, comprising approximately 8,359,430 shares of the Corporation's common stock valued at approximately $202.5 million, and $21 thousand in cash in lieu of fractional shares . This 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 . The acquisition contributed $1.7 billion in loans and $1.5 billion in deposits . Merger and integration costs associated with the ESSA acquisition were $13.8 million for the year ended December 31, 2025 .

Business Outlook

The Corporation's management and Board of Directors, through the Asset/Liability Committee (ALCO), continuously monitor liquidity and establish and monitor acceptable liquidity ranges, actively managing its liquidity position through target ratios and employing strategies to maintain adequate liquidity . The Corporation expects to satisfy its short-term and long-term cash requirements through deposit growth, principal and interest payments from loans and investment securities, maturing loans and investment securities, and by maintaining access to wholesale funding sources . As of December 31, 2025, the Corporation's cash and cash equivalents position was approximately $527.9 million, including liquidity of $441.5 million held at the Federal Reserve . These funds, combined with collective contingent liquidity resources of $6.4 billion, including available borrowing capacity from the FHLB and the Federal Reserve, and unused commitments from brokered deposit sources and other third-party funding channels, result in total available liquidity sources approximately 5.2 times the estimated amount of adjusted uninsured deposit balances .

The Corporation's strategy in the current environment is to focus on lower risk securities and shorter durations that complement the current portfolio investment ladder, coupled with consistent reinvestment of cash flows to replace lower earning assets . The Corporation monitors the earnings performance and the effectiveness of the liquidity of the securities portfolio on a regular basis through meetings of the ALCO .

The Corporation continues to explore the credit and reputational risks associated with climate change and their potential impact on its lending activities, while closely monitoring regulatory developments on climate risk . This includes researching and developing a formalized approach to considering climate change related risks in the Corporation's underwriting processes, which will be impacted by the accessibility and reliability of both customer climate risk data and climate risk data in general . One objective of these efforts is to enable the Corporation to better understand the climate change related risks associated with its customers' business activities and to monitor their response to those risks and their ultimate impact on the Corporation's customers .

The Corporation's material contractual obligations as of December 31, 2025, consist of long-term borrowings, operating and finance leases, time deposits with stated maturity dates, and commitments to extend credit and standby letters of credit . The Corporation's Board of Directors presently intends to continue the policy of paying quarterly cash dividends . The amount of any future dividends will depend on economic and market conditions, the Corporation's financial condition and operating results, and other factors, including applicable government regulations and policies .

Risk Factors

The Corporation faces significant economic risks, including adverse changes in capital and financial markets, changes in interest rates, and the credit risks of lending activities, which could lead to increased loan delinquencies and default rates . Compliance with increased regulation in the banking and financial services industry may raise costs and limit business opportunities . Market developments could affect customer confidence, impacting loan delinquencies and default rates, and potentially causing other-than-temporary impairments in the securities portfolio . The Corporation's liquidity could be adversely affected by changes in economic conditions, interest rates, and competitive pressures, potentially increasing the cost of funds . The allowance for credit losses may not be adequate to cover loan losses, as its determination involves a high degree of subjectivity and reliance on estimates of current credit risks and future trends, which may undergo material changes . Interest rate volatility could significantly reduce profitability, as earnings depend on the net interest margin, which is susceptible to fluctuations from economic and competitive factors . Declines in the value of the investment securities portfolio may require impairment charges, adversely affecting results of operations and financial condition . A substantial decline in the value of the Bank's FHLB common stock could adversely affect results, liquidity, and financial condition, and the Bank's liquidity may be impacted if alternative funding sources are not available . The Bank could be held responsible for environmental liabilities relating to properties acquired through foreclosure, potentially resulting in significant financial loss . Operational and strategic risks include the concentration of loans in certain geographic areas (Pennsylvania, Ohio, New York, and Virginia), making the Corporation vulnerable to adverse economic conditions in those markets . Severe weather, flooding, other effects of climate change, and natural disasters could adversely affect financial condition, results of operations, or liquidity by impacting properties, increasing costs, or damaging reputation . The Corporation depends on the accuracy and completeness of customer and counterparty information, and incorrect assessments of creditworthiness or reliance on misleading financial statements could negatively impact financial condition . Acquisitions present risks such as integration difficulties, unanticipated costs, disruption of business, and impairment of relationships . Strong competition and rapid technological change, including AI, may adversely impact profitability if the Corporation fails to adapt or invest sufficiently . The soundness of other financial institutions with which the Corporation does business could adversely affect its operations due to interdependencies and potential defaults . Failures or breaches in the Corporation's or third-party vendors' information technology networks and systems, including cyber attacks, could disrupt business, lead to unauthorized disclosure of information, damage reputation, and increase costs . The Corporation's use of AI could expose it to errors, malfunctions, and increasing regulations, leading to operational and legal risks . Extensive government regulation and supervision may affect the ability to conduct business and negatively impact financial results, with changes in laws or failure to comply potentially leading to sanctions, restrictions, and reputational damage . As a result of the ESSA merger, the Bank assumed obligations under the ESSA Consent Order, which could incur unanticipated costs and expenses for compliance and potentially lead to further enforcement actions . Future federal or state legislation responsive to credit conditions could cause higher credit losses by reducing contractual payments or limiting foreclosure abilities . The Corporation relies on its management and other key personnel, and the loss of any of them may adversely affect operations . The Corporation's risk management framework may not be effective in mitigating all risks and losses .

Management Priorities

Management's message to shareholders emphasizes the Corporation's commitment to supporting its ongoing financial performance objectives and future growth goals by evaluating, developing, and implementing strategies to address challenging interest rate and competitive environments . They also proactively assess the potential impact of economic and geopolitical events on the credit risk profile of customers and develop strategies to mitigate such impacts on the loan portfolio . For the year ended December 31, 2025, net income available to common shareholders was $61.8 million, or $2.49 per diluted share . Excluding after-tax merger transaction related expenses, adjusted earnings were $73.4 million, or $2.95 per diluted share . The Corporation's strategic priorities include maintaining an appropriate level of liquid funds through asset/liability management, which involves managing the mix and time to maturity of financial assets and liabilities on its balance sheet . Another priority is to maintain the investment securities portfolio at an appropriate level to balance earnings and liquidity, focusing on lower risk securities and shorter durations that complement the current portfolio investment ladder, coupled with consistent reinvestment of cash flows . Furthermore, management is dedicated to exploring and formalizing its approach to climate change-related risks in underwriting processes, aiming to better understand and monitor customer responses to these risks and their ultimate impact on the Corporation .

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — CNB Financial Corporation
  2. [2] Item 1, Business — CNB Bank
  3. [3] Item 1, Business — CNB Financial Corporation
  4. [4] Item 1, Business — CNB Financial Corporation
  5. [5] Item 1, Business — CNB Bank
  6. [6] Item 1, Business — CNB Bank
  7. [7] Item 1, Business — CNB Bank
  8. [8] Item 1, Business — CNB Bank
  9. [9] Item 7, MD&A — Overview
  10. [10] Item 1, Business — CNB Bank
  11. [11] Item 1, Business — CNB Bank
  12. [12] Item 1, Business — CNB Bank
  13. [13] Item 1, Business — CNB Bank
  14. [14] Item 1, Business — CNB Bank
  15. [15] Item 1, Business — CNB Bank
  16. [16] Item 1, Business — CNB Bank
  17. [17] Item 1, Business — CNB Bank
  18. [18] Item 7, MD&A — Results of Operations Year Ended December 31, 2025 vs. Year Ended December 31, 2024
  19. [19] Item 7, MD&A — Financial Condition
  20. [20] Item 7, MD&A — Financial Condition
  21. [21] Item 7, MD&A — Financial Condition
  22. [22] Item 7, MD&A — Financial Condition
  23. [23] Item 7, MD&A — Cash and Cash Equivalents
  24. [24] Item 7, MD&A — Loan Quality
  25. [25] Item 7, MD&A — Interest Income and Expense
  26. [26] Item 7, MD&A — Interest Income and Expense
  27. [27] Item 7, MD&A — Non-Interest Income
  28. [28] Item 7, MD&A — Non-Interest Expense
  29. [29] Item 7, MD&A — Merger with ESSA Bancorp, Inc.
  30. [30] Item 7, MD&A — Merger with ESSA Bancorp, Inc.
  31. [31] Item 7, MD&A — Merger with ESSA Bancorp, Inc.
  32. [32] Item 7, MD&A — Funding Sources, Deposits
  33. [33] Item 7, MD&A — Non-Interest Expense
  34. [34] Item 1A, Risk Factors — Economic Risks
  35. [35] Item 7, MD&A — Liquidity and Capital Resources
  36. [36] Item 7, MD&A — Liquidity and Capital Resources
  37. [37] Item 7, MD&A — Liquidity and Capital Resources
  38. [38] Item 7, MD&A — Securities
  39. [39] Item 7, MD&A — Securities
  40. [40] Item 7, MD&A — Loan Origination/Risk Management
  41. [41] Item 7, MD&A — Loan Origination/Risk Management
  42. [42] Item 7, MD&A — Loan Origination/Risk Management
  43. [43] Item 7, MD&A — Liquidity and Capital Resources
  44. [44] Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Dividends Restrictions
  45. [45] Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Dividends Restrictions
  46. [46] Item 1A, Risk Factors — Economic Risks
  47. [47] Item 1A, Risk Factors — Economic Risks
  48. [48] Item 1A, Risk Factors — Economic Risks
  49. [49] Item 1A, Risk Factors — Economic Risks
  50. [50] Item 1A, Risk Factors — Credit and Interest Rate Risks
  51. [51] Item 1A, Risk Factors — Credit and Interest Rate Risks
  52. [52] Item 1A, Risk Factors — Credit and Interest Rate Risks
  53. [53] Item 1A, Risk Factors — Credit and Interest Rate Risks
  54. [54] Item 1A, Risk Factors — Credit and Interest Rate Risks
  55. [55] Item 1A, Risk Factors — Operational and Strategic Risks
  56. [56] Item 1A, Risk Factors — Operational and Strategic Risks
  57. [57] Item 1A, Risk Factors — Operational and Strategic Risks
  58. [58] Item 1A, Risk Factors — Operational and Strategic Risks
  59. [59] Item 1A, Risk Factors — Operational and Strategic Risks
  60. [60] Item 1A, Risk Factors — Operational and Strategic Risks
  61. [61] Item 1A, Risk Factors — Operational and Strategic Risks
  62. [62] Item 1A, Risk Factors — Operational and Strategic Risks
  63. [63] Item 1A, Risk Factors — Risks Related to Legal and Compliance Matters
  64. [64] Item 1A, Risk Factors — Risks Related to Legal and Compliance Matters
  65. [65] Item 1A, Risk Factors — Risks Related to Legal and Compliance Matters
  66. [66] Item 1A, Risk Factors — General Risk Factors
  67. [67] Item 1A, Risk Factors — General Risk Factors
  68. [68] Item 7, MD&A — Forward-Looking Statements and Factors that Could Affect Future Results
  69. [69] Item 7, MD&A — Forward-Looking Statements and Factors that Could Affect Future Results
  70. [70] Item 7, MD&A — Results of Operations Year Ended December 31, 2025 vs. Year Ended December 31, 2024
  71. [71] Item 7, MD&A — Liquidity and Capital Resources
  72. [72] Item 7, MD&A — Securities
  73. [73] Item 7, MD&A — Loan Origination/Risk Management

Analysis on 5/20/2026