EX-99.1 2 ccne101918991.htm CCNE 10.19.18 99.1 Exhibit
Exhibit 99.1

News Release
 
 
pressreleaseq32018fir_image1.gif
 
 
 
 
Contact: Brian W. Wingard
 
 
Treasurer
 
 
(814) 765-9621
 
 
FOR IMMEDIATE RELEASE


CNB FINANCIAL CORPORATION REPORTS THIRD QUARTER EARNINGS FOR 2018,
HIGHLIGHTED BY STRONG ORGANIC LOAN AND DEPOSIT GROWTH
Clearfield, Pennsylvania – October 19, 2018

CNB Financial Corporation (“CNB”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the third quarter and first nine months of 2018. Highlights include the following:

Net income of $9.2 million, or $0.60 per share, in the third quarter of 2018, compared to net income of $7.2 million, or $0.47 per share, in the third quarter of 2017. Pre-tax income in the third quarter of 2018 was $10.9 million compared to $9.5 million in the third quarter of 2017, an increase of 14.6%.
Net income of $24.8 million, or $1.62 per share, during the nine months ended September 30, 2018, compared to net income of $20.4 million, or $1.34 per share, during the nine months ended September 30, 2017. Pre-tax income for the nine months ended September 30, 2018 was $29.1 million compared to $27.6 million for the same period in 2017, an increase of 5.5%. Pre-tax income for the nine months ended September 30, 2017 includes securities gains of $1.5 million and a gain on sale of a branch of $536 thousand.
Annualized returns on average assets and equity of 1.12% and 13.28%, respectively, for the nine months ended September 30, 2018, compared to 1.02% and 11.48%, respectively, for the nine months ended September 30, 2017. The annualized return on average tangible equity was 15.83% and 13.90% during the nine months September 30, 2018 and 2017, respectively.
Net interest margin on a fully tax-equivalent basis of 3.75% and 3.80% for the nine months ended September 30, 2018 and 2017, respectively. Net interest margin on a fully tax-equivalent basis was 3.79% for the third quarter of 2018, compared to 3.74% for the second quarter of 2018.
Loans of $2.39 billion as of September 30, 2018, compared to loans of $2.10 billion as of September 30, 2017, representing organic loan growth of 13.7%.
Deposits of $2.52 billion as of September 30, 2018, compared to deposits of $2.06 billion as of September 30, 2017, representing organic deposit growth of 22.4%.
Book value per share of $16.64 as of September 30, 2018 increased 4.1% compared to book value per share of $15.99 as of September 30, 2017, and tangible book value per share of $14.05 as of September 30, 2018 increased 5.3% compared to tangible book value per share of $13.34 as of September 30, 2017.
Non-performing assets of $20.4 million, or 0.65% of total assets as of September 30, 2018, compared to $20.4 million, or 0.74% of total assets, as of December 31, 2017, and $21.1 million, or 0.77% of total assets, as of September 30, 2017.

Joseph B. Bower, Jr., President and CEO, stated, "We continue to be excited and encouraged by the business opportunities we are finding, particularly in our newer markets. BankOnBuffalo has grown to $274 million in deposits and $222 million in loans in just two years. Businesses and consumers continue to choose CNB for their financial services needs as our brand and customer service presence continue to grow and expand."

Net Interest Margin

Net interest margin on a fully tax equivalent basis was 3.75% and 3.80% for the nine months ended September 30, 2018 and 2017, respectively. The yield on earning assets increased 17 basis points to 4.65% for the nine months ended September 30, 2018 from 4.48% for the nine months ended September 30, 2017. The cost of interest-bearing liabilities increased 27 basis points to 1.06% for the nine months ended September 30, 2018 from 0.79% for the nine months ended September 30, 2017.

Total interest and dividend income increased by 19.1% to $95.5 million for the nine months ended September 30, 2018 from $80.2 million for the nine months ended September 30, 2017. Net interest income increased by 13.4% to $76.8 million for the nine months ended September 30, 2018 from $67.7 million for the nine months ended September 30, 2017.





Asset Quality

During the three and nine months ended September 30, 2018, CNB recorded a provision for loan losses of $1.1 million and $4.6 million, as compared to a provision for loan losses of $1.4 million and $3.6 million for the three and nine months ended September 30, 2017. Net chargeoffs during the three and nine months ended September 30, 2018 were $707 thousand and $1.8 million, compared to net chargeoffs of $820 thousand and $2.0 million for the three and nine months ended September 30, 2017. CNB Bank net chargeoffs totaled $436 thousand and $392 thousand during the nine months ended September 30, 2018 and 2017, or 0.02% and 0.03%, respectively, of average CNB Bank loans. Holiday Financial Services Corporation, CNB’s consumer discount company, recorded net chargeoffs totaling $1.4 million and $1.6 million during the nine months ended September 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 a result, CNB recorded a specific loan loss reserve for this impaired loan of $758 thousand as of June 30, 2018.  During the quarter ended September 30, 2018, the customer sold its business and CNB received full repayment of the outstanding principal balance of $5.5 million along with previously outstanding interest and fees totaling $127 thousand.

Non-Interest Income

Net realized gains on available-for-sale securities were $1.5 million during the nine months ended September 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 nine months ended September 30, 2018 and 2017 was $16.3 million and $13.8 million, respectively.

As a result of CNB’s continued focus on growing its Private Client Solutions division, wealth and asset management revenues were $3.2 million for the first nine months of 2018, an increase of 13.5% from $2.8 million in the first nine months of 2017. In addition, as a result of its continued organic growth, CNB experienced an increase in service charges in deposit accounts of $603 thousand, or 17.2%, in the first nine months of 2018 compared to the first nine months of 2017. Similarly, other service charges and fees increased $398 thousand, or 23.8%, in the first nine months of 2018 compared to the first nine months of 2017. Net income (loss) attributable to investments in Small Business Investment Companies was $612 thousand in the first nine months of 2018 compared to $(37) thousand in the first nine months of 2017, which is reported as a component of other non-interest income.

Non-Interest Expenses

Total non-interest expenses were $20.8 million and $59.3 million during the three and nine months ended September 30, 2018, compared to $17.6 million and $52.4 million during the three and nine months ended September 30, 2017. Salaries and benefits expense increased $4.1 million, or 15.1%, during the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. As of September 30, 2018, CNB had 534 full-time equivalent staff, compared to 490 full-time equivalent staff as of September 30, 2017, an increase of 9.0%. 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 September 30, 2018 were 63,619, compared to 59,026 households at September 30, 2017, an organic increase of 7.8%.

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 $2.8 million, or 39.5%, during the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017. CNB’s effective tax rate was 14.9% in the first nine months of 2018 compared to 26.1% in the first nine months of 2017.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $3.1 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
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
 
 
%
 
 
 
2018
2017
change
 
2018
2017
change
Income Statement
 
 
 
 
 
 
 
Interest income
$
34,040

$
28,069

21.3
 %
 
$
95,526

$
80,176

19.1
 %
Interest expense
7,162

4,552

57.3
 %
 
18,722

12,468

50.2
 %
Net interest income
26,878

23,517

14.3
 %
 
76,804

67,708

13.4
 %
Provision for loan losses
1,095

1,400

(21.8
)%
 
4,631

3,550

30.5
 %
Net interest income after provision for loan losses
25,783

22,117

16.6
 %
 
72,173

64,158

12.5
 %
 
 
 
 
 
 
 
 
 
 
Non-interest income
 
 
 
 
 
 
 
Service charges on deposit accounts
1,584

1,244

27.3
 %
 
4,102

3,499

17.2
 %
Other service charges and fees
732

587

24.7
 %
 
2,073

1,675

23.8
 %
Wealth and asset management fees
1,031

952

8.3
 %
 
3,151

2,775

13.5
 %
Net realized gains on available-for-sale securities

5

NA

 

1,543

NA

Net realized and unrealized gains on trading securities
421

160

163.1
 %
 
672

475

41.5
 %
Mortgage banking
283

237

19.4
 %
 
801

668

19.9
 %
Bank owned life insurance
335

592

(43.4
)%
 
1,074

1,308

(17.9
)%
Card processing and interchange income
1,066

942

13.2
 %
 
3,140

2,790

12.5
 %



Gain on sale of branch


NA

 

536

NA

Other
481

313

53.7
 %
 
1,277

625

104.3
 %
Total non-interest income
5,933

5,032

17.9
 %
 
16,290

15,894

2.5
 %
 
 
 
 
 
 
 
 
 
 
Non-interest expenses
 
 
 
 
 
 
 
Salaries and benefits
11,429

9,101

25.6
 %
 
31,095

27,008

15.1
 %
Net occupancy expense of premises
2,650

2,219

19.4
 %
 
7,780

7,016

10.9
 %
FDIC insurance premiums
361

295

22.4
 %
 
1,037

869

19.3
 %
Core Deposit Intangible amortization
222

305

(27.2
)%
 
718

967

(25.7
)%
Card processing and interchange expenses
767

541

41.8
 %
 
2,139

1,577

35.6
 %
Other
5,365

5,157

4.0
 %
 
16,567

15,012

10.4
 %
Total non-interest expenses
20,794

17,618

18.0
 %
 
59,336

52,449

13.1
 %
 
 
 
 
 
 
 
 
 
 
Income before income taxes
10,922

9,531

14.6
 %
 
29,127

27,603

5.5
 %
Income tax expense
1,686

2,285

(26.2
)%
 
4,353

7,194

(39.5
)%
Net income
9,236

7,246

27.5
 %
 
24,774

20,409

21.4
 %
 
 
 
 
 
 
 
 
 
 
Average diluted shares outstanding
15,285,430

15,207,589

 
 
15,281,250

15,103,629

 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
0.60

0.47

27.7
 %
 
1.62

1.34

20.9
 %
Cash dividends per share
0.170

0.165

3.0
 %
 
0.500

0.495

1.0
 %
 
 
 
 
 
 
 
 
 
 
Payout ratio
28
%
35
%
 
 
31
%
37
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(unaudited)
 
 
(unaudited)
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
 
September 30,
 
 
September 30,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
2017
 
 
2018
2017
 
Average Balances
 
 
 
 
 
 
 
Loans, net of unearned income
2,356,668

2,075,147

 
 
2,288,143

1,992,406

 
Investment securities
520,161

442,074

 
 
477,462

467,516

 
Total earning assets
2,876,829

2,517,221

 
 
2,765,605

2,459,922

 
Total assets
3,073,967

2,723,206

 
 
2,952,900

2,658,220

 
Non interest-bearing deposits
332,334

308,157

 
 
319,003

296,517

 
Interest-bearing deposits
2,129,756

1,759,419

 
 
1,989,596

1,744,412

 
Shareholders' equity
253,244

243,931

 
 
248,644

236,940

 
Tangible shareholders' equity (*)
213,465

203,117

 
 
208,623

195,801

 
 
 
 
 
 
 
 
 
 
 
Average Yields
 
 
 
 
 
 
 
Loans, net of unearned income
5.19
%
4.93
%
 
 
5.03
%
4.83
%
 
Investment securities
2.96
%
2.96
%
 
 
2.84
%
2.99
%
 
Total earning assets
4.78
%
4.58
%
 
 
4.65
%
4.48
%
 



Interest-bearing deposits
0.90
%
0.53
%
 
 
0.77
%
0.51
%
 
Interest-bearing liabilities
1.22
%
0.87
%
 
 
1.06
%
0.79
%
 
 
 
 
 
 
 
 
 
 
 
Performance Ratios (annualized)
 
 
 
 
 
 
 
Return on average assets
1.20
%
1.06
%
 
 
1.12
%
1.02
%
 
Return on average equity
14.59
%
11.88
%
 
 
13.28
%
11.48
%
 
Return on average tangible equity (*)
17.31
%
14.27
%
 
 
15.83
%
13.90
%
 
Net interest margin, fully tax equivalent basis
3.79
%
3.82
%
 
 
3.75
%
3.80
%
 
 
 
 
 
 
 
 
 
 
 
Loan Charge-Offs
 
 
 
 
 
 
 
Net loan charge-offs
707

820

 
 
1,814

2,031

 
Net loan charge-offs / average loans
0.12
%
0.16
%
 
 
0.11
%
0.14
%
 
 
 
 
 
 
 
 
 
 
 
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
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
%
 
 
 
%
 
 
 
2018
2017
change
 
2018
2017
change
 
 
 
 
 
 
 
 
 
 
Pre-tax net income, GAAP basis
10,922

9,531

14.6
 %
 
29,127

27,603

5.5
 %
Net realized gains on available-for-sale securities

(5
)
NA

 

(1,543
)
NA

Gain on sale of branch


NA

 

(536
)
NA

Pre-tax net income, non-GAAP
10,922

9,526

14.7
 %
 
29,127

25,524

14.1
 %

 
(unaudited)
 
(unaudited)
 
 
 
 
September 30,
December 31,
September 30,
 
% change versus
 
2018
2017
2017
 
12/31/17
9/30/17
 
 
 
 
 
Ending Balance Sheet
 
 
 
 
 
 
Loans, net of unearned income
$
2,386,955

$
2,145,959

$
2,098,574

 
11.2
 %
13.7
 %
Loans held for sale
775

852

1,672

 
(9.0
)%
(53.6
)%
Investment securities
531,220

416,859

430,742

 
27.4
 %
23.3
 %
FHLB and other equity interests
23,836

21,517

26,145

 
10.8
 %
(8.8
)%
Other earning assets
1,863

2,199

2,806

 
(15.3
)%
(33.6
)%
   Total earning assets
2,944,649

2,587,386

2,559,939

 
13.8
 %
15.0
 %
 
 
 
 
 
 
 
Allowance for loan losses
(22,510
)
(19,693
)
(17,849
)
 
14.3
 %
26.1
 %
Goodwill
38,730

38,730

38,730

 
 %
 %



Core deposit intangible
907

1,625

1,888

 
(44.2
)%
(52.0
)%
Other assets
167,537

160,725

162,361

 
4.2
 %
3.2
 %
   Total assets
$
3,129,313

$
2,768,773

$
2,745,069

 
13.0
 %
14.0
 %
 
 
 
 
 
 
 
Non interest-bearing deposits
$
345,154

$
321,858

$
313,543

 
7.2
 %
10.1
 %
Interest-bearing deposits
2,177,225

1,845,957

1,747,067

 
17.9
 %
24.6
 %
   Total deposits
2,522,379

2,167,815

2,060,610

 
16.4
 %
22.4
 %
 
 
 
 
 
 
 
Borrowings
252,422

257,359

342,158

 
(1.9
)%
(26.2
)%
Subordinated debt
70,620

70,620

70,620

 
 %
 %
Other liabilities
29,516

29,069

27,233

 
1.5
 %
8.4
 %
 
 
 
 
 
 
 
Common stock



 
NA

NA

Additional paid in capital
97,328

97,042

96,697

 
0.3
 %
0.7
 %
Retained earnings
165,427

148,298

147,132

 
11.6
 %
12.4
 %
Treasury stock
(608
)
(1,087
)
(544
)
 
(44.1
)%
11.8
 %
Accumulated other comprehensive income (loss)
(7,771
)
(343
)
1,163

 
NA

NA

   Total shareholders' equity
254,376

243,910

244,448

 
4.3
 %
4.1
 %
 
 
 
 
 
 
 
   Total liabilities and shareholders' equity
$
3,129,313

$
2,768,773

$
2,745,069

 
13.0
 %
14.0
 %
 
 
 
 
 
 
 
Ending shares outstanding
15,285,430

15,264,740

15,285,236

 
 
 
 
 
 
 
 
 
 
Book value per share
$
16.64

$
15.98

$
15.99

 
4.1
 %
4.1
 %
Tangible book value per share (*)
$
14.05

$
13.33

$
13.34

 
5.4
 %
5.3
 %
 
 
 
 
 
 
 
Capital Ratios
 
 
 
 
 
 
Tangible common equity / tangible assets (*)
6.95
%
7.46
%
7.54
%
 
 
 
Tier 1 leverage ratio
8.06
%
8.45
%
8.44
%
 
 
 
Common equity tier 1 ratio
9.68
%
10.00
%
10.14
%
 
 
 
Tier 1 risk based ratio
10.54
%
10.97
%
11.12
%
 
 
 
Total risk based ratio
13.66
%
14.32
%
14.45
%
 
 
 
 
 
 
 
 
 
 
Asset Quality
 
 
 
 
 
 
Non-accrual loans
$
18,882

$
19,232

$
19,786

 
 
 
Loans 90+ days past due and accruing
1,044

477

592

 
 
 
   Total non-performing loans
19,926

19,709

20,378

 
 
 
Other real estate owned
449

710

760

 
 
 
   Total non-performing assets
$
20,375

$
20,419

$
21,138

 
 
 
 
 
 
 
 
 
 
Loans modified in a troubled debt restructuring (TDR):
 
 
 
 
 
 
   Performing TDR loans
$
8,489

$
8,344

$
8,655

 
 
 
   Non-performing TDR loans **
9,255

8,959

8,853

 
 
 



        Total TDR loans
$
17,744

$
17,303

$
17,508

 
 
 
 
 
 
 
 
 
 
Non-performing assets / Loans + OREO
0.85
%
0.95
%
1.01
%
 
 
 
Non-performing assets / Total assets
0.65
%
0.74
%
0.77
%
 
 
 
Allowance for loan losses / Loans
0.94
%
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)
 
 
 
 
September 30,
December 31,
September 30,
 
 
 
 
2018
2017
2017
 
 
 
 
 
 
 
 
 
 
Shareholders' equity
$
254,376

$
243,910

$
244,448

 
 
 
     Less goodwill
38,730

38,730

38,730

 
 
 
     Less core deposit intangible
907

1,625

1,888

 
 
 
Tangible common equity
$
214,739

$
203,555

$
203,830

 
 
 
 
 
 
 
 
 
 
Total assets
$
3,129,313

$
2,768,773

$
2,745,069

 
 
 
     Less goodwill
38,730

38,730

38,730

 
 
 
     Less core deposit intangible
907

1,625

1,888

 
 
 
Tangible assets
$
3,089,676

$
2,728,418

$
2,704,451

 
 
 
 
 
 
 
 
 
 
Ending shares outstanding
15,285,430

15,264,740

15,285,236

 
 
 
 
 
 
 
 
 
 
Tangible book value per share
$
14.05

$
13.33

$
13.34

 
 
 
Tangible common equity/Tangible assets
6.95
%
7.46
%
7.54
%