8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) January 29, 2016

CNB FINANCIAL CORPORATION

(Exact name of Registrant as specified in its Charter)

Pennsylvania	000-13396	25-1450605
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification Number)

1 South Second Street

PO Box 42

Clearfield, Pennsylvania 16830

(Address of principal executive offices)

Registrant’s telephone number, including area code: (814) 765-9621

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On January 29, 2016, CNB Financial Corporation (NASDAQ: CCNE), the parent company of CNB Bank, issued a press release describing its results of operations for the fiscal quarter and year ended December 31, 2015. That press release is attached hereto as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits

(a) Not applicable.

(d) Not applicable.

(d) Not applicable.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release of CNB Financial Corporation dated January 29, 2016

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	CNB Financial Corporation
Date: January 29, 2016	By:	/s/ Brian W. Wingard
		Brian W. Wingard
		Treasurer

Exhibit Index

Exhibit No.	Description
99.1	Press release of CNB Financial Corporation dated January 29, 2016

EX-99.1

Exhibit 99.1

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

CNB FINANCIAL CORPORATION REPORTS YEAR END 2015 EARNINGS,

HIGHLIGHTED BY STRONG ORGANIC LOAN GROWTH

Clearfield, Pennsylvania – January 29, 2016

CNB Financial Corporation (“CNB”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the year ended December 31, 2015. Highlights include the following:

• Total loans of $1.6 billion at December 31, 2015, an increase of $222.5 million, or 16.4%, as compared to December 31, 2014. All of CNB’s loan growth in 2015 was organic.

• Total deposits of $1.8 billion at December 31, 2015, which is down 1.7% from year-end 2014, but is comprised of an increase of 7.7% in non-interest bearing deposits and a decrease of 3.2% in interest-bearing deposits. CNB’s loan to deposit ratio increased from 73.4% at December 31, 2014 to 86.9% at December 31, 2015.

• Net interest margin of 3.73% for the year ended December 31, 2015, compared to 3.82% for the year ended December 31, 2014. Included in net interest income in 2015 was $2.2 million of net accretion related to acquired loans, which was down from $2.9 million included in 2014. Excluding the impact of the net accretion, net interest income increased by $800 thousand for 2015 as compared to 2014.

• Net income of $22.2 million for the year ended December 31, 2015, or $1.54 per share, compared to net income of $23.1 million for the year ended December 31, 2014, or $1.60 per share. Impacting these results were approximately $700 thousand less in purchase accounting net accretion to loan interest income in 2015 versus 2014, $308 thousand of merger costs related to our pending acquisition of Lake National Bank, as well as the addition of staff and related expenses in 2015 to position our infrastructure for future growth.

• Returns on average assets and equity of 0.99% and 11.23%, respectively, for the year ended December 31, 2015 compared to 1.07% and 12.76%, respectively, for the year ended December 31, 2014.

• Tangible book value per share of $11.96 as of December 31, 2015, an increase of 9.0% over tangible book value per share of $10.97 at December 31, 2014.

• Non-performing assets of $13.2 million, or 0.57% of total assets as of December 31, 2015, compared to $10.2 million, or 0.47% of total assets, at December 31, 2014.

In December 2015, CNB announced the acquisition of Lake National Bank, headquartered in Mentor, Ohio, which is expected to close in the third quarter of 2016.

Joseph B. Bower, Jr., President and CEO commented, “We are very excited to have Lake National as part of our ERIEBANK team. Our strategy of growing organically is enhanced by the markets in which they are located and which they are already developing. CNB’s loan growth in 2015 was extremely positive. Our outlook for the next several quarters, however, is good but not as rapid as last year. Competitive pressures from banks and non-bank competition are resulting in lower projected growth for 2016 as we maintain our pricing and credit quality discipline.”

Net Interest Margin

Net interest margin on a fully tax equivalent basis was 3.73% for both the three months and year ended December 31, 2015, compared to 3.94% and 3.82% for the three months and year ended December 31, 2014. Net accretion included in loan interest income related to acquired loans was $358 thousand and $2.2 million for the three months and year ended December 31, 2015, resulting in an increase in the net interest margin of 8 basis points and 11 basis points, respectively. Net accretion included in loan interest income related to acquired loans was $1.2 million and $2.9 million for the three months and year ended December 31, 2014, resulting in an increase in the net interest margin of 23 basis points and 14 basis points, respectively.

During 2015, CNB experienced net interest margin compression as a result of loans repricing downward and new loans with market yields significantly below historical averages, which is consistent with the trends across the financial services industry in this historically low interest rate environment. The cost of interest-bearing deposits was 53 basis points during the year ended December 31, 2015, compared to 51 basis points during the year ended December 31, 2014.

Asset Quality

During the year ended December 31, 2015, CNB recorded a provision for loan losses of $2.6 million, as compared to a provision for loan losses of $3.8 million for the year ended December 31, 2014. The provision for loan losses was $668 thousand and $282 thousand for the three months ended December 31, 2015 and 2014, respectively, as a result of strong organic loan growth during the quarter. Net chargeoffs during the year ended December 31, 2015 were $3.2 million, as compared to net chargeoffs of $2.7 million during the year ended December 31, 2014, and the ratio of net chargeoffs to average loans was 0.22% and 0.21% for the years ended December 31, 2015 and 2014, respectively.

During the fourth quarter of 2015, CNB charged off a commercial real estate loan in the amount of $486 thousand, which was fully reserved as of September 30, 2015. In addition, there were no new impaired loans in the fourth quarter that required a significant loan loss reserve, and no material revisions were required for loan loss reserves of existing impaired loans. The overall decrease in the provision for loan losses in 2015 compared to 2014 is a result of lower historical loss rates in the commercial & industrial and commercial real estate portfolio segments.

Non-Interest Income

Excluding the effects of securities transactions, non-interest income was $14.3 million for the year ended December 31, 2015, compared to $13.8 million for the year ended December 31, 2014. Net realized gains on available-for-sale securities were $666 thousand during the year ended December 31, 2015, compared to $429 thousand during the year ended December 31, 2014. Net realized and unrealized losses on trading securities were $213 thousand during the year ended December 31, 2015, compared to net realized and unrealized gains of $121 thousand during the year ended December 31, 2014.

Non-Interest Expenses

During 2015, CNB made numerous infrastructure, personnel, and other investments to facilitate its continued growth. Total non-interest expenses were $14.8 million and $56.5 million during the three months and year ended December 31, 2015, respectively, as compared to $13.7 million and $52.7 million for the three months and year ended December 31, 2014. Included in non-interest expenses for the three months and year ended December 31, 2015 were merger related expenses of $308 thousand.

Salaries and benefits expenses increased $2.6 million, or 9.5%, during the year ended December 31, 2015 compared to the year ended December 31, 2014. During 2015, CNB added 27 full-time equivalent staff, which included both customer-facing personnel such as business development and wealth management officers, as well as support department personnel. In addition, CNB is undertaking a core processing system upgrade with completion scheduled for the second quarter of 2016. Included in other non-interest expenses for the three months and year ended December 31, 2015 are $108 thousand of nonrecurring costs associated with this system upgrade, with additional nonrecurring costs expected in 2016 totaling approximately $500 thousand.

The ratio of non-interest expenses to average assets was 2.53% and 2.44% during the years ended December 31, 2015 and 2014, respectively.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $2.3 billion that conducts business primarily through CNB Bank, CNB’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, loan production offices in Hollidaysburg, Pennsylvania and Ashtabula, Ohio, and 29 full-service offices in Pennsylvania, including ERIEBANK, a division of CNB Bank, as well as 9 full-service offices in central Ohio conducting business as FCBank, a division of CNB Bank. More information about CNB and CNB Bank may be found on the internet at www.bankcnb.com.

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.

	(unaudited) Three Months Ended December 31,									Twelve Months Ended December 31,
	(Dollars in thousands, except share and per share data)
	2015			2014			% change			(unaudited) 2015			2014			% change
Income Statement
Interest income	$	21,994		$	22,495			-2.2	%	$	87,178		$	86,882			0.3	%
Interest expense		3,066			3,063			0.1	%		12,471			12,287			1.5	%
Net interest income		18,928			19,432			-2.6	%		74,707			74,595			0.2	%
Provision for loan losses		668			282			136.9	%		2,560			3,840			-33.3	%
Net interest income after provision for loan losses		18,260			19,150			-4.6	%		72,147			70,755			2.0	%
Non-interest income
Wealth and asset management fees		749			725			3.3	%		2,977			2,860			4.1	%
Service charges on deposit accounts		1,160			1,176			-1.4	%		4,442			4,560			-2.6	%
Other service charges and fees		866			809			7.0	%		3,089			2,809			10.0	%
Net realized gains on available-for-sale securities		102			184			-44.6	%		666			429			55.2	%
Net realized and unrealized gains (losses) on trading securities		108			106			1.9	%		(213	)		121			NA
Mortgage banking		262			279			-6.1	%		746			781			-4.5	%
Bank owned life insurance		342			340			0.6	%		1,195			1,041			14.8	%
Other		557			487			14.4	%		1,897			1,720			10.3	%
Total non-interest income		4,146			4,106			1.0	%		14,799			14,321			3.3	%
Non-interest expenses
Salaries and benefits		7,853			7,151			9.8	%		29,563			26,991			9.5	%
Net occupancy expense of premises		1,643			1,695			-3.1	%		7,000			6,911			1.3	%
FDIC insurance premiums		321			296			8.4	%		1,278			1,322			-3.3	%
Core Deposit Intangible amortization		230			274			-16.1	%		1,007			1,180			-14.7	%
Merger costs		308			—			NA			308			—			NA
Other		4,461			4,253			4.9	%		17,301			16,284			6.2	%
Total non-interest expenses		14,816			13,669			8.4	%		56,457			52,688			7.2	%
Income before income taxes		7,590			9,587			-20.8	%		30,489			32,388			-5.9	%
Income tax expense		2,082			2,844			-26.8	%		8,292			9,314			-11.0	%
Net income	$	5,508		$	6,743			-18.3	%	$	22,197		$	23,074			-3.8	%
Average diluted shares outstanding		14,345,926			14,340,919						14,338,737			14,360,278
Diluted earnings per share	$	0.38		$	0.47			-19.1	%	$	1.54		$	1.60			-3.8	%
Cash dividends per share	$	0.165		$	0.165			0.0	%	$	0.660		$	0.660			0.0	%
Payout ratio		43	%		35	%					43	%		41	%

Average Balances
Loans, net of unearned income	$	1,553,980		$	1,329,958		$	1,460,163		$	1,316,745
Total earning assets		2,130,412			2,060,641			2,093,853			2,025,080
Total assets		2,268,570			2,191,695			2,231,882			2,161,076
Total deposits		1,827,710			1,855,266			1,849,202			1,843,476
Shareholders’ equity		202,130			188,501			197,688			180,776
Performance Ratios (quarterly information annualized)
Return on average assets		0.97	%		1.23	%		0.99	%		1.07	%
Return on average equity		10.90	%		14.31	%		11.23	%		12.76	%
Net interest margin (FTE)		3.73	%		3.94	%		3.73	%		3.82	%
Loan Charge-Offs
Net loan charge-offs	$	1,167		$	751		$	3,196		$	2,701
Net loan charge-offs / average loans		0.30	%		0.23	%		0.22	%		0.21	%

	(unaudited)			(unaudited)						% change versus
	December 31,			September 30,			December 31,
	2015			2015			2014			9/30/15			12/31/14
	(Dollars in thousands, except share and per share data)
Ending Balance Sheet
Loans, net of unearned income	$	1,577,798		$	1,516,121		$	1,355,289			4.1	%		16.4	%
Loans held for sale		1,381			551			887			150.6	%		55.7	%
Investment securities		546,043			591,822			690,225			-7.7	%		-20.9	%
FHLB and other equity interests		15,921			13,438			6,695			18.5	%		137.8	%
Other earning assets		3,959			4,589			3,633			-13.7	%		9.0	%
Total earning assets		2,145,102			2,126,521			2,056,729			0.9	%		4.3	%
Allowance for loan losses		(16,737	)		(17,236	)		(17,373	)		-2.9	%		-3.7	%
Goodwill		27,194			27,194			27,194			0.0	%		0.0	%
Core deposit intangible		2,395			2,626			3,403			-8.8	%		-29.6	%
Other assets		127,182			120,617			119,260			5.4	%		6.6	%
Total assets	$	2,285,136		$	2,259,722		$	2,189,213			1.1	%		4.4	%
Non interest-bearing deposits	$	263,639		$	270,816		$	244,743			-2.7	%		7.7	%
Interest-bearing deposits		1,551,414			1,576,876			1,602,336			-1.6	%		-3.2	%
Total deposits		1,815,053			1,847,692			1,847,079			-1.8	%		-1.7	%
Borrowings		220,515			166,030			111,695			32.8	%		97.4	%
Subordinated debt		20,620			20,620			20,620			0.0	%		0.0	%
Other liabilities		27,035			25,529			21,271			5.9	%		27.1	%
Common stock		—			—			—			NA			NA
Additional paid in capital		77,827			77,677			78,022			0.2	%		-0.2	%
Retained earnings		123,301			120,170			110,619			2.6	%		11.5	%
Treasury stock		(1,114	)		(1,146	)		(1,152	)		-2.8	%		-3.3	%
Accumulated other comprehensive income		1,899			3,150			1,059			-39.7	%		79.3	%
Total shareholders’ equity		201,913			199,851			188,548			1.0	%		7.1	%
Total liabilities and shareholders’ equity	$	2,285,136		$	2,259,722		$	2,189,213			1.1	%		4.4	%
Ending shares outstanding		14,407,980			14,406,481			14,404,416
Book value per share	$	14.01		$	13.87		$	13.09
Tangible book value per share (*)	$	11.96		$	11.80		$	10.97

Capital Ratios
Tangible common equity / tangible assets (*)		7.64	%		7.63	%		7.32	%
Tier 1 leverage ratio		8.73	%		8.64	%		8.39	%
Common equity tier 1 ratio		11.07	%		11.17	%		NA
Tier 1 risk based ratio		12.33	%		12.46	%		13.06	%
Total risk based ratio		13.39	%		13.58	%		14.30	%
Asset Quality
Non-accrual loans	$	12,159		$	12,161		$	9,190
Loans 90+ days past due and accruing		105			193			213
Total non-performing loans		12,264			12,354			9,403
Other real estate owned		925			563			806
Total non-performing assets	$	13,189		$	12,917		$	10,209
Loans modified in a troubled debt restructuring (TDR):
Performing TDR loans	$	9,304		$	8,108		$	14,771
Non-performing TDR loans **		5,637			5,833			3,887
Total TDR loans	$	14,941		$	13,941		$	18,658
Non-performing assets / Loans + OREO		0.82	%		0.85	%		0.75	%
Non-performing assets / Total assets		0.58	%		0.57	%		0.47	%
Allowance for loan losses / Loans		1.06	%		1.14	%		1.28	%

* - 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. 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.

	(Dollars in thousands, except share and per share data)
	(unaudited)			(unaudited)
	December 31,     2015			September 30,     2015			December 31,     2014
Shareholders’ equity	$	201,913		$	199,851		$	188,548
Less goodwill		27,194			27,194			27,194
Less core deposit intangible		2,395			2,626			3,403
Tangible common equity	$	172,324		$	170,031		$	157,951
Total assets	$	2,285,136		$	2,259,722		$	2,189,213
Less goodwill		27,194			27,194			27,194
Less core deposit intangible		2,395			2,626			3,403
Tangible assets	$	2,255,547		$	2,229,902		$	2,158,616
Ending shares outstanding		14,407,980			14,406,481			14,404,416
Tangible book value per share	$	11.96		$	11.80		$	10.97
Tangible common equity/Tangible assets		7.64	%		7.63	%		7.32	%